ECOFIN
George Osborne Excerpts(10 years, 1 month ago)
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The Chancellor of the Exchequer (Mr George Osborne)
A meeting of the Economic and Financial Affairs Council will be held in Brussels on 6 May 2014. The following items are on the agenda to be discussed.
Current Legislative Proposals
The presidency will provide an update to Council on the ongoing work on financial services dossiers.
Parent Subsidiary Directive
Council is expected to be asked to reach political agreement on an amending directive to the parent subsidiary directive. The Government support the proposed amendment, which will effectively close a loophole whereby companies operating across Europe could exploit differences between member states in the tax classification of certain financial instruments in order to reduce their overall tax liability.
Financial Transactions Tax
Council will hold a state of play discussion on the proposal for a Council directive implementing enhanced co-operation in the area of financial transactions tax. Following a number of working level meetings, this is the first opportunity for Finance Ministers to discuss the proposal since the Council decision authorising enhanced co-operation was adopted early last year.
Macro-economic Imbalances Procedure—In-depth reviews
Council will discuss the in-depth reviews published on 5 March and adopt a set of related Council conclusions. The Government take note of the Commission’s assessment that the UK is not experiencing excessive imbalances, and can support the proposed conclusions.
Follow-up to the meetings of G20 Finance Ministers and Governors (10-11 April) and IMF/World Bank (11-13 April) in Washington DC
Council will be informed of the main outcomes of the G20 Finance Ministers and Central Bank Governors and IMF/World Bank meetings held in Washington DC from 10 to 13 April. The Government remain supportive of the Australian G20 agenda, particularly on the development of comprehensive growth strategies.
Oral Answers to Questions
George Osborne Excerpts(10 years, 1 month ago)
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Jeremy Lefroy (Stafford) (Con)
1. What assessment he has made of the effect of freezing fuel duty on the price of petrol.
The Chancellor of the Exchequer (Mr George Osborne)
This Government will freeze fuel duty for the rest of this Parliament. As a result, petrol will cost a full 20p per litre less than if we had stuck with the previous Government’s hated fuel duty escalator. We can afford to do this because we have got a grip on the public finances.
The House will also want to know that today we learned that GDP grew by 0.8% in the first quarter of this year. That is 3.1% over the year and today’s figures show that Britain is coming back. We cannot take that for granted. We have to go on working through our long-term economic plan, but for the first time in a decade all three main sectors of the economy—manufacturing, services and construction—have grown by at least 3% in the past year.
The impact of the great recession is still being felt, but the foundations—
Mr Speaker
Order. The Chancellor will resume his seat. The answer was not just too long—it was far too long.
Mr Osborne
Absolutely, Mr Speaker: having heard all the bad economic news in the previous Parliament, I thought Parliament would want to hear some good economic news. The reduction in fuel duty is one of the number of steps we have taken to support the British economy and families. As my hon. Friend says, we have just published a study that shows that the reduction and freeze in fuel duty has the potential to increase GDP by 0.5%. As Conservatives, we understand that lower taxes mean higher economic growth.
Mr Andrew Tyrie (Chichester) (Con)
The whole House will welcome the fact that we now have a policy to drive down costs on hard-pressed motorists, who have found it very tough in recent years. Can we take it from the Government that that reflects a wider shift in policy and that they are seeking to bear down on other energy input costs, including those of fossil fuels, in order to help hard-pressed consumers and encourage British competitiveness?
Mr Osborne
We need to have competitive energy prices while at the same time building a sustainable energy mix. The major £7 billion package in the Budget to help with the cost of energy for manufacturers has been welcomed not just by the big energy-intensive industries, but by many small business and, of course, families.
Angela Smith (Penistone and Stocksbridge) (Lab)
2. What recent representations he has made to the European Union on the proposed cap on bank bonuses.
Graham Evans (Weaver Vale) (Con)
3. What recent steps he has taken to make saving more flexible.
The Chancellor of the Exchequer (Mr George Osborne)
This Government believe that people who have worked hard and saved hard through their lives should be trusted with their own pension savings in retirement. That is why, following the Budget, we have already given people much greater access to their pension savings and why, from next April, they will have complete freedom of access to their defined contribution scheme.
Graham Evans
This year’s Budget exposed some people’s innate belief that those who have worked hard and saved all their lives could not be trusted with their own money. Will my right hon. Friend the Chancellor reassure savers in Weaver Vale that he rejects such patronising views, and will he update the House on his plans to let people choose how to spend their own money and to make savings far more flexible?
Mr Osborne
I absolutely agree with my hon. Friend. The fact that the Labour party had nothing to say in response reflects the muddled approach: it did not support the measure, but it did not know what to do with a popular Budget proposal. We are absolutely clear that we reject the patronising view, pursued by the previous Government, that the state knows better than individuals how to spend their money. Trusting people, reducing taxes, supporting savers—that is this Government’s approach.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Does the Chancellor agree that the traditional financial services sector has let down savers and borrowers? Is it not time that he gave more encouragement to the crowdfunding sector, which is flexible and gives a much better deal?
Mr Osborne
The hon. Gentleman has asked me about that matter at previous Treasury questions and I know that he takes a keen interest in it. He wrote to thank me for the measure in the Budget to include crowdfunding vehicles in individual savings accounts. That is an important step to support this new sector.
Mr James Clappison (Hertsmere) (Con)
As the Government’s long-term economic plan unfolds successfully, will my right hon. Friend consider giving further encouragement to savers through ISAs? Savers have warmly welcomed the greater flexibility that he has introduced with the new ISA regime.
Mr Osborne
Alongside the flexibility in and access to pension pots, we have increased the limit for both ISAs to £15,000. The new ISA will come in at the beginning of July and there will be complete flexibility in transferring funds from equity ISAs to cash ISAs. Of course, we have also abolished the 10p savings rate. Unlike the shadow Chancellor, when we abolish a 10p rate we get rid of it altogether, rather than doubling it.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
The Chancellor said that last month’s Budget was a Budget for savers, so will he tell us why page 106 of the Red Book shows that the saving ratio is falling and that it has been revised down this year, next year, the year after and in every year up to 2018?
Mr Osborne
What the hon. Lady did not say is that by 2018 the saving ratio will still be double what it was under the Labour Government. That is a rather important piece of information that she failed to tell the House. We are 15 minutes into Treasury questions. When will a Labour MP welcome the GDP numbers?
Robert Flello (Stoke-on-Trent South) (Lab)
4. What recent assessment he has made of the level of bank lending to businesses since May 2010.
Mr Robin Walker (Worcester) (Con)
5. What recent assessment he has made of growth in the economy.
The Chancellor of the Exchequer (Mr George Osborne)
As you know, Mr Speaker, GDP grew by 0.8% in the last quarter and 3.1% over the year. Growth is broadly balanced, and those who predicted a year ago that our plan would choke off recovery got it spectacularly wrong.
Mr Walker
In March last year, with youth unemployment in Worcester at 645, the shadow Chancellor said that
“the economy will get worse”.
Youth unemployment in Worcester is down by a quarter since then and by 40% since it peaked under Labour. Will my right hon. Friend the Chancellor update the House on how the wider economy has performed during that time?
Mr Osborne
My hon. Friend is absolutely right. Since the shadow Chancellor made his prediction, the economy has grown by more than 3% and almost 1 million jobs have been created. In Worcester the claimant count is down by 20% in the past year, so we have more of these predictions from the shadow Chancellor and the economy just keeps growing.
Ian Austin (Dudley North) (Lab)
Does the Chancellor not understand that despite the belated but welcome growth in the economy, the only people who are not worse off than they were four years ago are the super-rich—people such as him and the other multi-millionaires sitting around the Cabinet table? His wilful refusal to accept what every ordinary family in the country know, from their daily experience just goes to show how out of touch he is.
Mr Osborne
Of course families are feeling the impact of the great recession over which the last Government presided, but the hon. Gentleman talks about who has felt the benefit of growth. What about the people in his constituency who have got a job, where unemployment has fallen by 17% and youth unemployment is down 18%? What about the 1.5 million people who have got jobs as a result of this Government working through their long-term economic plan?
Christopher Pincher (Tamworth) (Con)
20. I welcome today’s excellent news. With the deficit down, growth up and more people than ever in work, the Government’s long-term economic plan is clearly delivering for my constituents. However, there is always more to do, so will my right hon. Friend tell me what further steps he can take to encourage growth in workplace apprenticeships? In Tamworth, they have grown by more than a third.
Mr Osborne
We have provided more than 1 million apprenticeships, and in the most recent Budget we provided more support for apprentices by extending grants to small and medium-sized companies to help them take on apprentices. We also introduced and expanded degree-level and post-degree-level apprenticeships. Apprenticeship schemes are one of this Government’s great successes, and we are going to build on it.
Geraint Davies (Swansea West) (Lab/Co-op)
Does the Chancellor accept that the growth he is talking about is fuelled by mortgages pushing up house prices and consumer debt? Lending from banks is now at the 2008 level for mortgages but down 30% to businesses, which is why productivity and real wages are down. When will he deliver sustainable growth rather than a bubble before an election?
Mr Osborne
The hon. Gentleman obviously has not looked at today’s GDP numbers, because they show that the sector that has grown most strongly is manufacturing.
Mr Osborne
The hon. Gentleman mentions services, but manufacturing has grown by 1.3% in the last quarter and services by 0.9%. Even a Labour MP can work out that 1.3 is higher than 0.9.
Andrew Percy (Brigg and Goole) (Con)
Long before the great recession, the region that it is my privilege to represent was getting poorer relative to the rest of the UK, with youth unemployment rising and private sector jobs shrinking. Now, however, things seem to be on the turn. May we have an assurance that, this time, the recovery will be for all, particularly for the north of England, and that we will finally start to bridge the gap that grew under the Labour party?
Mr Osborne
My hon. Friend is right that the gap between the north and south grew under the last Government, who put all their bets on the City of London, which went spectacularly wrong. In his part of the world, which he represents so ably, we are not only helping manufacturing by reducing energy costs, which is important for steelworks in his area and elsewhere, but helping with the tolls on the Humber bridge. We have also had the great news that Siemens will open its new wind turbine factory in the area. Those are all examples of how we will have a more balanced economy than the one that we inherited.
Ed Balls (Morley and Outwood) (Lab/Co-op)
Back in 2010, the Chancellor promised to balance the books in 2015 and said that living standards would rise “steadily and sustainably”. Following today’s welcome news that the economy is finally growing again, will the Chancellor tell us whether he is now on track to keep either of those two promises?
Mr Osborne
I am delighted that the shadow Chancellor is still here. He is the man who, quite literally, crashed the car. On that occasion he fled the scene, but when it comes to crashing the British economy he cannot escape scrutiny of his record. Let me be clear: we said we would get the deficit down, and the deficit has come down; we said we would recover the economy, and recovery is taking place. He predicted that 1 million people would lose their jobs, but 1.5 million jobs have been created. He has apologised to the lady whose car he crashed into—why does he not apologise to the British people?
Ed Balls
If this Chancellor wants to have a discussion about whiplash we can do that any day of the week—Mr, Mrs or Mistress. However, let us not go back to biographies of the past; let us get back to the serious issue. The fact is that the Chancellor has failed to answer my question. For all his promises, he has broken them, even on the deficit, and living standards are not rising but falling year on year on year. People are £1,600 worse off under the Tories. If the Chancellor really thinks that his economic plan is working, let him answer this one simple question: at the next election, after five years of this Chancellor, will working people be better off than they were in 2010—yes or no?
Mr Osborne
Of course Britain will be better off because we will not have the mess of an economy on the brink of collapse, a banking system on its knees, and an 11% budget deficit. The only way to help people in this country is to grow the British economy. What the figures reveal today is that Britain is coming back, but we cannot take that for granted. People are still experiencing the impact of the shadow Chancellor’s economic policies, and the only thing he can say to us is “Why are you not clearing up our mess quickly enough?” That is literally what he is saying; it is absolutely pathetic. His car crash was caused by a seven-point turn that he was trying. Why does he not just get up, make a simple U-turn, admit that he got it wrong and that Britain is growing again?
Stella Creasy (Walthamstow) (Lab/Co-op)
6. What comparative assessment he has made of trends in the annual rates of inflation and growth in average earnings since May 2010.
Mr Philip Hollobone (Kettering) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability and prosperity of the economy.
Mr Hollobone
My constituents were very worried indeed when the shadow Chancellor told them four years ago that the Chancellor’s attempts to rebalance the economy would result in a 1 million increase in the number of unemployed people. Would the Chancellor be kind enough to inform the House of the actual impact of his long-term economic plan on the Kettering economy, and to explain how my constituents can look forward to a more secure financial future as a result?
Mr Osborne
Our economic plan is delivering stability, and it is now also delivering the economic growth and jobs that we all want to see. We are coming out of the very deep mess in which the shadow Chancellor and his team left the country, with the result that in Kettering the claimant count is down by 30%, and 1,500 new jobs have been created in the last year. As my hon. Friend well knows—because, as an assiduous Member of Parliament, he has lobbied hard for them—major improvements have been made in the road and rail infrastructure in the Kettering area, to ensure that there is a balanced economic recovery.
Mr William Bain (Glasgow North East) (Lab)
T3. The Chancellor spends taxpayers’ money in Brussels on defending big bank bonuses, but he has not lifted a finger in four years to deal with the falling real wages of millions of ordinary working people. Is he not just presiding over recovery by the few, of the few, and for the few?
Mr Osborne
Well, I do not think the hon. Gentleman is Abraham Lincoln, but the point I would make is that we can only see an increase in the living standards of the British people if the British economy is growing and jobs are created. That is exactly what our economic plan is delivering.
Stephen Phillips (Sleaford and North Hykeham) (Con)
T2. Further to the question from my hon. Friend the Member for Kettering (Mr Hollobone), the House will also recall that earlier this year the shadow Chancellor said:“do I think the level of public spending going into the crisis was a problem for Britain? No, I don’t, nor our deficit, nor our national debt”.As the last Government were spending more than they took in as early as 2002, does my right hon. Friend agree that this shows they still cannot be trusted to take the difficult decisions needed to control public spending and get the deficit down?
Mr Osborne
I absolutely agree with my hon. and learned Friend. [Interruption.] The shadow Chancellor is chuntering away, but this is what he said on the radio this morning: “I don’t think I’ve been too pessimistic in the last few years.” He predicted that the economy would be choked off and that jobs would be lost, but the reverse is happening. In Sleaford and North Hykeham, as my hon. and learned Friend knows, the claimant count has come down and 1,700 jobs have been created.
Julie Hilling (Bolton West) (Lab)
T4. When the Chancellor said earlier this month, “If you are hiding your money offshore, we are coming to get you”,did he mean “coming to get you to work in the Treasury”?
Mr Osborne
This Government have taken action against tax avoidance that the last Government never dreamed of taking. We have increased the resources for tackling avoidance and evasion. I will tell the House something else: we do not preside over a tax system in which cleaners pay higher tax rates than the people they work for. That was the tax system that the Labour party voted for, and we have got rid of it.
Andrew George (St Ives) (LD)
T5. I thank my right hon. Friend the Chief Secretary to the Treasury for visiting Cornwall last week, when he will have been impressed by the resourcefulness and enterprise in the Cornish economy. Will he make sure that those charged with managing the Cornwall EU structural fund programme are granted the appropriate delegated powers of intermediate body status in future?
Mike Kane (Wythenshawe and Sale East) (Lab)
T6. With average wages down, ordinary working people are increasingly being driven into the arms of payday loan lenders with their usurious rates of interest. What measures are the Government taking to give ordinary working people access to fair credit?
Mr Osborne
We are introducing a cap on payday lending, and that will be an important—[Interruption.] The shadow Chancellor chuckles. He was the City Minister; he could have taken that decision at any point when he was—[Interruption.]. Why has it taken so long? Labour had 13 years to do these things—13 years when its team were running the Treasury. That is why people will not listen to what they have to say. The answer to the hon. Gentleman’s question is this: by supporting credit unions, capping payday lending and encouraging competition on the high street, we will help his constituents and many others.
Bob Blackman (Harrow East) (Con)
T8. As the economy continues to prosper and grow under the excellent stewardship of our Chancellor, will my right hon. Friend join me in congratulating the tube workers who turned up to work today to keep London moving, and in congratulating the workers who went to work this morning despite the antics of the RMT?
Mr Osborne
I join my hon. Friend in thanking those who went to work today on our tube system. The strike is totally irresponsible and unnecessary. It impacts on the economy and makes it difficult for people in London to get to work. [Interruption.] Well, perhaps the reason that so few Labour MPs are at Treasury questions is that they are manning the barricades with the RMT.
Mrs Emma Lewell-Buck (South Shields) (Lab)
T7. My constituent Mr Effard works on a zero-hours contract and does not know from week to week whether he will be given enough hours to be able to cover his bills. Mr Effard wants to work, but admits that in many ways jobseeker’s allowance provided him with more stability. Will the Chancellor admit that the normalisation of these contracts under his Government means that for people such as my constituent a job no longer guarantees financial security?
Mr Osborne
The last study on the impact of zero-hours contracts was undertaken by the previous Labour Government, who concluded that they wanted to retain the flexibility that such contracts offer to business. However, we are not satisfied that all the work has been done on this, which is why the Department for Business, Innovation and Skills is consulting on what changes potentially need to be made to zero-hours contracts. We have received a lot of representations, we are looking through them and of course we will come forward with a response shortly.
Simon Wright (Norwich South) (LD)
T9. Within a few months, Norwich will no longer be the UK’s largest city not to be connected to the dual carriageway network. Can the Chancellor confirm that the excellent progress of the coalition’s A11 dualling scheme in Norfolk is meeting Treasury expectations, and will he keep this in mind when considering destinations for further infrastructure investment?
Lindsay Roy (Glenrothes) (Lab)
If the Government’s economic plan is working so well, why is the Chancellor planning to borrow £190 billion more than previously planned?
Mr Osborne
This country was borrowing £150 billion a year when this Government came to office, and we are on course to reduce the deficit by a half this year. We are taking—[Interruption.] What exactly is the Labour party’s complaint? Is it that we are not doing enough to reduce the deficit? Labour said that we were doing it too quickly and opposed all the things we proposed in recent years. Labour simply has no explanation for why the economic growth it said could not happen has happened.
Lorraine Fullbrook (South Ribble) (Con)
T10. Does my right hon. Friend agree that politicians would do well to listen to senior business figures who warn that the anti-business policies put forward by the Labour party would put jobs and investment at risk, and would prevent Britain from having a stronger, more competitive economy?
Mr Osborne
The Opposition do have an anti-business agenda, but the Government are taking a different approach. We are reducing business taxes; we have introduced an employment allowance this month which will help small companies with their jobs tax; and of course next year we are taking under-21s out of the jobs tax. Labour’s plan is now not only to increase corporation tax; the party is discussing plans to put up the jobs tax, which would be a total disaster.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Since May 2010, long-term unemployment in my constituency has increased by 27%, long-term youth unemployment has increased by 40% and average real weekly wages have decreased by £116.93. Does the Chancellor want to take credit for that?
Mr Osborne
The hard-working people of the hon. Gentleman’s constituency should take credit for the fact that unemployment is down by 21% in his constituency and youth unemployment is down by 29% there.
Mr James Gray (North Wiltshire) (Con)
Will the Chancellor join me in warmly welcoming this morning’s announcement that Dyson is to invest £250 million in expanding its headquarters in Malmesbury in my constituency and intends to employ 3,000 more people, 2,000 of whom will be high-quality engineers, designers and a large number of apprentices? Does he agree that that is hard evidence that that shrewd operator Sir James Dyson has every possible confidence in the Chancellor’s long-term economic plan?
Mr Speaker
I think the hon. Gentleman is planning an Adjournment debate on the subject. I have that distinct sense, although some people may think he has already had it.
Mr Osborne
The jobs being created by Dyson at Malmesbury are excellent news. Many people will know Dyson’s products, but its facility at Malmesbury, which I have visited, is fantastic. We went to James Dyson to ask how we could replicate some of that success elsewhere in our economy. He came forward with proposals—which became our innovation and catapult centres—to bring applied science to commercial success. We are building on the success of Dyson, not just for the people my hon. Friend represents, but for the whole country.
Fiona Mactaggart (Slough) (Lab)
How often have the Chancellor and his colleagues referred to the long-term economic plan during this Question Time? Is it because the shorter-term economic plan that he announced in 2010, allegedly to get rid of the deficit and reduce the debt by next year, has failed and he is instead adopting something much closer to the two-term offer that Labour proposed?
Mr Osborne
I have not been keeping count of how many times the long-term economic plan has been mentioned, but the hon. Lady has just added two more to the total. That long-term economic plan is reducing the deficit, which is due to be down by a half this year, seeing the creation of 1.5 million jobs in our economy and supporting the growing economy, as we have seen in the GDP numbers today.
Mr David Ruffley (Bury St Edmunds) (Con)
The elimination of the deficit by the end of the next Parliament still requires reducing general Government consumption to its 1948 level. Will the Chancellor confirm that that is in the national interest and that the Labour party does not have a snowball’s chance in Hades of achieving it?
Mr Osborne
The Labour Government left us the highest budget deficit in the peacetime history of this country. The numbers to which my hon. Friend refers assume that there are no savings in welfare. I have made it clear that I think we should consider savings in welfare. Of course, other parties, such as the Labour party, have put forward proposals to increase tax.
Nia Griffith (Llanelli) (Lab)
Given the great success of the Labour Welsh Government’s Jobs Growth Wales scheme, which is on target to help 16,000 young people into sustainable jobs, mostly in the private sector, will the Chancellor now commit to a similar UK-wide scheme funded by a repeat of Labour’s tax on bankers bonuses?
Mr Osborne
This week, the help to work scheme came into force, which is helping long-term unemployed people, providing them with more support and ensuring that those who need to sign on daily do so, and that those who need work experience and who need to be in work can take community jobs. We are reforming welfare, and that is part of the approach that we are taking to create jobs in this country by ensuring that work always pays.
Steve Baker (Wycombe) (Con)
There is no doubt that low interest rates have played a crucial part in the Chancellor’s long-term economic plan and brought about today’s widely welcomed news, but low rates will not be good news for those people who have worked hard, done the right thing and now wish to see a safe return on their cash. Will he explain to the House and to savers in my constituency what he is doing to promote their interests by supporting saving?
Mr Osborne
My hon. Friend is absolutely right that the low interest rates put in place by the independent Bank of England have made life more difficult for savers, although, of course, the growing economy is good news for savers as well as borrowers. My hon. Friend has warmly supported what we have done in the Budget, not only to give people access to their pension pots but to introduce the new ISA. We have also introduced the new savings bond for pensioners, which will come into effect at the end of the year, with higher interest rates to help those in his constituency who have worked hard and saved hard.
John Cryer (Leyton and Wanstead) (Lab)
Real wages have fallen by £1,600 since the election, so will the Chancellor now answer the question repeatedly asked by Opposition Members: will wages in real terms be higher or lower at the next election than they were at the last election?
Mr Osborne
Britain is better off because we are rescuing this country from the economic mess in which the Opposition left us. There is a complete fantasy in the Labour party, demonstrated again in the past hour, that one can have an economic policy that destroys the banks, destroys business and destroys the public finances but somehow helps the people of the country in the process. As we learned to our cost under the previous Labour Government, that is not the case. They wrecked the economy and we are recovering it.
Duncan Hames (Chippenham) (LD)
Last Friday, my right hon. Friend the Chief Secretary saw the world-class robotics engineers of Anthony Best Dynamics in Bradford-on-Avon. What is he doing to create the conditions in which such successful manufacturers can continue to grow right where they are?
Valerie Vaz (Walsall South) (Lab)
According to the Office for National Statistics, unemployment in the west midlands has risen to 8.2%. Can the Chancellor explain why?
Mr Osborne
The statistics for the hon. Lady’s constituency show that unemployment is down 20%, youth unemployment is down 20% and long-term unemployment is down 20%. In the west midlands, during the boom years—the unsustainable boom—private sector employment actually fell. That points to what went wrong with the previous Government—they put all the bets on the City of London, the shadow Chancellor did not regulate it properly, it blew up and we are now retrieving the situation that he created.
Jake Berry (Rossendale and Darwen) (Con)
In Rossendale and Darwen, the majority of our large employers are in the construction and manufacturing sectors. People want not just new jobs, but security and stability in those jobs. Will my right hon. Friend confirm that the latest figures show that those two sectors are growing at their fastest rate for 10 years?
Mr Osborne
My hon. Friend, who so ably represents his constituency, is absolutely right that in his constituency, manufacturing is doing better. That is because, in the Budget, we introduced a package of measures to support manufacturing and, above all, through the long-term economic plan, we are providing the economic stability that allows for investment in construction. I have every confidence that, when he takes that argument to the British people, he will see off the red princeling who is standing against him.
Charter for Budget Responsibility
George Osborne Excerpts(10 years, 2 months ago)
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The Chancellor of the Exchequer (Mr George Osborne)
I beg to move,
That the modified Charter for Budget Responsibility, which was laid before this House on 19 March, be approved.
I am putting before the House today a charter for budget responsibility updated to include a new cap on welfare spending. I am conscious that this is a time-limited debate and will keep my remarks brief so that others can speak. The welfare cap marks an important moment in the development of the British welfare state. I believe the public back a welfare system that provides fair support for those genuinely in need and that supports those who have a disability and cannot work; those caring for others; those on maternity or paternity leave; and those who have lost a job and are trying hard to find work. The public, through their taxes on that hard work, are willing to pay for that support. It is a level of support that a country such as ours—we now have a growing economy—can afford to give.
However, that is not the welfare state we inherited in 2010. That welfare state was not fair and not affordable. It was not fair that some received £50,000, £60,000 or up to £100,000 in housing benefit, paid for by taxpayers who could never dream of affording homes with rents that big, so we capped housing benefit payments at just over £20,000 a year.
Mr Osborne
I will give way in a moment.
It was not fair that many out-of-work families received more as an income in welfare than the average family got from going out to work, so we capped the total benefits that one family can receive at £26,000. Thirty-six thousand households are now subject to the cap.
Sheila Gilmore
How many families received housing benefit at the level he first mentioned—the £50,000-plus mark? Is he aware that, of the families covered by the benefit cap, nearly half are in temporary accommodation provided by councils because they owe them the statutory duty?
Mr Osborne
First of all, 21,000 people have been affected by the housing benefit cap, so 21,000 people were receiving housing benefit more than that. Secondly, the hon. Lady seems to be suggesting that she is against the cap on benefits. That points to a wider truth that we will discover today about the welfare cap, and specifically whether the Labour party is committed to the cap we are setting out today, with the list of benefits in it. We will discover whether Labour is committed to the cap at the level we have set—not just the principle of a welfare cap, but the practical application of it.
Mr Osborne
We will explore that point later, but let me take my hon. Friend’s intervention.
Robert Halfon
Is my right hon. Friend aware that a person on average wages pays roughly £1,200 a year in taxation just to pay the welfare bill, not including pensions? Does he agree that the welfare cap is fair on lower earners?
Mr Osborne
It is absolutely fair. That is what the cap is about—building a welfare system that is fair to those who need it and fair to those who pay for it.
Mr Osborne
I will take a couple of interventions in a while. I have only 15 minutes for my opening remarks because we want lots of contributions later in the debate.
