Education (Student Support) (Amendment) Regulations 2015
Jim Fitzpatrick Excerpts(8 years, 4 months ago)
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Jim Fitzpatrick (Poplar and Limehouse) (Lab)
Mr Percy, it is a pleasure to see you presiding in the Committee today. I will be brief.
I start by echoing the comments of my hon. Friend the Member for Sheffield Central (Paul Blomfield) that the Minister is held in high regard, so it is disappointing that he has brought these regulations to the Committee. However, we have been here before. Maintenance grants were abolished by the Labour Government between 1997 and 2001. Looking round the room, I think only my hon. Friend the Member for Blackpool South (Mr Marsden) and I were here at the time.
For me, the issue was huge and still is. The vast majority of my young people in Poplar and Limehouse—the constituency was Poplar and Canning Town then—were not impacted by the introduction of tuition fees at £1,000, and I supported it. I still support tuition fees, not at £9,000 but at a more moderate level. The income threshold for my young people meant that they would not have to pay tuition fees. My worry was about those who were just above the threshold for whom grants were critical in allowing them to go on to higher education.
The issue is personal because my two brothers in Glasgow went to university and college, presumably only because they received a grant. I do not think my parents could have afforded to pay for my brother to go to Glasgow University and my other, younger brother to go to Glasgow Art School and then Dundee Art College. It was my only rebellion during the 1997-2010 Labour Administration. Conservative Members should know that standing on principle is not an impediment to promotion. In fact, it get may get them noticed. They should think long and hard, because this is a major issue. To the credit of the Labour Government, they changed their mind a few years later because they recognised the impact of the measure and restored maintenance grants.
The Prime Minister, to his credit, speaks a lot about social mobility but, as we have heard, many people think this measure will impact on social mobility. My hon. Friends have outlined the case very strongly and much better than I could. I appeal to the Government on behalf of my young constituents not to proceed with these regulations today. I congratulate the shadow Minister, my hon. Friend the Member for Blackpool South, on the very powerful case he has mounted, supported by other Opposition Members. This measure reflects badly on the Government and it reflects even more badly on them that we are dealing with it in Committee, rather than in the full glare of the public in the Chamber, where many more colleagues, who would have wanted to contribute, could speak. This issue is fundamentally important for those people in our society who need a helping hand up. We need to ensure that they can share the great life that we all live in Britain.
Scotland Bill
Jim Fitzpatrick Excerpts(8 years, 10 months ago)
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Alex Salmond
I do agree with that, but I also think that we must consider the motivation for the introduction of what appears to be a remarkably foolish tax. Any Chancellor looking at Heathrow, for example, would see a fully congested airport and an air passenger duty with an effective collection rate of 100%, whereas any Chancellor looking at the north of England, Northern Ireland or Scotland would see airports with substantial capacity where a reduction in APD could increase business, and, given increased revenues from VAT and other taxation, would see the magic formula for a Laffer curve emerging. I was going to turn to the hon. Member for North East Somerset (Mr Rees-Mogg) at that point, but when I mentioned the Laffer curve, he was busy having a conversation, just when he could have reached a peak of excitement.I think that it would be possible to achieve that Laffer curve, reducing the tax and increasing the revenue, and it seems that my view is shared on both sides of the Committee.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
Does the right hon. Gentleman not recognise that, whether the Davies commission decides on Heathrow or on Gatwick, the vast majority of the investment will come from the private sector? It will not be billions of pounds of taxpayers’ money. Does he not also recognise that there has been a campaign in the aviation industry to abolish APD altogether, and that the Treasury is hooked on the tax because it is worth £2.3 billion a year?
Alex Salmond
I agree with the hon. Gentleman’s first point only to the extent that there are people who argue that nuclear power does not require the investment of public money. I think he will find that, as the implementation of these proposals proceeds, substantial amounts of public money will be invested in the infrastructure to make it viable and credible. According to a recent study of transport infrastructure spending per head in various parts of England, the figure for the south-east of England was over £2,000 per head, the figure for the north-east was £26 per head, and the figure for the north-west was £200 per head. I do not have the exact figures, but I think that I have the relative parameters just about right—
Budget Resolutions and Economic Situation
Jim Fitzpatrick Excerpts(9 years, 1 month ago)
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The Secretary of State for Communities and Local Government (Mr Eric Pickles)
This Government have put Britain on the road to economic recovery. In 2010, our country was on the cliff edge, staring into an abyss of financial oblivion. The economy was stalling, unemployment was rising and the national debt was spiralling out of control. From day one, pulling the country back on to safer, more secure ground was our top priority.
