Oral Answers to Questions

Richard Fuller Excerpts

Tuesday 27th January 2015 Commons Chamber

[Priti Patel]

Let us put this into some context. For a start, tax credit spending rocketed under the previous Government and throughout this Parliament we have made it abundantly clear that we support those with low incomes. Let us not forget either that the impact of Labour’s great recession is still being felt. We continue to help people with the cost of living through the increases in personal allowances, the freeze in fuel duty, cuts in council tax and, of course, by reducing the cost of child care.

[Richard Fuller (Bedford) (Con)]

Working tax credits are in effect a form of corporate welfare for employers who could pay higher wages, especially if tied to increased skills. Will the Minister continue her conversations with the Minister for Skills and Equalities about ways in which we can create a combination of those two, perhaps in the form of tax credits for training, such as proposed by Premier Inn?

[Priti Patel]

I thank my hon. Friend for his suggestion. He is right that more can be done through working with business and learning from their suggestions.

Charter for Budget Responsibility

Richard Fuller Excerpts

Tuesday 13th January 2015 Commons Chamber

[Ed Balls]

Of course that is exactly what the Chancellor has done in this Parliament. In 2010, when he set his first mandate, he said that this would be done by the end of the rolling five-year forecast period. In 2010, the Prime Minister clearly thought that that meant 2015 but the Chancellor now thinks it means 2018 or 2019, which is why he still says he is meeting his fiscal target. Everybody else can see it is a completely preposterous claim.

[Richard Fuller (Bedford) (Con)]

The shadow Chancellor has called this proposal a load of “pony and trap”, which I believe is a metaphor for something else. He has also called it a “gimmick”. He knows that many in his own party oppose it, but he has not explained to this House why he is forcing them to vote for it.

[Ed Balls]

The hon. Gentleman did not mention the quote from the TaxPayers Alliance, which also said it was a complete gimmick. That simply exposes the fact that the Chancellor has failed to meet his targets. Now let me come on to our fiscal position—

Finance Bill

Richard Fuller Excerpts

Tuesday 1st July 2014 Commons Chamber

[John McDonnell]

I will be fairly brief.

Under the last Government, I moved amendments like the new clause on virtually every Finance Bill. It has always made me anxious when Governments resist the requirement to provide information. That is all that is sought in the new clause. It simply looks to ensure that the House is properly informed about the impact of a differential tax rate. For the life of me, I could not understand why such amendments were resisted by the last Government, and I cannot understand why the new clause is being resisted now.

[Richard Fuller (Bedford) (Con)]

On the point about being informed, does the hon. Gentleman think it unwise that the Leader of the Opposition has already stated that he will increase the rate to 50p?

[John McDonnell]

I want openness and transparency. I would prefer people to put their cards on the table in the run-up to the general election, so that the electorate know where everyone stands. It would be invaluable for all parties in the House to have the information that is requested in the new clause, so that they could test it and see whether the hypothesis that has been put forward by the right hon. Member for Wokingham (Mr Redwood) and others is accurate. I do not believe that it is.

This debate goes much wider than the 50p rate of income tax. Members need to wake up to that. A few months ago, the Mayor of London ordered water cannon in case there are more demonstrations and riots. There is a deep feeling of unease and a building anger in our community about inequality. People do not usually mobilise and go out on the streets in the depths of a recession. Let us look at what has happened elsewhere: people get angry, mobilise and go out on the streets when they feel that the country is coming out of recession, but they are not sharing in the benefits from the sacrifices that have been made. We have asked people in this country to make immense sacrifices.

We should look at the various reports that have come out. A few months ago the Oxfam report exposed the fact that for the first time more of the people who are in poverty are in work than out of work. More children are therefore growing up in poverty in working families than in non-working families. I think that that is a first in the history of this country. A survey by Save the Children showed that, as a result of poverty, a staggering number of parents are going without food so that their children can eat. It showed the number of children who have never had a winter coat because their parents are unable to afford one. All that is building up into a significant anger about the inequality in our society.

Taxation rates are therefore not just about the income that they raise; they are about tackling inequality. The right hon. Member for Wokingham said that this has been happening over a long period. We now live in a society that is more unequal than it has been since Victorian times. It is true that for a short period in this recession, the Gini coefficient went down for two years. However, according to HMRC figures, it started rising again in 2012-13. I think that that will provoke anger in our community. Politicians need to be aware of that anger. Unless we do something about it, it will be difficult to contain.

That is why Governments need to be seen to be addressing the appalling inequality in our society. One way of doing that is to redistribute wealth, as Governments ought to do. The new clause does not talk about the vast maldistribution of wealth in our society. One publication from the Treasury revealed:

“The top 10% of earners in Britain have salaries which are equal to more than the bottom 40% of earners”.

That is absolutely staggering, and that is just about earnings: in some FTSE 100 companies, the chief executive and the directors earn 166 times the average wage of the workers.

Taxation is about addressing inequality. The new clause simply looks at one element of taxation and asks for an accurate report on whether it helps in the redistribution of wealth and in tackling inequality.

[Richard Fuller]

The hon. Gentleman has expressed his concerns about rising inequality. Why does he think the Opposition have been so timid in proposing remedies? Are they afraid of something? Are they worried what the media might say?

[John McDonnell]

I will give the Labour party the benefit of the doubt. It has the national policy forum at the weekend, where there is the discussion and development of policy. That is the healthiest level of democracy we have had in the party for a number of years. I hope that it is bubbling up into a comprehensive programme that we can put before the electorate and that addresses the central issue of inequality. One way of doing that is to have accurate information before us, which is what the new clause seeks.

I will finish there because I know that other Members want to speak. I just warn the House that unless we address inequality, we will reap a whirlwind in our society. We saw riots only a few years ago. I think that the injustices in the distribution of wealth will provoke even greater conflict in our society unless it is addressed.