It was not fair that benefits were unlimited. We have introduced a cap. It was not fair that those looking for work faced marginal tax rates as high as 96%, sapping the incentives to find a job. We are addressing that through universal credit. It was not fair that benefits were rising much faster than wages; not fair that people who could never afford a place with a spare room subsidised the spare rooms of others; not fair that people who did not speak English could receive out-of-work benefits without even trying to learn it; and not fair that the long-term unemployed were cycled and recycled through the new deal. That was not fair, but it was the welfare system we inherited. It was unfair to those trapped in poverty and to the millions of people who paid for it. It was a perverse distortion of what William Beveridge had conceived. In the face of opposition to each and every measure we have introduced, we are removing those distortions, restoring the work incentives and creating a fair welfare state.
Mr Osborne
I will take an intervention from the hon. Member for Rhondda (Chris Bryant).
Chris Bryant
Will the Chancellor confirm that, since his initial spending review, he has had to spend £13 billion more on welfare than he predicted? He has had to put it up by £1 billion this year and another £1 billion next year, so if the cap he envisages had been in place during this Parliament, he would have had to come to the House and apologise on four occasions?
Mr Osborne
For a start, welfare spending is £3.7 billion lower than I set out in my first Budget. It is also £10 billion less than the Labour party proposed. Labour Members cannot have it both ways. They keep claiming that we are cutting the welfare system and then complain that the cost is too high. That is one thing that we will explore in the debate—what exactly is the Labour policy.
Mr Osborne
I will give way to my hon. Friend the Member for Rochford and Southend East (James Duddridge) and then make progress.
James Duddridge (Rochford and Southend East) (Con)
If we had followed the policies of the Labour party, we would not have created 1.3 million jobs and those people would have been on benefits.
Mr Osborne
My hon. Friend is absolutely right. We have also created the right incentives so that work pays. Alongside supporting business—by the way, extraordinarily, the Labour party last night voted to increase taxes on business—we are creating an environment in which jobs are being created.
We are creating a fairer welfare state.
Andrew Gwynne (Denton and Reddish) (Lab)
Will the right hon. Gentleman give way?
Mr Osborne
I will give way in a little moment, but let me make some more progress.
We are creating a welfare state that the country—
Ed Balls (Morley and Outwood) (Lab/Co-op)
Will the right hon. Gentleman give way?
Mr Osborne
Of course I will give way, but will the shadow Chancellor confirm, so that we know the terms of this debate, whether he is committed to the specific welfare cap, the list of the benefits included and the level to which the Government have committed? The shadow Work and Pensions Secretary, the hon. Member for Leeds West (Rachel Reeves), said on the radio that Labour would do things differently. Perhaps he could confirm that.
Ed Balls
I will make my speech on the welfare cap in a moment. I want to go back to the remark the Chancellor just made about last night’s vote. We have said that we do not think we should go ahead with the next cut in corporation tax and instead use all the money for a freeze in business rates for small businesses. Is the Chancellor really saying that large companies are business, but small businesses do not count? [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Just to remind everybody, shorter interventions would be helpful. We have 11 speakers to follow and I know the Front Benchers are desperate to hear the Back Benchers.
Chris Ruane (Vale of Clwyd) (Lab)
Both the Chancellor and the Prime Minister have used the line that people on benefits are getting £60,000, £70,000, £80,000 and £90,000 a year. I have tabled parliamentary questions and freedom of information requests on this point. Will the Chancellor tell me how many people are receiving more than £100,000 a year?
Mr Osborne
None, because we have capped housing benefit payments. [Interruption.] Just to clear up the previous point, Labour is going to say to the country, “Elect a Labour Government and business tax will be higher and corporation tax will be higher.” That is a terrible message to send to the rest of the world. [Interruption.]
Ed Balls
We are proposing that all the money from deferring the cut in corporation tax goes to small business in a business rates freeze. That is not a rise in the taxes on business, unless the Chancellor thinks that somehow small businesses are second class and do not count. Is that really what the Chancellor is saying?
Mr Osborne
We have cut the corporation tax rate for small businesses. We have capped rates for small businesses. We are giving a £1,000 discount to high street stores. Those are the measures we are taking for small businesses, and we are also cutting the corporation tax rate. The truth is that Labour is now committed to higher business taxes in Britain with a high corporation tax rate.
Mr Osborne
May I just say to the shadow Chancellor that he does not need to talk to me? He needs to talk to the business community of Britain, which knows that he is anti-business. His party is anti-business, anti-job creation and, as I am about to explain, it is the welfare party, too. If he waits a little, he can intervene and answer the question that we need answered.
Mr Osborne
I will give way in a moment. Let me make progress with my speech. [Interruption.] All right, I will give way if the right hon. Gentleman answers this question in his intervention: is Labour committed to a higher rate of corporation tax? Yes or no?
Ed Balls
The Chancellor must not mislead and misrepresent on the welfare state or on business taxes. Labour is not committed to an increase in business tax. He has said that three times. Every time he has said that, he has misled this House. I am saying that all the money from the corporation tax rate will go back to small business. That is the right position. Every time he misleads this House I will correct him, Mr Deputy Speaker.
Mr Osborne
This is desperate stuff from the shadow Chancellor. If Labour had had its way in the vote last night, business taxes would be higher—yes or no?
Mr Osborne
Yes, they would be, because corporation tax would be higher and businesses would be paying more. No wonder Labour does not have a clue about how to fix the economy or how to deal with the welfare system. That is evident from its period in office, when welfare spending, which will be contained by the cap, went up 42% in real terms. Housing benefit went up by £7.6 billion alone, as a real increase—bigger than the entire police budget. Every single one of the pounds the Labour Government spent on working age welfare was not earned, but borrowed—borrowed because Britain could not pay its way in the world. Rather than using valuable public resources to pay for apprenticeships, science, roads and railways, money was spent on an unaffordable, unfair and out-of-control benefits bill. That economic insecurity is being addressed and control is being re-established. We insist that welfare is affordable and we insist that it is fair: fair to those who need it and fair to those who pay for it.
Mr Osborne
I will make a bit of progress and then take some interventions.
Today, we take another important step towards the goal. We seek the support of Parliament not just for the principle of this welfare cap—important as that is—but its practical application: the list of benefits in it and the cash limit we set out today. I have noticed, in the past 24 hours, a change in the language being used by those on the Labour Front Bench. A day or two ago it was, “We are going to vote for the Government’s welfare cap.” Clearly, Labour MPs did not like that, so this morning the shadow Work and Pensions Secretary, said that Labour will sign up to something called a welfare cap, but that
“We would do it in different ways”.
What different ways? Does that mean different benefits would be included? [Interruption.] Will the shadow Chief Secretary, the hon. Member for Nottingham East (Chris Leslie), explain Labour’s welfare cap? Does that mean different levels of benefits? Does it mean a different level of spending? Every time the Opposition are faced with a difficult decision and asked to prove their fiscal credibility, they buckle because they are weak. We know what has happened. They have read the polls and seen the focus groups. They are being told not to vote against the welfare cap, but everyone knows what their instincts are. Everyone knows what gets them a cheer at the Labour conference: more spending on welfare paid for by more borrowing. Indeed, their only welfare policy is a £500,000 increase in housing benefit. The shadow Work and Pensions Secretary gave it away last week, in a private left-wing meeting. She said this, in private:
“it will be much better if we can say that all of the changes the Government have introduced we can reverse and all benefits can be universal.”
At least those Labour MPs voting against the welfare cap today are being true to what they believe in. No one thinks that of the shadow Chancellor and the Labour leadership today.
Time is short, so let me set out briefly how the cap will operate, first by enforcing public expenditure control where there was none previously. Welfare spending was called annual managed expenditure by the previous Government—no doubt a term dreamt up by the shadow Chancellor when he was running things so badly—but it was expenditure that was neither managed nor set annually. Now it will be. The Budget document sets out the 26 different benefits that will sit under the cap. They include almost all transfer payments from tax credits, housing benefit and employment and support allowance to statutory maternity pay, carer’s allowance and disability living allowance.
Some of those benefits, such as statutory maternity pay, have relatively stable and predictable costs, while others, such as housing benefit, have consistently grown much faster than forecast; but each one involves many hundreds of millions, often billions, of pounds of spending, and deserves the same careful management and scrutiny as items in the defence budget or the education budget. Some of those benefits, such as disability living allowance, help some of the most vulnerable citizens, but that is not an excuse for failure to manage their budgets. After all, our national health service also cares for the most vulnerable, but that does not prevent us from giving it an annual budget.
Mr Nigel Dodds (Belfast North) (DUP)
Will the Chancellor spell out the implications for devolved regions such as Northern Ireland, where welfare spending is devolved? What is the implication for the block grant if there is a rise in welfare expenditure through no fault of the Northern Ireland Executive?
Mr Osborne
Many benefits apply universally throughout the United Kingdom, but some areas of welfare spending are devolved. I know that there are specific arrangements with Northern Ireland, and we have been having discussions with the Northern Ireland Executive. I am well aware that the right hon. Gentleman represents only one party in the power-sharing arrangement, but we are keen to see the Executive make progress on welfare reforms and help to control the bills, and, as he knows, we are discussing that with him and his colleagues. However, I shall be happy to sit down and work out with him how some of the principles of the welfare cap here can be used to control welfare spending in Northern Ireland.
Mr Osborne
Let me make a few more points first. I will give way in a second—or a minute, perhaps.
The only benefits that we are excluding from the cap are the most cyclical ones which track the performance of the economy directly, such as jobseeker’s allowance and the housing benefit that is passported with it. They are the basic automatic stabilisers. By excluding only those benefits, we ensure that the economic cycle does not drive permanently higher spending on, for instance, sickness and disability benefits. We have also excluded the state pension and the additional pension. I know that the shadow Chancellor wanted to include them, but I would think it pretty unfair if a Chancellor who, for example, lost control of tax credit spending responded by cutting the basic state pension. That would not be sensible, and it would certainly not be fair. I think that adjusting the pension age is the best way to control expenditure on pensions over the long term as life expectancy rises.
In the Budget, we set the cash limit for the benefit cap at £119.5 billion in 2015-16—
Mr Osborne
I shall now ask the hon. Member for Denton and Reddish (Andrew Gwynne) whether he supports that cash limit.
Andrew Gwynne
In one breath, the Chancellor talks of fairness to taxpayers and the need to impose budgetary control on welfare spending. Can he perhaps explain to the House why setting up universal credit has cost taxpayers about £161,000 per claimant?
Mr Osborne
This is a huge system that will apply to millions and millions of people. Let me tell the House what we are going to do. I know that this will come as a complete shock to the Labour party, but we are going to take our time, get it right, and make sure that we do not put everyone on to a new credit with which the system cannot cope, which is exactly what the Labour party did with tax credits. All of us who were Members of Parliament at that time remember people coming to our surgeries who had been treated shockingly by a Labour Administration who had not got their administration right.
As I was saying, we will set the cash limit for the welfare cap at £119 billion. If inflation is higher than forecast, the Government cannot wash their hands of that either. Public services such as the police and transport have to absorb higher inflation, so why should welfare budgets be different? [Interruption.] I am sorry, Mr Deputy Speaker; there is a private conversation going on. My right hon. Friend the Secretary of State for Work and Pensions has done more to reform the welfare state than any of that lot.
The charter makes clear what will happen if the welfare cap is breached. The Chancellor must come to Parliament, account for the failure of public expenditure control, and set out the action that will be taken to address the breach. Then the House of Commons—the ultimate guardian of the people’s money—
Mr Osborne
No; I am going to end my speech now. [Interruption.] Well, I want to make sure that all these Labour Members have a chance to stand up and say exactly what they think of the welfare cap, and tell us that they support it, and that they should have introduced it when they were in office. They look such a cheery bunch. I want to make sure that they have a chance to explain what they are voting for this afternoon—or perhaps some of them will not.
I could set out more of the details, but much of that has already been done in the Red Book. This is the key point that I want to make to Labour Members. The welfare cap brings responsibility, accountability and fairness. Those who want to undo our welfare reforms will now have to tell us about the other cuts that they will make, or else come clean and admit to the public that what they really want are higher welfare bills. The phoney argument that welfare can be magically cut by a Government’s spending more and borrowing more will run into the brick wall of the OBR’s independent assessment. The phoney argument that a Government can spend half a billion pounds of taxpayers’ money on a spare room subsidy and pay for it with a cut in winter fuel payments worth a fifth of that will be exposed by an inevitable breach of the welfare cap. The “welfare party” will have to make its case for more welfare spending in the plain sight of the British people.
Our welfare cap ensures that never again can the costs spiral out of control and the incentives become so distorted that it pays not to work. From now on, any Government who want to spend more on welfare will have to be honest with the public—honest about the costs—and secure the approval of Parliament in order to breach the cap. Twenty-six benefits will be controlled by the welfare cap as part of our long-term economic plan to restore sanity to the public finances. This is a system that is affordable and fair, and I commend it to the House.
Financial Statement
George Osborne Excerpts(10 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr George Osborne)
I can report today that the economy is continuing to recover, and recovering faster than forecast. We set out our plan, and together with the British people we held our nerve. After the mess we were left, we are putting Britain right, but the job is far from done. Our country still borrows too much; we still do not invest enough, export enough or save enough, so today we do more to put that right.
This is a Budget for building a resilient economy. If you are a maker, a doer or a saver, this Budget is for you. It is all part of a long-term economic plan—a plan that is delivering security for the people of this country. I have never shied away from telling the British people about the difficult decisions we face, and just because things are getting better, I do not intend to do so today. Yes, the deficit is down by a third, and now in the coming year it will be down by a half, but it is still one of the highest in Europe, so today we take further action to bring it down.
Yes, investment and exports are up, but Britain has 20 years of catching up to do, so today we back businesses who invest and export. Yes, manufacturing is growing again, as my hon. Friend the Member for Pendle (Andrew Stephenson) just reminded us, and jobs are being created across the country, but manufacturing halved under the last Government, with all bets on the City of London. So today, we support manufacturers and back all regions of our country. While as a nation we are getting on top of our debts, for many decades Britain has borrowed too much and saved too little, so in this Budget we make sure hard-working people keep more of what they earn and more of what they save.
Yesterday we set out our support for parents with tax-free child care. Today support for savers is at the centre of this Budget, as we take another step towards our central mission: economic security for the people of Britain.
Let me turn to today’s forecasts from the Office for Budget Responsibility. I am grateful to Robert Chote, Steve Nickell and their team, and thank Graham Parker for agreeing to serve with them for another term. It is a credit to the OBR that we now take it for granted that the figures presented at this Dispatch Box are not fiddled but fair and independent. A year ago at the Budget, the OBR forecast the economy to grow by just 0.6% in 2013. It now confirms that it grew by three times as much. At the autumn statement, it significantly revised up its expectations for future growth. Today I can tell the House it is revising up its forecast again. A year ago, it predicted that growth in 2014 would be 1.8%; at the autumn statement, 2.4%; today, the OBR forecasts growth in 2014 of 2.7%. That is the biggest upward revision to growth between Budgets for at least 30 years. Growth next year is also revised up, to 2.3%; then, it is 2.6% in 2016 and 2017; and with the output gap closed around a year earlier than previously predicted, growth returns to around its long-term trend, at 2.5%, in 2018. Taken together, these growth figures mean our economy will be £16 billion larger than was forecast just four months ago.
There is another prediction the OBR makes today that the House will want to know about. Six years ago, Britain suffered a great recession. We had the biggest bank bail-out in the world. We had the biggest deficit since the war. We suffered the deepest recession in modern times—or as the shadow Chancellor put it, some mistakes were made. But later this year the OBR expects Britain to reach the point when our economy is finally larger than before it collapsed six years ago. That is because we are now growing faster than Germany, faster than Japan, faster than the United States—in fact, there is no major advanced economy in the world growing faster than Britain today.
But we should be alert to the risks. The euro area is slowly recovering, but as the OBR cautions today,
“further damaging instability remains possible”.
There is volatility in emerging markets, and while for now the OBR does not expect the situation in Ukraine to have a “large impact” on us, it does warn that an escalation risks higher commodity prices, higher inflation and lower growth. It is a reminder of why we need to build our economy’s resilience.
At home, the biggest risk is clear: abandoning the economic plan that is working. And nowhere is the success of that plan more evident than in job creation. Today again we are reminded that the most important consequence of our plan is more people in work, with each job meaning a family more secure. Some in this House predicted that our plan meant a million jobs would be lost. They were spectacularly wrong. The pace of net job creation under this Government has been three times faster than in any other recovery on record: 1.3 million more people in work. The latest figures today show a staggering 24% fall in the claimant count in just one year, and the fastest fall in the youth claimant count since 1997. The OBR now forecasts one and a half million more jobs over the next five years and unemployment down from the 8% we inherited to just over 5%., and the OBR predicts earnings will grow faster than inflation this year and in every year of the forecast. That is why the country can afford a real-terms increase in the national minimum wage. This is a Government whose plan is delivering jobs. We now have a record number in work; a record number of women in work; and for the first time in 35 years, a higher employment rate than the United States of America. That is what we mean when we say we are getting Britain working.
There can be no economic security if there is no control of the public finances. Before I presented my first Budget to this House, the Government were borrowing £1 in every £4 they spent, and we were faced with the threat of a sovereign debt crisis. We have taken difficult decisions, each and every one of which was opposed. But thanks to those decisions, the IMF now says that we are achieving the largest reduction in both the headline and the structural deficits of any major advanced economy in the world. There were those who said repeatedly that the deficit was going to go up. Instead, I can tell the House that the OBR has revised down the underlying deficit in every year of its forecast. Before we came to office the deficit was 11%. This year it says it will be 6.6%—lower than forecast and down a third; next year, 5.5%—down a half; then it will fall to 4.2%, 2.4% and reach 0.8% in 2017-18. In 2018-19, it is forecasting no deficit at all; instead, at plus 0.2%, a small surplus. But only if we work through the plan.
The Government’s fiscal mandate is met, and continues to be met a year early, yet while the underlying structural deficit falls, it falls no faster than was previously forecast, despite higher growth. This goes to the heart of the argument this Government have made: faster growth alone will not balance the books. Securing Britain’s economic future means there will have to be more hard decisions—more cuts. The question for the British people is: who has the credibility to deliver them?
Let me turn to the underlying cash borrowing numbers. Britain was borrowing £157 billion a year before we came to office. This year we expect to borrow £108 billion. That is £12 billion less than forecast a year ago. Indeed, even since the autumn statement the OBR has revised down borrowing in every single year. In 2014-15 it says it will fall to £95 billion. Then it falls again to £75 billion in 2015-16, then £44 billion, and then down to £17 billion. In 2018-19 we will not be borrowing at all—we will have a small surplus of £5 billion.
Taken together, these new figures mean Britain will be borrowing £24 billion less than was forecast. That is more than we spend in an entire year on the police and criminal justice system. Lower borrowing and a smaller deficit mean less debt. While we meet the debt target one year late as before, the OBR has revised down national debt in every single year of the forecast. It expects it to be 74.5% of GDP this year, 77.3% next year, peaking at 78.7% in 2015-16—lower than the 80% previously forecast—before falling to 78.3% in 2016-17, then falling to 76.5% and then 74.2% in 2018-19.
So, growth is up, the deficit is set to halve, debt is lower. and the biggest single saving of all is a £42 billion reduction in the interest payments we will have to make on that debt, saving every family in the nation the equivalent of almost £2,000, money that was going to creditors around the world, now going to pay for the NHS and other public services.
It is because we have a credible fiscal plan that the Bank of England can provide the support needed to businesses and families. Yesterday I confirmed the appointments of Anthony Habgood to chair the court and Ben Broadbent and Minouche Shafik to be the new deputy governors for monetary policy and for markets and banking respectively. All three make a strong team at the Bank stronger still.
I today reconfirm my remit for the Monetary Policy Committee, including the target of 2% CPI inflation, which the OBR expects will be met this year, next year and in the years ahead. I also set out the remit for the Financial Policy Committee, the body created by us to avoid the mistakes of the past. Although the OBR forecast that house prices will remain below their real-terms peak until at least 2018, I have asked the committee to be particularly vigilant against the emergence of potential risks in the housing market. To enhance our resilience and protect us from economic shocks, we will also continue rebuilding our foreign exchange reserves. Those reserves are now 50% higher than when we came to office.
Of course, the prerequisite of sound money is a sound currency, and the £1 coin has become increasingly vulnerable to forgery. It is now among the oldest coins in circulation, and one in 30 £1 coins is counterfeit. That costs businesses and the taxpayer millions each year, so I can tell the House that we will move to a new, highly secure £1 coin. It will take three years. We will consult industry. Our new £1 coin will blend the security features of the future with inspiration from our past. In honour of our Queen, the coin will take the shape of one of the first coins she appeared on: the threepenny bit. A more resilient pound for a more resilient economy.
Sound money depends, too, on sound public finances. We are entering a critical phase and we must learn from the past. Every time a post-war Government have embarked on public spending cuts, real spending has risen back to its previous heights within three years. Sure enough, there are those today who say: “Ease up, spend more, borrow more.” That would mean debt rising towards 100% of GDP, undermining growth. It would be a huge mistake, and we are not going to let that happen.
Many Chancellors faced with a recovering economy and improved borrowing forecasts before an election would be tempted to squander the gains. I will not do that today. These gains were hard won by the British people, and we are not going to jeopardise their economic security. Britain is not going back to square one, so in this Budget all decisions are paid for. Taxes are lower but so, too, is spending, for we must bring our national debt substantially down. Analysis published today shows that just running a balanced current budget does not secure that. Instead, Britain needs to run an absolute surplus in good years. We will fix the roof when the sun is shining, to protect Britain from future storms.
So I can confirm that, in addition to the cuts this year and next, there will be cuts in the next Parliament too. To lock in our country’s commitment to this path of deficit reduction, we will seek the support of Parliament in a vote, and I will bring forward a new charter for budget responsibility this autumn. We are taking further difficult decisions now so we can reduce the deficit and protect our NHS and schools and meet our obligations to the world’s poorest by contributing 0.7% of our national income to help them. I am proud that we are doing that.
On public service pensions, we implemented the reforms proposed by John Hutton. Once again the House will want to thank him for his work. We will ensure that schemes are properly valued, saving the taxpayer over £1 billion a year. We are continuing with pay restraint in the public sector—an essential part of maintaining sound finances and economic stability. We will also insist on the prudent management of departmental finances. Thanks to the efforts of my colleagues in Cabinet, these now regularly come in under budget. In order to lock in these underspends, I said in December that we would reduce spending by £1 billion in 2015-16. Today, I am making that overall billion-pound reduction permanent.
I look forward to the work my excellent colleague the Chief Secretary is now doing, with the Cabinet Office, to find further efficiencies. Difficult decisions on public service pay and pensions, further savings in Departments, a cap on welfare bills—none of these decisions is easy, but they are the right thing to ensure that Britain lives within her means.
We set out today the details of that welfare cap, and we will seek the support of Parliament for it in a vote next week. From housing benefit to tax credits, the full list of benefits included in the cap is published in the Budget document today. Only the state pension and the cyclical unemployment benefits are excluded. I am setting it at £119 billion in 2015-16. It will rise, but only in line with forecast inflation, to £127 billion in 2018-19.
Britain should always be proud of having a welfare system that helps those most in need, but never again should we allow its costs to spiral out of control and its incentives to become so distorted that it pays not to work. In future, any Government who want to spend more on benefits will have to be honest with the public about the costs, will need the approval of Parliament, and will be held to account by this permanent cap on welfare.
The distributional analysis published today shows that the Budget decisions, and the decisions across this Parliament, mean that the rich are making the biggest contribution to the reduction of the deficit, because we are all in this together. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The right hon. Gentleman needs to get to the end of the speech without anybody having to intervene.
Mr Osborne
The independent statistics show that under this Government income inequality is at its lowest level for 28 years, lower than at any single moment under Labour. Thanks to my right hon. Friend the Prime Minister’s leadership we have driven the international efforts to develop tough new global tax rules that stop rich individuals hiding their tax and companies shifting their profits offshore. Here at home we are collecting twice as much as before through compliance—collecting the taxes that are due—and the number of registered tax avoidance schemes has fallen by half.
While the vast majority of wealthy people pay their taxes, there is still a small minority who do not. We will now require that those who have signed up to disclosed tax avoidance schemes pay their taxes, like everyone else, up front. This will apply in future to schemes covered by our general anti-abuse rule too. If people feel they have been wronged, they can of course go to court. If they win, they get their money back with interest. We have already consulted on this idea; now we will implement it. The OBR confirms that this will bring forward £4 billion of tax receipts and it will fundamentally reduce the incentive to engage in tax avoidance in the future.
Public tolerance for those who do not pay their fair share evaporated long ago, but we had to wait for this Government before there was proper action. Today we go further still. I am increasing the budget of Her Majesty’s Revenue and Customs to tackle non-compliance. We will block transfers of profits between companies within groups to avoid tax. We will increase tax credit debt recovery rates for those with sufficient earnings. We will give HMRC modern powers to collect debts from bank accounts of people who can afford to pay but have repeatedly refused to do so, like most other western countries. We will increase compliance checks to catch migrants who claim benefits that they are not entitled to, saving the taxpayer almost £100 million. We will take action to curb potential misuse of the enterprise investment and venture capital trust schemes, and we are expanding the new tax that we introduced to stop people avoiding stamp duty by owning homes through a company.
We will expand the tax on residential properties worth over £2 million to those worth more than £500,000, and from midnight tonight anyone purchasing residential property worth more than £500,000 through a corporate envelope will be required to pay 15% stamp duty. None of this applies to homes that are rented out. Many of these are empty properties held in corporate envelopes to avoid stamp duty. This abuse will end.
Another abuse has been the manipulation of the LIBOR rate. Our regulators are broadening their investigation to the foreign exchange markets and I will keep the House informed. Financial services are a hugely important industry to this country which I want to promote around the world. But I also want the fines paid by those who have demonstrated the worst values to support those who demonstrate the best of British values. I am talking about the men and women in our armed forces who risk their lives to keep us free. So I will continue to direct the use of the LIBOR fines to our military charities and our emergency service charities too. Because the sums continue to grow through the fines, I can today extend that support to our search and rescue and lifeboat services, and provide £10 million of support to our scouts, guides, cadets and St John Ambulance. I am today waiving inheritance tax for those in our emergency services who give their lives protecting us.
I will also relieve VAT on fuel for our air ambulances and inshore rescue boat services across Britain, and provide a new air ambulance for London, all in response to huge and heartfelt public demand and the campaigns of my hon. Friends the Members for Hexham (Guy Opperman), for Brentford and Isleworth (Mary Macleod) and for Argyll and Bute (Mr Reid).
Tomorrow is the 21st anniversary of the IRA bomb that killed young Tim Parry and Johnathan Ball. Survivors for Peace was set up by Tim’s parents, Colin and Wendy, and it no longer receives lottery funding. My hon. Friend the Member for Warrington South (David Mowat) and the right hon. Member for Dulwich and West Norwood (Dame Tessa Jowell) have both raised this issue, and I know myself what incredible work they do. To honour the memory of all victims of terrorism, we will provide the funding that this programme needs. Last month with the Under-Secretary of State for Scotland, my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), I visited Lockerbie to pay my respects on the 25th anniversary of that tragedy. We will support the scholarships created for local people there to study in the United States.
