The Economy
Nick de Bois Excerpts(9 years, 5 months ago)
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Chris Leslie
We had a global banking crisis, but, as I recall, growth was 1% in the first quarter of 2010. We had a strong level of growth as we came out of that crisis, because we took up the challenge to stimulate the economy and get it moving again. There was a VAT reduction at that time, and then what happened? What did the Chancellor of the Exchequer do? What did he do, with the help of the hon. Gentleman’s votes? He whacked up VAT to 20%, although the hon. Gentleman had not mentioned that in his election manifesto. He, too, will have to face his electorate and account for the decisions that he has made.
I do not want to take up too much time, because I know that many other Members wish to speak, but it is important for me to say something about the fiscal challenge. There will have to be other difficult decisions, which is why Labour is looking at every single Department and every item of expenditure, line by line, in our zero-based review, and identifying the different choices that can be made to enable us to live within our means. We have already proposed scrapping winter fuel payments for the richest 5% of pensioners, cutting Ministers’ pay by 5%, capping child benefit rises at 1% for two years, reviewing the value for money of assets and non-essential buildings owned by the Government, and making savings of £250 million in the Home Office budget—by, for example, scrapping police and crime commissioners—in order to better protect front-line policing. Over the weeks ahead, we will set out more of our early findings from other Departments.
Our plan is to balance the books and get the national debt falling as soon as possible in the next Parliament. While the Prime Minister and Chancellor think it is okay to make £7 billion of unfunded pledges—the Prime Minister said that again today at Question Time—although even the Secretary of State for Business, Innovation and Skills has described that as a “total fantasy”, our manifesto will not make commitments that would be paid for by additional borrowing. When we make promises, we will say where the money will come from. We would willingly put all our costings before the OBR so that it could check and validate them—but, of course, that would upset the Chancellor’s plan to smear our proposals and run a dirty election campaign based on fear rather than fact. If the Chancellor only had the guts to put his plans, and all our plans, in front of the OBR, perhaps we could let the public form a judgment based on the values and merits of the manifestos and their policy proposals.
Nick de Bois
How can the hon. Gentleman credibly expect the public to buy into Labour’s ability to balance the books? Every year, from 2001 onwards, the Labour Government spent far more than they took in, which is why they were left with one of the biggest deficits in the G7. You cannot spend more than you take in: that is the root cause of the problem, but Labour Members do not get it.
Chris Leslie
The hon. Gentleman and the Chancellor of the Exchequer were backing all the spending plans during those years. Moreover, the hon. Gentleman did not even mention the banking crisis. Where was he during that period? Does he really think that his constituents will be tricked by his airbrushing of the situation? The hon. Gentleman’s party has been in office for five years, but the Conservatives have failed on the promises they made to tackle the Budget deficit and get borrowing down. They promised that we would not have a Budget deficit, and they failed and it will be up to the next Government to finish the job.
Whoever wins the next election will have to pick up the pieces of this current mess. We will make sure that resources are channelled towards the issues that matter most to the public, but we should not have to wait until next May: the Chancellor has the opportunity to act now. That is why the third task for this autumn statement is to deliver a costed and funded plan to save and transform our national health service. In my constituency in Nottingham it is getting harder to see a GP; on cancer waiting times we still have a system struggling to meet the two-week target from GP referral to first outpatient appointment; and at the beginning of the month in Nottingham almost one in five patients had to wait more than four hours at our local emergency department. We have excellent staff and diligent management at our local hospital, but the pressures on their shoulders have been getting worse and worse, and Ministers have left the NHS to cope on its own, without finding the new sources of funding to put this situation right.
I therefore put this challenge to the Minister today: when she gets to her feet to respond to this debate, will she accept our suggestion to use £1 billion of banking fines from the recent foreign exchange rigging scandal and earmark this windfall for the NHS? More than that, will the Minister do what is required to tackle tax avoidance, and introduce a levy on tobacco firms and a tax on properties worth over £2 million to raise £2.5 billion a year—on top of the Government’s spending plans—for an extra 20,000 nurses and 8,000 doctors? These are necessary—and some of them are difficult—decisions, which focus relentlessly on supporting the NHS at this time of need.
These are the tests for next week’s autumn statement: a recovery for the many; a fairer approach to balancing the books; and a plan to save our NHS. Britain cannot afford another autumn statement of inactivity, neglect and the same old trickle-down economics. We need a Government who step up and take action to deliver a recovery shared by all. I commend the motion to the House.
Priti Patel
My hon. Friend’s point tells us everything we need to know about the economics of the Labour party.
We believe in a recovery that works for the many, and there are three ways of putting that recovery in place. First, we create the right macro-economic conditions. Cutting the deficit, restoring public spending to sustainable levels, ending the culture of Government excess—which the Labour party knows quite a bit about—securing inward investment, building, manufacturing, exporting and securing our place in the world are all key, and we are doing those things.
Nick de Bois
The Minister has touched on a crucial point. When this Government came to power, exports to the EU far outweighed those to the rest of the world. Our investment in UK Trade & Investment and the confidence of British investors in the macro-economic conditions that we have created have now turned that situation round. We are no longer as dependent on the struggling EU economy, following a 10% increase in growth outside the EU.