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[Mr Gauke]

There is no evidence that HMRC’s original analysis was wrong. When the Opposition announced earlier this year that Labour would introduce a 50p rate, they claimed that a new £10 billion had emerged that had previously not been taken into account. That turned out not to be the case, however; they got that completely wrong. The data still point in the direction that HMRC’s conclusions are as I have suggested, and there is no reason to believe that the analysis was wrong. The fact is that the 50p rate is an ineffective way of raising money from the wealthiest.

[Richard Fuller]

Is the Minister as concerned as I am that Labour Members are not simply calling for a 50p rate? We have also heard calls for a 60p and a 70p rate. Are they not trying to set the tone for what has already been introduced in France—namely, a rate that is much higher than 50%?

[Mr Gauke]

I note the fact that the right hon. Member for Holborn and St Pancras referred to a rate of “at least 50p”, and I suspect that he speaks for many of his colleagues in that regard. The fact is that there is an ideological divide involved here, in that the Opposition want the higher rate, regardless of the practicalities.

The reality is that, if we want to raise money from the wealthiest, a high rate of income tax is ineffective. My right hon. Friend the Member for Wokingham (Mr Redwood) made it clear that the changes in the 1980s resulted in more income being raised from the wealthiest. If we want to raise money from the wealthiest, there are much better ways of doing it, as my hon. Friend the Member for Redcar (Ian Swales) said. For example, we have taken a number of steps to deal with avoidance and disguised remuneration—those measures were opposed by Labour, by the way—and to deal with stamp duty avoidance. We have increased stamp duty rates. We have also introduced measures relating to capital gains tax and restricted the cost of the pensions tax relief. Those measures have raised far more than the revenue forgone from the 50p rate.

We talk about priorities. Let me set out one fact for the House. Even if we put aside the additional sums raised from the wealthiest, and even if we put aside the damage to competitiveness from the 50p rate, for every £1 forgone as a result of our measures on the 50p rate, we have forgone £160 as a consequence of the increase in the personal allowance. That is where our priorities lie, and I am proud of that record.

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[Chris Evans]

My hon. Friend advances the argument eloquently. We debate these issues and talk about employment rights, but if someone is in a poor workplace, is struggling to pay the rent or the mortgage and the bills, and faces a severe threat that they might lose their job, they might be forced into doing this. In many non-unionised businesses there will be nobody to police this, so those people might be forced into it. She powerfully made the point about how women, in particular, are in that type of situation.

I should have made my next point before the hon. Member for Eastbourne (Stephen Lloyd) intervened on me, but I will do so now. Paul Callaghan, partner in the employment team at Taylor Wessing, has said:

“Osborne is potentially forcing all new employees to waive the main employment rights including unfair dismissal and redundancy rights in exchange for £2,000 of shares. This makes Adrian Beecroft’s fire at will proposals look moderate.

From April it may become the norm for job offers to require this waiver which will also involve the loss of flexible working rights and stricter maternity rights. This is likely to have a disproportionate effect on women.”

Henry Stewart, founder and chief executive of the training company Happy Ltd, has said:

“I welcome anything which makes it cheaper and simpler to give employees shares, but coupling it with taking away employment rights is ridiculous. If as an employer you have a problem with unfair dismissals, you need to improve management—that’s what the government should be giving incentives for. I don't think it's been thought through.”

In a nutshell that sums up what I think of this proposal. Bad employers who are afraid of unfair dismissal cases, reprisals, recrimination and grievances from employees should think about how they are managing their staff and look hard at their human resources department.

Corey Rosen, founder of the National Centre for Employee Ownership, one of the world’s leading groups promoting share ownership, has said:

“There is a lot of employee ownership in our country, but not one of these employees and not one of these plans asks employees to give up any employment rights to get any of the various tax benefits associated with employee ownership.”

That is a voice from the United States, not somewhere known for being particularly friendly to those in trade unions or on employment rights.

Simon Caulkin, writer on management and business, has said:

“In effect, Osborne's cobbled-together scheme is a back-door re-run of the agenda of…Beecroft”.

Rebecca Briam, partner at Gannons Solicitors, said:

“It is unlikely to get off the ground.”

With only five businesses out of 200 wanting to take up the scheme, I think she is right. She goes on to say:

“The proposals will be unpopular with employees because the chances of benefitting are so slim.”

She said that it was

“unpopular with employers, especially privately controlled companies, because of the risks imposed to the share structure. Far from saving on payroll expenses, the total costs for an employer may well increase.”

Manufacturers’ organisation EEF said:

“Our members have indicated they would not implement the new status.”

The Federation of Small Businesses said:

“The scheme is unlikely to be appropriate for many small businesses.”

The Chartered Institute of Personnel and Development said:

“There is very little evidence as to why this policy is needed or what impact it will have.”

Such views support the new clause that is before us.

Earlier, I talked about the vehicles that are created for the purpose of tax avoidance. Matthew Findley, partner at law firm Pinsent Masons, addressed that matter quite eloquently. He noted that the income tax positions of those receiving the shares is still unclear:

“There is nothing in what the Government has said so far that would stop senior executives or substantial shareholders from participating in the arrangement. This may mean that an opportunity still exists for such individuals, even if they may be viewed by some as the ‘wrong’ people politically to benefit.”

Paul Johnson from the Institute for Fiscal Studies talked about the potential for tax avoidance as the scheme

“prepares to put another billion pound lollipop on the table.”

He says:

“Just as Government Ministers are falling over themselves to condemn such behaviour, that same Government is trumpeting a new tax policy which looks like it will foster a whole new avoidance industry.”

An avoidance industry is something of which a Government who want to create jobs cannot be proud.

I support new clause 11. As there has been such a low take-up of the scheme—only five in 200 companies have said that they would consider it—a report needs to be produced. Numerous commentators from the business community have expressed the fear that a new tax avoidance scheme is being set up, which suggests that this is a pertinent and sensible new clause, and I urge the Government to accept it.

[Richard Fuller]

I am pleased to follow the hon. Member for Islwyn (Chris Evans), who spoke with great authority, drawing as he did on his experiences as a trade union official before he was a Member of Parliament. I will, if I may, draw on some of my own experiences of working with small businesses. In that regard, I draw Members’ attention to my entry in the Register of Members’ Interests.

