Banking

Harriett Baldwin Excerpts

Wednesday 15th January 2014 Commons Chamber

[Harriett Baldwin (West Worcestershire) (Con)]

It is reported today that the Opposition are proposing specific market shares on specific banks. Has that ever been tried in any other country?

[Sajid Javid]

My hon. Friend is right. It is reported that, this Friday, the Leader of the Opposition will make a speech on the economy and attempt to set out an economic policy. I am afraid that his last such speech did not go very well. From what we know about this proposal—very little at this stage—I am not aware of any country in the developed world that has a similar approach, with the possible exception of the former Soviet Union, which adopted a similar approach to its banking sector.

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[Harriett Baldwin (West Worcestershire) (Con)]

It is a pleasure to follow the hon. Member for Linlithgow and East Falkirk (Michael Connarty). I, too, encourage many of my small businesses to look around and to act as customers. They do not have to stay with the bank they have been with since they were students.

I could not believe the bare-faced cheek of the Opposition motion on the Order Paper when I read it this morning. I am sure you felt the same, too, Madam Deputy Speaker, because you will recall—in your very impartial way—the state of the banking sector when this Government came to power. It is worth recalling the mess that we had to deal with when we took over. We had had the first run on a bank in this country for well over 100 years; we had had the biggest banking failure in the world; and we had had a decision, taken under conditions of panic by the former Chancellor and Prime Minister, effectively to nationalise large parts of the banking system. The Opposition motion should acknowledge that that was a deliberate decision. The natural course of events under capitalism would have been for those banks to fail, for all their employees to lose their jobs and for the branches in all our constituencies to close, followed by a restructuring process taking place outside state ownership. Instead, we have effectively perverted the course of capitalism, and that was a deliberate choice.

[Mark Garnier (Wyre Forest) (Con)]

Will my hon. Friend remind the House who the architect of the Financial Services and Markets Act 2000 was? That Act set up the Financial Services Authority, the regulator that manifestly failed to regulate the banks properly, which allowed the collapse to happen. Will she also remind us who the City Minister was at the time of the banking collapse?

[Harriett Baldwin]

I think I am right in saying that the then City Minister is now the shadow Chancellor. My hon. Friend rightly reminds us that the regulatory architecture that allowed this disaster to occur was also set up by the previous Government. Having been regulated by that regulator for many years, I know how important it is that the regulation of banks has been returned to the Bank of England. That is important because the Bank of England sees the canary in the coal mine when banks have problems with day-to-day liquidity. The Bank of England was able to see such problems in the run-up to the crash, whereas the Financial Services Authority, in its lofty headquarters in Canary Wharf, was at one remove from that, and there was no ability to join up the reaction. My hon. Friend makes an incredibly important point.

At the start of this Parliament, our Government inherited, in effect, a state-owned oligopoly in the banking system, and that is not a good place to be if we want to achieve a competitive and healthy banking system. The Government have embarked on a long-term economic plan to reform the banking system and make it more responsive to the needs of businesses and consumers up and down the land. That cannot be done overnight—it takes time. Step No. 1 was to reform the system of financial regulation. That was an extremely thorough and elaborate process, involving many people from within this House and the other place, and as of last year we had the final enactment and implementation. So we have taken some difficult and long-term decisions to reform the regulatory architecture in a way that will make it impossible for this sort of crisis to occur in the future.

Secondly, we have established a long-term economic plan for people and for businesses in this country. We have reformed the way in which the economy is working: we have lowered the cost of mortgages for home owners; we have lowered the cost of government for council tax payers; and we have lowered the cost of fuel over and above what the Opposition planned, so that people who drive to work do not have to pay that extra £11 in tax that had been planned for them.

Thirdly, I come to the final piece of this journey in passing on to future generations a banking sector that is, once again, fit for purpose: addressing this problem of the state-owned oligopoly. We cannot restructure the failed banks effectively within the Government’s ownership, and the best way to say that we have closed this terrible chapter that we inherited in the banking system will be by privatising the banks that are publicly owned and returning them to the private sector. We have started on that with the sale of the first tranche of Lloyds shares. I sincerely hope that the Minister will be able to reassure us that it is the Government’s plan to return Lloyds shares to the private sector.

I also argue that it is in the best interests of the economy and the country that we move now to return RBS, whose share price is still well below that paid by the former Prime Minister for its shares, to the private sector, even if that means recognising and crystallising a loss which is the price we pay for Labour’s banking failure. At the moment we are in the worst of all possible worlds: we have a system where we need to allow new entrants to come into the space, but a large semi-state-owned dinosaur is taking up a lot of market share. It would be better for that to be restructured effectively within the private sector.