Further, this summer, many services of remembrance will be held in our cathedrals to mark the great war, so we are providing £20 million to support the repairs that these historic buildings need. We will also support the celebration of the 800th anniversary of the signing of the Magna Carta next year. King John’s humbling defeat centuries ago seems unimaginably distant—a weak leader who had risen to the top after betraying his brother, compelled by a gang of unruly barons to sign on the dotted line. I will provide a grant to the Magna Carta Trust to ensure that today’s generation learns the lessons of the past.
We will not have a secure economic future if Britain does not earn its way in the world. We need our businesses to export more, build more, invest more and manufacture more. Our exports have grown each year and the OBR today forecasts rising export growth in the future. Our combined goods exports to Brazil, India and China have risen faster than those of our competitors, but we are starting from a low base and we have many lost years to catch up. Britain has to up its game on exports, and today we do. With Stephen Green, and now Ian Livingston, we are expanding the reach and support that UK Trade & Investment offers British businesses. For many firms the truth is that they can win the contract only if they are backed by competitive export finance. For decades the British Government have been the last port of call, when we should be backing British businesses wanting to sell abroad. Today, we fundamentally change that, and we are going to start with the finance we provide our exporters. We will double the amount of lending available to £3 billion, and I can announce that from today the interest rates we charge on that lending will be cut by a third. Instead of having the least competitive export finance in Europe, we will have the most competitive.
We will also reform air passenger duty to end the crazy system where you pay less tax travelling to Hawaii than you do travelling to China or India. It hits exports, puts off tourists and creates a great sense of injustice among our Caribbean and south Asian communities here in Britain. From next year, all long-haul flights will carry the same, lower, band B tax rate that you now pay to fly to the United States. Private jets were not taxed at all under the previous Government. Today they are, and I am increasing the charge so they pay more. And because we want all parts of our country to see better links with the markets of the future, we are going to provide start-up support for new routes from regional airports, such as Liverpool, Leeds or, indeed, Inverness. More support for businesses; competitive finance; cheaper global flights—I want the message to go out that we are backing our exporters, so that wherever you are around the world you cannot fail to see “Made in Britain”.
One key British export is the North sea’s oil and gas. We will take forward all recommendations of the Wood report, and we will review the whole tax regime to make sure it is fit for the purpose of extracting every drop of oil we can. We will introduce now a new allowance for ultra-high pressure, high temperature fields to support billions of pounds of investment, thousands of jobs and a significant proportion of our country’s energy needs. Even with these measures, the North sea is a mature basin, and the OBR has today revised down the forecast tax receipts by a further £3 billion over the period. The Scottish economy is doing well and jobs are being created, but this is a reminder of how precarious the budget of an independent Scotland would be. These further downgrades in the tax receipts would leave independent Scots with a shortfall of £1,000 per person—Britain is better together.
Our country needs to export more and it also needs to build more. House building is up 23%, but that is not enough. That is why we are making further reforms to our planning system and offering half a billion pounds of finance to small house building firms; it is why we are signing city deals across the country to get more built, with a new funding deal this week for Cambridge; it is why we are giving people a new right to build their own homes and providing £150 million of finance today to support that; it is why we are funding regeneration of some of the worst conditions in urban housing estates that we have in this country, and we are extending the current support for mortgage interest scheme to 2016; and it is why we have got Help to Buy.
We are extending the Help to Buy equity loan scheme for the rest of the decade, so that we get 120,000 new homes built. In the south-east, where the pressure is greatest, we are going to build new homes in Barking Riverside, regenerate Brent Cross and build the first new garden city in almost 100 years at Ebbsfleet. The Opposition have said they already announced the homes in Ebbsfleet a decade ago, and they did make the announcement. Do you know how many homes have been built since then? It is less than 300; it was more “ebb” than “fleet”. Instead, we are going to build 15,000 homes there, put in the infrastructure, set up the development corporation and make it happen. I thank my hon. Friends the Members for Dartford (Gareth Johnson) and for Gravesham (Mr Holloway) for their tremendous support. And we will be publishing a prospectus on the future of garden cities. Taken all together, the housing policies I announce today will support over 200,000 new homes for families—we are getting Britain building.
We are also going to get Britain investing. Britain has under-invested for decades. We are the first Government to have committed to long-term and rising capital budgets, and this autumn I will set out the detailed plans for the projects that will be supported for the rest of the decade. We have been reminded again this week of the benefits of high-speed rail and what that will bring to the north of our country, and I am determined that it goes further north faster. Today, I have approved a £270 million guarantee for the Mersey gateway bridge, thanks to the hard work of my hon. Friend the Member for Weaver Vale (Graham Evans). And, tomorrow we introduce legislation to give new tax and borrowing powers to the Welsh Government to fund their infrastructure needs, and they can start now on work to improve the M4 in south Wales.
Because of the exceptionally poor weather this winter, I am making an additional £140 million available, on top of what has already been provided, for immediate repairs and maintenance to damaged flood defences across Britain. Our roads have taken a battering, too. My hon. Friend the Member for Northampton North (Michael Ellis) has been a very persistent campaigner for resources to repair the potholes in his constituency and across the country. His persistence has paid off and I am making £200 million available, which local authorities can bid for—I trust Northampton will be making an application.
Modern infrastructure is part of a successful economy. So, too, is a modern industrial strategy. If Britain is not leading the world in science and technology and engineering, we are condemning our country to fall behind. So we will establish new centres for doctoral training, for cell therapy and for graphene—a great British discovery that we should break the habit of a lifetime with and commercially develop in Britain. To make sure we give young people the skills they need to get good jobs in this modern world, we have doubled the number of apprenticeships, and I will extend the grants for smaller businesses to support over 100,000 more apprentices. And we will now develop new degree-level apprenticeships, too.
In my maiden speech here in this House I spoke of Alan Turing, the code breaker who lived in my constituency, who did more than anyone else—almost—to win the war and who was persecuted for his sexuality by the country he helped to save. I am delighted that he has finally received a posthumous royal pardon. Now, in his honour, we will found the Alan Turing Institute to ensure that Britain leads the way again in the use of big data and algorithm research. I am determined that our country is going to out-compete, out-smart and out-do the rest of the world.
Government investment is part of the story, but we need business investment, too. When we came to office, Britain had one of the least competitive business tax regimes in Europe—now we have the most competitive. Thanks to the Office of Tax Simplification, we have already cut burdens on administration, and I am grateful to Michael Jack, John Whiting and their team for their hard work. Today, we accept their recommendation to move the collection of class 2 national insurance contributions into self-assessment, abolishing for 5 million people this wholly unnecessary bureaucracy. And we have cut business tax rates, too. Corporation tax was 28% when we came to office. In just two weeks, corporation tax will be down to 21%, high street stores will get £1,000 off their rates and every business in the country will get the employment allowance—a £2,000 cash-back on jobs. Next year, corporation tax will reach 20% and we take under-21s out of the jobs tax altogether.
So businesses are keeping more of their money to create jobs and invest in the future—today, I want to go further. Many of the enterprise zones we created are now flourishing, so the business rates discounts and enhanced capital allowances will be extended for another three years. And I can confirm that, with the Northern Ireland Executive, we will establish the first enterprise zone there near Coleraine. I am raising the rate of the research and development tax credit for loss-making small businesses from 11% to 14.5%. Two years ago, I launched the seed enterprise investment scheme to help finance start-ups. It has been a great success and I am making it permanent. We are backing investment into social enterprises with a social investment tax relief at a rate of 30%. And we are supporting our creative industries, too. The European Commission has today approved the extension of our film tax credit, and I will apply the same successful approach to theatre, especially regional theatre. From this September, there will be a 20% tax relief for qualifying productions—and 25% for regional touring. And we are expanding by a third the size of the cultural gift scheme.
But I want to do something today that helps all businesses to invest. In 2012, I increased the annual investment allowance tenfold to £250,000. This generous allowance was due to expire at the end of this year, but all the business groups urged me to extend it. So we will, but we will do more. We will double the investment allowance to £500,000, extend it to the end of 2015 and start it next month—99.8% of businesses will get a 100% investment allowance. Almost every business across Britain will pay no up-front tax when they invest in the future. It costs £2 billion in the short term, so when we say that we are going to get Britain investing and to back growth around the country, we mean it.
A resilient economy is a more balanced economy, with more exports, more building, more investment and more manufacturing too. We have got to support our manufacturers if we want to see more growth in our regions. To those who say that manufacturing is finished in the west, I say look at America, which will see up to 5 million new manufacturing jobs by the end of this decade, and I will tell you why. US industrial energy prices are half those in Britain. We need to cut our energy costs. We are going to do this by investing in new sources of energy, new nuclear power, renewables, and a shale gas revolution. We are going to do this by promoting energy efficiency. Today, we are tilting the playing field—extending the 2% increase in company car tax in 2017-18 and 2018-19 while increasing the discount for ultra low emission vehicles, and reducing the rate of fuel duty on methanol. But above all, we are going to have a £7 billion package to cut energy bills for British manufacturers, with benefits for families and other businesses too.
First, I am capping the carbon price support rate at £18 per tonne of carbon dioxide from 2016-17 for the rest of the decade. This will save a mid-sized manufacturer almost £50,000 on its annual energy bill, and it will save families £15 a year on their bills too, over and above the £50 we have already taken off.
Secondly, I am extending the existing compensation scheme for energy-intensive industries for a further four years to 2019-20. Our steelmakers, chemical plants, paper mills and other heavy energy users make up 35% of our manufacturing exports and employ half a million people. This scheme helps the companies most at risk of leaving to remain in the UK.
Thirdly, I am introducing new compensation worth almost £1 billion to protect these energy-intensive manufacturers from the rising costs of the renewables obligation and the feed-in tariffs, otherwise green levies and taxes will make up over a third of their energy bills by the end of the decade.
Fourthly, I am exempting from the carbon price floor the electricity from combined heat and power plants, which hundreds of manufacturers use. This entire package will be delivered without any reduction in the investment in renewable energy.
Today, I have cut the cost of manufacturing in Britain. Half of the firms that will benefit most are in the north of England, and a third are in Scotland and Wales. Thousands of good jobs are protected. We have a more resilient economy, a Government on the side of manufacturers and a Britain that makes things again.
We are backing exports, backing manufacturing and backing a Britain that builds. We also want to help hard-working people keep more of what they earn and of what they save. That is what we have done by freezing council tax, freezing fuel duty and raising the personal allowance to £10,000. From next year, there will be tax-free child care—20% off for up to £10,000 of child care costs for parents, and an early years pupil premium to help the most disadvantaged.
Today we can do more to help. Let me start with duties. I can confirm that the fuel duty rise planned for September will not take place. Petrol will be 20p lower per litre than it would have been under the plans of the previous Government.
Turning to gambling duties, fixed odds betting terminals have proliferated since gambling laws were liberalised a decade ago. These machines are highly lucrative, and therefore it is right that we now raise the duty on them to 25%. We will also extend the horserace betting levy to bookmakers who are based offshore, and we will look at wider levy reform and at introducing a “racing right” to support the sport.
While the number of betting machines have grown, the number of bingo halls has plummeted by three quarters over the last 30 years, yet bingo duty has been set at the high rate of 20%. Now that fuel duty is frozen, my hon. Friend the Member for Harlow (Robert Halfon) has turned his energy and talent into a vigorous campaign to cut bingo duty, ably assisted by my hon. Friend the Member for Waveney (Peter Aldous). They want the rate cut to 15%. I can go further. Bingo duty will be halved to 10% to protect jobs and to protect communities.
Let me turn now to tobacco and alcohol duties. Tobacco duty has been rising by 2% above inflation and will do so again today, as previously confirmed. This escalator was due to end next year, but there are no sound health reasons to end it, so it will be extended for the rest of the next Parliament.
We have introduced new laws to prevent alcohol from being sold below minimum tax rates, and this helps to prevent supermarkets from undercutting pubs and it helps to stop problem drinking. It is a far more targeted approach than the alcohol duty escalator, which was introduced by the previous Government and hated by so many responsible drinkers. Today, I am scrapping that escalator for all alcohol duties. They will rise with inflation, with these exceptions: Scottish whisky is a huge British success story. [Hon. Members: “Scotch whisky.”] To support that industry, instead of raising duties on Scotch whisky and other spirits, I am today going to freeze them, and with some cider makers in the west country, who have been hit hard by the recent weather, I am going to help them by freezing the duty on ordinary cider too.
Then there is beer. I know the industry, led so ably by my hon. Friend the Member for Burton (Andrew Griffiths), has been campaigning for a freeze, but beer duty next week will not be frozen; it will be cut again by 1p—pubs saved, jobs created and a penny off a pint for the second year running.
It is a central part of our long-term economic plan that people keep more of the money they have earned. When we came to office, the personal tax allowance was just £6,500. In less than three weeks time, it will reach £10,000. That is an income tax cut for 25 million people. Today, because we are working through our plan, we can afford to go further. Next year, there will be no income tax at all on the first £10,500 of your salary—£10,500 tax free and £800 less in tax every year for the typical taxpayer. Our increases in the personal allowance will have lifted over 3 million of the lowest paid out of income tax altogether, and I am incredibly proud of what we have achieved.
I can also confirm today that the higher rate threshold will rise for the first time this Parliament, from £41,450 to £41,865 next month, and then by a further 1% to £42,285 next year. Because I am passing the full benefit of today’s personal allowance increase on to higher rate taxpayers, people earning £42,000, £43,000, £50,000, £60,000—all the way up to £100,000—will be paying less income tax because of this Budget. We have tax cuts for those on low incomes, and those on middle incomes too—help for hard-working people as part of a long-term economic plan delivered by a coalition Government and a Conservative Chancellor. I am linking the rate of the transferable tax allowance for married couples to the personal allowance, so it will also rise to £1,050—help for 4 million families that they will take away and that we are proud to provide.
Our tax changes will help people in work, but there is a large group who have had a particularly hard time in recent years, and that is savers. This matters not just because they are people who have made sacrifices to provide for their own economic security in retirement. It matters too because one of the biggest weaknesses of the British economy is that it borrows too much and saves too little. This has been a problem for decades and we cannot fix it overnight. It is no surprise that the OBR forecasts the savings ratio falling, so today we put in place policies for savers that stand alongside deficit reduction as a centrepiece of our long-term economic plan.
The reforms I am about to announce are only possible because, thanks to this Government, we have a triple lock on the state pension; more people are saving through auto-enrolment; and we are introducing a single-tier pension that will lift most people above the means test. That secure basic income for pensioners means that we can make far-reaching changes to the tax regime to reward those who save. Here is how. First, I want to help savers by dramatically increasing the simplicity, flexibility and generosity of individual savings accounts. Twenty-four million people in this country have an ISA, and yet millions of them would like to save more than the annual limits of around £5,500 on cash ISAs, and £11,500 on stocks and shares ISAs. Three quarters of those who hit the cash ISA limit are basic rate taxpayers. So we will make ISAs simpler by merging the cash and stocks ISAs to create a single new ISA. We will make them more flexible by allowing savers to transfer all of the ISAs they already have from stocks and shares into cash, or the other way round, and we are going to make the new ISA more generous by increasing the annual limit to £15,000—that is £15,000 of savings a year tax free, available from 1 July. I am raising the limits for junior ISAs to £4,000 a year too.
But the £15,000 new ISA is just the first thing we are doing for savers today. Secondly, many pensioners have seen their incomes fall as a consequence of the low interest rates that Britain has deliberately pursued to support the economy. It is time Britain helped them out in return, so we will launch the new pensioner bond, paying market leading rates. It will be issued by National Savings & Investments, open to everyone aged 65 and over, and available from January next year. The exact rates will be set in the autumn, to ensure the best possible offer, but our assumption is 2.8% for a one-year bond and 4% on a three-year bond. That is much better than anything equivalent in the market today. Up to £10 billion of these bonds will be issued. A maximum of £10,000 can be saved in each bond. That is at least a million pensioner bonds. Because 21 million people also invest in premium bonds, I am lifting the cap for the first time in a decade from £30,000 to £40,000 this June, and to £50,000 next year, and I will double the number of million-pound winners.
I still want to do more to support saving, so, thirdly, we will completely change the tax treatment of defined contribution pensions to bring it into line with the modern world. There will be consequential implications for defined benefit pensions upon which we will consult and proceed cautiously, so the changes we announce today will not apply to them. But 13 million people have defined contribution schemes, and the number continues to grow. We have introduced flexibilities, but most people still have little option but to take out an annuity, even though annuity rates have fallen by half over the last 15 years. The tax rules around these pensions are a manifestation of a patronising view that pensioners cannot be trusted with their own pension pots. I reject that. People who have worked hard and saved hard all their lives, and done the right thing, should be trusted with their own finances, and that is precisely what we will now do: trust the people. Some changes will take effect from next week. We will cut the income requirement for flexible draw-down from £20,000 to £12,000; raise the capped draw-down limit from 120% to 150%; increase the size of the lump sum small pot fivefold to £10,000; and almost double the total pension savings someone can take as a lump sum to £30,000. All of these changes will come into effect on 27 March.
These measures alone would amount to a radical change, but they are only a step in the fundamental reform of the taxation of defined contribution pensions I want to see.
I am announcing today that we will legislate to remove all remaining tax restrictions on how pensioners have access to their pension pots. Pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, anytime they want: no caps; no draw-down limits. Let me be clear: no one will have to buy an annuity.
We are going to introduce a new guarantee, enforced by law, that everyone who retires on these defined contribution schemes will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have. Those who still want the certainty of an annuity, as many will, will be able to shop around for the best deal. I am providing £20 million over the next two years to work with consumer groups and industry to develop this new right to advice. When it comes to tax charges, it will be possible to take a quarter of your pension pot tax-free on retirement, as today, but instead of the punitive 55% tax that exists now if you try to take the rest, anything else you take out of your pension will simply be taxed at normal marginal tax rates, as with any other income—so not a 55% tax, but a 20% tax for most pensioners.
The OBR confirms that in the next 15 years, as some people use these new freedoms to draw down their pensions, this tax cut will lead to an increase in tax receipts. Government Members understand that when you cut a tax rate that is punitively high, that can increase revenues. These major changes to the tax regime require a separate Act of Parliament, and we will have them in place for April next year. What I am proposing is the most far-reaching reform to the taxation of pensions since the regime was introduced in 1921.
There is one final reform to support savings that I would like to make. There is a 10p starting rate for income from savings. It is complex to levy and it penalises low- income savers. Today, I am abolishing the 10p rate for savers altogether. When I abolish a 10p rate, I do not sneakily turn it into a 20% rate like the last lot: I am turning it into a 0% rate: no tax on these savings whatsoever. We will almost double this zero-pence band to cover £5,000 of saving income. One and a half million low-income savers of all ages will benefit. Two thirds of a million pensioners will be helped.
The £15,000 new ISA; the pensioner bond; people given access to their own pension pots; a right to impartial advice; the 10p rate for savers abolished to zero—the message from this Budget is this: you have earned it; you have saved it; and this Government are on your side. Whether you are on a low or middle income, whether you are saving for your home, for your family or for your retirement, we are backing a Britain that saves. The central mission of this Government is to deliver economic security. We are not promising quick fixes. Instead we are taking the next steps in our long-term plan. The forecasts I have presented show growth up; jobs up; and the deficit down. Now we are securing Britain’s economic future with: manufacturing promoted; working rewarded; saving supported. With the help of the British people, we are turning our country around. We are building a resilient economy. This is a Budget for the makers, the doers, and the savers, and I commend it to the House.
ECOFIN
George Osborne Excerpts(10 years, 2 months ago)
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The Chancellor of the Exchequer (Mr George Osborne)
A meeting of the Economic and Financial Affairs Council was held in Brussels on 11 March 2014. The following agenda items were discussed.
Follow-up to the G20 meeting of Finance Ministers and Governors (Sydney, Australia, 22-23 February 2014)
Council was informed of the main outcomes of the G20 Finance Ministers and Central Bank Governors’ meeting in Sydney. The Government are supportive of the Australian G20 agenda, particularly the focus on strong, sustainable and balanced growth.
Preparation of the European Council on 20-21 March 2014—Economic Elements of the EU 2030 Energy and Climate Framework
Council held an exchange of views on economic elements of the EU 2030 energy and climate framework, in order to input to the March European Council. The Government expressed support for the emerging conclusions on the EU 2030 framework and reiterated the importance of member states retaining the flexibility to pursue the most cost-effective transition to a low-carbon economy.
Savings Taxation
Council discussed a proposal on taxation of savings income in the form of interest payments. Austria and Luxembourg could not support the proposal and the presidency concluded that it will need to return to a future Council. The Government support an agreement of the amending proposal to the EU savings directive as soon as possible.
Current legislative proposals
The presidency provided an update on the ongoing work on financial services dossiers.
Single Resolution Mechanism
The Council examined the state of play of the single resolution mechanism in relation to the trilogue process with the European Parliament. The Government welcome the progress made on this file since the general approach was reached at ECOFIN in December 2013, and will be ensuring that they fully respect the unity and integrity of the single market.
ECOFIN
George Osborne Excerpts(10 years, 3 months ago)
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The Chancellor of the Exchequer (Mr George Osborne)
A meeting of the Economic and Financial Affairs Council will be held in Brussels on 11 March 2014. The following items are on the agenda to be discussed.
Follow-up to the G20 meeting of Finance Ministers and governors
The presidency and the Commission will debrief the Council on the main outcomes of the G20 Finance Ministers and central bank governors’ meeting in Sydney. The Government are supportive of the Australian G20 agenda, particularly the focus on strong, sustainable and balanced growth.
Preparation of the European Council on 20-21 March 2014—economic elements of the EU 2030 energy and climate framework
Council will have an exchange of views on economic elements of the EU 2030 energy and climate framework, with a view to input to the March European Council. The Government support the EU 2030 framework, which should provide certainty for investors and support the EU’s cost-effective transition to a low-carbon economy.
Savings taxation
Council will seek to adopt the amended savings taxation directive, as requested by the European Council in December 2013. The Government continue to support the adoption of the amended savings directive as a means of advancing the automatic exchange of information agenda.
Current legislative proposals
The presidency will provide information on the ongoing work on financial services dossiers.
Single resolution mechanism
The Council will examine the state of play and may revise the mandate for the presidency to finalise negotiations with the European Parliament. The Government welcome the progress on this file since general approach was reached at ECOFIN in December 2013, and will be ensuring that it fully respects the unity and integrity of the single market.
Oral Answers to Questions
George Osborne Excerpts(10 years, 4 months ago)
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George Freeman (Mid Norfolk) (Con)
1. What fiscal steps the Government are taking to support women who want to set up businesses.
The Chancellor of the Exchequer (Mr George Osborne)
The most important thing that we can do to support women in business is supporting the economy to grow. Today’s gross domestic product figures show that our economy grew by 0.7% in the last quarter, bringing four-quarter growth up to 2.8%. I am sure that that news will be welcome across the House. These numbers are a boost for the economic security of hard-working people. Growth is broadly based, with manufacturing growing fastest of all. It is more evidence that our long-term economic plan is working, but the job is not done, and it is clear that the biggest risk now to the recovery would be to abandon the plan that is delivering jobs and a brighter economic future.
George Freeman
May I congratulate the Chancellor on the appointment of Karren Brady as small business ambassador? Does he agree that our record of 500,000 new businesses started last year, bringing the total to 880,000 now run by women, and accelerating economic growth to 2.8% a year demonstrate that our long-term economic plan for an entrepreneurial recovery is working in the face of the pessimism and bankrupt business credibility of the Opposition?
Mr Osborne
My hon. Friend is right to draw attention to the remarkable success story of many women entrepreneurs. Karren is a role model for many of them, and she is helping with a mentoring programme to encourage more women to set up their own business and become entrepreneurs. It is all part of the picture where we now have a record number of women in work, and our proposals to bring in tax-free child care next year will help as well.
Lucy Powell (Manchester Central) (Lab/Co-op)
The Chancellor will know that one of the main barriers for women setting up a business is the cost of child care. Given that it has risen five times faster than wages in this Parliament, what help is he offering to women in this Parliament to meet those costs?
Mr Osborne
We have provided extra free child care, and we have increased the number of hours available, which has been a real help. We have also helped the parents, including mothers, of those on low incomes by extending the child care offer to younger children, and we will legislate for tax-free child care. I hope the hon. Lady can support that.
Caroline Nokes (Romsey and Southampton North) (Con)
22. Little Bee bakery in my constituency is owned by Melissa O’Dwyer, and it is a great example of a business set up from home that has expanded into an industrial unit, employs exclusively female staff and is growing. Does my right hon. Friend agree that this is an example of female entrepreneurs playing a critical part in economic growth?
Mr Osborne
I absolutely agree with my hon. Friend, and I congratulate Melissa on her business and her expansion plans. We are there to provide advice and support for women who want to grow their businesses. We are there to provide help, as I have set out, with tax-free child care. Above all, we are there to provide economic conditions in which businesses can grow and our long-term plan is, as the numbers show today, delivering that.
Sheila Gilmore (Edinburgh East) (Lab)
Of course, 0.7% is lower than 0.8% in the previous quarter, but leaving that aside—[Interruption.] With construction—[Interruption.]
Sheila Gilmore
Construction is down as well, but to return to the question—[Interruption.] Well, the Chancellor did not return to it. Support through tax credits and child care tax credits has been crucial for many women going into self-employment for the first time. Proposed universal credit rules will make it a lot more difficult for self-employed people. Will the Chancellor speak to the Secretary of State for Work and Pensions to help him to get this right for women entrepreneurs?
Mr Osborne
First, the economy shrank by 7% of GDP when the Opposition were in office. It is striking that no Labour MP has yet got up to welcome the good economic news today. They cannot bring themselves to welcome the news that jobs are being created and the economy is growing and, yes, we are reforming our welfare system with universal credit to make sure that work always pays.
Stuart Andrew (Pudsey) (Con)
2. What assessment he has made of the effect of freezing fuel duty on the price of petrol.
Andrew Jones (Harrogate and Knaresborough) (Con)
12. What recent fiscal steps he has taken to support small businesses.
The Chancellor of the Exchequer (Mr George Osborne)
We heard today that our economy continues to grow and we know that there is currently the greatest number of businesses in the UK on record—around 400,000 more than at the general election. We have supported that by reversing the previous Government’s increase in the small companies tax, undoing their jobs tax, cutting red tape, freezing fuel duty, taking the smallest firms out of business rates and helping the high street, and in a few months’ time, we will have our employment allowance, a £2,000 cashback on jobs, which will take almost half a million small firms out of employer national insurance altogether. Unlike others, we are unabashedly pro-business.
Alun Cairns
Small businesses recognise the supportive economic framework that the Chancellor has set out, such as reductions in corporation tax, national insurance and business rates, among many others, by recruiting more people than ever before. Will the Chancellor reassure me that he will not follow any advice from the shadow Chancellor, who called for a plan B and predicted a double and even a triple-dip recession?
Mr Osborne
There is no danger of that. In the last few days, even the Labour Ministers who served with the shadow Chancellor are not prepared to follow his advice. The important point here is that we have supported a private sector recovery, small businesses are absolutely at the centre of that, and the Prime Minister yesterday, at the Federation of Small Businesses, reinforced the point that we are there to do more to help small businesses and we encourage them to come forward with ideas for the Budget.
Damian Hinds
Town centre businesses in Alton, Bordon and Petersfield will welcome the Government’s package of help for high streets. As many young people rely on local shops and cafés for their first job, will my right hon. Friend update the House on what he is doing to make it easier to employ those young people and give them the key skills that they need to get on in life?