I apologise to the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) for missing the beginning of her comments. I thought that she spoke persuasively and eloquently about some of the issues and about the policy that the Government have introduced. She had me persuaded all the way, until she referred to the spare room subsidy as a tax. It is just not a tax, and it is such a shame when bad slogans happen to good people because all the persuasion power of their speeches is lost. The rest of her speech raised some important points.

We should put the new clause into context. The Government have an extraordinary long-term economic plan that is delivering improvements to the economic lives of my constituents in Bedford and Kempston. It impacts on their ability to find work and get into work. It also raises their average weekly earnings, which is a major concern for many people. It is good to see the plan starting to bear fruit.

Perhaps now is not a good time for an ordinary Tory Back-Bench Member to criticise the Government, but if my hon. Friend the Minister will forgive me, I will do so. We are looking here at a policy in search of a problem; we are not really looking at something that will have a dramatic impact on the well-being of our businesses or our employees. I am open to being persuaded by the Minister. He usually persuades me and I am sure that he will do so today, but perhaps I could go through some of my experiences from when I was in business relating to two parts of our debate.

On the one hand, we have employee and workers’ rights and, on the other, we have employee shareholdings. The approach seems to be to conflate those two issues into one policy and I am not sure whether that will ultimately prove to be wise. In my experience as an employer, although employees’ issues in employment sometimes concerned the extent of employee rights, red tape and regulation often led to far more concerns about the impact of government on the business. In addition, the problem was not necessarily the rights per se but the complexity of the regulations. For a small business, just understanding the regulations to comply with them causes problems. I am not sure that the problem was specifically the rights that were given to employees. Is the objective in this case to reduce the complexity of regulation for businesses through the use of the combination of employee shareholdings, or is there some other objective?

The hon. Member for Islwyn mentioned some of the issues when companies give shares to employees. For a large part of my life, I have worked with technology businesses and the provision of shares was a norm for business. It was a way in which many companies could afford to start, to grow and to prosper. In those circumstances, people were given shares not because of their employee rights but as an incentive either to reward effort or to encourage effort to promote the success of the company. It was also a matter of the trade-off of rewards. Many small companies did not want to use the cash they got from investors to pay high or market rates to their employees and wished to defer that by providing people with the opportunity to have shares to share in the ultimate long-term success of the business. That is a tremendously powerful model for many sectors, not just the technology sector but other sectors of our economy, in that people are willing to trade off immediate returns for long-term rewards.

When we consider other ways to think about compensation, which will, I think, be a growing issue over the next five years, we must consider how to encourage people to defer some of their compensation until later in their lives. I can understand how the promotion of employee shareholding helps with short and long-term rewards, but my concern is that combining that with employee rights means that clarity might be lost. Rather than being given a positive impression about why we are encouraging employees to become shareholders, people will instead ask whether there is a catch. It should be absolutely clear that there is no catch when people are being offered shares. This is clearly an issue of deferring compensation from period x to period y.

I am concerned that, as I have said, this is perhaps a policy in search of a problem. As with so much that Government do, we will see unintended consequences. If the new clause is targeted at small businesses, we must remember that the Government have other options at their disposal. Just a week or two ago, the Centre for Policy Studies produced some very positive policies about abolishing corporation tax for very small businesses and abolishing capital gains tax for investors. To my mind, that would have more of an impact on encouraging more entrepreneurial businesses. We have recently seen news about the merger of national insurance and income tax, which would alleviate some of the burdens and complexity for business in managing employees.

[Bob Stewart (Beckenham) (Con)]

When I visit small businesses in my constituency, I am sometimes quite shocked that, say, one person out of 10—a large proportion of the staff—has to spend all his or her time dealing with regulations and sorting out the problems they cause rather than getting on with making money.

[Richard Fuller]

My hon. Friend speaks from great experience and is, as usual, exactly on the point. For many small business people, the biggest constraint is time: they have to be the sales person, the accountant, the HR person and the form filler. The policy that has given rise to new clause 11 is supposed to be helping those people, but I think there are many other ways we can support our small businesses that would have a greater impact.

One of those is that the Department for Business, Innovation and Skills should lose its great focus on a grand industrial policy, centred on our large corporations, and start to show a bit of passion about our small businesses. I know that the Secretary of State is a good friend of the Treasury Bench—obviously, he is a member of it—but somehow we are not getting the focus and heart for our small businesses that we should be getting, and it would be good to hear that voice coming through louder and clearer.

I am drawn by Opposition Members’ eloquence on the questions they are raising about this policy. It did not occur to me at the start of our support for the policy that it was going to be a big policy that would have an impact on many businesses. I would be interested to hear an update from the Minister on where the policy is taking us and what our goals are when it comes to promoting employee shareholding. What are his concerns? Does he share my concern that, in trying to put together promotion of employee shareholding and reductions in employee rights, we may be failing to make progress on two issues, rather than making progress on both?

[Mike Kane]

It is a delight to follow the hon. Member for Bedford (Richard Fuller), who spoke with such authority about his work now and previously with small businesses. It was a pleasure to serve with him on the Finance Bill Committee, where generally he spoke loyally from the Government Benches on his party’s agenda, even though he disagrees slightly with the policy before the House now. It is also a pleasure to follow my hon. Friend the Member for Islwyn (Chris Evans), who spoke articulately and ably, using his experience as a former trade union official.

I believe that shares for rights as it has been proposed lacks common human dignity. We know that the main purpose of Government is to protect individuals, communities and their property from exploitation and harm; Government must also provide a stable economic, social and legal framework for businesses and economies to thrive. The proposal does not do that. As I mentioned earlier, Lord O’Donnell described shares for rights as a form of modern-day slavery. It creates a two-tier market and a two-tier work force—one part having sold its rights and the other retaining them. I think that that is wrong for our economy.

