Lindsay Hoyle
Main Page: Lindsay Hoyle (Speaker - Chorley)Department Debates - View all Lindsay Hoyle's debates with the HM Treasury
(13 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Derek Twigg
On a point of order, Mr Deputy Speaker. The Chief Secretary hinted a few moments ago that the money was not available for Building Schools for the Future projects in my constituency, yet the shadow Education Secretary has had a letter from the permanent secretary at the Department for Education saying that the money was available. Also, I know for a fact that the money was there for the Mersey Gateway project, yet the Chief Secretary said it was not. Can we have some consistency in the accuracy of answers?
Mr Deputy Speaker (Mr Lindsay Hoyle)
That is not a point of order. If the hon. Gentleman wants to intervene, it is up to the Minister to give way if he wishes.
Danny Alexander
I have given way a great deal, and I now give way to the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards).
Mr Deputy Speaker
Order. I should inform the House that Mr Speaker has not selected the amendment.
Mr Byrne
The right hon. Gentleman has today put out a number of very constructive suggestions—for example, urging people hit by budget cuts to wear more clothes, to turn down the thermostat and to eat more vegetables—[Hon. Members: “Withdraw!”] I am merely quoting the Daily Mail, which is a source I trust—it is, of course, beyond reproach.
Mr Deputy Speaker
Order. Obviously the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) used the Daily Mail. I am sure that it was not meant with intent, and that we can be a little more careful in the way that we proceed.
Mr Deputy Speaker
Order. The right hon. Gentleman should withdraw that comment if it has been withdrawn from the website.
Mr Byrne
I am happy to withdraw comments published in the Daily Mail.
The point that I was about to make was that the business community, having had a chance to reflect on the Budget, has come to some conclusions, and I was surprised not to hear about them in the Chief Secretary’s remarks. A fortnight ago, the Chancellor told us that the Budget was
“a balanced package that will send the signal that Britain is open for business.”—[Official Report, 22 June 2010; Vol. 512, c. 176.]
In the weeks since, it is fair to say that business has not been hanging out the bunting. The stock market has now recorded its worst quarterly fall for eight years, as it fell to its lowest point for 10 months. Goldman Sachs has warned that tighter fiscal policy now
“would make it hard to deliver improving growth for all, or possibly any”
country. The chief economist of the British Chambers of Commerce has said that the scale and severity of the Budget
“inevitably increases the danger of an economic setback”.
The Chartered Institute for Purchasing and Supply has said that its managers have
“voiced grave concerns that budget cuts and VAT will tip the scales and amplify the likelihood of the UK slipping back into recession”.
The confidence of Britain’s finance directors has fallen to a 12-month low—just one in four is optimistic, and two thirds say that tighter fiscal policy will hurt their business. Yesterday, the confidence of Britain’s supply chain had its largest monthly fall since 1997. It is for those reasons that a wise man once said that
“the next government has to recognise the fragility of the economy and not take action which would precipitate a double dip recession leading to more unemployment and even bigger budget deficits.”
That was, of course, the Business Secretary in April—once a prophet and now a lost cause.
Mr Deputy Speaker
Order. I hope that we can stick to the Bill. We are getting carried off in many directions, and I am sure that hon. Members will not want to do that.
Simon Hughes
May I say to the right hon. Gentleman and the hon. Member for Chesterfield (Toby Perkins) that the four major proposals on tax, finance and equality with which we went into the election have been delivered in the Budget? The only one that was not delivered was value added tax. The right hon. Gentleman knows that there is concern about its increase, but he has heard me say that I believe that, in the event, rather than making further spending cuts, it was the least worst option.
Ms Angela Eagle (Wallasey) (Lab)
We have had an interesting debate. We just heard from the hon. Member for Morecambe and Lunesdale (David Morris) the most amazing reason why debate in the House should be curtailed that I think I have ever heard used in a democracy. I hope we are not going to hear more arguments that debate in the House should be curtailed because of the cost, as that seems rather odd.
I begin my response to a long and illuminating debate by adding my congratulations to those who made their maiden speeches. The hon. Member for North East Cambridgeshire (Stephen Barclay) gave an extremely entertaining speech about the history of his constituency. He told us that it was better known as the fens, which sounds a lot more exciting than its current name, which if I may say, is rather boring. He then spoke of the history of drainage in the fens and many of the issues that he is confronting as a newly elected Member. I wish him a long and happy membership of the House. He certainly made a good impression with his maiden speech.