Priti Patel
My hon. Friend is absolutely right. This Government made the right decisions. For a start, we do not vilify businesses; we work with them to help them grow, export, and expand overseas. We have also invested heavily in UKTI, which is working in partnership with businesses up and down the country.
Sheila Gilmore (Edinburgh East) (Lab)
I rather suspect that the few people who may be listening to this debate will feel that it is running a similar course to previous debates. Sometimes it feels as if we are talking about different countries and different experiences, but I genuinely think that we all want and support many of the same things. I take exception to some of the portrayals of Labour party policy and politicians as not wanting to see people in work or not supporting people in employment. That is simply not the case and never has been.
Some 350,000 single parents alone were enabled to work as a result of the introduction of tax credits in the early part of this century. All were grateful to a Government who enabled them to take jobs that they had previously been unable to do.
Nick de Bois
Notwithstanding the good intentions behind tax credits, is not the reality that that Labour party policy is encouraging and funding corporations to pay less in the full knowledge that the state will pick up their employment bill?
Sheila Gilmore
If I have time I will come back to some of those important issues.
The point I was making was that the policy of the last Labour Government focused on getting people into employment and making work pay, not on encouraging people not to work as is so often alleged. We do not get the chance to challenge some of the statements and generalisations that have been made as much as we want. Earlier in this debate, the hon. Member for Ipswich (Ben Gummer) said—and perhaps he misspoke—that unemployment is now the lowest in our history. That is slightly astonishing, given that unemployment was lower than it is now, by some considerable margin, in all years between 1998 and 2008, when the recession struck, and of course the 1950s and 1960s saw considerably lower unemployment rates. There is no need to exaggerate the position.
Nor is it true that long-term unemployment was much worse during the years of the Labour Government. I am glad to hear that in 2013-14, the last financial year, long-term unemployment—people unemployed for more than two years—fell for the first time since 2003. But in 2008, as the recession was striking, that level of long-term unemployment was 200,000. It peaked at 460,000 in 2013, and this is the first fall since then. That is a considerable increase in the number of people unemployed long-term for many years during the period of this Government.
We hear a lot about the fall in jobseeker’s allowance payments in various constituencies, and coalition Members are happy to throw those figures back at every Opposition Member who speaks. But not every reduction in jobseeker’s allowance translates into someone being back in employment—and certainly not back in full-time employment. Many people cease to be entitled to jobseeker’s allowance because they come to the end of their entitlement, not necessarily because they are in a job or eligible for any other benefit.
The Minister suggested that the last Government did not do much for older people, but pensioner poverty was slashed during that time. During this welcome—although slow—recovery, we are seeing some alarming issues for people attempting to work. The number of people who are self-employed is much higher than it has ever been—it was 15% in 2014—and indeed two thirds of the increase in the total number of workers between 2008 and 2014 has been among the self-employed. The problem is that a lot of that self-employment is not generating a high level of income. We have to ask what is happening. When those figures for the high level of self-employment are given, the assumption is that we are talking about thrusting entrepreneurs who are doing very well, but the average earnings of the self-employed have fallen. They are now getting £200 and some a week, which is less than half that of employees.
A lot of self-employed people are struggling, either because their businesses are very new or, possibly, because they have been encouraged to become self-employed as an alternative to unemployment, but find that their earnings and family income are very low. That is an important point to consider, as is much other low-paid employment, when we look at the tax take. The deficit will rise this year—having come down by one third, which was not the total reduction we were promised—and that has a lot to do with reduced tax take. We argue that that has a lot to do with the underemployment that people are suffering and self-employment on very low earnings.
People are in self-employment of a very dubious kind. I met a constituent last Friday. He is in his 50s and he has always been a construction worker. He cannot get permanent employment in that area, even in a city such as Edinburgh where unemployment is relatively low. He has signed up with an agency. Periodically, it phones up to offer him work—four days here or five days there, with gaps in between. Recently, he was phoned up at about lunchtime and asked if he could get down to a building site that afternoon. “How long will the job be?” he asked. “Oh, just today and tomorrow.” So that was one afternoon and one day’s work for someone who is a skilled tradesman and has worked all his life. That is having a devastating effect on his ability to pay his rent, remain in his home and hold his head up as a valued worker. If that is the kind of employment we are encouraging, we must do something about it.
Nick de Bois (Enfield North) (Con)
I listened with interest to the opening speech by the hon. Member for Nottingham East (Chris Leslie), who relied a good deal on the forecasts made by the Chancellor in 2010. I shall not dwell on them, but the response to that autumn statement was made by the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), whose own forecast then was that this would be a jobless recovery. When it comes to examining forecasts, we should perhaps recognise that as well.
I share something else in common with the right hon. Gentleman, who by his own admission is not an economist: I am not one either. Looking broadly at the key issues, it strikes me that we have a little bit of “Dad’s Army” from the Opposition Front-Bench team, in that they are trying to create a panic and harm confidence. I would take the advice of Corporal Jones: “Don’t panic, Member for Nottingham East!” Public sector net borrowing fell by £200 million to £7.7 billion compared with the previous year. Although there has been a slight increase in the current budget deficit in the year to date, let us be clear that this coincided with a £3.2 billion increase in net public investment. Income tax revenues on the margins may be 0.4%, but, on the question of being confident about collecting revenue, Labour Members have talked at length about the increase in the self-employed and made some disparaging remarks, the idea being that self-employment is a last resort. It is not. There will probably be a boost in tax revenues as the taxes of the self-employed are collected in January. I would proceed with caution before reading too much significance into a statistically not too significant adjustment in the figures. Forecasts will be important. Even if the tax estimates were slightly down on the revenues, that would be a sign that a growing number of young people are going into jobs at lower salaries, which bodes well for the future—and we are here for the long-term, not for the short-term, recovery. That is important.