Mr Pickles
In a few moments I will. It would be rather nice if I was able to start the speech, because I am sure that the hon. Gentleman would like something to critique.
Five years later, it is a different story: we have stepped back from the cliff edge, our growth rate is faster than that of anywhere in the G7, and our job creation is the envy of the developed world. It all confirms the old Yorkshire proverb, “Where there’s muck, there’s brass” and, boy, did Labour leave us a lot of muck. We have managed to start cleaning up the mess only because we stuck to our long-term economic plan. We stood our ground when ferocious economic headwinds blew in from the eurozone. We did not listen to those who said that the only solution was more borrowing and more spending beyond our means. Nobody now talks about plan B. We stood firm, and as a result today the deficit has been brought down by a half. Living standards are rising and a record number of people have found jobs. With our council tax freeze, there is more money in people’s pockets. The Budget is built on economic success. It will make our economy more resilient and protect taxpayers’ money. It will bring down the deficit and ensure that Britain pays its way in the world, so much so that the shadow Chancellor said that there is nothing in the Budget that Labour would vote against. Now the hon. Member for Blaydon (Mr Anderson) will tell me why the shadow Chancellor was wrong.
Mr Pickles
I kind of regret giving way to the hon. Gentleman. That sort of bellicose description is not worth considering. After all, Yorkshire is at the very heart of our economic growth, but naysayers like him—
Jim Fitzpatrick
I thank the Secretary of State for giving way. I apologise for interrupting him prematurely at the beginning of his speech. I was just very curious to know whether, in outlining the economic recovery, he was going to refer to the report from the Institute for Fiscal Studies, which was covered by yesterday’s Telegraph and today’s Guardian and says that the 300,000 immigrants have fuelled the recovery. What does that do to the UK Independence party’s fox and some of the Members on the Government Benches who have been raising immigration as a scare story?
Mr Pickles
Of course if we create more jobs in the UK than in the rest of the European Union combined, it is not surprising that we are doing well, and that people are leaving our great friends in France to come here to increase our prosperity. I am surprised that the hon. Gentleman, who has such a distinguished record of supporting the firefighters, did not wish to congratulate the Government on changing the rules to ensure that spouses of firefighters who die in action will be able to remarry, should they desire to do so, and not lose their pension.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
It is a pleasure to follow the hon. Member for Bury St Edmunds (Mr Ruffley). I have the highest regard for him, as I am sure he knows, and I am sorry that he is leaving the House. He has given another eloquent and solid performance on behalf of his Chancellor and his party, but he will not be surprised to learn that I do not agree with his analysis, as I shall outline in a few moments.
Many previous Budgets have taken until Sunday to unravel. It was to the credit of my right hon. Friend the Leader of the Opposition that he immediately spotted the big flaw in this Budget. In his response, he cited the Red Book to identify that the level of cuts impacting on the public sector over the next three years will be as deep as the cuts during the past five years. Many Labour colleagues have already referred to that in the debates during the past two days.
In fairness, there were some redeeming features, as there are in every Budget. The hon. Member for Bury St Edmunds mentioned that that was true of Budgets during Labour’s period in office. Those features include the initiatives on savings and the extra money for air ambulances, while bashing the banks is always popular—the hon. Gentleman is going back to the City, but that measure has gone down well with the public—and the measures on tax evasion and avoidance clearly have universal support.
There are, however, clear dividing lines between the parties. In east London, the big ticket issues are homes, training, the national health service and the public sector in general, including the issue of local authority budgets. I and my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali), who I am happy to see in her place, have not only assisted the campaign to save the local health service for the past 18 months, but are still trying to get a clearer picture of the budget for primary care in our part of east London as well as that for east London generally. There is real concern about the funding of health centres right across the country, and it is not clear whether the Budget will offer them any help.
On adult training and further and higher education, Tower Hamlets college has had a 25% in its budget during the past four years, and only this week there has been an announcement about another 24% cut. That will have a huge impact on adult training in east London; it will certainly do so in my constituency. The announcement has united the Association of Colleges, the University and College Union and the National Union of Students, as well as students themselves. The fact that such an alliance should come together demonstrates that the issue is very serious, and it is not just restricted to east London. My hon. Friend the Member for Coventry South (Mr Cunningham) raised it in an oral question yesterday, showing that other parts of the country are affected as well.
That announcement will also mean further cuts to English as a second language training, which is hugely important to east London. Last year, it was found that English for speakers of other languages training has already been reduced by 40% over the past five years. Such training is critical to train and educate people with English language challenges so that they can compete in the jobs market.