Mr Osborne
This year, there is the help for the high street and the £1,000 support for business rates for our high street shops, cafés and pubs. We are also introducing the employment allowance, which will take many small businesses out of employer national insurance altogether. Next year, we have the removal of the jobs tax altogether when someone under the age of 21 is employed. That is what we are doing to help the many businesses that my hon. Friend so ably represents in Parliament.
Margot James
There have been 3,000 new business start-ups in my borough of Dudley since 2010, many of which will benefit from increased research and development tax allowances, the national insurance rebate and the business rates cap. Does my right hon. Friend agree that while the fiscal measures he has introduced make a vital difference, the 2.8% growth in the economy announced today is sure-fire proof that his economic plan is working and that those small and medium-sized enterprises are now on a far better growth trajectory as a result?
Mr Osborne
I am delighted to hear about the success of businesses in the Dudley borough area and in my hon. Friend’s constituency. The Government made a choice that we were going to back a private sector recovery and that, in a time of limited resources, we would put our efforts into helping small businesses grow by cutting their business and employment taxes. That is what we have done, and we are beginning to see the fruits in the growth of jobs in the west midlands and across the whole country.
Andrew Jones
In the past 20 months, unemployment in my constituency of Harrogate and Knaresborough has halved. It is now has one of the lowest levels of unemployment in the country, particularly for young people. Much of that growth has come from our strong small business sector. What assessment has my right hon. Friend made of the impact that the employment allowance will have on improving the situation further, and does he agree that the anti-business rhetoric and measures proposed by some would destroy that progress?
Mr Osborne
The employment allowance will help many small firms that want to invest or take on a new member of staff. I saw that for myself when I visited a small business in Enfield that, as a result of the employment allowance, will take on an extra member of staff. That is the support we can give. It is up to those in this House who promote anti-business rhetoric to get up and explain how that could possibly help our economy. The truth is that by being anti-business, they are anti-recovery, anti-jobs, anti-investment and anti-the British people.
Mr Andrew Love (Edmonton) (Lab/Co-op)
The latest figures show that net lending by banks to businesses has dropped by nearly £56 billion since 2010. The Chancellor is on record as supporting lending to small businesses, so what action is he taking to address the problem?
Mr Osborne
Credit conditions for small businesses have been one of the huge challenges since the banking crash. The better news is that conditions are starting to ease, as the most recent surveys show, but I am the first to say that the job is not done. That is why we are shifting the focus of the funding for lending scheme with the Bank of England onto small business lending and why we have introduced the British business bank, which did not exist before. We are doing all those things to support credit, including for small businesses.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
Following that answer, will the Chancellor tell us how many firms have actually been helped by the business investment bank?
Mr Osborne
The British business bank is lending to intermediaries that support non-bank lending to small firms. [Hon. Members: “How many?”] There was no British business bank before. The only bank that the Opposition helped to take into public ownership was the Royal Bank of Scotland, because they completely failed to regulate it.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
One of the ways that the Treasury can help small businesses is by giving them a better chance of winning Government contracts. What is the Chancellor doing to use his Department’s clout across Whitehall to ensure that those contracts are not just snaffled up by the big guys?
Mr Osborne
That is a huge challenge for any Government and any bureaucracy, but I am pleased to report that under this Government, because we have focused all Departments on trying to increase their procurement from small firms, that has gone up from around 10% to around 20% of Government procurement. That is a big step forward, but I am the first to say that the job is not done. We want more procurement from small firms, not least because they are often the most innovative and entrepreneurial in the country.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Business rates are one of the biggest concerns for employers, yet they are still going up and up under this complacent Chancellor. The autumn statement saw some relief for retailers, but will the Government commit to giving genuine support to all small and medium-sized enterprises, which are the lifeblood of our economy, by matching our pledge to cut and freeze business rates for all small firms—not just those in retail, but manufacturers, high-tech firms and other job creators too?
Mr Osborne
Business rates rocketed under the last Government. First, we have taken about 400,000 of the smallest businesses out of business rates altogether, a scheme that the Labour Government wanted to bring to an end. Secondly, we have capped the increase at 2%, so we have protected businesses from inflation. Thirdly, we have chosen to provide particular support to our high street stores, and I am very disappointed that the hon. Lady does not support that. It is interesting that another of the Labour spokespeople has got to their feet, but not one of them has yet—20 minutes into Treasury questions—welcomed the good economic news today.
Sir Malcolm Bruce (Gordon) (LD)
Is my right hon. Friend aware of changes in the VAT export rules that are causing concern among auctioneers, damaging EU trade and putting them at a competitive disadvantage? Will he look into this, and try to ensure that Her Majesty’s Revenue and Customs makes the system manageable?
Mr Osborne
I will make sure that the specific issue is looked at and that the right hon. Gentleman can meet my hon. Friend the Exchequer Secretary, who handles such tax and VAT issues.
Ms Margaret Ritchie (South Down) (SDLP)
There is evidence that Ulster bank deliberately bankrupted some viable businesses to make more profit, according to one of the Government’s key advisers, Lawrence Tomlinson. What is the Chancellor going to do about this to protect the small businesses affected by Ulster bank and by RBS?
Mr Osborne
The revelations by Tomlinson shocked everyone, and the business practices of RBS, including Ulster bank, are now under the microscope. Of course, these revelations would not have come to light if we had not asked Tomlinson to do his work and had not published the Tomlinson report.
We are particularly aware of the challenge in Northern Ireland, with the weakness of the Northern Ireland banking system—affected by what has happened in the Republic and the fact that RBS is such an important player through Ulster bank—and we are in constant discussion with the Northern Ireland authorities. I know that my hon. Friend the Financial Secretary is talking to the Northern Ireland Executive about precisely what we can do to help to protect the Northern Ireland economy, as RBS implements its bad bank plan.
Mr Andrew Tyrie (Chichester) (Con)
The Prime Minister said yesterday:
“I am a tax-cutting Tory”.
So am I. Does the Chancellor agree that, when resources allow, cuts in tax are the best possible tonic that the Government can provide to small businesses? Does he further agree that the best spur to incentives for small businesses is to cut the marginal rates of corporation and personal tax as soon as he can?
Mr Osborne
I am a low-tax Conservative as well, and I hope that I am in good company on the Government side of the House. We have made reductions in tax. The small companies tax rate was due to go up to 22% under the Budget plans voted on by the Labour party, but we have reversed that and reduced it to 20%. We are now of course bringing the main headline rate of corporation tax down to 20% as well, and getting rid of the complicated taper. That is all further evidence to support the ambition of reducing marginal tax rates for businesses.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Could the Chancellor and I make a deal that I will start to welcome any measure of improvement in the economy if he stops blaming the whole economic world meltdown on the previous Labour Government?
On small businesses, many people find crowdfunding and crowdsourcing a real way to start businesses and get the finance to do it; women, in particular, are coming through that route. Will he meet an all-party group of MPs to talk about the proposed regulation of crowdfunding so that we do not strangle a rather nice baby at birth?
Mr Osborne
I am glad that the hon. Gentleman welcomes the better news. Indeed, I think that unemployment in his constituency has fallen by 20%, which is further good news. It is the first time in years that I have heard him try to defend the record of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown): since he is not here, the hon. Gentleman has to do it for him.
The point that the hon. Gentleman makes about crowdsourcing is a serious one. We are looking at this new market and at what, if anything, the Government should do to support it. It is of course growing without Government support, but we are actively looking at it, and I would very happily consider any positive suggestions he has on what more we can do to support crowdfunding.
Chris Heaton-Harris (Daventry) (Con)
5. What recent steps he has taken to reduce income tax.
Stella Creasy (Walthamstow) (Lab/Co-op)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability and prosperity of the economy.
Stella Creasy
When the right hon. Gentleman was first asked to vote on the issue, the figure was 1 million; now it is 5 million—that is, people in hock to payday lenders. Does the Chancellor therefore regret voting against the cap on the cost of credit so many times?
Mr Osborne
I was the shadow Chancellor for five years and never once did the Labour Government propose a cap on payday lending. It is this coalition Government who are introducing a cap on payday lending. I would have thought that of all people the hon. Lady, considering her campaign, would welcome that.
Philip Davies (Shipley) (Con)
T2. Does the Chancellor agree that the previous Government led us to financial ruin not through taxing us too little but by spending too much, and that the solution to the problem is to reduce spending to affordable levels? Will he therefore guarantee to plug the remainder of the deficit through spending reductions, rather than through tax rises on hard-working and hard-pressed families?
Mr Osborne
While no responsible Chancellor rules out tax changes, I believe the remainder of our deficit reduction plan can be achieved by reducing spending. Indeed, the reduction in the deficit has contributed to the economic stability that has been a platform for the economic growth we have seen. Perhaps the shadow Chancellor will get up and welcome that.
Ed Balls (Morley and Outwood) (Lab/Co-op)
After three damaging years of flatlining in our economy—[Interruption.]
Ed Balls
After three damaging years of flatlining, today’s growth figures are welcome, but everything we have seen today from the Chancellor shows he just does not understand that for working people facing a cost of living crisis, this is still no recovery at all. Last week, the Chancellor and the Prime Minister tried to use dodgy figures to tell people they had never had it so good. Why will he not today admit the truth: he has failed to get the deficit down, and since he came to office, working people have been not better off, but worse off?
Mr Osborne
I am not sure that that was worth waiting for. Since we last met, there has been a very important Labour economic announcement, and one that we wholeheartedly support: the decision to keep the right hon. Gentleman in his job until the general election. He welcomes the economic news through gritted teeth, because he said not only that it would not happen, but that it could not happen if we pursued our economic plan. He predicted that jobs would be lost, but 1 million have been created; he predicted that the deficit would go up, but it has come down; he predicted there would be no economic growth, unless we borrowed and spent more. He has been wrong on all these things. What the Opposition need are new crystal balls.
Ed Balls
Very good, Chancellor—a joke about my name being Balls. Fabulous.
The reality is that business investment is still weak, housing demand is outstripping supply, the savings ratio is falling and the average working person is £1,600 a year worse off than they were in 2010. Let me ask the Chancellor about the one thing he has refused to talk about now for four days. He has delivered one massive tax cut for the richest 1% earning more than £150,000, when everybody else is worse off. The Prime Minister and the Mayor of London are now saying that they want to cut the top rate of income tax again, to 40p. Is that really the Conservative party’s priority? If the Chancellor still believes that we are “all in this together”, why will he not stand at the Dispatch Box and rule out another top-rate tax cut from the Conservatives in the next Parliament? Come on, George: stand up and rule it out.
Mr Osborne
I will tell the right hon. Gentleman what the big tax cut was this Parliament: it was for working people through our increase in the personal allowance to £10,000. After last week, it is clear that the shadow Chancellor has learned absolutely nothing from the economic mess he brought upon this country. He said that Labour should have spent more money in the boom; he has set out fiscal plans that allow billions more of borrowing; and on the top rate of tax, he announced a plan that was attacked by Labour Ministers whom he served with in government, by the people who lent the Labour party money and by credible business people across the country—and his costings were shot down by the Institute for Fiscal Studies last night. There cannot have been a more disastrous policy launch in the history of the modern Labour party. On the day we learn that our economy continues to grow, is it not clear that the anti-business Labour party is now the biggest risk to the economic recovery?
Stephen Gilbert (St Austell and Newquay) (LD)
T3. That seems to be game, set and match.The European Commission is considering the removal of the aggregates levy exemption, which would affect the Cornish china clay industry and put up to 500 jobs at risk. Will my right hon. Friend confirm that the Government will do all they can to maintain the exemption and protect these vital jobs?
Harriett Baldwin (West Worcestershire) (Con)
T4. This time last year, the shadow Chancellor said that the economy would get worse. Can I lob the following question to the Chancellor and ask him how that prediction turned out?
Mr Osborne
The economy has grown by 2.8 % over the past four quarters, which is the point. First, when the shadow Chancellor was in office, he predicted that there would be no more boom and bust—we had the biggest boom and the biggest bust—and secondly, he predicted that there would be no recovery unless we borrowed and spent our way into economic risk, which has turned out to be untrue. I do not know why anybody in the Labour party still listens to his predictions at all.
Jason McCartney (Colne Valley) (Con)
T5. I do not know whether the shadow Chancellor has been to Yorkshire recently, but if he does come up north, he will see that, in Colne valley and Huddersfield, manufacturing is surging, whether it is Magic Rock brewery exporting to Australia, Camira fabrics selling its textiles to the Los Angeles transit system or even Newsholme foods selling black puddings to Spain. Will the Chancellor please continue to reject the doom-mongering, mithering and class warfare from the Labour party and continue with his long-term economic plan?
Mr Osborne
I was in Pudsey the other day seeing a very successful manufacturing business near to my hon. Friend’s constituency. What was interesting was that that business is now exporting to China, which is a total reversal of what we have seen in the textile trade over the last few decades. I am very willing to come and see my hon. Friend and perhaps taste some of that delicious black pudding that the Spanish are buying.
Alison Seabeck (Plymouth, Moor View) (Lab)
Thousands of small businesses are often unaware that they are sitting on a bit of a time-bomb: embedded swaps sitting within personal loans, often sold to them without their knowledge. What will the Chancellor do to bring that back into the Financial Conduct Authority review to ensure that these swaps, which are currently not subject to any regulation, are regulated?
Mr Osborne
The FCA is looking at the whole issue of swaps and how they were sold to small businesses, and clearly, considerable sums of compensation are going to be paid. I will look at the specific point that the hon. Lady makes. If she believes that there is a group that are not currently included that should be included in that work, I will take a close look at it personally and get back to her.
Chris Kelly (Dudley South) (Con)
T6. Last week, we saw the sharpest quarterly increase in the number of people in work since records began. Does my right hon. Friend agree that that is more evidence that the Government should stick with their long-term economic plan to reduce the deficit and create more jobs, which is already providing a record number of people with the stability and security of a regular pay packet from firms such as Steelco in Dudley, which I visited last week?
Mr Osborne
I know from visits with my hon. Friend to the manufacturing businesses of Dudley that he is a powerful supporter of their interests in growing those businesses and taking on more people. Unemployment in Dudley has fallen by 19 % since he started to represent that town. I welcome his support. Together let us make sure that we have a business-led recovery and a recovery in the west midlands and that we reject the anti-business approach of the Labour party.
Mr Geoffrey Robinson (Coventry North West) (Lab)
The whole House has heard the Chancellor proclaim over the last three years that when the recovery comes—as it will—it will be a different kind of recovery, based on investment and, indeed, investment-led. Is it not the case that business lending is stagnating, if not falling, that capital investment in the much-heralded infrastructure plan is 7.4% lower than it should be, and that what we are actually seeing is an economic-pick-up based on consumer spending? Does that not send a warning signal to the Chancellor? Instead of boasting about the situation, he should be doing something about it.
Mr Osborne
Given his experience, the hon. Gentleman must surely consider the growth of the car industry in Coventry, and in the west midlands as a whole, to be as strong as any growth that he has seen in his career. We are exporting cars at a rate at which we have not exported them since the early 1970s. Of course we want to see more business investment and more exports, but what we are seeing now is a rebalancing of the economy. The private sector is growing, and the number of jobs is increasing throughout the country—and that includes the west midlands, an area in which the number of jobs fell during the boom.
Incidentally, given his business experience, I suspect that the hon. Gentleman does not support for one moment the proposals announced by the shadow Chancellor over the past week.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
T7. In south Essex, £1.5 billion is being invested at London Gateway, £500 million is on the table for a new power station, £180 million is being invested at Lakeside, and the regeneration of Basildon town centre is about to begin. Does my right hon. Friend agree that those inward investments in my area indicate that our long-term economic plan is working, leading to rising growth and falling unemployment for the benefit of my constituents?
Mr Osborne
I entirely agree with my hon. Friend. I congratulate him on the work that he has done to bring that investment into his constituency, and to create jobs and opportunities for the people whom he represents. It is important for us to send a message to the world that we are open for business and open to investment, and because we are doing that, we are now a go-to destination for world investment. Can my hon. Friend imagine the impact on jobs and investment in his constituency if we adopted the Labour party’s approach?
Mark Durkan (Foyle) (SDLP)
May we have an update on the Chancellor’s intention to introduce a new regime for annually managed expenditure? Will the overall welfare cap of which he has spoken include a cap within a cap for welfare spending in Northern Ireland?
Mr Osborne
We are not proposing a cap within a cap, as the hon. Gentleman puts it, but we are proposing a welfare cap. We have set out the details of the benefits and the annually managed expenditure that will be part of the cap, but we will announce further details about the level of it at fiscal events later this year.
Jesse Norman (Hereford and South Herefordshire) (Con)
T9. Next week I shall be hosting an event to celebrate independent retailers, cafés and pubs in the city of Hereford, in particular Hat Trick, La Madeleine and The Barrels. I greatly welcome today’s excellent economic news. Does the Chancellor share my view that low taxes are a vital means of helping and encouraging small businesses to grow and create jobs?
Mr Osborne
It sounds very tough, campaigning in Hereford.
I thank my hon. Friend for bringing those businesses to the attention of the House, and congratulate him on the support that he has given to the economic policies that are helping them to grow. He is absolutely right: we must continue to support firms of that kind. High street shops, pubs, cafés and the like will, of course, benefit from the £1,000 rate relief which will be introduced this spring, and which will be a huge help to all—or most—of the businesses on the high streets of Hereford.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Average weekly gross pay in my constituency has fallen by 32.5% since 2010. Why?
Mr Osborne
The person who had the best answer to that question was the head of the Institute for Fiscal Studies, who said very clearly that the reason why the country was poorer was the very deep recession. He said that we have had the biggest recession in 100 years and that it would be astonishing if household incomes had not fallen and earnings had not fallen. This country is poorer because of the disastrous economic policies of the shadow Chancellor. It is under this Government that the economy is growing and jobs are being created, including jobs in the hon. Gentleman’s constituency.
ECOFIN
George Osborne Excerpts(10 years, 6 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr George Osborne)
A meeting of the Economic and Financial Affairs Council will be held in Brussels on 10 December 2013. The following items are on the agenda to be discussed.
Savings taxation
Council will be asked to reach political agreement on a proposal on taxation of savings income in the form of interest payments. The compromise text which Ministers will be asked to agree is identical to that discussed at ECOFIN in November. The Government support an agreement of the amending proposal to the EU savings directive and an adoption of the mandate as soon as possible.
Bank Recovery and Resolution
Council will consider the European Parliament’s amendments to a proposal for a directive establishing a framework for the recovery and resolution of credit institutions and investment firms, in preparation for potential political agreement.
Deposit Guarantee Schemes
Council will consider the European Parliament’s amendments to a proposal for a directive on deposit guarantee schemes, in preparation for potential political agreement.
Macro-economic Imbalance Procedure—Commission Alert Mechanism Report
Council will hold an initial exchange of views on the alert mechanism report, the first stage in the macro-economic imbalance procedure.
Annual Growth Survey 2014
Council will hold an initial exchange of views on the annual growth survey 2014. The Government broadly welcome the annual growth survey 2014 and its continued focus on jobs and growth.
Assessment of Economic Partnership Programmes
Council will be invited to adopt draft Council opinions on the economic partnership programmes of Spain, France, Malta, the Netherlands and Slovenia, describing the policy measures and structural reforms that are needed to ensure an effective and lasting correction of their excessive deficits.
Implementation of the Stability and Growth Pact
Council will seek to adopt a Council decision and Council recommendation relating to Poland’s excessive deficit procedure.
Annual report of the Court of Auditors on the implementation of the budget for the financial year 2012
The President of the European Court of Auditors, Mr Vitor Caldeira, will present to Council the annual report of the Court of Auditors on the implementation of the budget for the financial year 2012. The Government take the report and its findings seriously and strongly support the need to improve financial management of the EU budget.
Proposal for a Council Regulation establishing a facility for providing financial assistance for Member States whose currency is not the euro
The presidency will hold a state of play discussion on a proposal to amend the current EU balance of payments regulation.
Single Resolution Mechanism
Council will examine the proposal, establishing uniform rules and a uniform procedure for the resolution of credit institutions and credit investment firms in the framework of a single resolution mechanism and a single bank resolution fund. The presidency is looking to reach a general approach.
Autumn Statement
George Osborne Excerpts(10 years, 6 months ago)
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The Chancellor of the Exchequer (Mr George Osborne)
Britain’s economic plan is working, but the job is not done. We need to secure the economy for the long term, and the biggest risk to that comes from those who would abandon the plan. We seek a responsible recovery, one in which we do not squander the gains we have made, but go on taking the difficult decisions, and one in which we do not repeat the mistakes of the past, but this time spot the debt bubbles before they threaten financial stability. We seek a responsible recovery, in which we do not pretend we can make this nation better off by writing cheques to ourselves, and instead make the hard choices. We need a Government who live within their means, in a country that pays its way in the world.
Three and a half years ago, I set out our long-term economic plan in the emergency Budget. That plan restored stability in a fiscal crisis, but it was also designed to address the deep-seated problems of unsustainable spending, uncompetitive taxes and unreformed public services for which there are no quick fixes. Over the last three years we have stuck to our guns and worked through the plan. We have done so in the face of a sovereign debt crisis abroad, and at home in the face of opposition from those who got Britain into this mess in the first place and have resisted every cut, every reform, and every effort to get us out of that mess. We have held our nerve while those who predicted there would be no growth until we turned the spending taps back on have been proved comprehensively wrong.
Thanks to the sacrifice and endeavour of the British people, I can today report the hard evidence that shows our economic plan is working, but I also report the hard truth that the job is not yet done. Yes, the deficit is down, but it is still far too high, and today we take more difficult decisions. Yes, the forecasts show that growth is up, but the same forecasts show growth in productivity is still too low, and today we set out further economic reforms. Yes, jobs are up and unemployment is down, but too many of our young people lack the skills to fill those jobs and the opportunities to acquire them, so now we take bold steps to remove that cap on aspiration. Yes, businesses are expanding, but business taxes are still too high and exports are too low and we must address that. And yes, real household disposable income is rising, but the effects of the financial crash on family budgets and the cost of living are still being felt. So where we can afford to help hardworking families, we will continue to do so—[Interruption.]
Mr Speaker
Order. Mr Ruane, calm yourself, man. Your bellicose barracking is detectable several miles away.
Mr Osborne
The hard work of the British people is paying off, and we will not squander their efforts. We will secure the economy for the long term, and this statement sets out how.
Let me turn to the report from the Office for Budget Responsibility. Again, I thank Robert Chote and his team for their rigorous and independent work. The OBR report notes that the Office for National Statistics has reassessed the depth of the great recession. The fall in GDP from peak to trough between 2008 and 2009 was not 6.3% as previously thought, but was instead an even more staggering 7.2%; £112 billion was wiped off our economy—about £3,000 for every household in this country—in one of the sharpest falls in the national income of any economy in the world. That is a reminder of the economic calamity that befell Britain and of the simple fact that our country remains poorer as a result of it. A lot of work still remains to be done to put that right. The data revisions also showed something else: there was no double-dip recession.
Let me turn to the future. At the time of the Budget in March, the OBR forecast that growth this year would be 0.6%. Today, it more than doubles that forecast and the estimate for growth will be 1.4%. Next year, instead of growth of 1.8%, it is now forecasting 2.4%. Faster growth now means that it has revised the following four years to 2.2%, 2.6%, 2.7% and 2.7%, so growth over the forecast period is significantly up. It is still not as strong as we would like it to be, but this is the largest improvement to current year economic forecasts at any Budget or autumn statement for 14 years. I can report that Britain is currently growing faster than any other major advanced economy: faster than France, which is contracting; faster than Germany; and faster even than America. That contrast itself points to the risks that remain for the UK from abroad, and the weakness of many of our main trading partners.
The first risk the OBR identified to our economic recovery is a recurrence of the damaging instability in the eurozone. Even with the relative calm of recent months, the OBR still forecasts that the euro area as a whole will shrink by 0.4% this year. Its growth forecasts for the US and emerging markets have also been revised down, and world trade has been weaker than it expected in March. While our exports are growing, they are not growing as fast as we would like. That is because we are too dependent on markets in Europe and north America. The Prime Minister’s visit to China this week is the latest step in the Government’s determined plan to increase British exports to the faster growing emerging markets, something our country should have done many years ago. Today, I am doubling to £50 billion the export finance capacity available to support British businesses, expanding the help available to firms in these emerging markets and ensuring that our excellent new trade Minister, Lord Livingston, has all the firepower he needs.
Let me turn to the forecast for employment. Today in Britain, employment is at an all-time high and the OBR has revised up its forecast for the future. It was expecting jobs to stay flat over the year, but it now expects the total number of jobs to rise by 400,000 this year. This is being felt right across the country. Since 2010, the number of jobs in Carlisle and on the Wirral, and from Selby to south Tyneside, has grown faster than in London. Meanwhile, the number of people claiming unemployment benefit has fallen by more than 200,000 in the past six months—the largest such fall for 16 years. Unemployment is also lower than in 2010, and is forecast to fall further from 7.6% this year to 7% in 2015, before falling even further to 5.6% by 2018. We have the lowest proportion of workless households for 17 years.
There were those who said it was a “fantasy” to believe that businesses could create jobs more quickly than the public sector would have to lose them. What they should have said was that it would be fantastic if it happened. So I have good news for them. Businesses have already created three jobs for every one lost in the public sector, and the OBR report today forecasts that this will continue, with 3.1 million more jobs being created by businesses by 2019, which, in its words, “more than offsets” the million or so reduction in the public sector headcount. Far from the mass unemployment predicted, we have a record number of people in work, hundreds of thousands fewer on welfare, and unemployment lower than when we came to office, and we will have 2 million more jobs than in 2010—an economic plan that is working and a Government who are seeking a job-rich recovery for all.
Let me turn now to the forecasts for Government borrowing and debt. When this Government came into office, the deficit was 11% of GDP. That was the highest level in our peacetime history. One pound in every four was being borrowed, and a former Chancellor and a former Prime Minister have now joined the consensus that spending was too high. The borrowing posed a huge risk to the economic stability and credibility of the United Kingdom, and we have taken many difficult decisions to bring that deficit down—every one contested and opposed.
I can report today, however, that the effort is paying off. The OBR uses a measure of what it calls “underlying public sector net borrowing”, which excludes the impact of the Royal Mail pension scheme and asset purchase facility transfers. I can tell the House that this underlying measure of the deficit, like the other deficit measure, has been revised down substantially since March. From the 11% back in 2010, the underlying deficit now falls to 6.8% this year, instead of the 7.5% the OBR forecast back in March. It then falls to 5.6% next year, then 4.4%, 2.7% and, in 2017-18, 1.2%. By 2018-19, on this measure, the OBR does not expect a deficit at all. Instead, it expects Britain to run a small surplus. These numbers mean that the Government will meet their fiscal mandate to bring the structural current budget into balance and meet it one year early.
Let me turn to the forecasts for cash borrowing on this same underlying basis. At the autumn statement last year, there were repeated predictions that borrowing would go up. Instead, borrowing is down—and down significantly more than was forecast. In their last year in office, the previous Government borrowed £158 billion. This year, we will borrow £111 billion, which is £9 billion less than was feared in March. That falls next year to £96 billion, then down to £79 billion in 2015-16, £51 billion the year after and £23 billion the year after that. So we are set to borrow £73 billion less over the period than was forecast in March. That means that we are borrowing the equivalent of £2,500 less for every household in this country.