The policy was announced with great fanfare in 2013, but the shares for rights scheme cannot be described as anything other than a massive flop. It is also proving to be another bone of contention in our fractured coalition. The Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson), and the Secretary of State are nowhere to be seen near the proposal. The real problem, though, as the Chancellor has found, is that it has been impossible to get employer organisations to back the scheme. As my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) said, according to the most recent information we have—hopefully, the Minister will update us—there were 19 expressions of interest by December last year. The Office for Budget Responsibility says it could be used as a tax dodge, costing us—the Treasury—nearly £1 billion a year. In this age of austerity, that is the last type of policy we need to be introducing.

Ministers seek to introduce the scheme without proper discussion, and without proper consultation, as my hon. Friend the Member for Islwyn said, and have proceeded in what can only be described as a very chaotic way. Following the publication of the details of the scheme, a Government source was quoted as saying that the scheme was on “life support”, but Ministers still went ahead. As was mentioned earlier, John Cridland, director-general of the CBI, said that this was a niche idea that businesses really do not want. There is unanimity among people who really care about employers and their rights and those Opposition Members who believe that employees should also be shareholders and work hard in their small and medium-sized enterprises, where most employees now reside.

Oral Answers to Questions

Richard Fuller Excerpts

Thursday 1st May 2014 Commons Chamber

[Mrs Grant]

I grew up in an area close to the north-east, and I know how fabulous it is. We have an excellent domestic tourism package, and VisitEngland has launched two brilliant “holidays at home” campaigns, which have generated millions of pounds of incremental spending. I hope that the hon. Lady’s constituency will benefit from that.

[Richard Fuller (Bedford) (Con)]

As chairman of the all-party parliamentary group on American football—and I declare my interest in that regard—I can tell the House that when it comes to sport-related tourism, I know of no sport that has the same potential. Will my hon. Friend join me in congratulating the National Football League on hosting three American football games at Wembley this year, and will she welcome the visitors who will come to support the Miami Dolphins, the Oakland Raiders, the Detroit Lions, the Atlanta Falcons, the Dallas Cowboys and the Jacksonville Jaguars?

[Mrs Grant]

I probably just need to say yes to all that—and many congratulations to all concerned.

Oral Answers to Questions

Richard Fuller Excerpts

Tuesday 11th March 2014 Commons Chamber

[Mr Gauke]

I have to remind the hon. Lady of the state of the public finances when we came to office and the very difficult circumstances that we face. The fact that 2.7 million people have been taken out of income tax as a consequence of our policies shows the emphasis by the coalition Government on supporting those in low-paid work.

[Richard Fuller (Bedford) (Con)]

The Minister is absolutely right about the commitment of our Liberal Democrat and Conservative colleagues in increasing the tax threshold. What consideration has my hon. Friend given to looking similarly to national insurance contributions?

[Mr Gauke]

My hon. Friend makes an important point. We have to look across the board, and what we see is a Government who, in difficult circumstances, while taking difficult decisions to reduce the deficit, have made every effort to ensure that work pays. I am sure that we will continue to do so.

--- Later in debate ---

[Sajid Javid]

The failed regulation by the previous Government that led to Government ownership of RBS also produced a system of governance that is done on an arm’s length basis. Those are commercial decisions for RBS. If the hon. Gentleman wants to make representations to it, he can do so through me if he wishes.

[Richard Fuller (Bedford) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Chief Secretary to the Treasury (Danny Alexander)]

The core purpose of the Treasury is to ensure the stability and prosperity of the UK economy. I can tell the House today that I am publishing the first review of compliance with the rules on tax arrangements for public sector workers. Compliance with those rules has been high, but details have been passed to Her Majesty’s Revenue and Customs in 125 cases where appropriate assurances have not been received, and I have imposed financial sanctions on two Departments that have breached the rules. The intention is to send a clear message that everyone should pay their taxes.

[Richard Fuller]

Since 2010, unemployment in Bedford has come down and average weekly earnings have gone from below the national average to above the national average thanks to the commitment of local people to making difficult decisions in tough economic times and the Government’s commitment to their long-term economic plan. Does the Minister agree that the biggest risk, given that the British Chamber of Commerce is forecasting higher growth next year, is for us to abandon that plan and adopt the policies of the shadow Chief Secretary to the Treasury, who has never had a proper job in his life?

Fairness and Inequality

Richard Fuller Excerpts

Tuesday 11th February 2014 Commons Chamber

[Jonathan Edwards]

In that regard, the Democratic Unionist party and Plaid Cymru share a common vision, in that we need to empower our respective Governments to deal with the economic and social challenges that our people face.

I want to set out how and why this inequality has been allowed to take a grip and, indeed, been actively pursued by the powers that be. I will also set out how that can be reversed, and how places such as Wales can become more prosperous and egalitarian societies. We have seen the over-concentration of power, status and influence in a narrow and unrepresentative financial elite over the past three decades. That has allowed greed, avarice and hubris to take hold among the elite’s own ranks, while poverty, destitution and exclusion have risen among much of the rest of society.

The uneven economic development of the UK and the concentration of so much wealth and power around London and the south-east distort much of the UK’s public life. They influence and shape many of the political, media and business perceptions about what is good for the entire UK, and lead to geographical polarisation and a super-concentration by Westminster politicians on certain sectors of the population whose opinion is seen as worth courting and listening to.

[Richard Fuller (Bedford) (Con)]

I am listening with great interest to what the hon. Gentleman is saying. Does he think that that concentration of power and authority in London and certain other parts of the country was a natural change that occurred as a result of global changes and that the Government did nothing to mitigate it, or does he think that it was a result of active Government policies over the past three decades?

--- Later in debate ---

[Stephen Crabb]

I am not sure that I recognise the figures that the hon. Lady gives.

[Richard Fuller]

Will the Minister assure the House that he understands the figures even if the Opposition do not, and that between 1995 and 2010 the total indebtedness of the UK went from twice the size of the economy to five times the size of the economy, making us the most indebted major economy in the world?

[Stephen Crabb]

My hon. Friend explains it very well for the benefit of Members of all parties. Under the previous Labour Government, the trajectory of public spending was set on a reckless course, and when the banking crisis hit, the true consequences were felt by hard-working families throughout the country.