On policing, there seems to be something of a conundrum. Although crime figures are down, my office has supplied me with Library statistics that show that there were 825 police officers in Tower Hamlets in 2010 and 627 this year, which is almost 200 fewer. Theft is up by 8%, burglary by 24%, sexual offences by 28% and robbery by 33%. Notwithstanding the Government’s success in making efficiency savings in police budgets, at some point the pendulum is going to swing too far. We are already perilously close to that point, and, sadly, it looks like police budgets are going to be squeezed even more.
There is consensus on and support for the benefits cap, but it throws up some anomalies. In east London, a number of families live in private sector rented accommodation and are charged market rents, and the benefits cap has a disproportionate effect on their ability to live. That is one example of how a universal benefit cap affects families in London. The shadow Secretary of State, my right hon. Friend the Member for Leeds Central (Hilary Benn), outlined Labour’s proposals for a fairer rents policy and guaranteed rents over three years, which will go down very well in east London and elsewhere.
A number of colleagues, certainly the Chancellor, made great play of the minimum wage. Government Members have said a lot about Opposition predictions of the number of jobs that would be lost through austerity. We say that if there had been no austerity, we could have made progress a lot sooner, because when the coalition came to power the economy had been growing for a couple of months. I remind the Conservative Members that when Labour introduced the national minimum wage, they were very confident that it would cost 1 million jobs. That prediction proved to be entirely wrong. For many of us, the living wage is even more important than the minimum wage.
In Canary Wharf in my constituency there are some fantastically well-paid bankers, but 105,000 people work there, many of whom are in low-paid jobs in cleaning, security and retail. I am happy to report that the majority of companies on the wharf have a living wage policy. I would like to see the Government promoting the living wage far more aggressively than they currently do. I am sure that a Labour Government would bring that aggressiveness to bear in due course.
Mr Andy Slaughter (Hammersmith) (Lab)
Does my hon. Friend agree that the Conservatives are taking exactly the same view of the living wage as they did of the minimum wage? That is shown by the comments of the Tory peer Lord Wolfson, who, as head of Next, paid himself £4.6 million last year, but says that the living wage is “irrelevant”. It is not irrelevant to my constituents.
Jim Fitzpatrick
My hon. Friend makes a very good point. Low wages are costing the Exchequer, and higher, fairer wages would benefit both the Exchequer and families. That argument is borne out by statistics that show that the living wage would help not only families but the economy.
I intervened earlier on the Secretary of State for Communities and Local Government to ask him about the Institute for Fiscal Studies report on migrant labour fuelling the economy, which was reported on in yesterday’s Independent and today’s Guardian. We do not seem to have acknowledged the contribution of migrants to the economy and how they have helped it over the past five years. The Government do not deserve all the credit. As I said, the Government wasted a number of years—a point that has been made a number of times by the Opposition.
Moving towards a conclusion—I am sure you will be pleased to hear that, Madam Deputy Speaker—I want to draw attention to some comments that have been made about the Budget. The chief executive of Citizens Advice, Gillian Guy, said:
“People on the lowest income and those without savings benefit least from this Budget…Positive moves on the personal allowance and fuel duty provide some small gains for stretched households, but there was nothing to address challenges around childcare, energy bills and private rents.”
All those challenges are addressed by Labour’s programme, which will go down well with Citizens Advice.
The Chancellor might not have been happy to hear what two commentators from the right had to say. I do not often quote right-wing commentators, but the editor of The Spectator, Fraser Nelson, said:
“I wonder: how ‘independent’ is the OBR? Osborne created it, defined its remit, appointed its chairman, banned it from assessing Labour ideas”.
If the Government, particularly the Conservative party, are so convinced and confident that Labour’s plans do not stack up and that our figures would create a black hole, why not use the independent Office for Budget Responsibility to do the analysis and reinforce their argument? I find it very strange and curious that that has not happened.
In yesterday’s Times, the subheading to an article by Tim Montgomerie—I do not agree with a lot of what he and Fraser Nelson say, but they are great writers and always a pleasure to read—stated, “The chancellor’s statement was the latest example of the Tories’ risk-averse strategy and leaves them without a vision”, while the headline stated, “We need more than this dull, simplistic budget”. If the Chancellor is being attacked from the right and from the left, I assume that some people will say, “He must be getting it right, because he’s in the middle,” but Labour Members do not agree.
The Chancellor also referred a number of times to fixing the roof while the sun shines. In Tower Hamlets when Labour was in power, most of our health centres and schools were rebuilt or refurbished; more than 20 Sure Start centres and the new Royal London hospital were opened; and thousands—possibly tens of thousands —of council and housing association properties were raised to the decency threshold for the first time in years and in some cases decades.