What most troubles me about this debate and the Captain Mainwaring approach to economics is simply this: we have set about focusing not just on the pure statistics of economic recovery because we believe it is crucial to create the environment for the entrepreneur to thrive and succeed, and for people to go back to work. That is what will drive the economy, given that more than 95% of our businesses are in the small to medium-sized sector.
Government intervention has driven change on the ground. In my constituency, for example, the employment allowance has reached 930 employers, the enterprise allowance has reached 200 people and, above all, since their inception, start-up loans of £500,000 have helped 100 new businesses. That is a return to the economics of the entrepreneur, making this a country to do business in. It is the growth of the SMEs on which we are focusing our policies that will drive the recovery, reduce unemployment and create employment opportunities. That is the key fact. We have more people in work than ever before. The situation in my constituency matches that across the country: youth unemployment is down 40%, and 38% down on the 2010 statistics. That is what counts for most people: delivering a regular pay packet and the security that comes with it.
Oral Answers to Questions
Nick de Bois Excerpts(9 years, 10 months ago)
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Mr Gauke
If the hon. Lady wants to cut taxes for 24 million people, she might want to consider increasing a personal allowance to £10,500, which is exactly what the Government have done, rather than doubling the 10p rate of income tax as the previous Government did. As for taxes on property, it was this Government who introduced the annual tax on envelope dwellings, ensuring that there is a contribution to the Revenue from owners and occupiers of properties held in a corporate envelope. Again, I really do not think that on this issue the Labour party has a leg to stand on.
Nick de Bois (Enfield North) (Con)
6. What recent assessment he has made of the effectiveness of his long-term economic plan.
The Financial Secretary to the Treasury (Nicky Morgan)
The Government’s long-term economic plan is working, and the UK is expected to grow faster than any other G7 country this year. Inflation is below target, the deficit has been reduced by more than a third since 2009-10, and employment is at record levels, but the job is not yet done, and the biggest risk now to the recovery would be abandoning the plan that is delivering a brighter economic future.
Nick de Bois
Evidence of the Government’s long-term economic plan was on display when the Chancellor visited Enfield to see the Meridian Water site, which is delivering jobs, houses and transport infrastructure. However, under this Government, will the Minister look at the opportunity for revisiting the northern gateway access road, which links the M25 with this vital economic area?
Nicky Morgan
My right hon. Friend the Chancellor has said that, yes, he is very happy to look at it. As he said when he visited, infrastructure investment is an important part of our long-term economic plan. I know that my hon. Friend has been working for many years on this scheme. He has built a coalition of partners locally and this is important for the Lee valley. The Government will always look at important infrastructure investment to bring jobs and growth to all parts of our economy.
Finance (No.2) Bill
Nick de Bois Excerpts(10 years, 1 month ago)
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Shabana Mahmood
As I set out, the issue is not just the risk taken by the banks, which have been very conservative in providing SMEs with access to finance. Members in all parts of the House accept that good businesses that have the capacity to grow, create more jobs and be successful are failing to get the finance they need. In my constituency, a number of successful, viable businesses are still failing to get finance from the banks. That is not a result of banks being a little bit conservative in their risk taking; they have significantly curtailed their lending, which is having a negative impact on SMEs and their capacity to grow and increase jobs.
The Public Accounts Committee also found that investment overall had declined and that Government Departments could not demonstrate whether their schemes had addressed the market failures that they had been set up to correct. There was no mechanism, the Committee said, for evaluation of the various schemes and no obvious goals were set for the schemes, making it easier for the Government to hide any failures. Goal setting of the kind envisaged by the Public Accounts Committee would make the failure of such schemes much starker, but would also lead to greater and quicker action to correct them and ensure that desperately needed finance reached SMEs.
An additional problem in the Government’s approach, according to the Public Accounts Committee—I think we can all agree on this—is the difficulty of raising awareness of the schemes available for SMEs, which are often small operations, one-man or one-woman bands. It is difficult to balance all the responsibilities of running a business, and often people do not have the time to engage with Government policy and how it affects them. They may hear about schemes randomly and it is not always easy to learn from Government websites what is available for small businesses. The Public Accounts Committee felt strongly that the Government lacked a clear strategy to ensure that SMEs were aware of the funding options available to them.
I noted at the weekend that the employment allowance introduced by the Government has been rolled out. Millions of letters have been written to businesses to make them aware of the £2,000 allowance that has come into effect. That goes to show the extent of the awareness raising that is required. I am sure that there was also a political advantage and motive to the writing of those letters. Writing to businesses telling them what change has occurred and how they might benefit is a good thing, but it shows the effort required to get the message out. Such effort was not necessarily apparent in the case of other Government schemes relating to access to finance.