In 2018-19, on this cash measure too, the OBR forecasts that the Government will not have to borrow anything at all. Instead, we will run a small cash surplus. Of course, this will only happen if we go on working through our long-term plan, delivering the reductions in the deficit we plan this year, next year and in the three years after. If we gave up on the plan now, we would be saddled with a deficit still among the highest in Europe, and the Government side of the House is not prepared to take that risk.
While the deficit remains, it adds to our national debt every year. The OBR today expects debt this year to come in at 75.5% of GDP, which is £18 billion lower than was forecast in March. It rises to 78.3% next year, before peaking at 80% the next year—5% lower than forecast at the Budget. In 2016-17, it then falls, albeit slightly, to 79.9%; then falls again to 78.4% and then to 75.9%. By 2017-18, debt is over £80 billion pounds lower than forecast in March. The supplementary debt target is for debt to be falling in 2015-16. At the Budget, the OBR forecast debt to be falling in 2017-18. It is now forecast to fall in 2016-17, which is one year earlier.
But let me enter this note of caution. The OBR is clear that this is a cyclical improvement. The forecast for the continuing fall in the structural deficit has not improved. The structural deficit is the borrowing that stays behind even when the economy improves. Thanks to our actions, it has fallen from the 8.7% we inherited to 4.4% today—more than in any other major advanced economy. It goes on falling, but no faster than was previously expected because, as we have always argued, the central task of reforming government and controlling spending does not simply dissolve when growth returns. It supports the case we have made all along that economic growth alone was never going to be enough to repair Britain’s broken public finances. An improving economy does not let us off the hook for taking the difficult decisions to make sure that the Government live within their means.
The single most important economic judgement I make today is this: we will not let up in dealing with our country’s debts; we will not spend the money from lower borrowing; we will not squander the hard-earned gains of the British people. The stability and low mortgage rates, the lower deficit and falling borrowing have been hard won by this country, but let us be clear that they could easily be lost. That is why we must work through our plan to secure the British economy for the long term.
So this autumn statement is fiscally neutral across the period. Indeed, I can announce today that we will take three new steps to entrench Britain’s commitment to sound public finances. First, we will bring forward next year an updated charter for budget responsibility and ask Parliament to support it. I can say today that both parties of the coalition have agreed that we must ensure that debt continues to fall as a percentage of GDP, including using surpluses in good years, for this purpose. In other words, this time we will fix the roof when the sun is shining.
We will look to see whether the five-year time horizon of the fiscal mandate could be shorter and even more binding now that the public finances are closer to balance, and we will see how fiscal credibility could be further enhanced by a stronger parliamentary commitment to the path of consolidation already agreed for 2016-17 and 2017-18. The answers will be written into an updated charter for budget responsibility, which will be presented to Parliament a year from now and voted upon.
The second step we take today to entrench Britain’s commitment to sound public finances is this: we will cap overall welfare spending. Welfare budgets were completely out of control when we came to office and the number of households where no one had ever worked nearly doubled. We have taken very difficult decisions to bring benefit bills down; we have saved £19 billion a year for the taxpayer. We need to maintain that discipline. The percentage of spending in the UK subject to fixed spending controls is very low by international standards—at just 50%. So from next year, we will introduce a new cap on total welfare spending.
I have had representations that the basic state pension should be included within that cap, but that would mean cutting pensions for those who have worked hard all their lives because the costs on, say, housing benefit for young people had got out of control. That is not fair, so we will not include the state pension, which is better controlled over a longer period. We will also exclude from the cap the most cyclical of benefits for jobseekers. All other benefits—from tax credits to income support to the vast majority of housing benefit—will be included in the cap.
At the beginning of each Parliament, the Chancellor of the day will set the welfare cap for the coming years, and will ask the House of Commons for its support. If the cap is breached, the Chancellor will have to explain why, and hold a vote in the House. The principle is clear: the Government have a responsibility to taxpayers to control their spending on welfare, and Parliament has a responsibility to the country to hold the Government to account for it.
That brings me to our third step. Ultimately, the test of fiscal credibility is whether you are prepared actually to make the difficult decisions that will keep spending under control. Tight discipline means that most Departments are now living well within their set budgets. This year they are expected to underspend by £7 billion, which is testimony to good financial management. We can therefore be confident in reducing the contingency reserve by £1 billion this year, and reducing departmental budgets by a similar amount in the next two years. That will save a further £3 billion in total. The protections for the NHS and schools will apply, and the security and intelligence agencies and Her Majesty’s Revenue and Customs will be exempt. The Barnett formula means that over the next two years, the budgets for Scotland, Northern Ireland and Wales will see a net increase. We will not apply those additional savings to local authorities, because we expect them to freeze council tax next year.
This year, Britain becomes the first G8 country to meet our promise to the poorest in the world to spend 0.7% of our national income on development., but we do not have to increase the budget of the Department for International Development further in order to do that. The effectiveness of the British Government’s aid effort in the Philippines, matched by the generosity of the British public, is a reminder of what marks us out as a nation, and we in this country can be very proud of it.
We are also immeasurably proud of the work of Britain’s armed forces. As they wind down their operations in Afghanistan, the budget that we spend there is also falling fast, so we can reduce the military special reserve by a further £900 million this year while still funding all operational costs. To reflect our society’s debt of gratitude to our servicemen and women and their families, I want to make a further £100 million of LIBOR fines available to our brilliant military charities, and to extend that support to those who care for the work of our police, fire and ambulance services. I think the whole House will agree that the terrible events in Glasgow this weekend, and the work that those services are doing right now to cope with the adverse weather conditions, remind us how much we owe to them.
Discipline with the public finances means more than just words. It means making difficult decisions, and being prepared to stick to them. It means using surpluses in good years to keep debt falling, so that we fix that roof when the sun is shining. It means capping welfare to keep it under control, and, when we do want to spend more money, it means finding extra ways in which to pay for it.
One of the biggest single items of Government spending is the basic state pension. I am proud to be in a Government who have introduced a triple lock that ensures a fair and generous increase in the state pension every year for those who have worked hard all their lives. I can confirm that next April the state pension will rise by a further £2.95 a week. That increase, and the other increases that have been made under this Government, mean that pensioners will be more than £800 better off every year. I can announce that we are also going to offer current pensioners an opportunity to make voluntary national insurance contributions to boost their income in retirement, and that we will extend that opportunity to those who reach pension age before the introduction of the single-tier pension. That will help those who have not built up much entitlement to the additional state pension, especially women and the self-employed.
However, we must also guarantee that the basic state pension is affordable in the future, even as people live longer and our society grows older, and the only way in which to do that is to ensure that the pension age keeps pace with life expectancy. The Pensions Bill, which is currently going through Parliament, puts in place reviews of the pension age every five years. We have set the principle that will underpin those reviews. We think that a fair principle is that, as now, people should expect to spend up to a third of their adult lives in retirement. Based on the latest life expectancy figures, applying that principle would mean an increase in the state pension age to 68 in the mid-2030s and to 69 in the late 2040s. The exact dates will be set by the future statutory reviews and in line with the most up-to-date demographic data, of which the next update is published next week. This is one of those difficult decisions that Governments have to take if they are serious about controlling the public finances. Future taxpayers will be saved around £500 billion. Young people will know that our country can afford to give them a proper pension when they retire. That is this generation fulfilling its obligations for fiscal responsibility to the next generation, not saddling them with the debts and the decisions we were not prepared to deal with ourselves.
Having sound public finances also means making sure that we collect the taxes that are due. Most wealthy people pay their taxes and make a huge contribution to funding our public services; the latest figures show that 30% of all income tax is paid by just 1% of taxpayers. We have given incentives to enterprise and cut punitive tax rates, and this year the rich pay a greater share of the nation’s income taxes than was the case in any year under the last Labour Government. But alongside those paying the most tax are those who try to avoid paying their fair share of tax. So today we set out in detail the largest package of measures to tackle tax avoidance, tax evasion, fraud and error so far this Parliament. Together it will raise over £9 billion over the next five years.
We are going to tackle the growth of intermediaries disguising employment as false self-employment, depriving work forces of basic employment rights such as the minimum wage in a bid to avoid employer national insurance. We will halve the final period exemption for capital gains tax private residence relief. We will end the abuse of dual contracts, offshore oil and gas contracting, derivatives linked to profits and share buy-backs. And we will ensure the tax advantages of partnerships are not abused either. We are introducing a new, limited power that requires people to pay their taxes up front where the scheme they used has already been struck down by the courts. We are going to strengthen Whitehall’s capacity to prevent error and tackle fraud in the benefit and tax credit systems, and expand its efforts to recover money that is owed.
There is one personal tax change we make today which is not about avoidance, but is about fairness. Britain is an open country that welcomes investment from all over the world, including investment in our residential property. But it is not right that those who live in this country pay capital gains tax when they sell a home that is not their primary residence while those who do not live here do not—that is unfair. So from April 2015, we will introduce capital gains tax on future gains made by non-residents who sell residential property here in the UK.
I can also announce that from 1 January next year the rate of the bank levy will rise to 0.156% and its base will be broadened in ways we have consulted on. The levy will raise £2.7 billion in 2014-15 and £2.9 billion each year from 2015-16. The country stood behind the banks in the crisis, and now it is right that they support the country in recovery.
Having a Government who live within their means is essential to secure the economy for the long term, but it is not sufficient. Britain has to earn its way in the world. Our infrastructure needs to be overhauled. We have to help our businesses compete. Above all, our young people need the skills to succeed in the modern world. This autumn statement takes the next big steps in all these areas.
Let me start with infrastructure. We are going to be spending more on capital as a proportion of national income on average over this decade than over the whole period of the last Government. That has involved making tough choices about priorities in spending and sticking to them. But that is not the most difficult decision in this area. We have to decide whether we are serious as a country about competing in the modern world and say to people that we need the new roads and the new railways, including the northern hub and High Speed 2. We have to say that we are prepared to push the boundaries of scientific endeavour, including in controversial areas, because Britain has always been a pioneer. We should say that the country that was the first to extract oil and gas from deep under the sea should not turn its back on new sources of energy such as shale gas because it is all too difficult, and the country with the world’s first civil nuclear programme should not be a country that says we can do this no longer.
Yesterday, my right hon. Friend the Chief Secretary and Lord Deighton published the update to the national infrastructure plan. That includes a co-operation agreement with Hitachi on the next nuclear power station in Anglesey and a deal with the insurance industry to invest at least £25 billion in UK infrastructure. We published the strike prices that support long-term investment in offshore wind and prioritise it over onshore wind. Today we go further, with a commitment to invest in quantum technology, and a new tax allowance to encourage investment in shale gas that halves tax rates on early profits. In the week in which Professor Peter Higgs travels to Stockholm to collect his Nobel prize for physics, we commit to build a new centre in his name at Edinburgh university, because science is a personal priority of mine.
Some of the most important infrastructure for British families is housing and we must confront this simple truth: if we want more people to own a home, we have to build more homes. The Office for Budget Responsibility is absolutely right today to draw attention to the weakness of housing supply in this country. The good news is that the latest survey data showed residential construction growing at its fastest rate for a decade. Our hard-won planning reforms are delivering a 35% increase in approvals for new homes, but we need to do more.
This week, we are announcing a billion pounds of loans to unblock large housing developments on sites in Manchester and Leeds and across the country. We will increase the housing revenue account borrowing limit by £300 million. Aspiration is not only for people who can afford their own home. We want to regenerate some of our most run-down urban housing estates. Councils will sell off the most expensive social housing, so they can house many more families for the same money. We are going to give working people in social housing a priority right to move if they need to for a job.
Right-to-buy applications have doubled under this Government, and we will expand it more. The very same spirit of aspiration that underpins right to buy is what drives this Government with Help to Buy. It is not enough to build more houses if families who can afford mortgages do not have the large deposits that the banks have demanded. Help to Buy is now helping thousands to own their own home. I can today announce that Aldermore and Virgin, two challenger banks, expect to join the scheme this month.
Help to aspiring families and building more homes: that is what we stand for. We must also avoid the mistakes of the past decade. We want a responsible recovery. That is why I am the first Chancellor to give the Bank of England the responsibility and the power not only to monitor overall debt levels, but to take action to deal with asset bubbles if they threaten our stability.
We want a functioning, stable housing market. The OBR’s latest house price forecast today, while higher, still has real house prices 3.1% lower in 2018 than at their peak in 2007. Together with Governor Carney, I acted last week to focus the funding for lending scheme away from mortgages on to small business lending, where its support is still needed. It is precisely because the authorities can act in this targeted and pre-emptive way, and because our public finances are under control, that the Bank can keep overall interest rates lower for longer and support the rest of the economy.
Investing in the physical infrastructure of our country is critical to our future. But in this global economy, it is better education and skills that hold the key to long-term national success. This week’s programme for international student assessment—PISA—scores show how much ground this country has to make up. My right hon. Friend the Education Secretary is doing more to transform school standards and raise the aspirations of pupils from the poorest families than anyone who has done that job before him. His expansion of free schools and academies has the full backing of this Chancellor.
We also know that children do better at school when they have a proper meal inside them. This autumn statement has found the financial resources to fund the expansion of free school meals to all school children in reception, year 1 and year 2, announced by the Deputy Prime Minister and supported by me.
But today we also focus on what happens when our young people leave school—and we do more to help them. First, we will not abandon those who leave school with few or no qualifications. At present, Jobcentre Plus does almost nothing to help 16 and 17-year-olds who are not in work or education. We will change that and will now fund the jobcentres to support these very young adults to find an apprenticeship or a traineeship.
Without basic maths or English, there is a limited chance any young person will be able to stay off welfare, so we are taking a new approach. Starting in some areas at first, anyone aged 18 to 21 signing on without those basic skills will be required to undertake training from day one or lose their benefits. If they are still unemployed after six months, they will have to start a traineeship, take work experience or do a community work placement—and if they do not turn up, they will lose their benefits.
A culture of worklessness becomes entrenched when young people can leave school and go straight on to the dole with nothing expected in return. That option is coming to an end in our welfare system.
The second reform is to apprenticeships. We have doubled the number of apprenticeships and now we will transform the way they are provided by funding employers directly through HMRC. I can tell the House there will now be an additional 20,000 higher apprenticeships over the next two years. I can also announce a big expansion of start-up loans, through which a new generation of entrepreneurs is being created: 50,000 more people will be helped to fulfil their aspiration to start their own business. We are extending the new enterprise allowance, too.
This year is also the 50th anniversary of the Robbins report, which challenged the nonsense that university was suitable only for a small few. In 1963, Robbins said:
“Courses of higher education should be available for all those who are qualified by ability and attainment to pursue them and who wish to do so.”
That was true then, and I believe it should remain true today. Our reforms to student loans, difficult as they were, have put our universities on a secure footing. Some predicted that applications from students from poor backgrounds would fall. Instead, I can report that this year we have had the highest ever proportion of young people from disadvantaged backgrounds applying to university.
But there is still a cap on aspiration. Each year, about 60,000 young people who have worked hard at school, got the results, want to go on learning and want to take out a loan to pay for it are prevented from doing so because of an arbitrary cap. That makes no sense when we have a lower proportion of people going to university than even the United States, let alone countries such as South Korea. Access to higher education is a basic tenet of economic success in the global race, so today I can announce that next year we will provide 30,000 more student places, and the year after we will abolish the cap on student numbers altogether.
Extra funding will be provided to science, technology, and engineering courses. The new loans will be financed by selling the old student loan book, allowing thousands more to achieve their potential.
Education underpins opportunity. It is business that provides those opportunities and the best way to help business is by lowering the burden of tax. KPMG’s report last week confirmed for the second year running that Britain has the most competitive business tax system in the world. Some in this House suggest that our response to this good news should be to increase corporation tax from 20%. Today, we publish the first of our studies of the dynamic effects of tax changes that shows that our corporation tax cuts increase investment and raise productivity—so much so that more than half the cost of the tax cut to the Treasury will be recovered because of higher growth. Putting up corporation tax hits investment, cuts productivity, costs jobs and raises much less. We thank the hon. Members for their submission, but we think it would be economic madness to pursue it.
Quite the reverse, today we take further steps to make our business taxes yet more competitive. The Budget announcement that we would abolish stamp duty on AIM shares was applauded around the world. Today, we also abolish stamp duty for shares purchased in exchange traded funds to encourage those funds to locate in the UK. We are making our successful film tax relief even more generous, and looking to extend the principle, including to regional theatre. We set out major reforms to encourage employee ownership of the kind that makes John Lewis such a success. And from April, we will be one of the first countries in the world to introduce a new tax relief for investment in social enterprises and new social impact bonds. I want to thank Sir Ronnie Cohen and the charities Minister, my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), for all their help in putting this innovative scheme together.
Business rates impose a heavy burden on businesses of all sizes. Today, we will help ease that burden—and here is how. The last Government wanted to halve small business rates relief—a relief that helps cut rates bills for half a million companies and means a third of a million of the smallest businesses pay no rates at all. If we had followed that plan, small businesses would have faced a rate increase of up to £3,375. So we have rejected that plan. Instead, we have extended that rate relief scheme year after year. It was due to expire next April. We will now extend it for another whole year. We have also listened to the small business groups and will relax the rules that discourage these firms from expanding and opening extra premises.
But that does not go far enough. All businesses are expecting rates to rise by 3.2% next year. Instead, I will cap the inflation increase in business rates for all premises at 2% from next April. We will also allow businesses to pay their rates in 12 monthly instalments. We will clear almost all the backlog of valuation appeals by July 2015, with reform of business rates on the agenda for 2017 revaluation.
There is one group of businesses that has found the recession especially hard, as it has coincided with a rising challenge from the internet that is only getting stronger. These are our local retailers—the shops, the pubs and the cafés that make up our high streets across Britain. With small business Saturday this weekend, I want the Government to do all we can to help them. We are already changing the planning rules to help town centres compete. To get the vacant shops that blight too many town centres to open again, I am introducing a new reoccupation relief that will halve the rates for new occupants.
But we can do more, and I want to thank my hon. Friends the Members for Wolverhampton South West (Paul Uppal), for Nuneaton (Mr Jones), for Hastings and Rye (Amber Rudd) and for Brentford and Isleworth (Mary Macleod) and many others for their campaign. Like them, I also want to help those who have struggled hard on our high streets—often working long hours for not enough in return. So I can announce today that for the next two years every retail premise in England with a rateable value of up to £50,000 will get a discount on their business rates. This discount will be worth £1,000 off their bills.
This is what we offer: business rates capped; for the smallest firms, no rates at all; and help for the high street, with £1,000 off for small shops, pubs, cafés and restaurants across our country. The people in these businesses epitomise the hard-working values this Government support, and we are backing British businesses all the way.
And we are backing British families. Next April, the personal allowance will reach £10,000. This Government are delivering an income tax cut worth up to £700 a year to over 25 million hard-working people. Under the last Government, council tax doubled. We are now helping councils freeze it for the whole of this Parliament. Tax-free child care is being introduced and free school meals are on their way. But there is more we are doing to help.
This autumn statement confirms that from April 2015 we will introduce a new transferable tax allowance for married couples. Available to all basic rate taxpayers, it enables people to transfer £1,000 of their personal allowance to their wife, husband or civil partner. It is just a start. And I confirm today that we will introduce a new uprating mechanism that ensures the new married couples tax allowance is automatically increased in proportion to the personal allowance. Four million families will benefit, many of them among the poorest working families in our country. This measure, along with the others we take today, ensures that across this Parliament our policies are progressive, showing that we are all in this together, with the very rich paying the most.
We are also helping families with their energy bills, not with a transparent con by pretending that we can control the world oil price, but instead by focusing on the thing that Government can and should control—the levies and charges that previous Energy Secretaries piled on bills. [Interruption.] This week we deliver on the promise made by the Prime Minister—[Interruption.]
Mr Osborne
This week we deliver on the promise made by the Prime Minister to roll back those levies. The result: an average of £50 off family bills. We are doing this in a way that supports the lowest income families, reduces carbon, supports investment in our energy infrastructure and, as the document shows, does not add a penny to the tax bills that families pay. My political philosophy is clear: instead of penalising people with more taxes and more regulation, give them incentives by reducing their taxes and their bills. As I have often said, going green does not have to cost the earth.
That brings me on to fuel duty. We inherited from the previous Government the hated fuel duty escalator that would have inflicted hardship on families and small firms alike. Instead of those rises, we abolished the escalator, and we have cut and then frozen fuel duty. I have had further representations from many, many hon. Friends, from my hon. Friends the Members for Blackpool North and Cleveleys (Paul Maynard) and for Argyll and Bute (Mr Reid), and of course my hon. Friend the Member for Harlow (Robert Halfon), who is a champion of the people he represents.
I said earlier this autumn that if we could find the money, I would like to go on freezing duty. Today I can report that because we have taken difficult decisions to control the public finances, I can deliver on that promise. Next year’s fuel duty rise will be cancelled. Instead of petrol taxes going up by 2p a litre, they will stay frozen. That means that, compared with the previous Government’s plans, petrol will be 20p a litre less. That is £11 less every time you fill up—a saving for drivers over this Parliament of £680, and double that for a small business with a van.
Cancelling fuel duty rises has been a major priority of the Government—a £22 billion demonstration that we are on the side of hard-working people in this country. A married couples allowance; £50 off energy bills. We are helping those who drive a car and we are helping those who get the train, too. Fares next January were going to go up by 1% above inflation. We are going to keep average fares flat in real terms.
We on the Government Benches know that there is one thing more than any other that has supported families through these difficult times, and that is being in work. At the heart of our economic plan is support for the creation of more jobs. That is why we opposed the last Government’s plan to increase the jobs tax. That is why we reversed the most damaging part of that increase in the very first Budget after we came to office. That is also why in the last Budget I introduced the employment allowance, which eliminates the jobs tax for half a million small businesses. And that is why we will go further still. We are going to abolish the jobs tax on young people under the age of 21. Employer national insurance contributions will be removed altogether on a million and a half jobs for young people. We are not going to leave young people behind as the economy grows. We are going to have a responsible recovery for all.
The cost for a business of employing a young person on a salary of £12,000 will fall by over £500. For someone on £16,000, that is over £1,000 off. I want to commend my hon. Friends the Members for Braintree (Mr Newmark) and for Carlisle (John Stevenson) and the Million Jobs campaign for highlighting this issue. The change requires legislation. It will come into force in April 2015, and it will not apply beyond the upper earnings limit.
This country is working through its long-term plan: bringing down the deficit and dealing with the debt; spending less on welfare and making the big decisions on infrastructure; living within our means and cutting tax on business; making work pay and letting people keep more of what they earn; and with confidence in the next generation, as they make their way in education and in the workplace. This statement shows that the plan is working. It is a long-term plan for a grown-up country. But the job is not done. By doing the right thing, we are heading in the right direction. Britain is moving again. Let us keep going.
Ed Balls
I think that on this one the Chancellor is right—it is a turkey of an idea.
On the cost of living crisis, on energy, on supporting families, this Government just do not get it. There is a reason why this Prime Minister and this Chancellor—the Chancellor said it in his statement—believe that people are better-off: it is that the people on their Christmas card lists have seen their bonuses rise and their taxes cut. They have shown that they are willing to stand up for the interests of the energy companies—[Interruption.] We have a Prime Minister and a Chancellor who will stand up for the energy companies, stand up for the hedge funds, and stand up for people earning over £150,000—who get a tax cut—but will not stand up for millions of families and pensioners in our country: people struggling with rising energy bills, falling wages, and rising child care costs.
We all know and agree that rising life expectancy means we are going to have to work longer and that the Chancellor’s failure on growth and the deficit means more tough spending decisions in the next Parliament. But when the country is crying out for a Government who will work with business to promote investment and wealth creation and build an economy that works for the many and not just the few, does this Chancellor really think he can get away with tinkering at the edges, letting the free market rip, and waiting for the wealth to trickle down? Is not what the Chancellor has announced today the clearest evidence yet that the Government just do not understand the scale of the challenge we face to get an investment-led recovery that works for all and not just a few—a strong recovery built to last?
Let me ask the Chancellor—[Interruption.] With the permission of the House, let me ask the Chancellor this: with house building under this Government at its lowest level since the 1920s, does he not see that his Help to Buy scheme to boost mortgage demand can deliver a strong and balanced recovery only if he does what we and the IMF have urged and invests in housing supply—more affordable homes. [Interruption.] Government Members sneer at building more affordable homes. Can the Chancellor tell the House why infrastructure output has actually fallen by 15% since 2010? No wonder the CBI is so upset.
On investment, why has not the Chancellor used the money from the planned increase in spectrum licence fees to endow a proper business investment bank? On tax avoidance, will he tell the House why HMRC has reported that the amount of uncollected tax actually rose last year?
Almost 1 million young people are unemployed; a record number who want to work full time are being forced to accept part-time work; the Work programme is a flop; the welfare bill is rising; and, as we have learned today, universal credit is a complete and utter shambles. There was no mention of universal credit in the statement: IDS—in deep shambles.
Is it not the fact that, for all the shambles and chaos and rising welfare bills, what the Chancellor has announced on youth unemployment is too little, too late? There will be help for under-21s only, and only in the last weeks of this Government in 2015. Why is he not being more ambitious? Why will he not repeat the successful tax on bank bonuses to pay for a compulsory job for all young people—a job they will take or lose?
Why will the Chancellor not remove the winter allowance from the richest 5% of pensioners? Why will he not reverse his tax cut for hedge funds and protect disabled people in our country by scrapping the unfair and perverse bedroom tax this Prime Minister introduced? Why will he not go further on the bank levy and expand free child care for working parents, make work pay and use it to help working parents?
Is not this the truth: will the Chancellor confirm that even after what he has announced today on fuel duty and increases in the personal allowance, his VAT rise, his cuts to tax credits and his cuts to child benefit mean that, on average, families with children are worse off because of his Budgets? That is the truth—giving with one hand, taking away much, much more with the other.
With energy bills still rising this winter, no real action to tackle the cost of living crisis, no proper plan to earn our way to rising living standards for all, surely Britain can do better than this.
This complacent Chancellor sits there and thinks he deserves a pat on the back. I have to say that, with bank bonuses rising and millionaires enjoying a big tax cut, this is a policy that is working for a few. But as this autumn statement shows, with this out-of-touch Chancellor and Prime Minister, hard-working people are worse off under the Tories.
Mr Osborne
The Leader of the Opposition and I agree on one thing: that was a complete nightmare. The only turkey around here is the speech just given. As for denial, the man who said that borrowing would not come down, unemployment would not come down and growth would not happen, and who refuses to apologise for what he did to the British economy, is the very epitome of denial. That is the central problem with his response and, indeed, his whole economic framework. Not only did he predict that the recovery would never come; he went out of his way to say that if we stuck with our plan it could never come.
This is what the right hon. Member for Morley and Outwood (Ed Balls) said in March this year:
“I’ve said consistently…unless there is a government led plan for confidence, for growth and jobs, the economy will get worse but also the deficit won’t come down, it’ll go up”.
He predicted that the economy would get worse and the deficit would go up and that 1 million jobs would be lost, but the economy is growing, 1 million jobs have been created and the deficit has gone down. I have an explanation for what has happened: we do have a Government-led plan for confidence, for growth and jobs. It is our plan, it is working and the right hon. Gentleman should have welcomed it.