My argument today is that the Government need to get out of the banking business as quickly as possible. It is not the role of government to be setting the compensation of every banker in this country. The Government must set the framework and the regulation, but this level of micromanagement is a function—a symptom—of the terrible inheritance that we received. By getting out, we must recognise that we will reform the banking sector for our children and our grandchildren. It will mean that those banks will then restructure within the private sector, and the socialists will never be able to get their hands back on running a large sector of our economy.

Autumn Statement

Harriett Baldwin Excerpts

Thursday 5th December 2013 Commons Chamber

[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.

Women and the Cost of Living

Harriett Baldwin Excerpts

Tuesday 19th November 2013 Commons Chamber

[Nicky Morgan]

I recall that the Prime Minister is going to write to the hon. Lady with that information, so I shall have to wait to see the letter. On the point about zero-hours contracts, first, the Government have announced that they are launching a review on the issue, and secondly, she ought to be looking at the number of Labour councils that employ people on those contracts first.

[Harriett Baldwin (West Worcestershire) (Con)]

My hon. Friend will appreciate, as a Treasury Minister, that the fact that more women are in work than ever before will also help the Exchequer’s revenues. In the last full tax year, men paid more than £90 billion in income tax whereas women paid only £36 billion, so she can see how helping more women work up the income scale really helps the revenues.

[Nicky Morgan]

My hon. Friend is, of course, right, but we also need to consider the wider argument: it is good for women to have the choice about whether working is the right thing for them to do given their family circumstances and any other responsibilities they may have. We want to make it as easy as possible for women to work, and I will come on to discuss child care.

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[Sheila Gilmore (Edinburgh East) (Lab)]

The Government’s response to all questions about falling living standards and rising costs is to talk about the raising of the income tax threshold. At least one part of the coalition is promising even more of the same and saying that that is how we help the lowest earners, many of whom are women. However, if the main aim is to assist the lowest earners, it is an extremely poorly targeted policy. It is an expensive tax cut. Three quarters of the billions of pounds that have been spent on raising the tax threshold have gone to the top half of earners in our country.

[Harriett Baldwin]

Is the hon. Lady arguing that the income tax threshold ought to be brought back to £6,475, as it was under her Government?

[Sheila Gilmore]

I will continue with what I was saying, because it is important to realise the cost of this policy to many women.

This generous gesture, which has advantaged more people on upper earnings, has been balanced by taxes and cuts elsewhere, such as the raising of VAT. Many of the cuts have affected women in particular. The cuts in tax credits have more than cancelled out the rise in the tax threshold for the lower-paid. People who have been affected by that will not be saying, “It was great that the tax threshold was raised.” They would probably rather have stayed in exactly the same position as they were in before.

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[Harriett Baldwin (West Worcestershire) (Con)]

It is a pleasure to follow the hon. Member for Edinburgh East (Sheila Gilmore), a former colleague on the Work and Pensions Committee, who is one of the most diligent attendees in the Chamber. However, I shall disagree vehemently with her and demolish a number of the arguments that are inherent in today’s motion. I urge all hon. Members to vote against it at 7 o’clock.

I shall start with some of the macroeconomic arguments and make the case that the way to destroy a country’s wealth, and to plunge people into many years of poverty, is to do what the previous Government did to the economy—create the largest recession for 60 years and the most significant banking crisis ever. I shall also outline the course of policy to follow for economic prosperity.

The secret of economic prosperity is not hard to find, but it is hard to achieve. The first ingredient is obviously a strong central bank maintaining sound monetary policy and a prudent Chancellor who maintains sound public finances. That is the framework that provides the environment in which businesses can invest, grow, export and create jobs. It is not politicians who create that wealth and those jobs, but we can damage the cost of living and the growth of businesses with bad monetary policies, high taxes, irresponsible borrowing, excessive regulation and the high interest rates that we saw under the previous Government.

The decision to make the Bank of England independent in 1997 was just about the only decision made by the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) with which I agreed. The mandate to keep inflation at 2% has meant some predictability and stability from the inflationary ravages that we all remember from the Labour Governments of the 1970s. It is essential that the Governor of the Bank of England, Mark Carney, is able to unwind the current additional monetary stimulus that has been needed since the crash of 2008 without allowing any major deviation from that 2% target. Sound money will mean that the pound stays strong. Given the UK’s dependence on imported goods and fuel, a strong pound keeps our cost of living down.