Nick de Bois (Enfield North) (Con)
Perhaps the hon. Lady will understand my confusion and clarify this point for me. She has spent much of her speech suggesting that the Government were doing nothing for small business. Then, when they contact businesses and tell them how they can benefit from the Government’s policies, she seems a bit disappointed. Can she explain the contradiction?
Shabana Mahmood
I assure the hon. Gentleman that it is not a matter of my personal disappointment. The Government have announced a number of schemes, which everyone agrees have failed to get lending to the rate that is necessary to have a game-changing effect on the landscape for small and medium-sized enterprises. The employment allowance, which we supported—the hon. Gentleman served on the relevant Bill Committee—came after the national insurance contributions regional holiday, a scheme that was in place for three years and almost from day one failed to meet the ambitious targets that the Government set for themselves. Throughout the life of that scheme, we called on the Government to change course, which they did not do until the scheme came to the end of its three years, at which point they introduced the employment allowance.
Shabana Mahmood
I will not give way; I am going to make a little more progress.
As hon. Members will know, the level of business rates is set by the Treasury, although the revenues are collected locally. Business rates increase with inflation, and the rate of increase each April is set according to the rate of retail prices index inflation in the previous September. In September 2013, RPI was 3.2%, so business rates were due to rise by 3.2% this year. Of course, that was before the Government made their autumn statement announcement, which capped that increase at 2%. Business rates have risen rapidly during this Parliament because of high inflation. More than one in 10 small businesses now say that they spend the same or more on business rates as on rent. This April, businesses have been hit by a rise of £270, on average, at a total cost to business of £45 million.
Nick de Bois
The hon. Lady spoke very passionately, and rightly so, about her parents’ corner shop business, which she is right to be proud of. In citing these numbers, however, she overlooks the fact that because of the Government’s extension of small business rate relief, anyone with a rateable value of less than £6,000 is not paying anything at all, as I found out when I went down my local high street and heard how grateful people are for this support. We need to keep some context when talking about these numbers.
Shabana Mahmood
I hear the hon. Gentleman’s point, which I will come to later in my remarks. On the action that the Government have taken in the round, he will not be surprised to hear that my criticism is that it does not go far enough. By comparison, our alternative proposal, which is a Labour manifesto commitment, goes much further and would result in a cut in business rates and a freeze the following year.
The only choice for many shops, workshops, start-up businesses and others who pay business rates is to pass the increases on to their customers, primarily through higher prices, which of course makes things difficult for those customers. They also face a continuing squeeze, which many of them complain means that they can no longer afford to stay in business. This is having a real impact, as I know from my casework in my constituency surgery. I have met many constituents with family-owned businesses whose stories are not dissimilar to the story of my own family, whose elder relatives came to this country in the ’60s and ’70s and set up businesses that they have passed on to their children and, in some cases, grandchildren. They are now terrified that the squeeze from the exponential growth in business rates might put their family-owned businesses out of business. I have seen constituents break down because every time the business rates bill comes they fear that many years of hard work, which is tied absolutely to their conception of what it is to be British and to enjoy the freedoms offered by this country, might be going down the drain.
Given how much businesses are struggling and given the collection of issues that SMEs are facing, we have said that the next Labour Government would cut business rates in 2015 and then freeze them in 2016. In 2015, we would cut business rates on properties with an annual rental value of less than £50,000, taking the rates back to the level of the previous year, and then freeze them for such properties in 2016. As we have said, we would pay for that by reversing the additional cut in the main rate of corporation tax due to go ahead next year, when it will fall from 21% to 20%. The main rate is paid by companies with profits of over £1.5 million, while companies with profits between £300,000 and £1.5 million pay the rate on a sliding scale, and companies with profits of less than £300,000, which pay the lower rate, will be unaffected by the cut.
All the money raised from the corporation tax increase that we envisage—that is, a rise from 20% back up to 21%—would be spent solely and exclusively on paying for our policy on business rates. That is an important point given some of the debate that has taken place in the House in the past week or two, when we have been speaking about the Budget and attitudes towards business taxation. Even at 21%, our corporation tax rate would remain competitive, being second lowest in the G8 and second lowest in the G20. Government Members often say that any corporation tax rise will have a negative impact on our country’s capacity to do business, but I disagree, because, as I said, even at 21% it will be the second lowest in the G8 and the G20. The headline rate of corporation tax is not the sole reason that businesses choose to come to this country to invest and create jobs. It is an important factor—no one can deny that—but it is part of a picture of support for business that those wishing to come to this country look at, or are advised on, before they make their decisions. I do not believe that putting corporation tax back up from 20% to 21% would have too great an impact on our capacity to attract businesses to this country.
Shabana Mahmood
I do not think it does send that message. Business people are much more sophisticated than that: they do not simply look at announcements about the headline rate. They will receive advice from their advisers—their accountants and lawyers—when they are making their decisions about where to base themselves and where to go to invest and grow their companies. It will be explained to them, and known to them, that this policy is designed to support a different type of business that benefits all of us who are interested in the business landscape.