I do not accept that we crashed the car. As the shadow Secretary of State, my right hon. Friend the Member for Leeds Central, said earlier, Lehman Brothers did not crash in New York because of public sector spending in east London. Labour Members not only think but know there is a better way, and on 7 May I hope people will give us a chance to show exactly what it is.
Finance (No. 3) Bill
Jim Fitzpatrick Excerpts(13 years ago)
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Mr Hanson
My hon. Friend makes some valid points. I know that he defends his constituency and the whole of the north-west region strongly when it comes to the importance of manufacturing industries. One issue that I want to explore with the Minister is the very question of whether the capital allowance reductions proposed in clause 10—as well as other in clauses, which we will consider in due course upstairs in Committee—will have an impact on the job creation and investment proposals that we are considering today. Unemployment in my hon. Friend’s region in the north-west will be very high, at around 9%, which again indicates the importance of generating and regenerating manufacturing industries in those areas.
Capital allowances allow businesses to write off the cost of certain capital assets, including plant and machinery, to arrive at their business profits. Capital allowances take the place of commercial depreciation, which is not allowed for tax. There are certain first-year capital allowances that allow 100% of a business’s expenditure on specific, environmentally-beneficial plant or machinery to be written off in the year that the expenditure is incurred. There is also the annual investment allowance, which allows businesses to write off the whole of their expenditure on most plant and machinery, up to a limit in the year in which it is incurred. Expenditure on plant and machinery not covered by the allowances also attracts writing-down allowances, at either the main rate or a special rate.
The changes in clause 10 are part of the package of corporate tax reforms announced in the Government’s 2010 Budget, as the Minister will undoubtedly explain later. The amendment calls for a review of the impact of the Government’s abolition of capital allowances for smaller businesses in 15 to 16 months—that is, October next year—when these allowances will have been operational and we can see what the growth potential in the economy has been over that period thanks to the corporation tax measures in the Budget, as well as the impact of stringent public spending cuts and rising unemployment across the UK.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
In the debate yesterday evening and earlier today, there were many references from Opposition Members to the concerns raised by the British Chambers of Commerce and the Federation of Small Businesses, and my right hon. Friend has referred to the CBI. Can he say whether those organisations support the review that is being requested, and whether he has had a chance to discuss the Government’s plans with them?
Mr Hanson
I want to refer to a number of comments that have been made in this debate. Perhaps I could start by being helpful to my hon. Friend and referring him to what Lord Northbrook said. Lord Northbrook does not take the Labour Whip in another place or even the Liberal Whip; he takes the Conservative Whip. He considered a range of issues on Second Reading in another place, and said of this proposal:
“How does the reduction in capital allowances square with the Government’s wishes to encourage a more manufacturing-based economy?”—[Official Report, House of Lords, 26 July 2010; Vol. 720, c. 1172.]
That is a tempered criticism, but it raises the very question that I wish to raise with the Minister. On the one hand, to help growth we have corporation tax cuts—which the Committee has just supported, although we want to see an estimate of the outcomes—but on the other hand, we have massive reductions in capital allowances, which are specifically designed to encourage businesses to invest in plant and machinery, and environmentally efficient equipment, all of which will help to build jobs and growth for the future. However, I will return to my hon. Friend’s point in due course.
The key reason to consider the matter in depth is that, as the Office for Budget Responsibility—the Government’s own creation—has said, even after this year’s Budget, which the Chancellor has dubbed a “Budget for growth”, growth will be lower this year and next year than it was predicted to be around this time last year, when my right hon. Friend the Member for Edinburgh South West (Mr Darling) was Chancellor of the Exchequer. Slower growth and rising unemployment will make it harder to make the deficit fall. It is therefore even more important that we encourage as much growth, manufacturing and manufacturing investment as we can, to help counterbalance the massive effects of large spending cuts, which will put many people out of work and have a knock-on effect in the private sector.
Even after the measures in the Budget are taken into account, the OBR has said that growth will be much lower this year and next. In 2011, growth is now forecast to be just 1.7%, compared with a forecast of around 2.6% a year ago. The estimated rate of unemployment has been revised upwards to 8.2%, from 8%. Despite all the discussions and the measures that we have seen so far, there is still fragility out there. We are not sure how the economy will perform in the next 12 months, nor are we sure whether it will retain its strength and grow, or whether manufacturing investment in particular will grow. We are taking a potential risk by balancing the growth in corporation tax, which the Minister believes will occur because of the cuts that have been proposed, against the cut—admittedly of 2%, but still a cut—in capital allowances proposed by clause 10.