The extraordinary thing about the right hon. Gentleman’s performance was that he could not bring himself to welcome any of the better economic news. He has built his whole proposition as shadow Chancellor on the basis that our effort to deal with the public finances would make that growth impossible. That makes me wonder what the right hon. Gentleman has been up to with his time, but he gave a clue in a newspaper interview this week. He said that he had to cancel his grade 3 piano exam, because it was
“exactly the time when George Osborne is standing up to do the Autumn Statement!”
I think he should have gone ahead with the “Chopsticks” rendition. The newspaper article also says that he asked Miss Perrin, his piano teacher:
“‘If I go wrong can I start again?’ She said: ‘I think it’s probably best to keep going.’”
He takes the same approach to economic policy as he does to his piano. The final thing he said is that he hopes to reach grade 8 piano over the next four years. After his performance today, I can see why he expects to have a lot more time to practise.
Let me turn to the points the right hon. Gentleman raised. The central point is that it is not possible to have a cost of living plan without an economic plan. Labour’s silence on the economy goes to the heart of its weakness. It cannot talk about its record, because it had the biggest recession ever. It cannot talk about the deficit, because it has no plan to deal with it. The right hon. Gentleman cannot even talk about infrastructure and his much vaunted plan for a cross-party consensus, because he was the person who tried to break the consensus on the biggest project of all. He cannot talk about housing, because there were 420,000 fewer affordable homes at the end of the Labour Government. He cannot talk about business rates, because they went up 71% under Labour. He cannot talk about support for business, because he wants to put taxes up on business. He cannot ask about standing up to the powerful, because this is the week that Labour caved in to the trade unions. He cannot ask about jobs, because he wants more jobs taxes. And he cannot ask about banking and financial services, because the person Labour hired to advise it was the Reverend Flowers.
The right hon. Gentleman has said that he would be the co-operative Chancellor. Let me end by saying that that is exactly what he would be: borrowing more than he can afford, with catastrophic management of the finances, and a deluded leadership preaching one thing and doing another. It is hard-working people who will pick up the price if it blows up again. He cannot welcome the economic recovery because he is the biggest risk to economic recovery.
Mr Andrew Tyrie (Chichester) (Con)
Does the Chancellor agree that the confidence now returning to the economy is a vindication of the Government’s decision to stand firm on reducing the deficit? Is it not now absolutely crucial that Britain sticks with this policy as the economy recovers, reduces the size of the state and creates room for the economy to grow, and with it, when resources allow—and only when resources allow—to reduce taxes?
Mr Osborne
I thank my hon. Friend for his support and his observation about what is happening in the economy. I complete agree with him. One of the things I said in the speech was that of course risks remain, the job is not done, productivity remains too low and we want it to grow. That requires economic reform and reducing taxes on business, which is what we have done again today.
Mr Alistair Darling (Edinburgh South West) (Lab)
I notice that the Chancellor’s growth forecasts follow a very familiar pattern of being fairly flat and then rising to, I think, 3.7% in four years’ time. That, of course, drives his assumptions in relation to borrowing and debt. Does he agree that risks remain not just in the eurozone, but here at home? In connection with that, could he tell me what the Office for Budget Responsibility is forecasting in relation to North sea oil revenues over the next few years, because there are some people who believe that that is a limitless source of funding for whatever they happen to be promising in the coming referendum? Finally, could he also tell me the source of the funding for the very welcome centre at Edinburgh university?
Mr Osborne
The right hon. Gentleman and I are both looking forward to the Higgs centre at Edinburgh university, which is a reminder of the scientific collaboration that can happen across the entire United Kingdom. We are, of course, incredibly proud of Professor Higgs.
The right hon. Gentleman makes a very good point about oil and gas receipts in the forecast from the entirely independent Office for Budget Responsibility. Its forecast today for the whole of the UK is that oil and gas receipts will be £3.5 billion in 2016. That compares with the £6.8 billion on which the SNP Scottish Government have based their premises and their claims for independence. It is twice as much as the OBR has independently assessed, and that is another example of how they are not being straight with people about the facts in relation to independence. It would of course mean that there was a black hole in an independent Scotland’s public finances that would cost the Scottish people £1,000 each. It is yet another example of how they are not being straight; the independent facts refute their case.
Mr John Redwood (Wokingham) (Con)
Will the Chancellor confirm that the independent official forecast shows that the more successful he is in future years in curbing spending and cutting borrowing, the faster the economy will grow, just as America has shown that by cutting the deficit, it can get more growth?
Mr Osborne
I agree with my right hon. Friend that unless we have a sustainable state, with borrowing and public finances under control, it will be very difficult to get the stability during which sustained growth happens. We have seen that in many of our neighbours, and that was the risk facing the United Kingdom in 2010. We have absolutely demonstrated that we can stick with a plan to deal with the deficit and take hard decisions on public finances, and see job creation and business expansion happen alongside that.
Margaret Hodge (Barking) (Lab)
Last year, the Prime Minister told tax avoiders to wake up and smell the coffee. Will the Chancellor explain why in last year’s statement he promised that £3.2 billion would come into our coffers from Swiss bank accounts, yet since April he has managed to collect a meagre £440 million? Will he also explain why the OECD’s head of tax has singled out the UK as the only country giving companies new opportunities to avoid tax by changes in the controlled foreign company rules? When will the Government’s reality match their rhetoric?
Mr Osborne
First, all receipts from any of these tax measures are now independently audited by the Office for Budget Responsibility, so there is an independent audit. The truth is that some of these taxes turn out to raise less than we hoped, and some raise more. For example, we are getting less from Switzerland, and we are speaking directly with the Swiss Government about that, but the deal with Liechtenstein is bringing in more money than was forecast. Some of the other measures we have taken—for example, to prevent the avoidance of stamp duty on residential property, particularly in London—are raising more money than forecast.
On the OECD, the United Kingdom and the Prime Minister have led the effort at international level to get international rules on base erosion and profit shifting to make sure that there is a global response to a global problem.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
Do not cutting tax on low pay, helping small business, freezing the petrol tax and getting from recession into growth show what can be achieved when two parties are prepared to work together and take the tough decisions that Labour would not have had the courage to take?
Mr Osborne
I agree with the right hon. Gentleman. In 2010, there was a hung Parliament and the potential for political paralysis in this country, but two political parties from different political traditions came together. It is a remarkable testament to the strength of this Government and the leadership of the Prime Minister and the Deputy Prime Minister that we can put together these complicated, difficult autumn statements, with difficult decisions being taken on things such as the pension age, public expenditure in Whitehall and tax avoidance. We can do that together; of course, I would rather do it alone, but that is up to the British people in the next election.
Stewart Hosie (Dundee East) (SNP)
There was such hubris from this Chancellor that he pointed to a 1% rise in GDP this year, when GDP will still be 2.5% smaller than before the crisis; that he pointed to recent falls in unemployment, when there are still 1 million more unemployed than before the crisis; and that he said borrowing would fall to £111 billion, when that is £55 billion more than he promised for this year in 2010. That was before the body blow of increasing the retiral age, so that youngsters leaving school this year will have to work for 50 years and will be older than their grandparents are now before they can draw their pension. Given that this Chancellor has failed on every target he has set himself, how can we possibly trust him on anything he has said today, including on oil forecasts?
Mr Osborne
The central point that Scotland might want to focus on today is that the oil forecasts are independently produced by the Office for Budget Responsibility, so either the SNP believes that Robert Chote has somehow fiddled the numbers to stack the campaign against independence, or the truth is that it is making a false promise to the Scottish people. The SNP is not being straight with people about the public finance position of an independent Scotland, and it is Scottish people who would pay the price if there was such an outcome, but I think that they are beginning to have serious doubts about the claims that the SNP is making.
Andrea Leadsom (South Northamptonshire) (Con)
I congratulate my right hon. Friend, particularly on removing the jobs tax on young people. Will he confirm that one of the aims of his Budgets has been to ensure that the young people of today do not end up paying for the mess left by Labour?
Mr Osborne
I absolutely agree with my hon. Friend, and I thank her for what she said. A central part of my Budgets has been to say to the next generation, “We are going to make sure you have the opportunities to succeed. If you have no skills, we will help you to get those skills. If you want vocational work and training, you will get that through apprenticeships. If you want to go on to higher education, you will get support from the lifting of the cap on student numbers, which is a huge reform”—and, as she mentioned, to say—“If you want to get into work, we will help you by abolishing the jobs tax on young people.” Dealing with the debts and deficits is also, of course, a huge part of saying to the next generation, “We will not leave you with the problems we weren’t prepared to tackle ourselves.”
Mr Michael Meacher (Oldham West and Royton) (Lab)
How can the Chancellor conceivably claim that this recovery is sustainable when business investment is still 25% below the pre-crash level, when only 0.1% of the 0.8% growth in the last quarter came from business investment, when productivity is one of the lowest in the OECD, when real wages have fallen 7% and are still falling, and when exports have still not taken off, despite the 25% fall in the exchange rate, and the deficit on traded goods is still likely to be in excess of £100 billion this year?
Mr Osborne
As I said in my statement, we need productivity to pick up in order to sustain the economic plan. I agree with the right hon. Gentleman that we want exports to increase. Exports were badly hit because our main export markets were in recession for much of last year. I agree with him about such things, but we disagree about the route to achieving them. His proposal is to put up a tax on business. I do not understand how that would possibly help either investment or exports. Tax increases on businesses would be regarded around the world as a bizarre move by the United Kingdom, and we are certainly not going to do that.
Dr Liam Fox (North Somerset) (Con)
I congratulate my right hon. Friend on helping us to get out of the debt and deficit horror that was left by the previous Labour Government. In particular, I commend his downward pressure on public expenditure, which is the only way to get us out of the debt interest that has been so crippling. Does he agree that the fact that we will spend more money next year servicing our debt than educating our children is the ultimate monument to socialist economic failure, the likes of which we saw outlined yet again by an Opposition who seem to have learnt absolutely nothing from their own failures?
Mr Osborne
My right hon. Friend puts his argument incredibly well. He has also argued that the best national security policy a country can have is to make sure that it is dealing with its debts and has sustainable public finances. Debt interest remains far too large a part of the Government’s budget, because the national debt went up so much under Labour. It left us with an 11% budget deficit, which we are now of course bringing down. My right hon. Friend is absolutely right that debt interest—the bills of economic failure—is what we were bequeathed by the previous Government.
Mr Dennis Skinner (Bolsover) (Lab)
In the real world, is it not a fact that working people are faced with cuts in real wages, part-time jobs and zero-hours contracts? It is nothing short of purgatory for those who have to work for a living, and a paradise for the bankers. On Reverend Flowers, is it not a bit of a cheek for the Chancellor to talk about the subject of lining people’s nostrils, while at the same he is lining the pockets of the people on millionaire’s row?
Mr Osborne
The people who sucked up to the bankers and brought the British banking system to its knees are sitting on the Labour Benches. [Interruption.] The shadow Chancellor shakes his head. He is in denial. He was the City Minister when RBS bought ABN AMRO and when Northern Rock was selling 125% mortgages. I agree with the hon. Member for Bolsover (Mr Skinner) that working people have paid a very high price for that catastrophic economic failure.
Sir Edward Leigh (Gainsborough) (Con)
In warmly congratulating the Chancellor on putting hard-working families and enterprise growth at the centre of the statement, may I draw his attention to those people in hard-working families who occupy key managerial positions and who typically earn just over £40,000 a year? More and more of those families are being dragged into paying higher rate income tax—perhaps as many as 2 million by the end of this Parliament. I ask him to bear those people in mind because they are the key to our recovery.
Mr Osborne
I agree with my hon. Friend that we want to help people on middle incomes as well as those on low incomes. Many of the measures, in particular those on fuel duty and rail fares, will help those people. The personal allowance is now passed through so that those who pay the higher rate of income tax, although not those who pay the top rate, get the benefit if they earn less than £100,000. The benefit is therefore flowing through to those people as well. That is all part of what we are doing to help working people in both the middle and lower income brackets.
Dame Joan Ruddock (Lewisham, Deptford) (Lab)
Last year, wholesale energy prices rose by 1.7%, but energy bills rose by more than 9%. Why does the Chancellor think it is appropriate to reduce the number of solid wall insulation tasks for energy companies, thus destroying thousands of newly created jobs, rather than tackling the excessive profits of the greedy energy companies that have their hands in all our pockets?
Mr Osborne
Of course, it was the Labour Government who left us with six energy companies—[Interruption.] I do think that is relevant, because it is this Government who are seeking the competition that will bring new entrants. Let me address the specific point that the right hon. Lady makes. To compensate for the fact that we are rolling back some of the levies, for example in the energy company obligation, we have set out schemes today that will reward home owners who use energy efficiency measures to improve the efficiency of their home. Those include an additional bonus for solid wall insulation. There is also extra money for public sector organisations and private landlords to make their buildings more efficient. Across the board, we are supporting the insulation industry, but we are doing so in a way that does not penalise people through their electricity and gas bills. That is something that she should support.
Richard Harrington (Watford) (Con)
In Watford, as I am sure my right hon. Friend the Chancellor is aware, unemployment is coming down every month, the number of apprenticeships has doubled in the past two years, a new university technical college is opening, and the Government are investing significant capital expenditure on infrastructure in the shape of the Croxley rail link. It seems that the shadow Chancellor’s policy is to spend more and borrow more, which would lead to exactly the reverse of what has happened in Watford. I hope that the Chancellor can assure me that he will be undeterred by what has been said today by the Opposition and will stick to his policies that support growth.
Mr Osborne
I want to return the compliment that my hon. Friend has paid me. He has been an outstanding Member of Parliament. His jobs clubs have helped many young people and his offer of work experience is helping people to get on the jobs ladder. The rail measures that we have announced today will help his constituents in Watford. He is right that for Watford, a Labour Government would mean higher unemployment, higher mortgage rates, more borrowing and more debt. That would put Watford and the rest of the country back into the economic mess we are taking them out of.
John McDonnell (Hayes and Harlington) (Lab)
Whatever one’s view of the past, there are worrying signs that the bonus culture is returning to the City, with large payouts, share distributions and high dividend payments disguising what were formerly bonuses. Will the Chancellor of the Exchequer make it clear that the Government stand ready to introduce further measures to control the bonus culture? I believe that they would have the support of the whole House in doing so.
Mr Osborne
I find myself in agreement with the hon. Gentleman. He put his question in a very measured way. We do not want to see a return to the uncontrolled bonus culture. We now have a much tougher regime in respect of the transparency of bonuses and clawback, which means that if things go wrong in trades or for a bank, they can get the money back that they have paid people in bonuses. We will take measures to tackle things such as dual contracts, as I mentioned briefly in my statement and as is set out in the document. People who work in the financial industry often split their contract so that they can claim that they are only working for part of the time in the UK to avoid tax. Where there is egregious tax avoidance, we will take steps. I agree with him that the banking system as a whole must be cognisant of the times in which it lives.
Mr Alan Reid (Argyll and Bute) (LD)
I congratulate the Chancellor on the fuel duty freeze which, as he pointed out, will save motorists 20p per litre compared with Labour’s plans. Will he confirm that motorists on the islands and in remote parts of the mainland in my constituency, such as Appin, will save 25p per litre compared with what the Labour party wants to charge them?
Mr Osborne
My hon. Friend has been an assiduous campaigner for lower fuel duty for his constituents. Indeed, he lobbied me about it in the Division Lobbies yesterday, although we had already taken the decision by then. He draws attention to the rural fuel rebate. That is an important scheme that we have introduced for some of the remote islands in Scotland and other parts of the United Kingdom. We would like to extend the scheme more widely, but we are constrained by European Union rules, which we are challenging. I am glad that the scheme is benefiting some of his constituents.
Bill Esterson (Sefton Central) (Lab)
When will the Chancellor accept the reality that for most ordinary people, the economy is about the cost of living crisis? Will he confirm that for 40 of the last 41 months, under his stewardship, prices have risen faster than wages?
Mr Osborne
Disposable household income is rising. The way to ensure that it continues to rise is to ensure that we have a sustained and responsible economic recovery. The cost of living for the people who live in this country cannot be detached from the performance of the overall economy, as the country sadly discovered when it had the biggest recession in modern history and people’s incomes were hit so badly. Our argument is that the only way to improve living standards in this country is to create jobs, support businesses as they expand and create those jobs, and ensure that the country gets out of its dependence on debt. That is precisely what we are doing.
Mr Mark Hoban (Fareham) (Con)
I commend my right hon. Friend for sticking to the course when others suggested that he was going too far and too fast. I am looking forward to voting for the charter for budget responsibility next year. What conclusion does he think people should draw if other parties in the House oppose it?
Mr Osborne
That will be an interesting opportunity to hear what the Labour party and any other party in this House that does not support our consolidation plans for 2016-17 and 2017-18 would do. If one listens carefully to what the shadow Chancellor says, one finds he makes a promise about current spending in the year in which the election will be held, but he makes no promise about capital spending in that year and says absolutely nothing about spending plans thereafter. We have an important opportunity to entrench this country’s commitment to fiscal consolidation. We will see what the Opposition do.
Caroline Lucas (Brighton, Pavilion) (Green)
The Chancellor has turned doublespeak into a new art form today with his mind-boggling claim to be helping the fuel-poor by slashing the very programmes they depend on to insulate their homes. Does he accept that this statement is a hugely squandered opportunity to offer lasting relief to the fuel poor by launching a major retrofit programme that would cut bills, cut carbon, and create hundreds of thousands of jobs?
Mr Osborne
As I said, we are launching a huge scheme to help home movers insulate their homes, help public authorities insulate their buildings, and ensure that private landlords also have incentives. I disagree with the hon. Lady—and, I guess, her philosophy—in that I think such things are better done through incentives and lower taxes than through higher taxes and higher charges that put people off the agenda she wants to promote.
Harriett Baldwin (West Worcestershire) (Con)
The Chancellor is an historian of some note. Can he recall an occasion where such good news on jobs and growth was heard in such stony silence by the Labour party?
Mr Osborne
I did history at university if that is what my hon. Friend is referring to. The extraordinary thing is that the Opposition gambled on there not being an economic recovery, and the shadow Chancellor based his entire reputation not only on the idea that the recovery would not happen, but that it could not happen. As a result, his entire economic edifice has collapsed.
Lilian Greenwood (Nottingham South) (Lab)
What advice does the Chancellor have for my 85-year-old constituent Ennis Peck, whose energy bills will rise to more than £120 a month in the new year? As a direct result of the Chancellor’s capitulation to the energy companies and changes to the energy company obligation, my constituent may no longer get his hard-to-heat, solid-wall home insulated under Nottingham’s greener housing scheme.
Mr Osborne
If Labour Members now say that they oppose our changes to the ECO, as implied by the hon. Lady’s question, she would be saying that bills should go up for the families she represents. It would be interesting to hear the Labour party clarify its position. The solid-wall insulation industry will be supported by additional incentives under the scheme to help home owners insulate their homes. Surely what we all want, including the hon. Lady, is for bills to come down for people across the country, and that is what will happen, by an average of £50.
Sir Bob Russell (Colchester) (LD)
I am delighted that the Chancellor took notice of my speech last week that called for the abolition of business rates on small shops. Now that there is flexibility in the defence budget, is it not time the Government reinstated the modernisation programme for the houses of our brave soldiers and their families?
Mr Osborne
My hon. Friend is right that the help for the high street announced today is significant—£1,000 off for shops, pubs, restaurants and cafés. For many shops that will be a lot better than a freeze and will wipe out their rates bill for a couple of years and help them in this difficult time. I know my hon. Friend has campaigned passionately on forces’ houses, and a lot of money is now going to military charities from the LIBOR fines. I know some of the bids being considered specifically involve forces’ housing, so that is one route through which we can ensure they get a better deal.
Jack Dromey (Birmingham, Erdington) (Lab)
What does the Chancellor have to say to the hard-working, aspirational Erdington family with whom I spoke this morning? The dad has lost his job twice in the past three years, with each new job on a yet lower rate of pay. The mum is a full-time carer for their disabled son. They are increasingly struggling to pay their mortgage and energy bills. They say to me, “Like all our friends, Jack, we don’t recognise the Chancellor’s recovery. Does he understand people like us?”, and in particular they ask, “What planet does the Chancellor live on?”. What does the Chancellor have to say?
Mr Osborne
I would say to his constituents, and anyone else, that times have been incredibly difficult for this country because we had the deepest recession in this country’s modern history. We had a 7% fall in GDP, which makes the country poorer. I argue that the best way to help that family, and many other families, is by keeping mortgage rates low and ensuring that more and better jobs are created in the economy, and that people can work longer hours if they want to. All those things are happening because we are standing behind our businesses and have control of our public finances. We are now investing in the next generation to ensure that that family can have a brighter future.
Jacob Rees-Mogg (North East Somerset) (Con)
Somerset celebrates the fact that the iron Chancellor has shown his true mettle. Following his comments about the dynamic effect on corporation tax, will he consider whether that may have an effect on other taxes, and will he look to the dynamic effects of tax cuts in future statements?
Mr Osborne
My hon. Friend is assiduous in his observation of these matters, and he will have spotted the first step in a quiet revolution. The Treasury has produced a dynamic model for tax reduction—in this case, for corporation tax. At the moment that sits alongside the static, more orthodox, model that the Treasury has always used. That dynamic model—which we have made available and will, of course, be subject to scrutiny—shows that reductions in corporation tax not only increase investment in this country, but as a result cost less than the scorecard method we normally suggest. We certainly intend to roll out that approach, as they say, to other taxes.
Mr Andrew Love (Edmonton) (Lab/Co-op)
Does the Chancellor accept that the recovery is too dependent on consumer expenditure? With net exports not increasing at all, the EU stagnating in coming years—as the Chancellor indicated—and business investment on the floor, what positive steps is he taking to secure a more balanced recovery?
Mr Osborne
We want a balanced recovery, as the hon. Gentleman says, and if we look at recent GDP data, the good news is that we have growth in manufacturing, construction and services. The forecast is for business investment and exports to increase, but I agree that those remain challenges, particularly because of what has happened to the source of 50% of our exports—the European continent. That is why the Prime Minister’s trade mission and the expansion I announced today of the export finance guarantee scheme will help Britain’s companies go out to emerging markets and ensure that we are connected to some of the fastest-growing parts of the world.
George Freeman (Mid Norfolk) (Con)
I welcome the statement and the news that despite the OBR’s calculation that the recession bequeathed to us by the previous Government represented a shocking 7.2% destruction of wealth—the sharpest fall in income since the war—there has in fact been no double dip, and the UK is now the fastest-growing economy in the west. I particularly welcome the creation of three jobs for every one lost in the public sector, the workfare proposals to tackle those not in education, employment or training, and the relief for pensioners and motorists, which will be warmly welcomed in Norfolk. Is not the truth that the tough decisions taken by the Government, and the hard work of the British people in paying off the debts they were left, mean that we are building a sustainable recovery, and that the Opposition’s economic policy has been proven to be—balls?
Mr Osborne
I agree with my hon. Friend which, of course, is not very difficult because that is now the general conclusion. Indeed, I have just heard that a source in the office of the Leader of the Opposition says:
“Labour has a very strong economic argument to make. Unfortunately it was not made well in the Chamber today.”
I agree with my hon. Friend about growth in Norfolk and across East Anglia, and there is real commitment to science, which I know is a particular passion of his. As detailed in the document, we intend to set out next year a long-term science strategy so that we can get right the investments in technologies and discoveries that will transform our world.
Barry Gardiner (Brent North) (Lab)
While the Chancellor was speaking, 30-year-high storm surges have been battering the coast of Britain. If he looks at the national infrastructure plan, he will find that the rate of coastal realignment is happening, in the view of the Energy and Climate Change Committee, at only one fifth of the pace necessary to avoid wholesale flooding that will cost billions of pounds to the economy. Will he look at that issue again, and at the funding for flood defences that this year has been reduced from £633 million to £527 million?
Mr Osborne
I will certainly look at the report that hon. Gentleman mentions. As I said in my speech, it is right for all of us to remember that people are enduring some very adverse weather conditions on the east coast of Britain and our emergency services are working hard to protect them.
On the broader point, we are investing in flood defences. We have recently increased the investment going into flood defences, and that is all part of the long-term infrastructure plan that this country needs.
Sir Tony Baldry (Banbury) (Con)
Is it not correct that there were those who predicted that my right hon. Friend’s policies would lead to a double-dip recession and increases in unemployment, and that it would be impossible to reduce public spending at the same time as restoring the economy to growth? In those predictions, they were wrong, wrong, wrong. The national nightmare would be if the people who made those predictions were allowed anywhere near the door of No. 11 Downing street.
Mr Osborne
My hon. Friend is right. It is not just that they got the predictions wrong: it is what that says about their governing philosophy—that they could go on spending and borrowing and running up the deficit with no consequences whatever. Unfortunately they were let near the door of No. 11 in the last decade and that is one of the reasons we are all clearing up this mess at the moment.
Alison McGovern (Wirral South) (Lab)
The Chancellor told us in 2010 that he would close the deficit gap by 2015 and he has told us today that it will be 2018-19. What happened?
Mr Osborne
As we have now discovered, the recession was even deeper than we knew at the time, with a 7% fall in national income. The financial crisis had an even bigger effect on our economy and its recovery and, at the same time and as is obvious to everyone, our nearest neighbours in the eurozone almost had their currency fall apart and remain in recession. During this period, we were also told repeatedly that if we stuck with our plan and went on trying to reduce the deficit, there would be no economic recovery. We have still had no explanation from a Labour Member as to why we now have a recovery.
Nicola Blackwood (Oxford West and Abingdon) (Con)
As an Oxford MP, I welcome the Chancellor’s personal commitment to science and his ongoing investment in Oxfordshire science. We already lead the world in key sectors, but does he agree that, as well as funding certainty, future STEM competitiveness will rely on our redoubling our efforts to raise school standards and increase our pool of highly skilled researchers and technicians—women as well as men?
Mr Osborne
I agree with my hon. Friend. She represents one of the greatest universities in the world. I met yesterday a professor of physics from Oxford university, Professor Walmsley, and he was very welcoming of the additional investment we are putting into quantum technology—£270 million in the coming years. It is cutting-edge technology and Oxford is a leader in it. I agree that we need to make sure that kids come out of our schools with the science and maths to take the undergraduate places that turn into the graduate research fellowships and the like. The school reforms being pursued by the Government are the best guarantee of that happening.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Is the Chancellor aware that the people I represent will have noticed that in his litany of constituency references, he did not include Coatbridge, Chryston and Bellshill? Could that be because he is ashamed to admit that though he says the economy is doing well, he did not take the opportunity to get rid of the hated bedroom tax, or could it be because he did not lay a finger on the excessive profits of energy companies while people are dying of hypothermia?
Mr Osborne
The people of the right hon. Gentleman’s constituency and across the country have of course been hit hard by the collapse in the economy in 2008-09 and we have had to take difficult decisions to recover our economy—[Interruption.] I am told by a colleague that unemployment in the right hon. Gentleman’s constituency has fallen by 15% in the last 12 months, and that points to the central argument we are making today—if we create jobs and give people opportunities to work, we can improve their standard of living. The only way we can create jobs is if we have economic stability and we control public budgets, including the welfare budget. That requires difficult decisions. If we duck all the difficult decisions, as the last Government did, it is an absolute disaster for the people he represents.