We have been very clear that this is the only change to corporation tax that we envisage during the next Parliament and that we are doing this not because we want to put people off coming to this country, or prevent them from doing so, but because we want to use all the money to pay for a cut and then a freeze in business rates. We have also said very clearly that any choices we make that differ from what the Government are doing will be fully costed and fully funded. As I said, we are happy for the OBR to look at our figures and audit our manifesto, and to do so for all political parties ahead of the next general election to make sure that the public are as well informed as possible about the different choices being made by parties that want to be in government.
Nick de Bois
Given the extreme volatility of corporation tax collections for decades, how would the hon. Lady deal with the unpredictable nature of the amounts collected? Will whatever is collected one year be applied as a discount on business rates the following year? If the revenues were below the expected amount, would the hon. Lady go back to businesses to ask for more in business rates? She should consider the unfortunate, difficult and unpredictable nature of the issue. Business needs certainty.
Nigel Mills
I am always a little nervous talking about Hitachi and rail, as I am from Derbyshire. I support Bombardier and want it to get rail contracts. I am sure that it is great news for the country and the north-east that Hitachi has chosen to do that. However, I clearly say that Bombardier is a far better make of trains and that it fully deserves the Crossrail contract it got in recent weeks. I look forward to healthy competition between the two. It would be great to have two well-regarded, highly skilled train makers in this country. Just to be clear: Bombardier clearly has the trump card on that.
It would be a terrible message to send out to the rest of the world, having seen us go so far in the right direction by reducing the rate of corporation tax from 28% down to the planned 20%, to suddenly start reversing that journey and saying, “Perhaps we’re not quite so sure that that was the right thing to do. Let’s have that extra revenue back and not support those businesses.” That would be the wrong thing to do.
Nick de Bois
Some people may be seduced by the idea that it is only 1%, going from 20% to 21%, but for corporations coming into a tax level of 20%, the Opposition are effectively saying that they would increase corporation tax by 5%. Let us make that clear.
Nigel Mills
I am sure my hon. Friend’s maths are absolutely right.
If we are to review taxes and rates, I am intrigued by the idea of having, as my right hon. Friend the Member for Wokingham (Mr Redwood) said, a wide-ranging dynamic assessment of tax rates. Let us have a look and work out exactly the right rates for various taxes. Are we in the right place, or are we throwing away revenue and destroying business activity by having certain rates in the wrong place? I would like to understand the impact on small businesses of the jobs tax or employees’ national insurance. I would be keen to know the impact of fuel duty rates and of the tax on energy bills. I suspect those measures are doing far more damage to our small businesses, and the number of jobs they can support, than other things. A wide-ranging study of the impact of tax on small business could be an interesting exercise and could direct the way forward for policy. I suspect that it would not go in the area the Opposition want. They seem to want an expensive hike in the indirect taxes on manufacturing that do so much damage.
We ought to welcome people moving in the right direction. In 13 years in government, Labour favoured property taxes via the council tax. They hiked it up thinking that people would not notice. It is intriguing that they have now realised that it is extremely unpopular for those taxes to get too high, and that perhaps it is easier to try to focus on direct tax rates.
In conclusion, the Opposition amendment is in many ways a complete waste of our time. It is absolutely right to get the corporation tax rate down to 20%. I suspect that that is the end of that journey and then we can look at various other measures to support small businesses. Reducing the main rate down to 20% will not stop our support for small businesses. Let us get on and do it: it is the right thing to do.
Oral Answers to Questions
Nick de Bois Excerpts(10 years, 2 months ago)
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Nicky Morgan
The number of children in poverty has fallen and the number of children in workless households has gone down by 100,000.
Nick de Bois (Enfield North) (Con)
5. What steps he plans to take to reduce youth unemployment.
The Financial Secretary to the Treasury (Sajid Javid)
Youth unemployment is falling, and the rate for the number of young people not in education, employment or training is at its lowest since 2008. However, we are not complacent. We are helping up to 500,000 young people into education and employment through the Youth Contract, funding jobcentres to help young adults who are not at school to find work through training, and piloting a new mandatory skills scheme for young jobseekers without basic maths or English.
Nick de Bois
When the Chancellor came to my constituency—where youth unemployment has fallen 32% since the general election—to launch his employment allowance, he met representatives of the excellent Ridgeway Garages, who told him that they would be employing more people and hoped to employ more young people. They also came to last week’s job fair and recruited five people, including young people. However, many businesses were unaware of the existence of the employment allowance. What steps will the Chancellor take to promote that excellent scheme?
Sajid Javid
Let me begin by praising my hon. Friend for holding another successful job fair in his constituency. It is a concept that he pioneered, helping many young people to find jobs. HMRC has already held discussions with businesses, charities and payroll software providers about the employment allowance, and will use its key publications and communications to advertise it further. It will also work with key stakeholders to ensure that the abolition of employer national insurance contributions for under-21s, which will come into effect in April 2015, is delivered effectively.
Tourism (VAT)
Nick de Bois Excerpts(10 years, 3 months ago)
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Nick de Bois (Enfield North) (Con)
I draw Members’ attention to my declaration in the Register of Members’ Financial Interests. I am also the chair of the all-party group on the UK events industry. I commend our report on the international competitiveness of the UK events industry to the Minister and to Members. That report is relevant to today’s debate, because I want to draw a distinction between business tourism and leisure tourism. Business sector tourism is defined as conferences, meetings, exhibitions, trade shows, corporate hospitality, music industry festivals and sports events, and that sector is worth £36 billion per annum to the UK economy. The industry forecasts that that will rise to £48 billion by 2020. It is worth noting that business visitors to the UK spend £131 a day on average, which is 72% more than leisure visitors. Visitors from overseas spend nearly 200% more on business trips, so the issue applies as much to the business sector as to the leisure sector.