The Government also need to play a part. The Chancellor has taken the tough and necessary steps to bring the public finances back into structural balance.

[Stephen Metcalfe]

My hon. Friend talks about the Chancellor making tough decisions. Do you think it would be right to abandon the programme that we have adopted and to increase the amount of borrowing? Do you think that would be the right way for the country to move forward?

[Harriett Baldwin]

rose—

[Mr Speaker]

Order. I do not think anything about these matters, although I am sure that the hon. Lady does.

[Stephen Metcalfe]

I apologise, Mr Speaker.

[Harriett Baldwin]

Some Opposition Members think that the Chancellor has tightened too fast, but others might argue that he could have tightened faster. I say that he has been a Goldilocks Chancellor, and this has been a tightening at the pace at which job creation has been allowed to flourish. I also want to put on record that there has been no recession in this country since 2009. At all points in this fiscal responsibility, the Chancellor has looked for measures that have helped hard-working families keep their cost of living under control. He has helped councils freeze their council tax, he has raised the tax-free threshold for working people and he has avoided the 13p fuel duty increase that Labour had planned—

[Dr Sarah Wollaston (Totnes) (Con)]

Today we have been talking about health care assistants, and there are 1.3 million women—it is an almost entirely female work force—doing that incredibly important job. All of them are likely to benefit from a rise in tax thresholds and very many of them from extra assistance with child care.

[Harriett Baldwin]

The previous Government, as we heard from the hon. Member for Edinburgh East, thought it was appropriate to tax people earning only £6,500 per year, and to give them their own money back in the form of tax credits. I believe it is more important that we do not take that money in the first place.

I want to demolish what the hon. Member for Ashfield (Gloria De Piero) said on disposable incomes. Since the start of the economic downturn, the average equivalised household income has fallen by about £1,200 since 2007-08. The Opposition talked about the average fall, but the richest fifth of households have seen largest fall. In contrast, after accounting for inflation and household composition, the average income for the poorest fifth of households has grown in the same period by 6.9%—a statistic from the Office for National Statistics. I refute the argument inherent in the motion that we have had a particularly serious impact on the cost of living for women.

I would also like to demolish the claim in the motion that the Chancellor has made

“women pay three times more than men to bring down the deficit”.

I have taken the trouble to look at the Full Fact website, which I recommend to Opposition Members. It makes a line-by-line demolition of their claims. For example, women such as me, who earn more than £60,000, no longer receive child benefit. That is counted as a negative, but I would argue that that is a sensible way to reallocate scarce resources. The Opposition count it as a negative that the income tax cut does not help women as much as men, whereas I think it is a good thing that women are given a tax break.

The third point I would like to demolish is that it is a problem for more women than ever before to be in work. I welcome it. One reason this has been a successful area of welfare reform is that the number of lone parents out of work—I accept that the number of lone parents out of work declined under the previous Government—has declined sharply since 2010, falling by 26% to just under 500,000. I agree that that is still too high and we have more to do, but we are doing an enormous amount—providing free child care and helping lone parents into work—to help them to lift their own families out of poverty. There are other positive aspects of welfare reform for women in the workplace. Although well intentioned, a terrible consequence of Labour’s approach to welfare is that it trapped many women in 16-hour-a-week jobs. I have met many women in my constituency who have said, “I have been offered more hours, but it does not make economic sense for me to take them.”

[Sheila Gilmore]

Will the hon. Lady give way?

[Harriett Baldwin]

I do not have enough time, I am afraid.

In fact, we were paying a lot of women to maintain 16-hour-a-week jobs. That may be ideal for some people’s family situation, but it sends a poor message, through the welfare system, that we need to tackle. We need to allow women to progress up the income scale in the same way as men so that—I do not often argue for higher taxes—men and women pay the same amount of income tax. At the moment, women pay approximately 60% less income tax and I would like to see progress on that.

The motion is full of holes. I urge right hon. and hon. Members to vote against it.

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[Tom Blenkinsop]

I cannot agree with that at all. The structural imbalance—I assume that the hon. Gentleman is referring to the staple industries in the north-east—has had a long-term effect primarily because of his party’s record in the north-east of decimating heavy industry back in the ’80s and ’90s. The increase in female unemployment is unprecedented. I have never before seen these levels of female unemployment. Previously, we had long-term male unemployment in my region. That was difficult, but families still had a working mother. Now, these families have unemployed mothers and fathers, meaning far more significant long-term consequences for my area. That is what I am frightened about.