My hon. Friend the Member for Scunthorpe (Nic Dakin) also made an extremely accomplished maiden speech this evening, paying suitable tribute to both his predecessors, Elliot Morley and Ian Cawsey. He displayed a passion for the constituency that it is now his privilege to represent. He lives there and clearly loves it, and I am sure that we will hear many more such contributions from him.
The hon. Member for Ipswich (Ben Gummer)—a chip off the old block—made a characteristically good maiden speech, as did the hon. Member for Weaver Vale (Graham Evans). The latter paid a tribute to his predecessor that Labour Members appreciated. I congratulate all hon. Members who made their maiden speeches tonight. I am not sure how many more maiden speeches there are to get through, but I have always enjoyed listening to Members’ first contributions to the House. After many years of listening to such speeches, I have not lost my enthusiasm for them.
The debate was initially joined enthusiastically and with a great deal of energy, but that energy petered out on the Government side of the House halfway through the evening. Instead of the usual to and fro of debate, there was no sign of anyone on the Government side willing to stand up to defend the Finance Bill. Government Members ran out of steam and stopped participating. As the Bill goes to Committee and Report in the next couple of weeks—unusually, that will take place completely on the Floor of the House—I hope they will show a little bit more stamina than they managed to show today, when the debate was somewhat one-sided.
The right hon. Member for Wokingham (Mr Redwood), whom I no longer see in his place, is one of life’s optimists. He told us that we are all far too pessimistic about the state of the economy. To listen to him, one would not have thought that his right hon. and hon. Friends on the Treasury Bench had spent the past few weeks driving down confidence in the economy with the scaremongering tactics they have been using to justify the measures in the Budget.
We then heard from the hon. Member for Dundee East (Stewart Hosie) on behalf of the Scottish Nationalists, who is a long-standing and experienced contributor to Finance Bill debates. I have served on many Finance Bill Committees with him and, as always, he brought his astute experience and forcefully expressed opinions to the debate. He was especially exercised about the increase in VAT in the Bill which, he said—I have to say I agree with him—contradicts the fairness theme that is purported to run through the Budget. He described it as unforgivable and economically foolish.
We also heard from the hon. Member for North East Somerset (Jacob Rees-Mogg) who gave us something of a history lesson and, like so many of his colleagues, foolishly raised the spectre of Greece. They really will have to stop doing that if they are to be reasonable and responsible.
One of the more interesting speeches from those on the Government Benches came from the hon. Member for St Ives (Andrew George), whose words we listened to with extreme care given his actions so far in tabling amendments to the Bill. Clearly, he is struggling with the VAT increase. It is worrying him. He said that he did not think the Red Book was accurate in its assessment of VAT as progressive and he raised the tantalising—for me, at any rate—possibility that he might consider amending the Budget in Committee or Report on the Floor of the House. We will certainly wait to see whether he does so, and we will look carefully at the issues that he wishes to raise.
We had a series of speeches from my side of the House, beginning with an extremely eloquent contribution from my hon. Friend the Member for Warrington North (Helen Jones), who talked about how regressive the VAT increase will be. She also said that the banks were being treated softly while industry was being treated relatively badly by the proposals in the Finance Bill.
We also heard from my hon. Friend the Member for North Durham (Mr Jones) and my right hon. Friend the Member for Oldham West and Royton (Mr Meacher), both of whom had pertinent critiques of the Budget judgment and the strategy implied by the Bill. We heard a tour de force from my hon. Friend the Member for Eltham (Clive Efford), who understandably had a go at the Liberal Democrats for their twisting and turning on VAT. He had some words to say about the Office for Budget Responsibility, which I will come back to.
We heard a superb speech from my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont)—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. There are too many private conversations going on and it is difficult to hear. We are getting near the end and I am sure that hon. Members can wait a little longer.
Ms Eagle
Thank you, Mr Deputy Speaker. I was just mentioning the speech by my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East—I cannot pronounce the name of his constituency very well, but it is definitely in Scotland. He made a superb speech about the political nature of economics and the attempts that have been made to hide what are basically political choices by describing them as economic imperatives that are somehow objective. He exposed what he called superstitions and myths around that whole area and demolished a lot of the arguments that the Government have been making to justify the Budget judgment in the Finance Bill. In particular, he talked with great wisdom about the paradox of Government thrift, which he pointed out is completely unlike budgeting for households. I look forward to many more such contributions from him as the Bill goes through its stages on the Floor of the House.
My hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) also made a good contribution, which I particularly welcome because I enjoyed canvassing with her during her election campaign. She is already well-loved, liked and respected in her constituency. She asked an important question that the House would do well to bear in mind as we consider the policies and legislation before us: where is the justice in the Budget measures, which will hit the poorest hardest? My hon. Friend the Member for Wansbeck (Ian Lavery) pointed out the perverse glee he perceived among Liberal Democrat and Conservative Members over the pain that will be inflicted through the Budget and this Bill. His speech demonstrated the human face of public sector workers, many of whom have found their reputations decried in the newspapers, and the jobs and the contribution that public sector workers make to our society belittled.
My hon. Friend the Member for Bishop Auckland (Helen Goodman) observed that the Budget judgments are very optimistic on jobs and, in particular, growth prospects, and she highlighted the impact on work incentives of some of the policies and Budget changes in the Red Book.
Stephen Pound
On a point of order, Mr Deputy Speaker. I would never presume to teach you your job, but some of us on this side of the Chamber are having great difficulty in hearing the priceless words that the shadow Minister is enunciating because of the well-refreshed ejaculations that are coming from those on the Benches opposite.
Ms Eagle
Thank you, Mr Deputy Speaker. I am trying to put the idea of well-refreshed ejaculations firmly out of my mind.
I was about to discuss the analysis by Howard Reed of Landman Economics and Tim Horton of the Fabian Society of the progressive or regressive nature of the Budget. They calculated the effect of the entire package, not just the tax changes. They included the distribution of the billions of pounds of extra spending cuts that had been announced, and then added an assumption of 25% cuts in departmental budgets. Their calculation showed that the combination of all the measures announced in the Budget that this Bill begins to enact will take £1,514 from the bottom 10% of households, which is fully 21.7% of their income. In sharp contrast, the richest 10% will experience an annual loss in income and services of £2,685, which is the equivalent of just 3.6% of their income. If there were 40% cuts in departmental budgets, as was briefed by the Chancellor and Chief Secretary at the weekend, the figures would be grimmer still.
My right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), the Shadow Secretary of State for Work and Pensions, commissioned the House of Commons Library to conduct a gender audit of the plans. It revealed that women would bear a disproportionate amount of the pain in the Budget. Of the nearly £8 billion net revenue to be raised by the financial year 2014-15, £6 billion will come from women and just £2 billion from men, despite the fact that women have considerably lower levels of income and wealth than men. The analysis does not include the impact of the savage cuts in public expenditure that the Deputy Prime Minister believes are necessary, and that are now being planned and announced. As women make up more of the public sector work force and rely more on public services, they will be hit harder by the pay freeze, hit harder by the job losses, and hit harder by the decimation of public provision for the needy, especially in their role as carers.
The Chief Secretary purported to rebut that earlier today by reading out a suggestion that the figures were not accurate because they assumed that all the family support is paid to women. It is not true that that assumption was made by the House of Commons Library. However, there are a couple of measures where the House of Commons Library has assumed 100% female receipt of benefits. That is the health in pregnancy grant and the Sure Start maternity grant.
The Conservative party and the Liberal Democrats will have to learn that merely asserting as loudly as possible that the measures in the Bill are “progressive” does not make it true. Producing a distributional table on page 67 of the Red Book which appears to show that it is progressive does not make their assertion true either, especially when the Institute for Fiscal Studies demolishes it the next day by pointing out that it included all Labour's key progressive measures enacted before the election to safeguard lower-income groups, and that it conveniently stops in financial year 2012-13, just before all the cuts to family support announced in the Budget are due to be implemented. If the Conservatives and Liberal Democrats were so confident that these measures are indeed progressive, they would commit the Government to carry on publishing those tables—[Interruption.]
Mr Deputy Speaker
Order. The House must come to order. Members are obviously coming near to the end. If we have a bit more patience, I am sure that we can move on.
Ms Eagle
If those two parties were so confident that these measures are progressive, they would commit the Government to carry on publishing those tables when the cuts really start to bite.
The huge hike in VAT is the regressive centrepiece of this regressive Budget and it features in the Bill. That is despite the fact that before the election the Prime Minister said on 23 April to Jeremy Paxman:
“We have absolutely no plans to raise VAT”,
and the Deputy Prime Minister fronted a huge VAT tax bombshell poster campaign warning about the dangers of electing a Tory Government, which still featured on his website until 9 o’clock this evening: when alerted to its continued presence by my right hon. Friend the shadow Chief Secretary, someone in the Deputy Prime Minister’s constituency finally did the decent thing and took it down.