The Minister will be interested to note that there are more than 25,000 businesses in the sector, including organisers, venues, suppliers and direct marketing organisations, representing roughly half a million full-time jobs. The international inbound event industry not only advertises Britain as a place fit to do business with in the permanent long term, but drives additional leisure tourism traffic. The many varied items that bring people to choose the UK, and London in particular, as a destination of choice are all discussed in our report, but I highlight the impact of the delegate fee for visitors. That is critical when choosing whether to come to this country for events, and our VAT position puts us at a competitive disadvantage. The league tables show that the UK is one of the top 10 countries for international meetings, but we are dwarfed by countries where VAT is outside the scope of being reclaimed. That reclaiming adds to the cost of visitors coming to this country. The USA, Japan and Singapore all dwarf us, as do other European countries that have lower VAT rates.
Whether the industry thrives or survives is not just down to VAT, but VAT influences decisions on where to hold events. I urge the Minister to understand that the impact both on the business events industry delegate price, which will influence choice, and on the subsequent leisure prices represent significant leverage in the pursuit of the industry’s goal of £48 billion in attendee expenditure by 2020. I commend the report to the Minister; in it, he will see the argument set out in great detail.
Cost of Living
Nick de Bois Excerpts(10 years, 5 months ago)
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Chris Leslie
I have not even said a word in response to the point of order. I will do so if the hon. Gentleman will allow me. It just goes to show that the Conservatives will do everything they can to distract attention from the cost of living crisis that is facing this country. As Corporal Jones might have put it, “They don’t like it up ’em!”
The hon. Member for Spelthorne (Kwasi Kwarteng)—
National Insurance Contributions Bill
Nick de Bois Excerpts(10 years, 6 months ago)
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Nick de Bois (Enfield North) (Con)
The Minister has talked about wages. Interestingly, the Federation of Small Businesses has said that about 29% of its members will use the employment allowance to give a pay rise to some of their employees, which they have been unable to do because of the economic circumstances. Does that not show that this policy is a way of delivering sustainable growth and sustainable wages, and not just a gimmick that will do more harm than good?
Shabana Mahmood (Birmingham, Ladywood) (Lab)
I salute the Minister’s valiant effort to gloss over recent history and his record. I can tell Government Members that the reason their Minister was not making any predictions about the impact of the policy in the Bill was that he got all his previous ones wrong.
Nick de Bois
Given the Opposition’s dreadful predictions about how many jobs would be lost under the Government, does the hon. Lady agree that it would be wise for her to tread carefully on predictions?
Shabana Mahmood
That was a valiant effort to change the subject, but today we are talking about this Minister’s record and the regional national insurance holiday plan. I note that the Minister could not bring himself to admit that the Opposition were right and that he was wrong about that. Perhaps we can return to that point later.
The Minister sought to focus as much as he could on the employment allowance and desperately tried to forget its predecessor scheme that the Government introduced in their 2010 emergency Budget—the regional national insurance holiday, which was enacted in the National Insurance Contributions Act 2011. The national insurance holiday was an abject failure, so I am not surprised that he wants to pretend it never happened, but it did, and it failed utterly. He has wasted three years clinging to that policy rather than doing what Opposition Members told him to do, which was to rip it up and design a new scheme that took account of the criticisms made by us and others.
The Bill introduces the employment allowance, which we support, so perhaps we should give the Minister credit for getting there in the end, but it is somewhat difficult to do so, because it has taken him far too long to rectify the flaws of the previous scheme, which we warned him about from the beginning, as my hon. Friend the Member for Nottingham East (Chris Leslie) has reminded him. As a result, businesses desperate for help have struggled in the meantime.
Those businesses, particularly small and medium-sized enterprises, which are the engine of our economy, have continued to suffer. Bank lending to SMEs is still contracting, and analysis published by the Department for Business, Innovation and Skills shows that tightening credit has disproportionately affected low and average-risk SMEs. Last year, Project Merlin missed its target for lending to SMEs by more than £1 billion. In 2010, the Office for Budget Responsibility predicted that lending to businesses would have risen 34% by now, but in fact it has fallen by 10%.
Given this climate of the past three years, action has been necessary to support business, but, on national insurance, it has taken the Government too long to get there.
Interest Rate Swap Products
Nick de Bois Excerpts(11 years, 11 months ago)
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Guto Bebb
That is an important point. My comments will state clearly that those products are not necessarily wrong. The question at stake is whether the products were sold appropriately, and whether there was a degree of mis-selling. Sophisticated investors, understanding what they are doing, should have the right to enter into such agreements. My question is whether the banks should be going after businesses with turnovers of less than £200,000 a year.
Nick de Bois (Enfield North) (Con)
I have a constituent, whom I will not name for understandable reasons, who has suffered a loss in excess of £1.5 million as a result of such a product. Does my hon. Friend not agree that the banks have an extra responsibility, because they are often dealing with inexperienced people who, nevertheless, place a massive trust in their long-term relationship with their banks?