There is a big gender split in apprenticeships, because young women take a much narrower range of apprenticeships than young men, yet there remains a skill shortage in these new industries. It seems only logical, then, that all the stops should be pulled out to encourage young women seriously to consider these industries as a career. Increasing the number of women working—or at least taking up apprenticeships—in these male-dominated industries would go a long way to stem the flow from short-term to long-term unemployment. We must challenge the stereotypes in careers advice for young women and encourage more girls to take up higher skilled apprenticeships, but that has been made increasingly difficult by a Government who have undermined careers services. One of the Government’s first decisions was to get rid of Connexions, which was a careers advice service in schools giving children guidance on career paths.

On equal pay, the gender pay gap stands at 15%, unchanged on the year before. We know that the reasons for the persistent gap are varied and complex, ranging from occupational segregation to a lack of well-paid part-time work and, even in this day and age, discrimination in the workplace.

In August, the Chartered Management Institute found that women who have reached management positions can expect to earn only three quarters of the pay of their male colleagues. Even more staggering was the finding that the more highly skilled and highly paid the profession, the greater the gap between men and women’s pay. In modern Britain, undervaluing the talents and skills of women is a loss to the whole economy, so the issue of equal pay is a tough nut that needs to be cracked.

Several actions could be taken to help that situation. For example, the introduction of mandatory pay reporting, including the Equality Act 2010, would highlight the differences between what businesses pay their male and females colleagues. We should improve the law on flexible working and do more to encourage businesses to utilise flexible working practices. However, the revelation that up to 50,000 women a year could be losing their jobs while on maternity leave is a shocking one, yet far from doing anything about it, Ministers are making it worse by charging women £1,200 for challenging discrimination at an employment tribunal.

To address the specific barriers that single mothers face, we Labour Members will support women who have to juggle work and child care by restoring breakfast and after-school clubs in primary schools from 6 am to 8 pm for every child, and provide 25 hours of free child care for three and four-year-olds of working parents. Those are simple actions that the Government should seriously consider.

My final point is on the broader issue of the cost of living crisis that women currently face. As we all know, women are struggling as prices continue to rise faster than wages, and the latest figures show that working people are on average £1,600 a year worse off since May 2010.

The Government’s change to the tax credits rules means thousands of families will have lost out on their working tax credits unless they have been able to increase their working hours significantly. Any woman or any couple earning less than about £17,700 will need to increase the number of hours they work from a minimum of 16 to 24 a week—otherwise, they will lose working tax credits of about £3,500 a year. According to the House of Commons Library, this has hit 212,000 low-income families.

Of course, the situation was supposed to have been compensated for by the March 2012 Budget’s introduction of universal credit that was to come into force last month. To a certain extent, it would have restored families to a parity with what was seen with working tax credits under Labour. Due to the ongoing chaos in the Department for Work and Pensions, that has not happened. Some of my hon. Friends have mentioned the Tory Free Enterprise Group and its proposals to increase the price of food and children’s clothes by 15%.

[Harriett Baldwin]

Will the hon. Gentleman give way?

[Tom Blenkinsop]

No.

This group of 42 Tory MPs sees it as necessary to raise VAT on gas and electricity to 15%, which would add £120 to the average energy bill. Let me remind the House that when the Prime Minister was an adviser to the Chancellor of the Exchequer under the previous Conservative Government, he advised that Chancellor to bring in VAT on fuel. He also advised that Chancellor to bring in air passenger duty and the fuel duty escalator. VAT has risen under every Conservative Government since it was introduced—another fact for Government Members to ponder. That is an illustration of the Tory addiction to indirect taxation.

For women, there is an even harsher reality. There is an increasing financial burden on women with many, particularly over 40-year-olds, prioritising supporting their children over building up a pension pot. Many have to find the money for family caring responsibilities or to pay off debts. Disproportionately stuck on pay below the living wage rate, 27% of women are not paid the living wage, compared with 16% of men. This gap is especially distressing now that mothers are either the breadwinners or co-breadwinners for their families in many households.

The future is not too bright either. Research by insurance firm, Scottish Widows found that only 40% of women put enough money aside for an “adequate” retirement—down from 50% two years ago, and the lowest amount since the number started to be tracked under Labour in 2006. On average, women who are saving are putting aside £182 each month, compared with £260 for men—a pensions “gender gap” of £1,000 in contributions each year. The continued squeeze on the cost of living has made it much harder for many women not only to live an adequate and healthy lifestyle now, but to consider saving for their future and retirement. The gender pay gap, the opportunity gap and the oncoming pensions gap have played a significant part in explaining why it is imperative to bridge those gaps sooner rather than later.