Sarah Newton (Truro and Falmouth) (Con)
I congratulate my right hon. Friend on holding his nerve and taking the tough but necessary decisions that are really helping Cornwall. I especially welcome support today for hard-working people on very low incomes who need decent homes. Will he explain a bit more about the plans for building more social housing?
Mr Osborne
We now have the largest social housing building programme under way for a generation, and of course there were 400,000 fewer social homes at the end of the Labour Government than at the beginning. I said explicitly in my speech that I am for aspiration, whether it is for people who can afford to buy their own home or for people who cannot, and we should be providing them with decent housing. We are setting aside £300 million for the housing revenue account, and councils, including my hon. Friend’s, will be able to bid for that money if they put forward value-for-money plans to build additional homes and make sure that hard-working constituents are decently housed.
Sammy Wilson (East Antrim) (DUP)
I welcome the fact that as a result of the Barnett formula Northern Ireland will be better off after the autumn statement. I also welcome the fact that the Chancellor has adopted a policy that has been very successful in Northern Ireland in bringing small businesses into empty premises through rate relief. As growth is so dependent at present on consumption expenditure, much of which has been financed by the withdrawal of savings, what will happen under the welfare cap if spending exceeds what he expects? Will those who are on benefit through no fault of their own have to bear the burden through decreased benefit payments?
Mr Osborne
I am glad that the hon. Gentleman notes that the Northern Ireland Executive will get additional resources because of the way in which the Barnett formula is applied. We are clear that we want to be fair to Northern Ireland. In designing our reoccupation relief we noted how some of Northern Ireland’s schemes to help people reoccupy empty properties have been successful. There is no doubt that empty shops on the high street—partly driven by technological change—are not a good advert for a community.
If the welfare cap is breached it is up to the Chancellor of the day to come to the House and say either, “I am prepared to breach the welfare cap: let’s have a vote on that”, or, “I am not prepared to breach the welfare cap and here are the measures I am prepared to take”. Those measures would also have to be voted on. In other words, the Chancellor will be accountable to the House for welfare spending, instead of the situation we have had for the past decade, in which welfare spending doubled with no statement ever being made from this Dispatch Box.
Nigel Adams (Selby and Ainsty) (Con)
On behalf of retired coal miners across the country, I thank my right hon. Friend for his recent announcement restoring the concessionary fuel allowance—it was the right and proper thing for him to do. I also commend him for his announcement on business rates, which will be welcomed by small businesses in Selby and Tadcaster and across my constituency. Will he join me in thanking those entrepreneurs and business people in my constituency whose efforts have resulted in a reduction in unemployment of more than 30% since the last election?
Mr Osborne
My hon. Friend led an effective and powerful campaign on behalf of his constituents and other former miners who had lost their concessionary fuel allowance because of the collapse of the company they had worked for. I stepped in to help because he and others, including my hon. Friends the Members for Sherwood (Mr Spencer), for Nuneaton (Mr Jones) and for North Warwickshire (Dan Byles), came to talk to me about the matter. It was a simple case of doing the right thing and, thanks to my hon. Friend, we have done it.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Will the Chancellor confirm press reports this morning that his free school meal announcement has resulted in an £80 million raid on the school building budget of the Department for Education?
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
I congratulate my right hon. Friend and thank him for his announcement reminding local authorities that they no longer need to increase council tax. Will he join me in urging my constituents to sign my petition to stop the Labour-controlled city council in Plymouth putting up council tax?
Mr Osborne
Plymouth council absolutely should freeze council tax. I commend my hon. Friend and his constituents for their campaign to make that happen. We have not included local government in the additional savings we have asked Whitehall for today, precisely so that councils can deliver a council tax freeze. If his council does not deliver a council tax freeze, he can ask Labour why it is putting up the cost of living for his constituents.
Teresa Pearce (Erith and Thamesmead) (Lab)
There is a housing crisis in London at the moment. The autumn statement says that house prices grew by 9.4% in the first nine months of this year—and that is before Help to Buy comes in, which nearly all forecasters believe will increase prices further. Does the Chancellor believe that spiralling house prices are good for the economy?
Mr Osborne
I made a point in my statement of saying that we want stable house prices and that we need more homes to be built. I know that that is what the Mayor of London also believes. We have taken steps to give the Bank of England powers to deal with asset bubbles as they develop. That, of course, did not happen five or six years ago, much to our cost. Specifically on the cost of London housing, the early Help to Buy statistics suggest that most of the families who have taken it up are from outside London and the south-east, and are buying properties worth on average £160,000. Help to Buy is therefore helping exactly those we want it to help: aspirational families who can afford a mortgage but cannot currently afford the very large deposit that the problems in our banking system have demanded of them.
David Rutley (Macclesfield) (Con)
I congratulate the Chancellor on sticking to the vital task of reducing the deficit. Does my right hon. Friend agree that calls to increase spending and further to drive up debt come from the same school of economic thought as no return to boom and bust, which was brought to us by the Labour party?
Mr Osborne
I agree. The school of no more boom and bust gave us the biggest boom and the biggest bust in our history—it was spectacularly unsuccessful. One would think that those who had been through that would have learned their lesson and be keen to see borrowing controlled, public finances in good order and the deficit come down, but they are not. That speaks to a broader truth, which is that in bad times the Opposition say, “Borrow more because the country needs it” and in good times they say, “Borrow more because the country cannot afford it.” What they never say is, “Let’s get a grip on the public finances.”
Michael Connarty (Linlithgow and East Falkirk) (Lab)
I do not know if the Chancellor does irony, but does he realise that the fundamental structure of his economic plan is similar to the strategy used by RBS, which was revealed in his own Tomlinson report? RBS looked after its big clients and attacked the financial circumstances of its small clients, driving them down into debt, poverty and eventually into bankruptcy, and then selling off their assets. That is, of course, what he is doing at the moment. The small folk in a democracy can vote out the Chancellor, unlike with the banks. One question I have raised in writing with the right hon. Gentleman relates to companies moving their assets of their pension funds to offshore funds—for example, in the Channel Islands—and declaring bankruptcy. The workers then have to go to the Pension Protection Fund. When will the Chancellor do something about that? I was told in a letter from his Department that that is legal, but those companies are clearly cheating the taxpayer and cheating their workers.
Mr Osborne
I am happy to look further at the hon. Gentleman’s point. The rules on pension protection and the pensions regulator are designed to prevent people from deliberately crashing their pension scheme to avoid their liabilities, and for those liabilities to fall on to the state or other companies. I am happy to look at any specific case he has. On his broader point on the economy, unemployment has come down by 11% in his constituency. The measures I announced today—abolishing the jobs tax for young people and the £1,000 discount for shops, cafés and pubs on the high street—are all designed to help small businesses, which are the engine of any recovery.
Charlie Elphicke (Dover) (Con)
May I welcome the investment in infrastructure, particularly flood defences? In east Kent in the next 24 hours, we face a difficult time and the investment in the flood defences in the town of Deal, which I represent, will help to keep the town more secure than it otherwise would have been.
Mr Osborne
I, with my hon. Friend, wish the people of Dover and Deal the best as they endure this difficult weather. I join him in praising the emergency services who will help people in that area through this difficult time. The flood defences in Deal will mean that such areas are better protected from adverse weather. The only way to afford such schemes is by controlling public spending and putting it into priority areas.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
With the Governor of the central bank saying he can foresee the assets of the banking sector swelling to nine times the size of the UK economy and with recent economic growth being driven by household consumption and house price inflation, has the Treasury not been re-infected by the British disease? What happened to the Chancellor’s march of the makers?
Mr Osborne
Manufacturing grew and was one of the strongest sectors in the most recent GDP numbers, but the hon. Gentleman is right to say we have got to make sure—this was implied in his question—that the financial system does not bring down the British economy again. All the banking legislation we have spent many days in this Parliament debating—ring-fencing the banks and putting the Bank of England in charge—has been designed to make sure we spot problems in advance this time. Britain wants competitive financial services. I suspect that in the many constituencies represented in the Chamber financial services is one of the largest private sector employers, so this is not just about the City of London. We have to ensure that this is done in a way that is safe for our economy and supports it, rather than bringing it down.
Richard Graham (Gloucester) (Con)
The Chancellor was absolutely right to stick to his strategy of backing business to deliver growth and jobs. My constituents will especially welcome the cut in energy prices, the freeze on fuel duty, the funds to help revitalise our high streets and even more support to get our young into jobs. My right hon. Friend knows how important housing debt write-off is to housing regeneration in Gloucester. Can he confirm whether the Treasury have been able, in principle, to approve the circa £50 million debt write-off case made by Gloucester city council, which would be the catalyst for our stock transfer and the first new social housing in our city for more than 25 years?
Mr Osborne
The short answer I can give my hon. Friend is yes. He brought to the Treasury an innovative scheme, on behalf of the people of Gloucester, to deal with the debts in the housing sector and enable the building of new homes. In our document, we reference the scheme specifically and give it our support in principle.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
In the past, the Chancellor often condemned economic growth based on an expansion of consumer spending and consumer debt, as opposed to investment and exports. We now have economic growth based on consumer spending, while exports and investment lag. I think there was in part an acknowledgement of that in the extra money for UK export finance. Unfortunately, he did not clarify whether the main obstacle to small businesses exporting our way out of recession is the drop in the minimum threshold for a deal from £5 million to a lower level, which the CBI says would bring in an extra £20 billion if implemented. Will he clarify whether he is doing that?
Mr Osborne
I will look at the hon. Gentleman’s specific point. We are expanding the scheme to help small businesses export, which is one of our central objectives. If we can go further, I will happily look at that and take it forward in the Budget, because that is our shared objective. We want more exports, but the issue is that our main export markets have been in a deep recession for the past year. It is not surprising, unfortunately, that exports have been hit. That has led to companies exploring opportunities much further afield. One of the best things to do for small exporters is to ensure that, when they turn up in places such as Shanghai, there is a helping hand, with facilities and an office available for them to start their search for partners. That kind of thing is precisely what we are funding today.
Dr Julian Huppert (Cambridge) (LD)
I warmly congratulate the Chancellor on the Government’s commitment to delivering the Greater Cambridge gain share, allowing us to unlock £1 billion of investment, providing much-needed sustainable transport and affordable housing and enabling Cambridge to continue to contribute to the British economy. Will he join me in congratulating Cambridge city council, the county council, South Cambridgeshire district council, Cambridge university and the local enterprise partnership on their work in delivering this?
Mr Osborne
My hon. Friend and the Leader of the House, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley), raised with me the Cambridge city deal, which is a really good plan. I can be absolutely candid with him: we worked hard to announce it today, and although we did not quite get it over the line we hope to do so in the next few weeks. It is a classic example of a good local authority and local MPs working with the national Government to secure a long-term plan that will help create jobs and housing in an incredibly important city.
Derek Twigg (Halton) (Lab)
In view of this week’s announcements on infrastructure, would the Chancellor, a fellow Cheshire MP, agree to meet a cross-party group of MPs from Cheshire and Merseyside so that we can air our case to change the plans to toll both the current Mersey crossing and the future road crossing? Our case is as strong as that behind his decision to drop the tolls for the A14.
Mr Osborne
I would be happy to meet the hon. Gentleman and other MPs local to my constituency. I know how important the second Mersey crossing is—he and I have joined forces over many years to try to deliver it—but I would draw a distinction: the A14 was an existing road that wanted upgrading, but of course it is controversial to put tolls on an existing road, whereas the bridge is a new bridge, and there is a long-established principle, from the Humber to the Severn estuary, that new bridges have tolls. Local people will have strong views on the level of the tolls, however, and I am happy to discuss that with my honourable neighbour.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I thank the Chancellor for his statement today. It shows how this Government are full of energy in driving forward British business and finding solutions. I want to give particular thanks for the A14 situation. Is it not important that we continue to dismiss the scaremongering and show that Britain is open for business?
Mr Osborne
Britain is very much open for business. We are now the destination for a huge amount of investment from around the world, and we have some very important ports, one of which in particular depends on the A14. That is an important strategic link. We have listened to representations from local people concerned about the prospect of tolling an existing road, albeit an improved one, and we will ensure that the road is improved, not just for local people, but for the whole country, but without imposing a road toll.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Evidence from Citizens Advice showed that last year citizens advice bureaux received 92,000 inquiries about fuel debt and 81,000 about water debt and that the four months to June this year saw a 78% rise in the number of people inquiring about food banks. Does the Chancellor agree that, with families on average £1,600 a year worse off, this is an unbalanced recovery, and does he regret that the UK has suffered the second-biggest fall in wages of any G20 country since this Government came to office?
Mr Osborne
We had one of the deepest recessions and the highest budget deficit of any country in the G20. We have been recovering from that situation, which this Government inherited, increasing the number of jobs in the hon. Lady’s constituency and ensuring opportunities for people to go to university or find apprenticeships and for those without skills to get good training. These are the things we are doing to clear up the mess that her party left behind.
David Morris (Morecambe and Lunesdale) (Con)
I congratulate the Chancellor on pulling us out of the mire the last Government left us in. To help bolster growth and provide the building materials needed for what is going on thanks to his efforts, a brickworks that closed down in 2010 in my constituency on the borders will reopen at the end of this month. I invite the Chancellor to come to the reopening. I also congratulate him on helping to get youth unemployment down by 15% in the last three months in Morecambe and on his comments about business rates for shops. The Visitor newspaper has been running regular articles on getting our shops restarted in Morecambe, and this will help immeasurably. May I also—
Mr Speaker
Order. The hon. Gentleman really has overdone it. I exercised a degree of leniency. I wonder whether he was seeking an Adjournment and then realised he had already had it.
Mr Osborne
Mr Speaker, there are so many good things happening in Morecambe that I am not surprised my hon. Friend wants to bring them to the attention of the House. Under this Government, not only is unemployment down and not only will many businesses be helped by the measures we have announced today on business rates, but, as he said, the construction materials industry is doing well, as construction continues apace. If I come and visit the beautiful Morecambe bay area with him, I will ensure we pop into the brickworks.
Mr Ronnie Campbell (Blyth Valley) (Lab)
Is it not the hard-working people of this country who have not had a wage rise for three years, the poor, the sick and the disabled who have had their benefits cut who are paying for this, while the Chancellor has been looking after his friends in the City—the spivs, the bankers with their big bonuses and those who are fiddling their taxes?
Mr Osborne
Presumably, those bankers the hon. Gentleman talks about are people such as Tony Blair and Peter Mandelson.
Mr Osborne
“Them particularly”, said the hon. Gentleman, in case the Hansard reporters did not hear.
We have discussed what we can do for Blyth Valley and are setting up the enterprise zone in the port of Blyth. The hon. Gentleman could at least have acknowledged that unemployment has fallen by 21% in the last 12 months and youth unemployment by 22%.
Neil Carmichael (Stroud) (Con)
In contrast to Labour’s nightmare economics, the Chancellor’s statement was both realistic and encouraging, especially for the real economy. I welcome his focus on STEM—science, technology, engineering and mathematics—subjects and the need to upskill our work force and reinforce our interest in engineering and manufacturing.
Mr Osborne
One of today’s most significant announcements, which will not necessarily be on the front pages tomorrow, was the increase in student numbers and the lifting of the cap on aspiration. That is a major structural improvement in the British economy. Britain has fewer graduates as a proportion of population than many other comparable countries, and it is a basic tenet of economic success that we should do more in this area. We are providing additional money for STEM subjects so that they are taught properly as well.
Yvonne Fovargue (Makerfield) (Lab)
Last year, The Brick, a Wigan borough charity, gave out 920 food parcels. This year to date, it has already given out 3,750, many of them to working families. Does the Chancellor agree with Citizens Advice that for many low-income families in work, the gain from the change in the personal allowance is swamped by the Government’s other changes to tax and benefits, causing them to turn to food banks for everyday necessities?
Mr Osborne
I praise the work that citizens advice bureaux do across the country, and I know that the hon. Lady was previously connected with them, but cutting income tax for the low-paid and taking them out of income tax is a real help, as is the freeze in fuel duty, rail fares and the like. As I say, in the end, the biggest thing we can do for this country is deal with our debts and get people into work. In her constituency, unemployment is down 26% and youth unemployment is down 40%. [Interruption.] Labour MPs shake their heads. I thought it used to be the party of full employment, but now it cannot welcome falls in unemployment.
Mark Reckless (Rochester and Strood) (Con)
Long before the last election, my right hon. Friend raised the unfairness of overseas residents buying the most expensive London properties without paying capital gains tax. Is he surprised that it has been left to him to close those loopholes and ensure that overseas residents pay both capital gains tax and proper stamp duty?
Mr Osborne
I know that my hon. Friend has campaigned on this issue. When I announced this measure in the autumn statement, one member of the Opposition Front-Bench team said, “Why aren’t you doing it sooner?”. Labour had 13 years to make this tax change, and the man who actually designed the tax policies and wrote the statements is the shadow Chancellor. I find it extraordinary that, whether it is dealing with this unfairness in capital gains tax or the general unfairness where they boasted that people in the City were paying lower tax rates than people who cleaned for them, we have stepped in to deal with the unfairness.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I find the Chancellor’s hubris absolutely breathtaking. Given that the economy would have to grow 1.5% every quarter until 2015 just to reach the levels that applied at the end of 2010, his hubris is staggering. He did not answer the question put by my hon. Friend the Member for Brent North (Barry Gardiner), so given today’s terrible weather, does he regret cutting the flood defence budget in 2010?
Mr Osborne
First, we are putting in additional money for the flood defence programme. Indeed, additional money in the autumn statement has gone into coastal management, too. The hon. Lady makes a point about the economy, but we have not, of course, heard a serious economic argument advanced by the Labour party so far. Let me point out that in the hon. Lady’s constituency, unemployment is down 30% and youth unemployment is down 48%, which are very significant falls for the people she represents.
Mary Macleod (Brentford and Isleworth) (Con)
With small business Saturday coming up this weekend, I join the director general of the British Retail Consortium, who said that the business rate cap
“will be welcomed enthusiastically by retailers across this country.”
While I will still keep urging the Chancellor to consider full-scale reform of business rates, does he agree that today’s announcement will save thousands of jobs around this country and boost the local economy in communities such as those in Brentford, Isleworth and Chiswick?
Mr Osborne
I know my hon. Friend has been assiduous in campaigning on behalf of her constituents for us to help with business rates for people running shops on the high street. I believe that she has raised the issue at the last two Prime Minister’s Questions, showing what a champion she is of her local constituency. She can take part of the credit for the measures we have taken today to help the high street.
Heidi Alexander (Lewisham East) (Lab)
We have heard a great deal from Government Members about the economy today, but some might say that it is a huge amount of bluster and bravado that will not square with the reality of life for millions of people up and down the country. Will the Chancellor simply confirm that the economy is now 2.5% smaller than it was before the crisis?
Mr Osborne
The economy is smaller because it fell 7%. That is why. It fell in the years 2008 and 2009 when the Labour party was in charge.
Simon Hughes (Bermondsey and Old Southwark) (LD)
I warmly welcome the Chancellor’s announcement about capital gains tax for foreign owners of property, particularly in London, and the increase in the borrowing limits for local authorities. When he does his review, promised in the autumn statement, of local councils’ ability to deliver more affordable housing, will he look at some very good examples of housing associations that, by using private sector investment and private sales, have hugely increased their capacity to build social housing—not just at affordable rents, but at social and target rents as well?
Mr Osborne
My right hon. Friend is absolutely right. Some excellent housing associations have used private money and sold off some of the most expensive social homes in order to provide more resource for building more homes, which is precisely what we want to encourage. On the additional money in the housing revenue grant, which I know has been of particular interest to his party, we have said that that money should be available on a competitive basis to those councils that are going to work with housing associations, for example, to deliver the sort of innovative schemes that he champions.
Sheila Gilmore (Edinburgh East) (Lab)
Some of the predictions in the OBR report have not been mentioned today. One is an upgraded prediction on how much is going to be spent on certain benefits, such as employment support allowance, which by 2017-18 is going to be £2.1 billion higher than in the last prediction, and housing benefit, which is going up by £1.8 billion—again, higher than the previous estimate. Quite apart from the misery caused by things like the bedroom tax, these welfare reforms are simply not working. When is the Chancellor going to ensure that his Government get a grip on that problem, rather than let those bills spiral? Given these predicted rises in spending, it is going to be very difficult to put a cap on welfare.
Mr Osborne
Although the hon. Lady put her question in quite a partisan way, she hits on a very good point. There are sometimes big increases in welfare spending that are not subject to the kind of control that we in this House exercise on much smaller sums in Government Departments. Precisely because of the forecast increases in employment support allowance and housing benefit, it is right for us to bring those issues to the House and discuss them. It is a bit wrong-headed to complain on the one hand that housing benefit is going up too much while on the other hand campaigning to increase housing benefit. No doubt we will be able to have a fuller debate when we introduce the welfare cap.
Angie Bray (Ealing Central and Acton) (Con)
I thank the Chancellor for his statement and for listening to businesses about their concerns over business rates. Businesses right across Ealing Central and Acton will welcome the cap on business rate rises, and many others will welcome the £1,000 reduction for those with houses of rateable values up to £50,000. It is a Christmas present come early for many, so I thank the Chancellor.
Mr Osborne
My hon. Friend is another who has been an assiduous campaigner on behalf of the shops, pubs and restaurants, and indeed the charity shops, in her constituency. These measures really will help on the high streets of Ealing and Acton, and I am glad that they have been so warmly welcomed. The people who run these businesses are the epitome of hard-working and aspirational people. This Government and our party are going to stand by them.
Mrs Emma Lewell-Buck (South Shields) (Lab)
When this Government gutted the public sector in the north-east, the Chancellor insisted that the private sector would make up the shortfall. A recent report by KPMG, however, shows that over a quarter of private sector jobs pay less than the living wage, compared with less than 10% in the public sector. Is it any surprise to the Chancellor that in-work poverty has risen in my constituency?
Mr Osborne
First, I would have hoped that the hon. Lady would welcome the 15% fall in unemployment in her constituency. We want to make sure that people get better jobs, and the way to achieve that is to ensure that our businesses can expand and our country and economy can grow, thus also dealing with the scourge of youth unemployment. One thing noted by the hon. Lady’s predecessor as MP for South Shields, before he left to look after International Rescue in New York, was that youth unemployment was rising from 2004. Since then, however, it has gone down by 23% in her constituency. If we invest in apprenticeships, in higher education and people with low skills, we will be able to help her constituents and the next generation of her constituents.
Paul Uppal (Wolverhampton South West) (Con)
When I first came to this place, one issue I raised with my right hon. Friend was the importance of urging the Government always to take a long-term rather than a short-term view. In that spirit, does the Chancellor agree that the real and true economic measure of any Government—and of any future Government—is the economic legacy they bequeath to their children and grandchildren?
Mr Osborne
My hon. Friend puts it very well. We have great obligations to the current generation, but we also have obligations to the next generations. Saddling them with debts or with an uncompetitive economy or one where jobs are not being created is a complete dereliction of our duty to the next generation. Thankfully, with the help, support and advice of my hon. Friend, we are now turning that situation round, dealing with the debts and making sure our businesses grow. Because of my hon. Friend’s forceful campaign, we are also helping many shops in his Wolverhampton constituency.
Roberta Blackman-Woods (City of Durham) (Lab)
Is not the point about the community infrastructure levy that it is there to pay for the infrastructure that communities need? Will the Chancellor tell us how much of it he intends to give away to individual households, and how he proposes to make up the resulting shortfall in funding for local infrastructure?
Mr Osborne
I do not have the specific answer with me, so I will write to the hon. Lady.
John Stevenson (Carlisle) (Con)
I congratulate the Chancellor on a statement that will provide support for business and employment. If my city of Carlisle is to grow and prosper, businesses need to succeed, and if the young people of Carlisle are to share in that success, they need employment. Does the Chancellor agree that the abolition of the jobs tax for under-21s gives businesses in Carlisle an incentive to employ the young?
Mr Osborne
I specifically mentioned in my statement the work that my hon. Friend has done on behalf of his constituents in Carlisle to support important local large employers such as Pirelli. Thanks to his campaign, we are now able to abolish the jobs tax for people under the age of 21, which will help young people in Carlisle to obtain jobs, but we are also helping those who want to go to college. I congratulate my hon. Friend on standing up for his constituents.
Nia Griffith (Llanelli) (Lab)
The Chancellor claims that the marriage tax allowance will help some of the poorest members of society, but poorer families who must rely on universal credit will be perversely affected by the rules on the earnings of a second person in the household. Will he look again at the way in which the clawback tapers will work, so that that does not become a disincentive to work?
Mr Osborne
The whole purpose of universal credit is to remove the disincentives to work that exist in our current welfare system, driven both by the complexity of all the different benefits and by the couple penalty for whose removal my right hon. Friend the Secretary of State for Work and Pensions has campaigned for many years. He is removing it—or, at any rate, heading in the direction of removing it—through universal credit, but there may be more than we can do, and I shall be happy to look into that.
James Duddridge (Rochford and Southend East) (Con)
Sadly, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) could not be with us today to hear about economic growth, but he did leave us the gift that is the shadow Chancellor. Given that everyone is saying that the shadow Chancellor had a bit of a nightmare today, is this not an opportunity to give him a break and to leave him in place rather than his being sacked, so that he continues to serve as a reminder of the economic failure in which the last Labour Government landed us?
Mr Osborne
The shadow Chancellor is one of the many people whom I want to keep in his job.
Mr William Bain (Glasgow North East) (Lab)
Hard-working people in my constituency are an average of £1,600 a year worse off because prices have risen faster than wages in all but one of the months in which the Chancellor has been in office. Can he confirm that this afternoon the Office for Budget Responsibility downgraded its March forecasts for average earnings next year, the year after, and in every year of its forecasting period? Did not the autumn statement simply fail to get to grips with Britain’s cost-of-living crisis?
Robert Halfon (Harlow) (Con)
I am glad that my right hon. Friend the Chancellor will not have to stuff his Christmas turkey this year, given that he so comprehensively stuffed the economic policy of the Opposition.
I thank my right hon. Friend for the excellent fuel duty freeze. Does it not show—along with the right to buy and the lower tax for lower earners—that we are the party of aspirational working people, and the true exponents of white van Conservatism?
Mr Osborne
I agree with my hon. Friend. For the people of Harlow, thanks to his assiduous campaigning, we have not only frozen fuel duty to make it 20p per litre less than it would have been had there been a Labour Member of Parliament for Harlow and a Labour Government, but helped people on low incomes by lifting them out of income tax, ensured that businesses can expand, and cut business rates for those on the high street. We have done all those things to help people who want to work hard and get on, who are exactly the people whom my hon. Friend represents.
Mr Steve Reed (Croydon North) (Lab)
According to figures from the Local Government Association, Croydon is experiencing the biggest growth in demand for school places anywhere in the country. However, Croydon council predicts that because of inadequate Government investment, there will be a shortfall of nearly 2,500 permanent places by 2016. Why will the Chancellor not act to resolve Croydon’s school places crisis, rather than showing the complacency that we witnessed this morning?
Mr Osborne
When we came to office, there was no provision to deal with the large increase in the number of school places that was clearly going to happen because there were more children. Since then, my right hon. Friend the Education Secretary has devoted billions of pounds to dealing with the increase and ensuring that school places are available in Croydon and elsewhere. That is another example of our not only planning for the long term, but clearing up the mess that was bequeathed to us.