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[Mr MacNeil]

Very good, Mr Deputy Speaker.

It is a slight concern of mine, however, that the captains of industry, as they get called, or the high-bonus City bankers or hedge fund managers, have never had that experience at a young age and have not engaged meaningfully with sympathy for the situation that others may be in as they gobble all the chocolates of productivity that our economy has produced, believing instead that they are self-made men and self-made women who worship their own creators.

[Richard Fuller]

Before the hon. Gentleman moves on from his Milk Tray doctrine of equality, will he accept that very many of us do learn those lessons in school and do not necessarily need the Government to act for us to fulfil our responsibilities as individuals? What would he say about considering ways to exhort people who have wealth, regardless of the taxes they pay, to give more to others?

[Mr MacNeil]

The hon. Gentleman’s intervention is laudable, and I understand what he says, but I disagree. The consensus post the great depression of the 1930s showed the importance of regulation, and that lesson was probably forgotten by the 1980s in the era of the Reagan-Thatcher deregulation that led up to the precipitous problems that finally exploded six years ago. In the absence of regulation, people have to look into their own hearts, but sometimes we can spend far too long doing that. The rule of politics, Parliament and Government is to ensure that we have the structures whereby all can benefit and they are not just dependent on the whim of some well-meaning individuals who may be a minority among the wealthy and could direct their contribution in the wrong way.

Before I get to the body of my speech, I have a final example of something that I think informs the human condition, namely the observations of anthropologists on hunter-gatherer societies. I hope this will also inform the debate, because I think that inequality is essentially about human choices—perhaps even bias—whether they be conscious or subconscious.

Anthropologists note that hunter-gatherer bands did two main things: they hunted and they gathered, hence, of course, the name—there is no need to be a Nobel prize winner to spot that. The crucial observation is that they treated the products of the hunt and the gather very differently. The products of the hunt were shared out almost instinctively, with many people who might not even have been on the hunt getting a share. Anthropologists explain this as the sharing of luck and good fortune, with those on the hunt realising that they might not have had a successful hunt in different circumstances and that, given the way in which the society of the day was arranged, they might earn the good will of others who might be lucky on another day.

That sharing, however, was not mirrored in the gather, and anthropologists reckon that that was due to the labour and endeavours of the individual graft and application of the gather.

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[Guto Bebb]

Obviously, I do not accept most of the hon. Gentleman’s arguments; certainly, we should be careful about taking lessons from the Irish implosion. Ireland is probably one of the few countries to have a banking crisis even greater than ours. Many of the eastern European accession countries have managed to create vibrant economies by imposing low-tax regimes, and the whole of the UK should look carefully at those countries’ performance.

In the debate about whether we have a 50p, a 45p or a 40p tax rate, I remind Labour that it found the 40p tax rate completely acceptable for the vast majority of its 13 years in government. What is the purpose of income tax? That is a question that is often forgotten. Its purpose is not to bring down and punish the successful. If we believe in a more equal society, we want more money coming into the Exchequer, because that means we can do more to support the less well-off in society, but we have lost sight of that argument. If we reduce taxes and get more money coming into the Exchequer, that is something that should be welcomed. Time and again, it has been shown that when taxes are reduced, more often than not, the result is more economic activity and a greater success story.

[Richard Fuller]

Does it not strike at the economic illiteracy of the shadow Front-Bench team that they are far more interested in a headline tax rate than in raising revenue to pay for the public services people want?

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[Richard Fuller (Bedford) (Con)]

The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) brings to this House a wealth of experience and understanding from her previous work in the area of health, and I hope that the House listened carefully, as I did, to her comments about the interaction between differences in health and the perpetuation of inequality in our country. However, I did disagree with some points in her critique, which I shall discuss later; most importantly, there was an absence of a full understanding of the context in which this Government are taking actions to address fairness and inequality.

I, like many people, get somewhat concerned and uneasy when I hear politicians bandying around words such as “fairness”, “equality” or “inequality”. History has taught people that when politicians profess themselves in favour of fairness, they too often end up enriching themselves and those politicians who would rally people to the banner of equality too often end up repressing those same people once power has been given to them. So it was with some trepidation that I came to this debate, but the prospect of being able to listen to perspectives on those issues from Members of this Parliament from different parts of the UK attracted me, and I have not been disappointed, either by the opening speech or by those of other hon. Members.

Judgments about what is fair or not fair, or about the balance between equality and inequality, are best left to individuals and families. People are perfectly capable of making those decisions based on what they have learned from their parents and grandparents, on what they have been taught in school or, perhaps, on the lessons they have learned in their church, synagogue, mosque or temple. Politicians fall rather low down the list of people who can be persuasive on those topics. Nevertheless, we shall battle forth.

[Mr MacNeil]

I do not disagree in any way, shape or form that people can make assessments about what is iniquitous or unfair, but the hon. Gentleman needs to go further down the road, because when people see inequity and unfairness they do not have the power to do anything about it. That is when this place and national Parliaments around the world have to regulate, reform things and so on to make sure we have the situation we had after world war two: a better settlement for the greatest breadth of citizenry.

[Richard Fuller]

I am grateful to the hon. Gentleman for that helpful intervention. Let us assess the ability of Government today to fulfil that positive role. One of the most important aspects of fairness is the future that we bequeath to our children and grandchildren. It is a natural aspect of human behaviour to want to give the best start in life to our children and grandchildren. One of the worst aspects of the context in which we are operating today, as a Government and as a Parliament, is that under the previous Government, we built up the most significant amount of debt to pass on to our children and grandchildren. One of the most important aspects of what the Opposition call the cost of living crisis—my constituents think of it as trying to meet the family budget—is the debt that was left by the previous Government for this Government to deal with.

The Opposition like to talk about the level of Government debt at that time, but a Chancellor of the Exchequer is custodian not just of part of the economy but of the entire economy, and, before he makes a decision, he has to look at the strength of the economy. It is an incontrovertible fact that the level of indebtedness of this country in 1995—Government debt, household debt and corporate debt—was about two times the size of the economy, and when the Labour party left office, it was five times the size of the economy. We do not need to have a credit card to know that we have to pay off all that debt, and not just part of it.