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[Harriett Baldwin]

Does the hon. Lady therefore disagree with the Office for National Statistics when it says that the equivalised, after-tax income for the poorest fifth of households has risen under this Government, and that that income has fallen the most for the richest fifth?

[Mrs Hodgson]

I just do not recognise those figures. Our figures from the Library—and any other figures that we have seen on this matter—show that women are £1,600 a year worse off under this Government. [Interruption.] It is true, and I will write to the hon. Lady and give her the figures.

Child care bills are rising five times as fast as incomes under this Government. Energy bills are shooting up at similar speeds. The weekly shop is getting even more expensive, and real incomes are down by between £1,500 and £1,600 as prices have outstripped wages in 40 of the 41 months of this Government. Women’s long-term unemployment is up 80,000 since the election, compared with a figure of 10,000 for men. Older women’s unemployment is up by a third, while the figure for men has marginally fallen. More than 1 million women are unemployed, and countless others are stuck in low-paid, insecure jobs.

It is women who are struggling to get by over the long school summer holidays, with extra child care to pay for, school uniforms to buy and extra food to put on the table, yet we hear from the Government that they want to slap 15% VAT on the school uniforms on our children’s backs, on the cereal in their bowls and even on the electricity that lights their homes. How out of touch can the Government get? Despite all that, women hold the key to building a sustainable economic recovery that works for everyone. Millions of women want to get back into work or to increase their hours.

Oral Answers to Questions

Harriett Baldwin Excerpts

Tuesday 5th November 2013 Commons Chamber

[Nicky Morgan]

It is very interesting to hear what the hon. Gentleman says, but the first thing he needs to do is explain to his constituents why he voted for the decarbonisation target, which is going to add £125 to energy bills. Secondly, it was the last Labour Government who created the big six. We started off with 20; they left us with the big six. Thirdly, this Government have set out very clearly how they will help households—by reviewing green levies, by encouraging switching, which I am pleased to see the Leader of the Opposition has taken up, and by increasing competition.

[Harriett Baldwin (West Worcestershire) (Con)]

I, too, welcome the Minister to her post. She will know that one of the energy bills that my rural constituents have to struggle with is for petrol. Will she tell us whether the Office for Budget Responsibility has done an assessment of how much families are saving by our avoidance of the 13p fuel hike planned by the Labour party?

[Nicky Morgan]

I thank my hon. Friend for her question. The OBR does an assessment of all taxes and their impact on the economy. The policies that this Government are pursuing in recognition of the pressures on household budgets mean that filling up the average car is costing families £7 less at the moment, and by the end of this Parliament it will cost them £10 less.

Oral Answers to Questions

Harriett Baldwin Excerpts

Tuesday 10th September 2013 Commons Chamber

[Sajid Javid]

It is interesting that the hon. Lady did not mention the Armitt review, which was set up by the shadow Chancellor. Perhaps it is because Mr Armitt concluded that there was an economic crisis when this Government took office and she does not want to draw attention to it. However, she will be reassured to know that the Government take infrastructure investment very seriously. It is a top priority, which is why public investment under this Government is higher in each year of this Parliament than under the previous Government’s plans, as well as being higher as a percentage of national income.

[Harriett Baldwin (West Worcestershire) (Con)]

A crucial part of our national infrastructure is broadband for the 21st century. Will the Minister join me in congratulating Worcestershire county council on its excellent plans to put 90% of homes and businesses on superfast broadband?

[Sajid Javid]

My hon. Friend is right to draw attention to what is a hugely important plan for the residents of Worcestershire, which includes my constituents in Bromsgrove. We are right to make that investment, because it will make a real difference.

Living Standards

Harriett Baldwin Excerpts

Wednesday 4th September 2013 Commons Chamber

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

The Government’s response to this timely Opposition motion is becoming clear already. They intend to airbrush the past three years from history as far as they can, as if they did not exist, and say, “We are now finally on the road to growth, and all will be well.” I have two comments to make about that.

First, today’s debate is about what has happened to those on average and below-average incomes over the past three years. It is clear that whatever recovery is eventually secured—all economies eventually recover, even though we maintain that the cuts have been too far, too fast and too deep—the essential thing is to see that the excessive burden that has been borne by those on average and below-average incomes is rectified.

Let us look at the incontrovertible facts about what has happened to wages under the current Government over the past three years. Wages are down by an average of almost £1,500 a year, prices have risen faster in the UK than in any other major economy and energy bills have risen by more than £300 since the general election. Those are facts, and I do not think anybody in the House would dispute them. Government Members may argue that it was all necessary, and that even though the burden has fallen heavily on those least able to bear it, it was all part of a plan that had to be implemented. We do not accept that, and we maintain our criticisms.