Some Liberal Democrat Cabinet Ministers are even now trying to argue that VAT is not as regressive as they thought it was before the election. It seems that there is no limit to the depths that they are prepared to sink to justify the betrayal of their pre-election promises. VAT is regressive. It hits pensioners and those who are too poor to pay any income tax the hardest. Why then have the Government chosen to raise the bulk of their new tax revenue, nearly £13 billion, by using that tax?
We were assured that the cuts would be fairly distributed in a progressive way, but our early experience of the decisions coming out of the Treasury has confirmed our worst fears. The poorest areas have been hardest hit by cuts to discretionary programmes, which were intentionally aimed at areas in the most need.
One of the first cuts that the Government made was to the future jobs fund. That is at a time when we know, thanks to a leaked Treasury document, that the Budget measures alone will destroy 1.3 million jobs in both the public and private sectors and there are 69 students chasing every job. The prediction by the OBR that 2 million private sector jobs will be created in a mere five years is highly suspect, as an analysis by Adam Lent has pointed out. It took seven years after the 1980s recession and nine and a half years after the 1990s recession to create 2 million jobs, and we are expected to believe that the 2 million mark will be surpassed in record quick time despite the global shock of the credit crunch.
What about the sneaky little move from the retail prices index to the much lower consumer prices index as the definition used for benefit indexation? That cuts £6 billion from the benefits bill at the expense of pensioners and the poorest, the most vulnerable in our society. The delay in implementing the VAT increase will ensure that the price inflation it causes—
Mr Deputy Speaker
The right hon. Member is quite entitled to move the closure motion. It is the decision of the Chair whether to accept it, so what I would say is, Angela Eagle, I am sure you must be very near the end of your speech now.
Ms Eagle
I was talking about the sneaky little move from the retail prices index to the much lower consumer prices index as the definition used for benefit indexes. The delay in implementing the VAT increase will ensure that the price inflation it causes is not reflected in this year’s indexation cost, which is another sneaky saving from the poorest that the Government hope no one will notice.
This Finance Bill is a risky ideological experiment that will inflict real pain and suffering on those who did not cause the credit crunch. The Bill is regressive not progressive, it is deeply unfair and it is taking a huge gamble with an economic recovery that is not yet assured—we intend to oppose it.
Mr Deputy Speaker
Order. If the Minister wanted to give way, he would do so. The hon. Gentleman has been in the House long enough to recognise that the Minister is not going to give way.
Mr Gauke
We are not going to take any lectures from the Opposition. Remember, theirs is the party that doubled the 10p tax rate. Of course, at that point the Government did not produce a distributional analysis. I have asked officials to look into this, and if we look at the distributional impacts of the changes in income tax announced in 2007, an interesting fact emerges: the bottom five deciles all lose and the top five deciles all win. That was the consequence of the policy of the right hon. and absent Member for Kirkcaldy and Cowdenbeath, and some of us remember Labour Members cheering when that policy was announced.
What a contrast with the coalition Government. Whereas the Labour Government raised income tax on the poorest, we have taken 880,000 people out of income tax. What a contrast on the deficit, as well. I do not believe that when the Labour Government came to power in 1997 they intended to leave the biggest budget deficit in our peacetime history, but the fact is that they did. We know it, the British people know it, and deep down, Labour Members must know it too, but the more we listen to them—in complete denial, opposing each and every measure to control the deficit, failing to engage in how we solve the problem—the more absurd and out of touch they look. That will not impress many people.
The British people know that this Government are sensibly and pragmatically clearing up a mess left by our predecessors. I say to Labour Members: accept that fact, engage constructively in what we do about it, but above all, apologise for it. It is clear, however, that we will not get any constructive engagement from Labour Members. Instead, we see Labour’s age-old habit of failing to confront the hard truths: self-indulgent, short-sighted, with passion and resolution marching into the wilderness—irresponsible in government, irrelevant in opposition.
This country deserves better than that. The British people know that sorting out the mess will not be easy. Yes, sacrifices will have to be made, but in this Finance Bill we are making tough choices—choices that will restore our public finances, choices that enhance not diminish our competitiveness, and choices that are fair to all sections of society. I commend the Bill to the House.
Question put, That the Bill be now read a Second time.