[Debbie Abrahams]

Will the hon. Gentleman explain the decisions that were made in the Health and Social Care Act 2012, which had nothing to do with the debt? We recognise the economic context, although we could quibble about the causes and whether we reduced the level of debt. I believe that we reduced it while we were in power. None the less, the specific policies of the Act had nothing to do with that debt. They were choices that the Government would have driven through regardless of the economic context.

[Richard Fuller]

The hon. Lady is repeating the point that she made in her speech. I am sure that the Minister will want to address it now or later. Earlier on, she missed this major contextual factor, which is somehow the Government must be able to manage the economy while dealing with a substantial overhang of debt, and individual families are doing that as well. That is a root and crucial part of how we can achieve a more equal society. We cannot achieve an equal society if we permit Government to pass on massive debts to future generations without any liability themselves.

[David T. C. Davies]

My hon. Friend is making an excellent speech. Does he find it as extraordinary as I do that that debt was being racked up from 2001 onwards at an average rate of about £30 billion a year, long before the financial crisis struck?

[Richard Fuller]

I appreciate my hon. Friend’s intervention. He is drawing our attention to the Government part of the debt, but I have to tell him that the stewardship of the economy by the Government was worse even before then. We, as people who can vote in Governments and as citizens, have to take that responsibility ourselves, too. We are responsible for what this generation does, whether it is our Government, our corporations or any other aspect of society, but we pass on those consequences to our children and grandchildren and they will inherit either a more equal and more prosperous society or a less equal and less prosperous society because of the decisions that we make as individuals and the way in which we hold our Government to account.

[Sheila Gilmore]

rose—

[Richard Fuller]

With respect, others wish to speak, so I will move on now to specific parts of the motion.

Let me address the issue of austerity measures and why they are in place. First, there is the fact that we have accumulated too much debt. Another issue is the ripple effects of that debt crisis. As the Government deal with the overriding debt, individual families, especially those in vulnerable circumstances, are pushed to the edge and need to go to payday lenders and other high interest rate lenders to deal with the consequences of that macro-financial situation. The individual circumstances of individual households have to be taken into account.

The other issue—again, it is the legacy of what occurred in preceding years—is the way in which house prices have become detached from incomes. Shelter is running a campaign on the issue, and although it is an interesting point to raise, I think that it is about 10 years too late. In the Living Wage Commission report, to which many hon. Members have referred, there is an interesting chart—figure 1.21—which looks at the ratio of house prices to earnings for the years 1952, 1975, 1997 and 2012. For the entire period from 1952 to 1997, the ratio of house prices to income fell. In 1952, it was five times the average income, but by 1997, it was 4.1 times. In the period from 1997 to 2012, it rose from 4.1 times to 6.7 times; 100% of that increase took place in the period to 2007. If we look at the cost of living and the cost of housing—part of enabling people to own their own home, get on the property ladder and pay their rent—we see that the issue of inequality will take time to resolve, because it took us a long time to get into that mess in the first place.

The motion refers to women and relative pay. I want to draw to the attention of the House, not by way of answer but by way of contribution to the argument, the House of Commons economic indicators report for February 2014. It looks at the gender pay gap and it makes the broad point that the overall pay gap between men and women has decreased steadily from 1997, but in considering whether the gap will be perpetuated in the future, it examines the gender pay gap by age range. For women and men between 18 and 39, the pay gap oscillates between 1.4% and 0.3%. For women over 40, it oscillates between 12% and 18%, which raises a question for policy makers such as the Minister: is that issue to do with career breaks and will it persist over time, or is it the result of a fairly good news story, with younger women and younger men on average having access to the same sort of jobs and pay, so that in about 20 years’ time the differential will go down? I do not put that forward as an answer, because I do not know the answer, but as a contribution to the debate and to broaden understanding.

There have been a number of contributions about the working poor, poverty and the living wage. We have discussed raising wages from the minimum wage level to living wage levels, but too frequently that would result in a small pay increase for the individuals concerned. It is a transaction between the employer and the Government in terms of the interaction of benefits and compensation. To contradict my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), who discussed the free market in wages—it is a small difference—I would argue that if in the low-pay sector Government are topping up wages to the tune of £10,000 on a £13,000 wage, which is the case for a married person with two children earning the minimum wage, the free market is far from working. There could be a strong argument, not only from the point of view of public finances but in order to have a freer market, for urging the Government to increase the pressure on companies by removing that subsidy, which is supporting labour. However, I should be interested to hear more from my hon. Friend.

[Jacob Rees-Mogg]

Is my hon. Friend aware that someone working 40 hours a week in receipt of the minimum wage would pay over £2,200 a year in tax, which must be part of the problem? I include in that employers’ national insurance.

--- Later in debate ---

[Richard Fuller]

My hon. Friend is absolutely right. This Government have sought to reverse the level of tax that people on low incomes pay, unlike the previous Government. In addition, with the employment allowance, the Government have a tool to encourage employers to increase pay for people on low incomes, and I hope that the Chancellor will do something about that.

We talk a lot about improving skills, which is important, but that does not work for everyone. Not everyone will want to take on additional skills. One aspect of pay that during my career in business changed dramatically was the recognition of tenure. It used to be the case that by doing the same job for two, three, five or 10 years, not improving one’s skills but just getting better at what one did, an increase in pay could be anticipated. We have lost sight of that too much over the last 10 or 15 years. We have said it is just one rate for the job, with no regard to tenure. I ask the Government to look at tenure as part of a more widespread response to the persistence of low pay in this country.

In addition to the promotion of a living wage by councils, there is an important point about the commissioning that councils do. There have been reports in the media recently about the commissioning of various types of service by local authorities that impact on the pay that can be earned by individuals, which is also an important point for the Government to consider.

I will not get into the debate about the rise of food banks under the last Government compared with now. Food banks provide a good service and I encourage people to support them as much as possible. I went to the food bank in Bedford and I pay tribute to the All Nations Church, to the Salvation Army and to the other Churches that run the food bank.