[Harriett Baldwin (West Worcestershire) (Con)]

During the summer, in one of his many mansions, was the hon. Gentleman able to read the book published by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne)? It states that

“From 2004 onwards”,

median families

“were feeling the strain…people were working just as hard as ever—but were not getting on.”

This is not a new issue, and the hon. Gentleman may recall that Treasury officials were examining it during his party’s time in government.

[Mr Robinson]

I hope that the Treasury is examining how we can ensure that there is a fair spread of the benefits that will come in the recovery, and how we can sustain that recovery. I will come to that in a moment.

In the global race on living standards, the UK is doing worse than any of our competitors and has had the biggest fall in worker income of any country in the G7. Why is that? Because none of the forecasts made for the past three years has been met, since the Chancellor announced with great fanfare the plan for the rectification of the deficit and the return to growth. He has not come anywhere near fulfilling a single one of the predictions he made then for any year on investment, growth or employment, which I will come to in a moment. It is clear that the failure of the Government’s policy has caused terrible burdens to fall on those least able to bear them. They have failed in their policy, their objectives and the tasks that they set for each sector of the economy. I do not know whether it had to be that way or whether they will repeat that failure, but personally I think it was unnecessary.

We all hope—no one more fervently than the Opposition—that that is behind us now and we can look forward to a recovery that can be sustained. We do not want the Government killing off this recovery like they killed off the one that they inherited from us back in May 2010. [Interruption.] They killed it off. The economy was beginning to grow, under a stimulus. They killed off that recovery, so let us see whether they can kill off this one. No doubt they will try. To avoid that happening, the Government must change course on several fronts, and they must do it quickly, even now.

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[Harriett Baldwin (West Worcestershire) (Con)]

When I saw the wording of the Opposition’s motion today, I simply could not believe its sheer gall, or the absolute nerve they had in making the points they made. In fact, in honour of Jewish new year tomorrow, I will say that they have incredible chutzpah in putting this motion on the Order Paper today. If there is one sure way in which the Government can reduce the living standards of their citizens, it is by living way beyond their means. A deficit is the spending reductions or tax rises that the Government are not prepared to impose today but willing to pass on to future generations.

I do not ask the House to believe me on that point, but to believe the recently retired Lord King, who has made it very clear that today’s living standard squeeze is a consequence of the Labour party’s policies. In 2011, he said:

“The real consequence of this crisis is only now beginning to be felt. They weren’t felt in 2008, they are only now being felt.”

What we have seen was the consequence of the previous Government, who left this Government with a note saying, “I’m sorry, Chief Secretary, there is no money left.”

[Ian Mearns]

It is a little rich for the hon. Lady to suggest chutzpah on our behalf. I live in the midst of an Orthodox Jewish community in my constituency of Gateshead. It is a learning community, given the local colleges, and contains considerable poverty. The people there would probably disagree with her.

[Harriett Baldwin]

What would that community feel about a Government who left a deficit of 11.8% of GDP? This Government have reduced it by a third, to 7.4%, although there is still a long way to go. More than any community, that community would understand the importance of living within one’s means. We need to judge the Government by their track record, compared with the previous Government.

[Charlie Elphicke (Dover) (Con)]

The issue is not just the deficit. Real earnings did not rise from 2004 onwards under the previous Government’s mismanagement. We still see the scars of the terrible recession of 2008 in the earnings lag, which continues to this day and which we are battling to turn around.

[Harriett Baldwin]

I agree, so let us turn to the track record of what we have tried to do in government to tackle the very issues raised in today’s debate. We all want to see our constituents prosper and have more money each month to pay their bills. The most important bill that they have to pay each month—on pain of imprisonment if they do not pay it—is their income tax bill. In 2007, people had to start paying income tax once their income rose to just over £5,000. By the end of the next tax year, people will be able to take home £10,000 before they have to pay income tax. That is a halving of the income tax bill for the hard-working person who works full time on the minimum wage. It is also a 20% real-terms reduction in the tax bill of someone on median income. That is the action that a responsible Government can take.

[Fiona O’Donnell]

Will the hon. Lady give way?

[Harriett Baldwin]

I am sorry, but I have now taken my fair share of interventions.