The amendment simply says that at some point in the future—October 2012—we should have a break point, when we review what has happened since the allowances came into effect, which will be next year, against the corporation tax cuts, which come into effect now, and the other issues in the economy, which, although they are not before the Committee, are still relevant to this debate. As I did last night, I wish to refer to the fact that unemployment is still high across the United Kingdom. We need to grow the economy and grow manufacturing jobs, yet the cut in clause 10 may well impact on our current fragile growth. As I mentioned last night, unemployment in the UK is highest in the north-east, at 10.2%. I notice that my hon. Friend the Member for Hayes and Harlington is here, as well as my hon. Friend the Member for Poplar and—
Mr Hanson
I still think of my hon. Friend as the Member for Canning Town; it is a habit that is hard to break. Just as I was about to say “Canning Town”, I realised that I was wrong, which is why I paused for a moment. In London—including the constituency of my hon. Friend the Member for West Ham (Lyn Brown)—the unemployment rate is 9.4%. London is a centre of prosperity, and it has growth in many parts, but if we are to encourage manufacturing industry in London to soak up those unemployed people and get them back into jobs and spending, it will be necessary to have an assessment of whether, downstream, the capital allowance cuts have been good or bad for unemployment rates.
The unemployment rate in the west midlands is 9.9%. In Yorkshire and the Humber, it is 9.3%. In my own region, Wales, it is 8.7%, and in Scotland it is 8.1%. Those are high levels of unemployment, and I want the Government to make an assessment of whether the capital allowance cuts will particularly hurt manufacturing industry in the north, the north-west, Yorkshire and the Humber and in the north-east, where my hon. Friend the Member for Tynemouth (Mr Campbell) has his constituency, more than it might do in the south, the south-east and the south-west, where the unemployment level is only 6%. That level is still high—it is 100% for those people who are unemployed—but it is still only 6%, compared with the higher levels at the heart of challenging constituencies in London and in the north and north-east.
Jim Fitzpatrick
When I won the seat of Poplar and Canning Town in 1997, the level of unemployment there was almost 17%. When Labour left office last year, it was down to about 9%. That was still between two and three times the national average, but it was a lot less than it was when we won the election in 1997 because of the efforts that the Labour Government put into attacking unemployment as the scourge of our economy. My right hon. Friend is making a strong argument that unemployment is not now going to be attacked as aggressively as we would hope, because of the economic policies of the coalition Government. I would like him to continue in this vein and to outline how we think it ought to be attacked, because it is the scourge of our economy.
Mr Hanson
I am grateful to my hon. Friend for making that valid point. I know that he is committed to bringing jobs and investment to his part of east London, as indeed my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) is to the north-west and elsewhere.
I am not saying that we will not approve the cuts in capital allowances in due course. I am simply asking the Minister to monitor their impact, and if they are becoming detrimental, given the corporation tax cut to which they are inextricably linked, we shall need to look at how the process will continue.
John McDonnell
As my right hon. Friend said earlier, all these clauses are linked and it is difficult to disaggregate them. Clause 10 is certainly being used a mechanism to fund the allowances being distributed to companies overall. As I say, I find it extremely difficult to link that to the rationale that has been given by both the Chancellor of the Exchequer and the Prime Minister in the past.
Jim Fitzpatrick
One of the biggest elements of British manufacturing is the food industry. When I was a Minister of State in the Department for Environment, Food and Rural Affairs, the National Farmers Union lobbied me aggressively. Consequently, I lobbied the Treasury, as DEFRA does, about capital allowances in respect of buildings and equipment for the farming community. Has my hon. Friend had a chance to talk to the NFU about the comments he is making? Has he any understanding about whether it is being penalised in order to assist transnational corporations from outside the UK? Is this being done instead of supporting British manufacturing and British business people?
John McDonnell
Strangely enough, given that I represent Hayes and Harlington, an urban area, I do not have an awful lot of engagement with the NFU, although my area does still have one farm left in it. I have an engagement with Hillingdon chamber of commerce—I am meant to be hosting its annual parliamentary lunch at the moment—and a number of its members have explained to me their concerns about the impact on small firms. I share the view of the hon. Member for Amber Valley: capital allowances should not be used just as mechanisms to be manipulated in years of high profit. There is a need for an overall review of capital allowances, but I find it unacceptable to cut them in the short term to pay for corporation tax reductions and for the beneficial treatment of multinational corporations. That is why I support the amendment, which is fairly mild-mannered and simply asks whether we can reconsider the matter.
As my right hon. Friend the Member for Delyn said, I would expect a wise Government to have the Treasury carry out such an assessment regularly. The amendment asks for that process to be more open and transparent and for it to be reported to the House so that we can have a full and thorough debate. I hope that the Minister can assure us that he can at least give us some line of reporting on the implementation of the policy over the coming period.