Guto Bebb
That is a key point. Time and again, businesses have told me that their relationships with banks go back 15 or 20 years, and that they believed the banks had their best interests at heart. In some situations, however, they have clearly been sold products that they did not understand, but they trusted their bank manager because they had dealt with them for so long.
Having been persuaded by Mr Jones’s transcript to look into this issue, I started asking questions, and as a result I came across the Federation of Small Businesses working hard on this issue and the organisation Bully-Banks. We have identified literally thousands of businesses that have been affected, and debates such as this are necessary to show that the House understands and cares about the problem and wants to see a resolution.
Financial Services Bill
Nick de Bois Excerpts(12 years ago)
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Mr Hoban
I ask the hon. Lady just to hold her horses for a moment. This is about the third time we have discussed this matter and she may want to engage in the debate later, but we need to understand the function of the market. The previous Government—[Interruption.] The hon. Member for Nottingham East (Chris Leslie) says that we are still making the wrong decisions, but our predecessors in government examined this issue of the cost of credit and concluded that price caps worked against the interests of consumers. This Government have, following the parliamentary debates on the matter, commissioned research to examine the impact of a cap on the total cost of credit. We should look at the research, understand what remedies are being proposed and follow that through. One of the advantages of moving the cost of the regulation of consumer credit away from the OFT to the FCA is that the FCA has a greater range of tools and can make a wider range of interventions than the more narrowly focused solutions of the OFT.
Nick de Bois (Enfield North) (Con)
Does the Minister understand that the sense of concern is heightened by the fact that although the research is welcome, as yet there is no sense of urgency or indication of when it might become available? I would be grateful if he could suggest when we might see the fruits of that research.
Justin Tomlinson (North Swindon) (Con)
I shall speak briefly to a number of amendments that are inter-linked, because the protection of vulnerable consumers cannot be taken in isolation. A series of measures needs to be taken to protect those who need the most help.
Members on both sides of the House will support the principle of amendment 40, on the total cost of loans, but it is important that through the review we find a way of making it work. We do not want to push people into the hands of illegal loan sharks, and the review, which has been going on for 18 months now, needs to conclude so that we can start to make progress, but we need to look at all the variables, including the need to limit the amount of roll-overs.
The shadow Minister described how people might use such loans in exceptional circumstances, but there are two aspects to that. First, there are some people who, through consumer choice, might wish to take out such loans, so to my mind we should have compulsory credit checks. If people who can afford to service such debts make a consumer decision to be relatively inefficient with their money, that is up to them, as long as they can afford to do so, but if vulnerable consumers get trapped in a cycle of debt and need protection, a limit on the amount of roll-overs will be absolutely essential.
I talk to a number of high-street lenders—including The Money Shop—which look at people’s bank statements, but it is not unusual for people to have more than one bank account, and the reason I am so keen on credit checks is that although people often look after one bank account in an orderly manner, that is the one they present when applying for a loan, not the one that is in financial chaos.
Nick de Bois
My hon. Friend refers to the review, but alongside other points he has made, would it be worth considering lending techniques such as doorstep lending and similar?
Justin Tomlinson
My hon. Friend makes an important point. In previous debates, I focused my anger on the techniques of doorstep lenders, who build up a relationship with the consumer, pop by once a month and, over a cup of tea, suggest items for which they might want to borrow money, trapping them in a lifetime of expensive, high-cost debt. For example, they might pop round at Christmas to ask, “Have you organised your Christmas presents for your children?” The householder says, “No, I’m not sure I can afford it,” to which the lender replies, “No problem. We’re here. We can lend you that. It’s only £3 a week. I’m sure you’re going to be having relatives to visit, so why don’t you get your carpet sorted at the same time.” Those nudge-nudge techniques, which encourage people to take on high-cost debt, need to be looked at.
Amendments 37 and 55 seek to empower consumers, and there are important factors, such as the need to access impartial advice, that need to be looked at. I found through my work as chair of the all-party group on financial education that 91% of people who got into financial difficulty would have made a different decision had they known otherwise. Hindsight is a wonderful thing, but through our casework as MPs we see that some people make the wrong decisions and get themselves into difficulty. Of the three ways I would like to see that tackled, one is by the provision of easy access to advice through organisations such as the Consumer Credit Counselling Service, Citizens Advice and the Money Advice Service. To my mind, if a debt management service offers a high-cost loan, it should provide links to those organisations, just as when somebody buys a packet of cigarettes, there is a health warning on it. There is then no excuse. It relies on consumer choice, but if somebody chooses to, they can take up the advice.
It will also help if all consumers have financial education in the first place so that they understand the advice. In the case of the Money Advice Service, one needs to know something about the products in the first place. Obviously, face-to-face advice would be ideal. I would also like all loans to be displayed in pure and simple cash terms, so that every consumer can make an informed decision. I am sure that even Treasury Ministers would struggle to work out what is meant by an APR. I will not embarrass individual MPs by carrying out a test, as I have in previous debates.