[Gordon Banks]

May I entice the hon. Gentleman to go into the matter of food banks a little? Has he seen the latest newsletter from the Trussell Trust, which somewhat contradicts the Minister’s position earlier? It says that 42% of all food bank users cite benefit-related problems as the reason why they use food banks.

[Richard Fuller]

I have not seen that report, but I have seen the data on those using the food bank in Bedford. For a large proportion of people the causes are related to benefit changes. I do not have the statistics, but within that group some people have been sanctioned for not complying with the benefit rules. Would the hon. Gentleman support policies that sanction people for not conforming with the benefit rules, or does he believe that they should not be sanctioned?

[Sheila Gilmore]

My constituents are not being sanctioned for not looking for a job, but for one-off incidents. One constituent rearranged an interview with the Work programme provider because of difficulties with her child’s school start times and was told that that was okay, but she was subsequently sanctioned. People are being sanctioned for minor infringements, almost on a whim.

[Richard Fuller]

I do not want the hon. Lady to conflate two things. If the 42% figure reflects the situation in Bedford, it is to do with the broader issues of benefits, which includes sanctions, changes to benefits and the specific examples that the hon. Lady mentioned, where the reason is fairly spurious or there is just a plain error. I do not believe such cases make up the 42% proportion, but they are part of it. But I am a Tory, so I understand that large bureaucracies forget the individual and people are caught by that. In my constituency—as I am sure the hon. Lady is in her constituency—I am creating a form with the local food bank provider so that when circumstances such as she describes occur, my office can be informed straight away. It is important that we as Members of Parliament use our power, when such spurious changes to benefits are made, to shorten the time that they take to resolve. For some of my constituents that can take six, seven, eight weeks or more, which is not correct if a sanction has been inappropriately applied.

[Gordon Banks]

I endorse what my hon. Friend the Member for Edinburgh East (Sheila Gilmore) said. I commend the hon. Gentleman on his work in moving things on for his constituents in respect of food banks. I do the same, as I am sure do many other right hon. and hon. Members, but I have had constituents who have been sanctioned because they have been ill and then, because they are sanctioned, they have no money to go to appointments, and are sanctioned again. That system is totally out of control.

[Richard Fuller]

I will not dwell on the matter. I have asked the hon. Gentleman whether he supports the process of sanctions. I would be interested to hear him explain in his speech what type of sanctions he supports and how he would implement them, if he had to take that responsibility.

The final part of the motion asks the Government to halt their spending cuts. If they halt that process, they have to look at increasing taxation. I am sure many hon. Members know that the ways in which we raise tax are moving more and more towards fewer people paying a larger proportion of tax, with 1% of the population paying 30% of income tax and 29,000 people paying 14% of income tax. On the one hand, this may be seen as an aspect of inequality. On the other, it may be seen as a fairly dangerous way in which a Government can raise money, in which case the shadow Chancellor’s proposal to increase tax rates again is probably inappropriate.

In some of the contributions from even those on the Government Benches, we convey the impression that the Labour Government were benign on tax. I draw the attention of the House and the Minister to what was going on between 2000 and 2010. It is in a House of Commons Library note called “Income tax: the additional 50p rate”, which looks at the top rate of tax, including social security contributions, between 2000 and 2010. It shows that in France that rate went down 10.6 percentage points, in Germany it went down by 5.8 percentage points, but in the United Kingdom between 2000 and 2010 that rate went up by 11 percentage points. So it is not fair to use the word that has been common in this debate or to maintain the perspective that somehow, under the Labour Government, the rich were getting off with low tax rates. The Labour Government were taxing people at a high rate. They started the process of a higher proportion of taxes being raised from fewer people, which results in a very difficult situation for people overall.

We have had an interesting debate and I look forward to hearing more contributions from hon. Members on fairness and equality. I have not yet been persuaded that politicians are best placed to determine that. I believe that individuals make their own judgments. I hope that by using some of the information that I have presented today, other contributions may be better placed to consider the issue.

Oral Answers to Questions

Richard Fuller Excerpts

Tuesday 10th December 2013 Commons Chamber

[Mr Gauke]

I am not sure that the hon. Lady heard the Chancellor correctly if that is what she thinks he said. The reality is that we have to get the deficit down and we have gone through two years of great challenges in the economy. Our argument was that because of those challenges it was more difficult to get the deficit down. Labour argued that the economy could not grow while getting the deficit down. We were right; they were wrong.

[Richard Fuller (Bedford) (Con)]

The record deficit left by the last Labour Government was, in essence, a tax on the future opportunities of our children and grandchildren, denying them opportunities that our generation was able to have. Will my hon. Friend assure the House that he will not repeat the mistakes of the last Labour Government and that he will prioritise further reductions in the deficit so that our grandchildren can have the same futures that we have enjoyed?

[Mr Gauke]

My hon. Friend is absolutely right. It is irresponsible to future generations if we do not take action to reduce the deficit. The approach we had from the party—[Interruption.] The shadow Chancellor has just said that the deficit is going up. He has been saying that all along, and I am afraid he is just plain wrong.

National Insurance (Contributions) Bill

Richard Fuller Excerpts

Tuesday 10th December 2013 Commons Chamber

[Richard Fuller (Bedford) (Con)]

If I heard the hon. Lady correctly, she said that she wanted the cut in the jobs tax to be brought in sooner, yet in 2010 she said in Committee that she was proud to stand on a record of increasing the jobs tax. Does that represent a flip-flop?

[Shabana Mahmood]

It does not represent a flip-flop, as the hon. Gentleman well knows. It would not be a debate on this issue if he did not make the point that he has made on a number of occasions. I would have felt as though I had missed out on something if he had not made that intervention, so I am grateful to him. He will not be surprised if I repeat my previous answers to him in relation to national insurance. I was very proud to stand for election on the Labour party manifesto at the 2010 general election and proud that the Labour Government had got the recovery under way at the time of that election—a recovery that was choked off by this Government as soon as they came into power. [Interruption.] Government Members might not like to hear it, but I am afraid that that does not stop it being true.