It worries me that as we cut capital allowances, which will reduce corporation tax in this country, we will get into a cycle just like that in the 1930s with an internecine battle between countries about reducing corporation taxes. That will lead to a policy of beggar thy neighbour in order to secure some short-term gain in the form of overseas investment in the UK. I do not believe that that is the solution and I think it will be found to be counter-productive in the long term, even though there might be some short-term gains to tide the Government over for the next 18 months, if they survive that long.
I believe that the Government are mistaken in bringing forward this process of corporation tax reduction. If we are paying for that through the capital allowances changes, we will divide industry and the private sector. A large number of small firms, particularly in the manufacturing sector, will lose out and will not gain sufficiently as a result of the corporation tax cuts. Other areas of the economy, particularly the finance sector, will gain yet again and yet more anxiety will be expressed in the private sector about the Government’s divide-and-rule policy.
Mr Love
I agree. If we take the coalition at face value, it has suggested that we need a vibrant small business and manufacturing sector, much of it consisting of small businesses. I would think that it would want to promote that by incentivising it through the taxation system. One wonders whether the measure would achieve that. I do not want to suggest, without any concrete figures, that that will in fact happen. We urge the Government to produce those figures, so that we can all make a judgment. Indeed, they can make a judgment about whether their policy has achieved their objectives.
Jim Fitzpatrick
My hon. Friend, like most of the speakers in this debate, is generously supporting the modest amendment tabled by our right hon. Friend the Member for Delyn. It does not attack what the Government are trying to do; it is just asking for
“an assessment of the impact of the changes”.
We are therefore giving the Government the benefit of the doubt, as their proposal may well be beneficial and positive. As my right hon. Friend has said, the Treasury will examine, monitor and scrutinise the impact of the measure on businesses, so what is wrong about publishing an account as suggested by the amendment?
Mr Love
I agree, as other Members do, that that is not an unreasonable request. If the Government choose not to support the amendment, are they concerned about the impact of capital allowances and the prospects for the UK economy? One wonders whether they do not want the debate that would ensue in 2012 when, if we are to believe Government figures and the OBR, the economy should turn a corner. That would be an appropriate time at which to carry out that investigation.
There are 5 million small businesses in this country, and it is a symbol of the unity that we occasionally achieve in the Chamber that Members from all parts of the House recognise the role that they play now and, importantly, in future. If we add to the impact of capital allowances on small businesses the failure of the banking system in this country to provide the credit necessary to expand the sector, I wonder whether we can achieve all that the Government hope to achieve through the shift from public sector to private sector activity. I merely raise that as an additional issue, but I hope that the Government will address the credit needs of the small business sector a little more robustly. That is what underpins the amendment.
Finance (No. 3) Bill
Jim Fitzpatrick Excerpts(13 years ago)
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Nic Dakin
I thank the hon. Gentleman for his intervention. We are arguing that because of the fragility of the recovery, it is time to repeat the bank bonus tax. The Government should make their decisions now when they are not constrained. The decision now should be to repeat the bank bonus tax and increase the bank levy year on year, rather than leaving it static. That is what this review of the bank levy would allow us to establish, and that would produce an additional income, he will be pleased to hear, of at least £2 billion in each year of this Administration. That additional £2 billion could be used by the Government on behalf of the British people, the taxpayers and, indeed, the shareholders of these companies.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
Would my hon. Friend be surprised to hear that the hon. Member for Bradford East (Mr Ward) was in Westminster Hall this morning, alongside many other Members, seeking additional funding for ESOL—English for speakers of other languages—training? My hon. Friend is giving a solution that would allow the Government to provide that additional funding, which would produce growth in the economy, rather than the shrinkage we are seeing promoted by the coalition Government.
Nic Dakin
I thank my hon. Friend for his intervention. The review of the bank levy, which is at the heart of the amendment, would allow the Government to look at the sorts of things that that money could be spent on. It could be used for a youth jobs fund, for putting £25 million into new homes or for providing the regional growth fund with an additional £200 million. My hon. Friend the Member for Nottingham East (Chris Leslie) has already explored those issues in some detail.
Jim Fitzpatrick
Technological advances such as hybrid vehicles, greener cars, electric vehicles and biofuels might lead to a reduction in emissions. Could they therefore be incorporated into the review? They will surely have an impact on taxation policy in future.