Finally, I deal with clause 10. I was interested in the Minister’s comments about advice being given to consumers six months in advance. As we all recognise, that presents a challenge, because if somebody could predict what will happen in six months’ time, they would be very wealthy. The principle is right: we need to protect consumers from sudden changes. The evidence shows that the majority of people who fall into financial difficulties do so because of a change of circumstances such as the loss of a job, a family bereavement or a divorce. One could extend that to a sudden change in the cost of a loan because of the interest rates.
Although this is often derided, I think that we need to encourage a savings culture. If one has money in reserve, one is better equipped to deal with a sudden shock to one’s circumstances. I welcome the moves of the Nationwide building society for first-time buyers, because they are among those most at risk from a change in circumstances owing to a change in their job or in their interest rates, because they extend their borrowing to the absolute limit to get themselves on the housing ladder. Nationwide has introduced a linked savings account into which people have to put regular savings for the six months to a year that they are trying to get their first mortgage. It encourages them to carry on doing so, so that if interest rates and the cost of their loan go up suddenly, they have a financial buffer. More could be done to encourage the industry to promote such products.
Finance (No. 4) Bill
Nick de Bois Excerpts(12 years, 1 month ago)
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Mr Russell Brown (Dumfries and Galloway) (Lab)
I want to look at what the Bill does for the economy, the country and the people of our nations. What does it mean in terms of jobs, growth and fairness?
After the global recession, there needed to be tough decisions on tax and spending and how best we pay the deficit down. As was indicated earlier, much has been said about the previous Government spending in an excessive manner, but when my party was in government, those who now find themselves on the Government Benches said nothing at all about programmes for new schools and hospitals. That was not excessive spending; it was all needed after years of lack of investment, and it was welcomed with open arms. Members now on the Government Benches went to official openings, and applauded what was happening in their back yards, yet suddenly it has become “excessive spending” by the Government who were in power at the time.
The 50p top tax rate on the richest was introduced by the previous Government, and it is why we set out the difficult cuts that would be required to police, education and welfare budgets. However, by raising taxes and cutting spending too far and too fast, this Tory-led Government have choked off the country’s economic recovery and put hundreds of thousands more people out of work.
As I have said on many occasions in the House, my constituency is a rural one. The two biggest employers are the national health service and local government, so in the private sector my constituency depends on small and medium-sized enterprises. This afternoon, we have heard what SMEs are looking for. Yes, they want to be able to employ an extra pair of hands—if the work is there—and people have said that should be made easier for them. I am not about making life difficult for SMEs, but I can tell Members who are still in the Chamber that SMEs are looking for a bit of optimism. They want to see the optimism that, when the national minimum wage was introduced, allowed them to invest and employ additional hands; it was a sign of growth or green shoots—call it what we may.
America had the same deficit problem as Britain after the worldwide slump, but President Obama stuck to the plan that we were pursuing when we were in government: supporting the economy until recovery was secure. The US is growing, as we can all see, and unemployment is falling—the opposite of what is happening here. As we have no growth and so many more people are out of work—on the dole rather than paying taxes—the Chancellor’s deficit reduction plan is not working. In fact, as has been recognised on both sides of the House, the Government are set to borrow an extra £150 billion to pay for that economic failure.
The sole Scottish National party Member who was in the Chamber has left his place for the time being. Much was said in the ’80s and ’90s about the abundant revenues that were accumulated in this country from North sea oil and gas, but it was clear even in those heady days that they were being used up in economic failure. We are seeing a repeat of the mistakes of the late ’80s and the early ’90s; we are paying a heavy price for economic failure. That is why to a certain extent it is difficult to oppose some public sector pay restraint when others are losing their jobs, but in tough times, it is even more important to do things fairly. We should freeze wages for top-paid public sector workers to fund bigger pay rises for those on the lowest incomes, because if they have more money in their pocket, they will spend it in our high streets, which will give a glimmer of hope to SMEs.
Ministers simply have not listened, but that is no surprise. Only last week, the right hon. Member for Haltemprice and Howden (Mr Davis) wrote that with every passing day the Government seem more and more out of touch with people on modest and middle incomes. They are not just out of touch; they are already showing signs of increasing incompetence. Over the last couple of weeks, we have seen half-hearted attempts at U-turns—going back and wishing to consult and reconsider. The next few days will really test this Government and this Chancellor and his Treasury team.
We all witnessed the Government’s incompetence when we read in our newspapers, heard on our radios and saw on our televisions that they had caused panic at filling stations the length and breadth of the country. The Government’s economic policies are failing. Working families are paying the price, and it is a heavy price. We all live in hope of a change of heart. Unless there is one, next year pensioners will be hit hard, as millions are asked to pay more so that millionaires can pay less.
The Budget does nothing to give Britain the jobs and growth we desperately need now, and nothing to support families and pensioners on modest and middle incomes. Instead, it will do the opposite. This month, families are starting to find out what the Government’s decisions will mean for their budgets. As my Front-Bench colleagues have pointed out, according to independent experts the changes coming into effect this month will leave a family with children worse off by an average of £511 a year. To many of us in this place, £10 a week may not seem a lot, but it is to a family merely getting by.
Nick de Bois (Enfield North) (Con)
The hon. Gentleman would do well to reflect on one thing that would really hurt families: it would be far more devastating if the Government did not stick to their policies, and there was an increase of 1% or more to the interest rate, and to mortgage rates. Does he agree?