One of the other large bills that people pay is the council tax. Under the previous Government—let us judge them by their deeds—council tax went up by 100%. This Government have managed to hold it broadly steady, which has meant a 9.5% real-terms reduction. Under the previous Government, fuel taxes were increased on 12 separate occasions for my constituents. Indeed, the previous Chancellor legislated for a further 13p in tax increases on fuel, which happily we have been broadly able to avert—an 11% real-terms reduction in that important bill, or a saving of £7 every time people fill up their tanks.

Mortgage rates are also at a record low. That important monthly bill would be £1,000 a year more if interest rates were to increase by 1%. That is a modest estimate of the increase if the Opposition were to borrow the additional £200 billion estimated by the Institute for Fiscal Studies. The cost of child care is extortionate, and I can speak from personal experience on that, but it went up 77% from 2004 under Labour. The Government have taken many steps to try to increase the availability of free child care for our constituents. For those on median incomes who find that it is not economic to return to work, we will make the cost deductible against tax from 2015.

We have tried to take steps on the unmanageable expected costs of social care expenses, and we have also made sure that pensioners will benefit each year from an increase in their pensions that at least matches inflation—something that will reassure them over time, compared with the 75p increase that they once received under the previous Government.

Those are the steps that we have taken to address the cost of living for our constituents. We also want to invest in skills, apprenticeships and the measures that will help people to move up the ladder of responsibility at work and take on higher-paid jobs over time. Our welfare reforms have made the incentive to work much stronger, so that the number of households with no one in work has dropped to a record low.

Growing private sector employment and record growth in the manufacturing index, which came out yesterday, are what will allow businesses to grow, to grow in confidence and to pay their employees more over time. That is how to tackle the cost of living for our constituents—not by taxing more and borrowing more as the Opposition propose. We must have a credible and responsible Government who keep their own costs down. We must never give the power to tax and spend back to the Labour party, with its damaging track record.

Finance Bill

Harriett Baldwin Excerpts

Tuesday 2nd July 2013 Commons Chamber

[Catherine McKinnell]

Thank you, Mr Deputy Speaker; I appreciate that clarification.

New clause 7 makes changes to the procedure for the granting of interim payments in common law claims relating to taxation matters so that the treatment of tax cases commenced under common law court claims and tax tribunals will be more closely aligned in future. We support this simplification process, and the Minister’s response to our probing questions during his generous explanation of the new clause has clarified the issue.

[Harriett Baldwin (West Worcestershire) (Con)]

Is it appropriate, Mr Deputy Speaker, that I now speak to amendments 52 and 53, tabled in my name?

[Mr Deputy Speaker]

No.

Question put and agreed to.

New clause 7 read a Second time, and added to the Bill.



Clause 175

Election to be treated as domiciled in the United Kingdom

--- Later in debate ---

[Sajid Javid]

Amendments 17 to 29 make a number of technical changes to schedule 9 and clause 25 to ensure that the qualifying insurance policy regime works as intended. Let me set out some brief background to these changes. The qualifying policy regime was introduced in 1968 to preserve pre-existing tax treatment for traditional moderate value, long-term, regular premium savings policies that contain a significant element of life insurance.

No upper limit was set for the investment premiums that could be paid into a QP, which allowed individuals to obtain unlimited relief from higher rates of income tax. In the 2012 Budget, the Government announced a restriction to the tax relief available for QPs. Clause 25 and schedule 9 introduce an annual premium limit of £3,600 on qualifying life insurance policies. This restriction limits the amount of premiums payable into QPs for an individual to no more than £3,600 in any 12-month period, with effect from 6 April 2013.

This measure supports the Government’s objective of promoting fairness in the tax system by ensuring that tax reliefs for QPs are correctly targeted. Consultation since the Bill was introduced has continued and identified the need for Government amendments to clause 25 to deal with points of detail in 13 areas. None of these represents a change of policy; as I have said, they are technical adjustments to ensure that the rules operate effectively and as intended. The amendments have been discussed with industry representatives and have benefited from the comments received.

Let me briefly explain the amendments in slightly more detail. The purpose of the changes is to provide flexibility to deal with potential future exclusions from the non-assignment rule and potential future exclusions from the circumstances under which beneficiaries must make statements, to extend the period by which an individual must first make a statement and to clarify what information an insurer must provide and obtain from a policy beneficiary and what an insurer must provide to HMRC. In addition, a number of amendments make minor corrections or consequential changes to the more material changes that I have described.

If I may, Mr Deputy Speaker, I will speak to amendments 52 and 53, standing in the name of my hon. Friend the Member for West Worcestershire (Harriett Baldwin), at the end of the debate.