Hugh Bayley
The premise that my hon. Friend puts forward is absolutely right. The fact that more and more people are using low-emission vehicles will obviously have an impact. However, the purpose of the review proposed in the amendment is to consider what effects the fiscal changes will have. If the price of fuel is raised, some people will consume the same amount of fuel anyway because they are in business and they do not want to contract their business, but generally speaking it has a marginal effect. Private motorists will reduce the number of discretionary journeys they make by trying to take their cars to the shops less frequently and perhaps abandoning some leisure trips, and businesses will look for ways of economising as prices rise. I have heard the Minister’s comments and I am grateful to her for drawing my attention to the estimate that the Government have made, but it is a fairly bald statement and it does not answer my question about whether the measure is driven by the Government’s environmental concerns or their revenue-raising concerns, and we need a clear answer on that.
Amendment of the Law
Jim Fitzpatrick Excerpts(13 years, 1 month ago)
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Joseph Johnson
Markets can turn on a dime if they detect backsliding. Recovering lost confidence would require much bigger cuts to public spending than the credible ones that the Government have outlined. Evidence for that is in abundant supply in countries on the periphery of the eurozone. Despite the agreement on the post-2013 European stability mechanism, concerns about the underlying solvency of the most vulnerable countries—Portugal, Ireland and Greece—are growing.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
I am terribly sorry to interrupt the hon. Gentleman, but will he respond later in his speech to the question that my hon. Friend the Member for Rhondda (Chris Bryant) asked him?
Joseph Johnson
I did not touch on it directly because the reply is obvious. Yes, other countries have large debts, but that does not mean that we do not have an urgent need to reduce the scope of our borrowing and our national interest payments.
Finance Bill
Jim Fitzpatrick Excerpts(13 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Gavin Shuker (Luton South) (Lab/Co-op)
Thank you for calling me, Mr Speaker. I am constantly amazed by this Chamber. I had had ambitions to speak in this debate today, but I now discover that it is tomorrow—[Hon. Members: “No, it’s still today.”] Of course it is not tomorrow; it is still today. That is another surprise. I shall keep my remarks characteristically short.
We have been looking at two opposing risks in the debate today. The one that has been mentioned most by those on the Government Benches is that we would find ourselves in a debt crisis as a result of a lack of confidence in the cuts that we are making. I might have a different view from those on the Government Benches. The other risk is that we will cut too deeply and take out investment that would otherwise go into growing our economy. To remove the bulk of the structural deficit, as the Government have chosen to do, reflects one of those positions very strongly. However, it does not reflect the fact that we must walk a path between those two risks. We must find a way.
I was pleased to stand for Parliament on a manifesto commitment to reduce the deficit by half over four years of the next Parliament. That struck me as a good route to take between those two risks. To go further than that, as the Government are choosing to do, is ideological. We all have different ideologies—I understand that—but at a time when risk is such an important aspect of the debate, not to recognise that fact is deeply worrying. Today, we have been talking about VAT, capital gains tax and insurance tax. There is one other tax that I would like to talk about tonight.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
My hon. Friend makes the good point that those on the Government Benches are offering an alternative view on the Finance Bill. However, we have not heard very much from them for a considerable period of time. Does he think that they have run out of arguments to defend their position, or that we are actually winning the arguments and that they will vote with us in opposing the Bill’s Second Reading tonight?
Gavin Shuker
I thank my hon. Friend for that intervention.
I represent the east of England in my constituency of Luton South, and there is another tax that will have profound implications for my constituents. It is the change in national insurance. I am one of only two Opposition MPs representing the east of England and, as of Budget day, I represent part of what the Government now call the greater south-east. I am sure that hon. Members can imagine how delighted I was to receive that accolade but, having never heard of the greater south-east, and given that I live there, I decided that I should find out more about it.
I learned that, contrary to the coalition’s view that our area is so affluent that, even in the most serious downturn of the past 60 years, it needs no Government support, it houses some of the most deprived wards in our country. It should be recognised, as some on the Government Benches have chosen to do tonight, that the inequality within regions can be as great as the inequality between regions. For example, the Dallow ward in my constituency stands in stark contrast to Elstree, one of the most affluent wards in the country, through which I pass every day on my commute to Parliament. Both are in the greater south-east.
I have also learned that, of all the regions in this country, the greater south-east is the most likely to have vital infrastructure projects shelved. Given the VAT rise and the other measures in the Bill, this will have a really profound effect on the inhabitants of the region. Investment in infrastructure is a far better way of kick-starting economies than cheap, short fixes and making cost savings. Indeed, the independent Office for Budget Responsibility accepts that growth projections must be downgraded as a result of the coalition’s plans.
Most importantly for the people living in my constituency, I have learned that if an entrepreneur wanted to start a new business in the greater south-east, they would find themselves some £50,000 worse off than if they had started their business elsewhere. Let us be clear about the impact. For my constituents in Luton South, that means that moving just two stops up the train line or two junctions up the M1 would effectively give them a £50,000 golden hello for starting up. This Government would deprive our region and our town of new jobs and businesses, and fresh opportunities for growth.