Mark Pawsey (Rugby) (Con)
It is clear from today’s statement that although the economy is recovering, there is still much to be done, but it is also clear that this Chancellor will not shy away from the tough decisions that will allow our progress to continue. Does he agree that it is entirely appropriate that the key beneficiaries of the measures that he has announced will be our young people, both through employment incentives and training opportunities from which they can benefit now, and, in particular, through his removal of much of the burden that was left for future generations by the Labour party?
Mr Osborne
My hon. Friend has campaigned on behalf of his Rugby constituents for more opportunities for young people, and we are providing those opportunities through the abolition of the jobs tax and the steps that we have taken to enable his young constituents to obtain apprenticeships and go to university. Above all, however, we are helping the businesses in his constituency. He in particular campaigned for me to do something about business rates, so he can share the credit: he is part of the Government who have delivered today.
Jonathan Ashworth (Leicester South) (Lab)
My constituent Mrs Patricia Zachariah complained to me yesterday that her gas bill was set by to rise by 86%. Does the Chancellor think that that is acceptable? If not, why did he not take strong action today to deal with the energy companies that are causing so much difficulty to our hard-pressed constituents?
Mr Osborne
First, we have taken action to take £50 off people’s energy bills. Secondly, we are looking at competition in the market that was left to us by Labour where there were only six energy companies, in order to ensure that there are new companies for people to choose. We are also insisting that people are put on the lowest tariffs, and giving them a real opportunity to switch so that they can obtain a better deal.
Christopher Pincher (Tamworth) (Con)
I congratulate my right hon. Friend on doing the right thing and clamping down on tax avoidance and evasion—that will add a further £6.8 billion to Treasury revenues over the next five years—but can he estimate the extent of the revenues that were forgone because of avoidance and evasion during Labour’s supposed boom years? Is this not another example of our having to clean up after Labour’s failure?
Mr Osborne
We are increasing yield by £40 billion over the current Parliament. It is not just a question of the specific measures that we take to deal with tax avoidance; it is also a question of the resources that we provide for the fraud and tax avoidance units of Her Majesty’s Revenue and Customs. Let me take this opportunity to praise HMRC for the incredible job that it has done.
We must ensure that we collect the revenues that are due. Of course we want to live in a society in which people pay lower taxes, which is why we raised the personal allowance in order to cut income tax, and why I have announced measures to cut business rates for shops and the like. However, people must pay the taxes that are due because they cheat the rest of the country when they do not, and that is why we have taken action to deal with tax avoidance.
Kate Green (Stretford and Urmston) (Lab)
One in four families with children is headed by a lone parent, and those are the children who are likely to face the greatest risk of poverty. They do not choose their own family circumstances, and, of course, they will not benefit at all from the Chancellor’s married couples tax break. Will he consider again whether there might be better and fairer ways of spending that £700 million on families?
Mr Osborne
We are helping lone parents in particular by offering them more help to obtain work, or to obtain the skills and training that they need in order to find work. All the evidence—and I know that the hon. Lady has spent a great deal of her life examining it—suggests that if children of lone parents can be in working households, that will really assist their life chances. Lone parents often have the least skills and have received the least help, and we are doing a huge amount to change that.
Fiona Bruce (Congleton) (Con)
I welcome the Chancellor’s statement. Does he agree that, while by reducing corporation tax the Government have already shown that Britain is open for business, today—with the announcement of real help for high street retailers, support for SME exporters, and the extension of small business rate relief—they are showing that Britain is very much open for small business, too?
Mr Osborne
My hon. Friend and neighbour has been a champion of small businesses. I am delighted that the change that we have brought about today with a £1,000 discount for shops and high streets will mean that in Congleton, Holmes Chapel and Middlewich, the people whom she represents will get a better deal.
Toby Perkins (Chesterfield) (Lab)
The self-congratulatory tone of the Chancellor and Government Members would be slightly less nauseating if it was not for the fact that people in Chesterfield are £1,600 a year worse off despite the fact that they are in work. As he reads out the fall in unemployment numbers, he will know that a huge number of those in jobs are under-employed. It used to be that going from unemployment to work made people better off. Does it not sicken him as much as it sickens me that on his watch people come to my constituency surgeries saying, “I am now in work and I am no better off than I was when I was on the dole”?
Mr Osborne
First, we are making work pay, through the changes to the welfare system, so that people are better off in work than out of work. This is the last Labour question and perhaps this is what the Opposition stand for: they would rather have people on welfare—[Interruption.] They would rather have an economic plan that was destroying jobs and putting taxes on business up than a plan which in his constituency has delivered a 21% fall in unemployment and a 14% fall in youth unemployment. He should get up and support the plan that is delivering that for his constituents.
Rehman Chishti (Gillingham and Rainham) (Con)
I very much welcome the Chancellor’s statement, which will help hard-working families and businesses in my constituency. In particular, I welcome the announcement on train fares. It will help hard-working constituents with their cost of living, unlike the Labour party, which increased train fares by more than 30% in my constituency —that was unacceptable.
Mr Osborne
I have been with my hon. Friend to one of his train stations in Gillingham. He has campaigned assiduously on behalf of the hard-working people he represents for help on train fares, and I am delighted that his persistence and campaigning for the people he represents have paid off today.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
I thank my right hon. Friend for his statement and congratulate him on his steadfastness in not listening to the voices, inside and outside this place, that said there was an alternative route to our recovery. Does he believe it would be irresponsible to duck our responsibilities to clear up the mess of the previous Government and leave it to our children and grandchildren to do?
Mr Osborne
I absolutely agree with my hon. Friend. We need a responsible recovery. We need to help not just this generation, but the next one. Whether we are talking about providing opportunities for young people to get training and skills and get on in life, abolishing the jobs tax for the young people or, above all, dealing with the debts that the people who created those debts were not prepared to deal with, this is all about being on the side of young people.
Jeremy Lefroy (Stafford) (Con)
I very much welcome the removal of the arbitrary cap on student numbers, which I believe is a decision taken in the long-term interests of this country and which will bring significant economic growth in the future. Does my right hon. Friend agree that this is precisely the time for universities to invest in the future? They should not do what Staffordshire university is perhaps doing by thinking about moving away from Stafford; it should invest there for the future expansion of university education.
Mr Osborne
I very much support my hon. Friend and his campaign to make sure that the university thrives in Stafford, and I commend him for identifying this as such an important issue for our country. Some 60,000 people a year have the grades, have the ambition, are willing to take out the loan and want to go to university, but at the moment we say no, because of a Gosplan system that has been in place. We get rid of that today. There will be a big increase in student numbers—of course quality will be maintained—and that will be great for the people he represents.
Alun Cairns (Vale of Glamorgan) (Con)
Over the time that council tax rates have broadly been frozen in England, my constituents and people across Wales have faced council tax increases in the region of 9%. Will the Chancellor join me in supporting the “Freeze the bill” campaign—the council tax bill campaign—to ensure that my constituents get fair play? This is a tax that politicians can control.
Mr Osborne
I absolutely support my hon. Friend and his campaign to make sure that the local council helps local hard-working families by freezing council tax—that is what it should be doing. By bringing this to our attention, he reminds us that there are things we can do to help people, and we are doing them today.
James Morris (Halesowen and Rowley Regis) (Con)
I warmly welcome the Chancellor’s statement, particularly his focus on infrastructure and his infrastructure plan, and the progress that has been made on the extension of Birmingham airport. Does he agree that as we sustain this economic recovery, investment in infrastructure in places such as the west midlands is crucial to rebalancing the economy and creating jobs in constituencies such as mine in the black country?
Mr Osborne
I agree with my hon. Friend. The good news is that businesses are expanding, and jobs are being created in Halesowen and across the black country. We have got to make sure we support that, with enterprise zones, with transport links, with links to the rest of the country and, indeed, with the European continent, through High Speed 2, and by investing in important things such as his local hospital. In all these areas we are backing his constituents, and because they have him as their Member of Parliament, they are heard in this place.
Oral Answers to Questions
George Osborne Excerpts(10 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Paul Maynard (Blackpool North and Cleveleys) (Con)
2. What assessment he has made of the effect of freezing fuel duty on the price of petrol.
The Chancellor of the Exchequer (Mr George Osborne)
Thanks to this Government’s action, pump prices are 13p a litre lower than they would have been under the previous Government’s plans. Provided we can find the savings to pay for it, my intention is to freeze fuel duty for the rest of this Parliament.
Paul Maynard
I thank my right hon. Friend for that reply. The cost of fuel is of great concern to many of my constituents. If he can freeze the price of fuel for the remainder of this Parliament, how much cheaper will petrol be, come the next election?
Mr Osborne
If we are able to freeze petrol prices for the rest of this Parliament, the price will 20p a litre lower than it would have been if we had stuck with the plans that the shadow Chancellor advocated at the last general election. That would mean, as my hon. Friend the Economic Secretary was just reminding us, a saving of over £10 every time people filled up their average car. That is what this Government are doing; by fixing the public finances, we are able to help people.
John Mann (Bassetlaw) (Lab)
When the Chancellor became Chancellor, unleaded petrol was £1.19 a litre. Can he tell us how much it is today?
Mr Osborne
It depends, of course, where you buy it. The last price I saw at a petrol station was around £1.35, but it would have been 20p higher if we had stuck with the last Government’s plans—the hon. Gentleman voted for them—in the last Labour Budget. That is the truth, and it is because we are fixing the public finances and fixing the economy that we can avoid these disastrous Labour tax rises.
Mr Andrew Tyrie (Chichester) (Con)
The freeze on duty makes a crucial contribution to improving business competitiveness, and will have been welcomed by all our constituents throughout the country. Will the Chancellor undertake, as part of his work on the autumn statement, to publish the Treasury’s own estimate of the full amount by which both motoring and energy input costs have been increased by climate change-related measures?
Mr Osborne
Of course the OBR provides an assessment of the impact of Government policies on the economy, and I will consider my hon. Friend’s specific suggestion that we look into the impact of climate change policies on energy prices. We are currently examining the charges and levies that the last Government, among others, added to energy bills, and seeing what we can do to roll them back in order to provide relief for customers.
Mr Nigel Dodds (Belfast North) (DUP)
I welcome the action taken by the Government to freeze fuel duties, but UK taxes on petrol and other fuels remain among the highest in any country in the European Union. What will the Chancellor do to remedy that much unwanted achievement?
Mr Osborne
I looked at the plans that this Government inherited, and then cut petrol duty in March 2011. We have frozen the duty ever since, and I intend to continue the freeze for the rest of the current Parliament, provided that we can find the savings to pay for it. That is the crucial point: if we do not sort out the economy, if we are not fixing the public finances, if we do not have an economic plan, we cannot have a living standards plan.
Robert Halfon (Harlow) (Con)
Notwithstanding the excellent news of the fuel freeze, petrol pump prices are still under threat from hard-liners at Grangemouth. Does my right hon. Friend agree that extremism in the pursuit of hard-pressed motorists is no virtue?
Mr Osborne
My hon. Friend is absolutely right. The greatest threat to fuel supplies recently has been the threat of industrial action from the Unite union, led by the chair of the Falkirk Labour party. We now hear the former Labour Chancellor and the former Labour Foreign Secretary saying that Labour should open its inquiry and publish what it finds, and a Labour Front Bencher saying that Labour does not “publish internal documents”.
Chris Leslie (Nottingham East) (Lab/Co-op)
I shall return to the actual question of duties. Has the Chancellor found the £750 million that is needed to pay for the freeze? At the party conferences, he also promised to spend a further £700 million on school meals, a further £300 million on his Work programme, and a further £600 million on a marriage allowance. That is £2.3 billion of promises. Let us be clear about this. Is the Chancellor going to raise taxes or cut services to pay for those promises, or is he planning simply to borrow even more? Which is it?
Mr Osborne
What a question from a Labour Front- Bench team that wants to spend £27 billion more, and to borrow every penny of it. If this is the hon. Gentleman’s debut performance as shadow Chief Secretary, I am afraid that he will have to do a lot better. His job should be to control the promises that he makes. As for our side, we are paying for the commitments that we are making to the hard-working people of this country.
Mr Osborne
I will tell the right hon. Gentleman how: by sorting out the mess that he created.
Chris Leslie
Despite all that hot air, it seems that there are still £2.3 billion of unfunded promises. Would it not be far easier if all those promises were fully costed and funded and independently checked by the Office for Budget Responsibility, just to ensure that the Chancellor’s sums add up?
We have proposed that all the main political parties should be able to submit tax and spending plans to the OBR ahead of the election manifestos. Surely we can all agree that—as the Chair of the Treasury Committee has suggested—an independent audit by the OBR for all the main political parties would be good for the democratic process, so will the Chancellor now join us in a cross-party consensus on that?
Mr Osborne
As to a cross-party consensus, I remember when I was speaking from the Opposition Dispatch Box and the hon. Gentleman’s party was in government that it opposed the creation of the OBR—opposed it time and again. I believe it is important that we preserve the independence and integrity of this new body, which is working well but is entrusted with the very important task of providing the economic forecasts for whoever is in government. That should be its primary purpose and the changes to the primary law that the hon. Gentleman is proposing are not very practical.
Roger Williams (Brecon and Radnorshire) (LD)
3. What his policy is on the issuing of Government bonds in the form of sukuk; and if he will make a statement.
Nigel Adams (Selby and Ainsty) (Con)
11. What estimate he has made of the number of jobs created in the private sector in the last 12 months; and if he will make a statement. [R]
The Chancellor of the Exchequer (Mr George Osborne)
In the past year, employment in the private sector has increased by 380,000, more than offsetting the fall in public sector employment of 104,000. For every public sector job lost, more than three have been created in the private sector. That confounds the predictions of those who thought it could never happen.
Graham Evans
Unemployment in my constituency is lower than it was when I became the MP. With the further good news that Waitrose is creating 140 new jobs in Northwich later this month, will my right hon. Friend the Chancellor set out how small and medium-sized enterprises will benefit from a reduction in national insurance contributions?
Mr Osborne
I am delighted by the news of the new jobs being created by Waitrose in Northwich; as my hon. Friend well knows, I represent part of that town. That will be good for the people who live in it, and I hope that some of my constituents will find work there. The employment allowance, which we debated in this Parliament this week, is going to take £2,000 off the national insurance bill of every firm, but the biggest benefit will be felt by the smallest companies; 450,000 firms will be taken out of employer NICs altogether. That is a real boost for business, and it shows how we can help to support the recovery.
Nigel Adams
Unemployment is down by almost 30% in my constituency since the last election. Given that Selby lost almost 2,000 jobs in 2004 in the mining industry, that is very encouraging. Given UK Coal’s recent troubles and its callous decision to withdraw concessionary fuel from some ex-miners and their widows, what comfort can the Chancellor give to these pensioners, who potentially face fuel poverty this winter?
Mr Osborne
I know that this difficult situation has been brought about by the failure of UK Coal. I congratulate my hon. Friend on leading this campaign to do something about the situation, and I know that my hon. Friends the Members for Sherwood (Mr Spencer) and for Nuneaton (Mr Jones) have joined him in coming to see me about it. We are looking very carefully at the case for what we can do to help those who have had their concessionary fuel allowance taken away because of the failure of UK Coal. I am personally looking at this case and I hope to have some good news shortly.
Anas Sarwar (Glasgow Central) (Lab)
Evidence shows that it is not just having a job, but having the right job and the right level of pay that lifts someone out of poverty. So can the Chancellor tell us how many of those new jobs that have been created are full-time jobs, how many do not involve zero-hours contracts and how many actually pay the living wage?
Mr Osborne
We have 1.4 million new jobs in this economy. To take on the point about part-time work, there has also been an increase in the number of hours worked in the economy, and a lot of the recent increase in employment has come from full-time employment. Let us compare that with the disastrous situation we inherited from the Labour party, where unemployment was rocketing and youth unemployment was rocketing. Unemployment is now lower than it was at the general election, and many thousands—[Interruption.] That is the fact. Many thousands of young people have come off the claimant count for youth unemployment, too.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Can the right hon. Gentleman now confirm that the number of people working part time because they cannot get a full-time job has risen over the past year to 1.45 million and is now at a record high? With prices rising faster than wages for 39 of the past 40 months, is this not just another reason why so many working people are facing a cost-of-living crisis after three wasted years under this Chancellor?
Mr Osborne
The best thing we can do for anyone’s cost of living is make sure that they have a job. Jobs are being created under this Government, after they were destroyed by the Labour Government. I am surprised that the hon. Lady did not thank us for creating an economy in which, in her constituency, unemployment is falling, and has fallen over the past year, and the claimant count is falling, when it was rocketing in the last years of the Labour Government.
Michael Moore (Berwickshire, Roxburgh and Selkirk) (LD)
The Chancellor made some important announcements last week about the future of the Royal Bank of Scotland. Although we are absolutely right to keep pressing the bank to improve its poor lending record, will he also put on record the need for us to recognise the hugely important private sector jobs underpinned by RBS in Scotland and elsewhere, and the fact that we see a strong future for that company?
Mr Osborne
I have discussed RBS and what we can do to ensure that it supports the Scottish economy with my right hon. Friend on many occasions. The plan that the management has proposed, which we and the Governor of the Bank of England support—it is the first time since RBS collapsed in autumn 2008 that all those groups agree on a single strategy for the bank—will mean a strong, healthy future for RBS as a bank that supports the entire United Kingdom economy and, in particular, the Scottish economy. It is an important part of Scottish economic history and of Scotland’s economic future, too.
Julie Hilling (Bolton West) (Lab)
6. What recent assessment he has made of the rate of increase in (a) average earnings and (b) consumer price inflation.
Mr Ronnie Campbell (Blyth Valley) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability and prosperity of the economy. Today I can also announce another step in the fight against tax evasion. This afternoon we will sign a tax information-sharing agreement with the Cayman Islands—the first ever with an overseas territory. As a result, information on UK taxpayers held in the Cayman Islands will automatically be provided to Her Majesty’s Revenue and Customs, which will use it to collect the tax that is due.
Mr Campbell
Is it still the Chancellor’s intention to withdraw jobseeker’s allowance from all young people under the age of 25?
Mr Osborne
That is not part of the Government’s programme. We are seeking to help young people into work through the Work programme and the Youth Contract. The good news is that the youth claimant count has fallen by many tens of thousands. I would have thought that the hon. Gentleman would use this opportunity to get up and point out that unemployment has fallen in his constituency over the last year, and there are—[Interruption.] Unemployment has fallen in his constituency, and every job created is one that he should be celebrating. He should remind his constituents of the enormous damage done to the north-east economy by the previous Labour Government.
Glyn Davies (Montgomeryshire) (Con)
T3. The most important financial issue in the lives of many young families is mortgage interest. Does my right hon. Friend the Chancellor agree that the best way—indeed, the only way—to keep mortgage rates low is to stick with the Government’s economic plan of cutting the deficit?
Mr Osborne
I completely agree with my hon. Friend. Of course, one of the consequences of the higher borrowing that the Labour party is advocating would be not just higher taxes, but higher interest rates, which would be absolutely disastrous for families. That is precisely why we have to stick with the economic plan that is delivering the recovery.
Ed Balls (Morley and Outwood) (Lab/Co-op)
I welcome the Economic Secretary and the shadow Financial Secretary to their new jobs, and let us not forget the former Treasury Whip, the Treasurer of Her Majesty’s Household, the hon. Member for Chelsea and Fulham (Greg Hands), who has finally got the promotion we have been urging him to get for three years.
On this Chancellor’s watch, the UK is experiencing the slowest recovery for more than 100 years, and with prices, including energy prices, rising faster than wages, for millions of people this is no recovery at all. Yet from the Chancellor’s earlier answers to the Chair of the Treasury Committee, he seems to think he can get away with cutting energy bills by simply shifting the burden of his green levies on to the ordinary taxpayer. Let me ask the Chancellor—[Interruption.]
Mr Osborne
First, I join the right hon. Gentleman in welcoming the two hon. Ladies to their new Front-Bench positions, although I think he got the title wrong of his new shadow Exchequer Secretary. By the way, while I am at it, may I welcome the fact that the right hon. Gentleman did not move in the reshuffle, because he is exactly where we want him to be?
Perhaps one of these days the right hon. Gentleman will welcome the fact that GDP is increasing, that unemployment is coming down and that today we had the best services purchasing managers index since May 1997. I believe we should roll back some of the levies and charges that have been imposed on energy bills. I am not clear whether he agrees.
Ed Balls
After three years of flatlining, people are worse off because of this Chancellor of the Exchequer. As for ordinary people’s rising energy bills, he just does not give an EDF.
Is it not the case that, over the past year, energy prices in the euro area fell by 1.7% while in the UK they have risen by a staggering 7.7%? Simply switching green levies on to the taxpayer is giving with one hand and taking with the other. Why does this Chancellor always hit ordinary families while standing up for a powerful few?
Mr Osborne
With questions like that, the right hon. Gentleman is never going to be npower, is he?
The truth is that the right hon. Gentleman created a situation in our economy whereby living standards were hit hard, because he destroyed jobs and economic prosperity. Like a bonfire on Guy Fawkes night, every single one of his economic predictions has gone up in smoke, and he has nothing credible or serious to say about the British economy.
Kwasi Kwarteng (Spelthorne) (Con)
T4. Is it not true that the only way to improve considerably our standard of living is to focus on the economic situation of the country to boost growth and pay down debt?
Mr Osborne
I completely agree with my hon. Friend that unless we have a credibly economic plan to grow the economy, deal with public finances and support business rather than tax it, we will get the reaction the shadow Chancellor got from the CBI, whose members said that the hairs on the backs of their necks stood up as they listened to all the terrible things that a Labour Government would do to them. The truth is that we are fixing the economic mess the shadow Chancellor left behind, and that is the best way to improve people’s living standards.
Toby Perkins (Chesterfield) (Lab)
T2. The Chancellor was warned that his cuts would choke off the growth that had returned to the UK economy when he took the job in 2010. Of course we welcome the fact that Britain is finally returning to growth, but does he not realise that if he had taken the advice of my right hon. Friend the Member for Morley and Outwood (Ed Balls) earlier, we would not have had three wasted years, the average working person would not be £1,500 worse off, and the talents and potential of 1 million young people would not have been laid to waste?
Mr Osborne
I remind the hon. Gentleman that the shadow Chancellor said that our economic policies would choke off the recovery in the spring of this year—the very moment when the recovery was under way. When will a Labour MP welcome the fact that our GDP has grown by 0.8% and unemployment is coming down? When will Labour acknowledge that it is our economic plan that is delivering that?
Mr David Heath (Somerton and Frome) (LD)
T5. One of the frustrations of losing ministerial office is that one cannot see through the things that one started. Will the Chancellor look carefully at the recommendations of the independent future of farming review, which I commissioned, because it has made far-reaching suggestions for changes in taxation that will benefit rural areas?
Mr Osborne
I pay tribute to the work that my hon. Friend did in government. I will make it a personal priority to ensure that his review sees the light of day and is acted on.
Chris Ruane (Vale of Clwyd) (Lab)
T7. Why has the number of the working poor doubled since the Chancellor took office?
Mr Osborne
The key thing is that people are getting into work. That is another Labour MP who has not acknowledged the fact that unemployment has fallen in his constituency. When will Labour Members acknowledge that our economic plan is repairing the mess that they left behind?
Andrew Griffiths (Burton) (Con)
T6. On behalf of brewers everywhere, I thank the Chancellor for being the man who scrapped Labour’s hated beer duty escalator and who cut beer duty for the first time since 1959. Last month saw the biggest growth in beer sales this century, with 1 million extra pints being sold and £60 million extra going to the Exchequer. I ask him to keep supporting Britain’s pubs and brewers.
Mr Osborne
This is a case of teamwork, because my hon. Friend has led a brilliant campaign involving many Members of Parliament in support of the local pub industry in their constituencies and the brewing industry, which is so important in Burton. The work that he has done has been fantastic. It was thanks to his campaign, which drew the evidence to my attention, that we were able to take the action that he has welcomed.
Mrs Mary Glindon (North Tyneside) (Lab)
T10. Will the Chancellor make a statement on why the decision has been taken to extend HMRC’s pilot of the new customer service model in the north-east by two months until the end of December?
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.
Ms Margaret Ritchie (South Down) (SDLP)
What progress has been made on the extension to the fuel duty rebate scheme, which is due for further implementation via a submission to the European Commission?
Stuart Andrew (Pudsey) (Con)
T9. I was delighted to welcome my right hon. Friend to Hainsworth mill in my constituency recently. Will he join me in welcoming the news that production output increased by 0.5% in the last quarter, and does he agree that that shows that British business is rising to the challenge of rebalancing the economy after an unsustainable decade under the Labour party?
Mr George Osborne
I was very impressed by the work being done at Hainsworth mill, which is one of the oldest textile mills in Britain and has been going for a couple of hundred years. It is now exporting textiles from west Yorkshire to China, which shows that the British economy can achieve remarkable things if we get the investment and economic policy right. My hon. Friend is right: we must stick with the economic plan that is continuing to improve the situation in his constituency and across the country.
Meg Munn (Sheffield, Heeley) (Lab/Co-op)
Every newly created job in the private sector is very welcome, but will the Chancellor tell the House how many public sector jobs have been redesignated as private sector jobs in the past three years?
Mr Osborne
I am happy to write to the hon. Lady with that number. Let us be clear: the Labour party and the shadow Chancellor said it was a complete fantasy that private sector job creation would outstrip the loss of public sector jobs required by fiscal consolidation. That is complete nonsense and we have not yet had an apology from the shadow Chancellor.
Ian Swales (Redcar) (LD)
Companies up and down the country have been investing in manufacturing capacity for the green infrastructure of tomorrow. Those in the north-east Energi Coast consortium have already invested £400 million. Will the Chancellor confirm the Government’s commitment to support the renewable energy industry?
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
The Institute for Fiscal Studies estimates that more than 1 million more children will be living in poverty in 2020, which absolutely wipes out the number of those lifted out of poverty under the previous Labour Government.
Mr George Osborne
The best approach to lifting children out of poverty is to ensure that they live in working households. We now have the lowest number of workless households since records began, which is due to the achievements of my right hon. Friend the Secretary of State for Work and Pensions, and of the economic plan that is getting the parents of children into work.
Mr Peter Bone (Wellingborough) (Con)
Given that the cost of the EU will double in this Parliament, and the huge current account deficit with the EU, does the Chancellor agree that our current economic relationship with the EU is wrong and that we should renegotiate?
Mr Osborne
I certainly agree that we need to reform the European Union so that our entire continent is not priced out of the global economy. We must also make reforms to the European Union, and Britain’s relationship with it, so that British businesses can thrive, compete and create jobs. I point out to my hon. Friend—he knows this anyway—that the cost of the European Union would have been much higher if my right hon. Friend the Prime Minister had not secured a very good deal. [Interruption.] The right hon. Member for Morley and Outwood (Ed Balls) says, “We did it,” but Labour gave up the rebate. The Prime Minister went to the EU battling for Britain and delivered for Britain.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Over the past six months more than 350,000 people, many of them in work, have accessed emergency food aid from a food bank. When will the Chancellor visit a food bank so that he can see for himself the impact of his cost-of-living crisis on hundreds of thousands of people across the country?
Mr Osborne
I have visited a food bank in Northwich in my constituency and seen the excellent work it does. I commend the volunteers at that food bank, and indeed across the whole food bank movement.