[Harriett Baldwin]

I rise to speak to amendments 52 and 53, standing in my name and the names of my hon. Friends the Members for City of Chester (Stephen Mosley) and for Finchley and Golders Green (Mike Freer).

I tabled these amendments to schedule 9 after being alerted recently to the consequences of the proposed changes to the life insurance qualifying policy regime for a small business in Malvern in my constituency, which is a market maker in traded endowment policies. The business provides a price at which it will both buy and sell an endowment policy, which creates welcome liquidity in these financial instruments. The firm has been recognised for its work with a Queen’s export award for industry.

The Association of Policy Market Makers estimates that the traded endowment policy market involves about 7,000 policies a year, out of the 20 million policies outstanding, and has a value estimated at approximately £150 million. The reasons why someone might want to sell an endowment policy vary. The most significant reason —accounting for 20%—is poor investment performance, although someone might be selling their house or trying to get some equity release. People sell endowment policies when they want to reduce their mortgage or improve their home—perhaps at retirement or when they lose their jobs, are bereaved or are getting divorced. Someone might want to buy a second-hand endowment policy to get a better rate of return than cash without a stock market risk. Endowment policies are also popular products with people with lump sums—such as victims of accidents who receive large payouts—because they have capital protection at maturity and tend to be priced to beat inflation.

The market is in natural decline, as endowment policies are no longer very popular and the existing 20 million policies have a finite end date. Nevertheless, there are thought to be seven such small businesses in the UK, employing about 200 people, including in the constituencies of my hon. Friends the Members for City of Chester and for Finchley and Golders Green. These firms worry that they will be put out of business by the change of tax treatment for these policies contained in schedule 9.

Royal Bank of Scotland

Harriett Baldwin Excerpts

Thursday 13th June 2013 Commons Chamber

[Sajid Javid]

I do not know whether the hon. Gentleman was listening to the statement I made. If he was, he would realise that the RBS board made this decision.

[Harriett Baldwin (West Worcestershire) (Con)]

As the Minister knows, I think the sooner the Government get out of the banking business, the better. There has been a lot of discussion today about the price at which they should do that. What has the Minister been able to discover about the due diligence that was done on the price the Government paid to buy RBS shares in the first place?

[Sajid Javid]

My hon. Friend raises a good point, and it is actually quite easy to find out—although I do not think the previous Government wanted to advertise it, and nor do I think the current Opposition want us to continue highlighting it—that when RBS was bailed out, the then Government overpaid by over £12 billion and wrote that off at that time. They did the same in the interventions in Lloyds bank and Northern Rock, and, as we know, all this was a direct result of the previous Government’s failure to regulate our banking and financial system properly.

Oral Answers to Questions

Harriett Baldwin Excerpts

Tuesday 14th May 2013 Commons Chamber

[Danny Alexander]

The hon. Lady will know that housing completions are 19% above the trough of 2010, numbers of housing starts are 58% above the trough of 2009, and she should welcome that improvement. In the Budget, we announced a £5 billion package to help the construction sector through the Help to Buy shared equity scheme, which will support the construction of 76,000 properties, as well as a massive expansion of the Build to Rent programme. It is staggering that the hon. Lady cannot bring herself to welcome those measures.

[Harriett Baldwin (West Worcestershire) (Con)]

Will the Minister welcome today’s figures showing that the number of first-time buyers increased by 20% this month? Will he also welcome the fact that the Department for Communities and Local Government has shown that 37,000 new homes for social rent were built last year, which is a record since 1997?

[Danny Alexander]

I welcome those figures. They suggest that the policies being pursued by this Government are having the desired effect.

Cyprus

Harriett Baldwin Excerpts

Monday 18th March 2013 Commons Chamber

[Greg Clark]

The Bank of England keeps the arrangements under constant review. I think it is fair to reflect that Cyprus is an infinitesimal part of the European banking system and an even smaller part of the world banking system. Although this is an extremely worrying time for citizens of Cyprus and our constituents who have investments or connections in Cyprus, in the wider context Cyprus does not have the systemic importance of other countries.

[Harriett Baldwin (West Worcestershire) (Con)]

Whatever the Cypriot Parliament decides this week, this has been a torpedo across the European banking system. What advice would the Minister give to pensioners who live in Spain and Portugal about whether they should maintain large deposits in eurozone banks?

[Greg Clark]

I agree that this is a warning and that it is necessary to have more robust financial arrangements in place to prevent this sort of crisis from happening in other countries. However, I reinforce the advice of the ECB that this problem is unique to Cyprus, which is particularly exposed and is in a state of particular indebtedness.