Rising unemployment often hits the poorest and the youngest hardest. Indeed, my right hon. Friend the Member for Tottenham (Mr Lammy) spoke passionately about his experiences of growing up at a time when he faced a double whammy of weak growth and spending cuts, along with increased taxation, and he pointed at the profound effects on the local economy—not just in the short term, but in the long term as well. All things being equal, who would not want to establish their business within a few miles of their own home? Who would not want to employ people from within their own community?
These plans are a missile aimed at the heart of the recovery in the east and in Luton South. As glamorous as “the greater south-east” sounds, I simply have to tell Government Members that the continued membership of this region simply does not serve our constituents. Given a choice, I would like to continue to be a Member representing the east of England.
Barry Gardiner
Not only has my hon. Friend made a perfectly apposite point, but she has made it better than I could ever possibly do. I can only agree with her.
Jim Fitzpatrick
If my hon. Friend is going to be so complimentary to those who intervene, how can I resist? Will he explain his perception that this is a Budget of choices? Is he going to refer to the analysis by the Institute for Fiscal Studies, according to which it is a Budget of choices and the Government made the wrong choices, or is this entirely his own analysis?
Barry Gardiner
My hon. Friend is absolutely right. The Institute for Fiscal Studies has made some damning comments about the regressive nature of this Finance Bill.
Should it be passed in the House of Commons, the Bill will be unavoidable in its own way. Consider the carer, middle-aged herself but looking after her ageing, frail parents. She will not be able to avoid seeing her carer’s allowance cut by £90 a year over the next five years. Consider the family of five living in Brent, already struggling to find the difference between what the landlord insists is a fair market rent and their housing benefit payments each month. They will not be able to avoid eviction as the Finance Bill cuts housing benefit. Consider the severely disabled sufferer from Crohn’s disease. She will not be able to avoid losing £300 a year as the Bill cuts support year on year.
Consider the young couple starting their life together, moving into and trying to furnish their flat. They will face the costs of conveyancing solicitors, new fridge, new washing machine, new carpets, new sofa, new telly. This is certainly the unavoidable Finance Bill for them, with an extra 2.5% on every item. It is the unavoidable Finance Bill for the poor, for the disabled, for those on housing benefit, and for carers. A clear choice has been made by the Conservatives to cut an extra £40 billion on top of the £78 billion announced already.
Owen Smith
I cannot but agree wholeheartedly. I am sure that that is an apposite intervention. Throughout the Bill and the wider Budget, there are measures about which all the most vulnerable people in our society should be concerned. My constituents are deeply worried about the measures affecting not just pensions, but, equally, housing benefit, the most pernicious effects of which we will not see until much later in this Parliament, and VAT. The VAT increase will not be introduced until next year, but when it is, it will bite on ordinary working people throughout my constituency and throughout the country.
Jim Fitzpatrick
I am very grateful to my hon. Friend for giving way. He is being most generous to Opposition colleagues—and perhaps some Government Members will want to engage in debate, too. Does he agree that the changes to housing benefit in constituencies such as mine—Poplar and Limehouse—will have a very damaging effect and could ultimately lead to poorer people being driven out of the centres of our great cities and banished to the suburbs? Surely that will not result in a cohesive society involving all parts of our community.
Owen Smith
Again, I wholeheartedly agree. I am not sure what is worse, that measure or the suggestion—the rehash that we heard only last week—that people should get on their bikes, get out of places such as Pontypridd and go to other parts of Britain where, allegedly, work will be created through the magical 2.5 million jobs that we are going to see each year.
I am about to finish, and I shall do so on a highly topical note, by returning to my quotation from Sir Alan Budd’s interview for a documentary programme some 10 years ago. He was asked whether he was worried that economists such as himself were being used to cover the political motives of the previous Tory Administration, and in response he said:
“The nightmare I sometimes have, about this whole experience, runs as follows. I was involved in making a number of proposals which were partly at least adopted by the government”—
the Thatcher Government—
“and put in play by the government. Now my worry is…that there may have been people making the actual policy decisions…who never believed for a moment that this was the correct way to bring down inflation.
They did, however, see that it would be a very, very good way to raise unemployment, and raising unemployment was an extremely desirable way of reducing the strength of the working classes—if you like, that what was engineered there in Marxist terms was a crisis of capitalism which re-created a reserve army of labour and has allowed the capitalists to make profits ever since.”
I wonder whether that might be why Sir Alan Budd has decided to leave the service of the current vintage of Tories.