Budget Resolutions and Economic Situation

Michelle Donelan Excerpts

Thursday 17th March 2016 Commons Chamber

[Dr Whiteford]

The hon. Gentleman makes an important point and highlights the fact that young people’s housing problems are caused by undersupply of affordable housing. With the best will in the world, people on normal wages will never be able to buy a house in an urban area such as London, or in places such as Aberdeen and Edinburgh where the housing market is inflated.

[Michelle Donelan (Chippenham) (Con)]

Will the hon. Lady give way?

[Dr Whiteford]

I will make some progress.

The lifetime ISA is a nice little bung for trustafarians and others with munificent parents or grandparents. An 18-year-old whose wealthy parents put £4,000 into a lifetime ISA every year until he or she is 40 will get a tidy wee £22,000 handout from the Government. That stands in sharp contrast to the Help to Save scheme under which people on breadline incomes—if, by some miracle, they manage to save £600 pounds a year—will get £300 from the Government. In other words, they receive less than a third of the annual benefit available to those who are already wealthy and privileged.

[Michelle Donelan]

Will the hon. Lady give way?

[Dr Whiteford]

I will not give way at the moment. No wonder that the Chancellor did not have much to say about the Help to Save scheme yesterday. It is a sham opportunity that is being dangled in front of people who can never hope to insulate themselves properly against financial shocks, whose financial security is increasingly precarious, and who are most exposed to the risks of global economic instability. Some people have already started calling the lifetime ISA the LISA, but out of deference to my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Lisa Cameron) I will resist that temptation. Instead, we might consider calling it the PIERS— for People Inherently Entitled to Rich Savings.

However, this is a serious point because we all recognise the need to encourage people to save more for later life, and for almost all of us the best way to do that will be through a workplace pension to which an employer can contribute. At best, the lifetime ISA is a fairly gimmicky sideshow, and at worst there is a danger that it could undermine auto-enrolment, which is the key vehicle for incentivising savings and promoting fairer universal pensions. We must shore-up confidence in auto-enrolment and not distract focus from it. The pensions industry and sector has suffered a real crisis of confidence over recent decades because people have not seen adequate rewards from the process and do not believe that that is the best way to protect themselves for the future.

This morning the Resolution Foundation published a graph that shows how the Government’s income tax cuts will benefit people across the income distribution. It shows that the lowest 20% of incomes will gain a miserly £10 on average, while the wealthiest 20% will gain an average of £225 each. For me, that encapsulates in a nutshell this Government’s warped priorities and the unfairness at the heart of this Budget. There is an alternative to austerity, and I am sorry that the Government have chosen not to take it.

--- Later in debate ---

[Michelle Donelan (Chippenham) (Con)]

The Chancellor coined this Budget as one for the “next generation”. What struck me was the focus not only on today or next year, but on the years to come after that. “Long-term economic plan” has been said in this Chamber about as many times as “Thank you, Madam Deputy Speaker” but the Budget has highlighted that the phrase is not rhetoric or jargon, but a tangible plan to create a saving, home-owning, business-friendly and education-focused nation. Education is the bedrock of opportunity and key to helping the next generation, so it is necessary that a Budget with such a label focuses on education and is bold—and bold it is.

The acceleration of fairer funding to help 90% of affected schools by 2020 will ensure that some older children in Chippenham will also have the chance to benefit from just and equal funding. It will mean an end to the ludicrous existing funding system and will ensure that Wiltshire’s schools get the money they deserve and can continue to offer the fantastic education for which they have become known. Pupil funding in Wiltshire is over £2,000 per pupil less than the national average, so teachers, parents and pupils will be thrilled by this week’s announcement, because they will recognise that their cry has been heard.

I am also delighted that the Government are backing academisation. To be clear, I do not for one moment think that it is the panacea to solve all our problems, but it offers independence, choice, economies of scales and high standards. Abbeyfield School in Chippenham is going through the process and is desperate to become an academy because of the huge benefits and freedoms on offer.

[Michael Tomlinson]

Does my hon. Friend recognise that some schools will have genuine concerns about the change and will need support and guidance about restructuring and the rest of the process?

[Michelle Donelan]

I completely accept my hon. Friend’s point. One of the reasons for the announcement was to encourage schools to take ownership and the process will be school-led. We want schools to choose which multi-academy trusts they join, so it is very much a bottom-up reform.

Moving on, I must also stress my support for the sugar tax on soft drinks, which is another bold move. It sends a message that will educate and encourage consumers, parents, children and the drinks industry. With the two tiers, it will also encourage manufacturers to try to reduce sugar in order to move to the second tier. My grandmother died of diabetes when my father was very young. She had a complete addiction to soft drinks. Although it was a different era and we cannot be 100% sure that soft drinks were the cause of the diabetes, it is extremely likely. The household had a modest income, and I often think what a difference might have been made if we had had the tax back then. So I ask anybody who doubts this policy what they mean when they say it will not have any effect. Do they mean it will save only one or two people? Do they mean it will save only someone else’s grandmother or mother? This tax is not just about that, however; it is also about cutting the obesity rate, which means that we will have more money for the NHS to pay for dealing with ailments such as cancer.

This policy will not deter everyone, and nobody is suggesting it will. You can only lead a horse to water, you cannot make it drink. We can, however, send a strong message about the threat that these drinks pose. I believe that this policy is very Conservative; it is a responsible action by a responsible Government. It is a forward-thinking action, one that does not ban but which encourages personal responsibility. It encourages people to take ownership when they have the right facts and the right message from the Government. A recent study by Public Health England found that the average teenager consumes more than three times the recommended amount of sugar. The report also showed that if they cut down to the 5% target within five years, 77,000 lives would be saved and the saving to the NHS would be £14 billion. That makes the case on its own.

Using the money generated to double the primary school PE and sport premium from £160 million to £320 million per year is a great step forward in encouraging sport and fitness, and tackling childhood obesity. The £285 million a year to allow 25% of schools to extend their school day by an hour will assist parents and reduce their childcare bill. That, too, is a forward-thinking move, one supported by the Sutton Trust. The use of the hour will be key, and I look forward to reading more information about that.

This Budget was business-friendly and it was aimed at combating our productivity crisis. It will help businesses in my constituency and around the country, and it will encourage start-ups. However, we also need to encourage and enable the next generation of business owners, managers, directors and employees, and they will need to be proficient in maths. We need to use this opportunity to bring maths to life—to teach practical and applicable maths. We need to teach maths for real life, to ensure that students are work-ready and life-ready. We need, thus, to be able to give them help with their mortgages, tax returns and balance sheets. We need to give them maths for technical applied roles and basic business mathematics—the list goes on. This is particularly important, given that we have a growing number of self-employed in the economy. There will be 40,000 self- employed people in Wiltshire alone in the next five years.

I must stress that we must not allow this to be the start of a journey towards compulsory A-level maths or a broad-based maths course pegged at this level. I hope that Sir Adrian Smith’s report will reflect the need to enliven and enrich students’ mathematical basis for the real world. We need to ensure that our system creates numerate and mathematically proficient young people, but we must also remember that not everyone needs to be a mathematician—as I well know. We will need to ensure that they have the element that is necessary for the workplace. I repeat that this report and this reform offer us a massive opportunity, but only if we go about this correctly. I also welcome the additional support to encourage lifelong learning, and the recognition it shows that the economy and labour market are moving at a fast pace in our international world.

There are many things I would have liked to have said, but the time limit has severely handicapped me. I just sum up by saying that this is a bold Budget. It is an opportunities-based Budget. It is a Budget designed not only to improve our education system in the long term, but to offer opportunities in the short term and the long term for all.