Let me clarify my point about the employment allowance. From the moment it was announced in the Budget, our immediate critique was not that it should not be introduced —we supported its introduction from the beginning—but to say, as we have continued to say, “Bring it in as soon as possible—why wait?” If there were compelling reasons for the wait, it would be understandable, but I am afraid that I find nothing compelling in anything the Minister has ever said about the delay in bringing these proposals forward. All the issues relating to IT and systems and getting software up and running could be sorted out, with a bit of will.

I understand that software developers are still waiting on HMRC to give them the full guidelines on what software they will need to produce to make sure that take-up of the employment allowance goes ahead with relative ease. I hope that the Minister has had sight of the submission by Mr Holloway of the Learn Centre to the National Insurance Contributions Bill Committee, which was submitted after the Committee had disbanded but was still made available to all its members, because it contains concerns about the delay in getting proper clarification and explanation to software developers on what they need to do in relation to the employment allowance. Given that it is December and they have to get ready for the employment allowance to come online in April 2014, they will not have a huge amount of time to get everything in place and ready. If that is the position on the employment allowance, then why not add in the proposal on NICs for under-21s and deal with both issues at the same time?

Given that we are speaking from the Opposition Benches—unfortunately—our amendment does not propose that the measure should be introduced immediately in 2014; otherwise Government Members would no doubt have shouted at us about the cost of doing so and the spending commitment entailed. However, we have asked for a review that would look at the level of youth unemployment now and the impact that introducing the measure in April 2014 would have had on the level of youth unemployment as it stands today. That is because the Government should not escape scrutiny for the impact that this measure may have had compared with what it will have, I hope, when it comes into force in 2015. If it is found that the measure would have had a significant impact, as we believe it would, that is an important bit of information and the Government would be put under pressure to introduce it sooner than they intended.

This Government found money in the autumn statement for the married couples allowance. They have always said that the recognition of marriage in the tax system is symbolic. However, government is about choices and priorities, and if money can be found immediately to do something that is symbolic and sends a message, then surely it should be found for a practical Government measure that helps to prioritise our young people who need jobs today and not on a date far from now. The choices and priorities of this Government are wrong and they should think again. The emergency presented to this country by the current rate of youth unemployment cannot wait to be dealt with on some future date. The Government should reconsider the start date of this proposal. We therefore intend to press our amendment to a vote.

--- Later in debate ---

[Shabana Mahmood]

Given that I am still relatively new to my shadow Treasury brief, I am not yet—as hon. Members who served in Committee will no doubt be pleased to note—suffering from review fatigue. Both of the new clauses seek further reviews from the Government. New clause 1 envisages a post-implementation review, which was the subject of some debate in Committee, and I felt it was worth having a further discussion to push the Government a little more in relation to the impact that the employment allowance will have on jobs and wage rates, and the effectiveness of the promotion of the employment allowance to all those who are eligible for it.

New clause 2 envisages an administrative and compliance cost review—a one-off review to take place six months after the employment allowance comes into force. It was prompted by the evidence of Mr Holloway, which I mentioned earlier, and I shall go into more detail shortly.

In Committee, the Minister helpfully indicated that he would publish information on two of the elements that I have included in new clause 1—the overall take-up of the employment allowance and its geographical spread. I understand from his comments in Committee that the information on the geographical location of those taking up the employment allowance will probably be available on a regional basis. I hope that he will clarify that point when he responds to the debate. The Minister said that he would put information on both elements in the Library so that Members can raise questions about the effectiveness of the employment allowance and its take-up levels. We have in mind the previous regional national insurance employers’ holiday, which had difficulties from the start. We have made the point that those difficulties should have been dealt with sooner, and it is in that context that we think the Government should have a formal post-implementation review of the take-up of the employment allowance.

[Richard Fuller]

The hon. Lady earlier made the breathtaking assertion that although the Labour party was proudly in favour of increasing the jobs tax in 2010, its attempt now to reduce it was not a flip-flop. With the proposal of an annual review, businesses will be concerned that the Labour party is not committed to the employment allowance, as we are. The hon. Lady said in Committee that she could not commit the Labour party to supporting the employment allowance at the next election, so will she therefore admit that Labour’s support for employment allowance is at risk in their shuffle of policies before that election?

[Shabana Mahmood]

I will repeat exactly what I said to the hon. Gentleman when we had this debate in Committee: we have been unequivocal in our support for employment allowance since it was introduced in the Budget earlier this year. We have taken every opportunity to say to the Minister and his colleagues in the Treasury team that it should be introduced sooner. We could not have been more unequivocal in our support.

The purpose of the review is not to put the employment allowance at risk. The regional national insurance employers’ holiday scheme had problems with take-up from the start. They were raised with Ministers in this House at every available opportunity—in oral and written questions—yet we had to wait for the full three years of the scheme to run before the Government brought forward a proposal without the same problems. That is the context for tabling new clause 1. We want employment allowance to succeed and not suffer from low take-up—we want it to be taken up. The Government say that it will be taken up by 90% of eligible employers. I am sure that all Members want to see 100% take-up, and there seems to be no real reason why 10% should be missed off. We want to ensure that take-up is not affected by any unforeseen issues during roll-out.

--- Later in debate ---

[Richard Fuller]

I start by thanking the hon. Member for Birmingham, Ladywood (Shabana Mahmood), if I may, for her grace and courtesy in responding to my persistent and somewhat repetitive questions about her party’s commitment to the proposals on employment allowance, and on its continuing commitment to it in the lead-up to the next election. The reason for my persistence is that I think it is an absolutely fantastic measure. It will have a positive impact on employment, on wages and on the economy, and it should be embraced by all parties across the House, now and in the lead-up to 2015. I wish the hon. Lady every courage in talking to her colleagues to ensure that their support for it is maintained in the Labour party’s next manifesto. I wish her every success in that regard.

This small measure is so important because it has shone a light on a much broader and deeper issue—namely, the extent of Government intervention in the wages and living standards of people on low incomes. I should like to give the House some figures. Let us take the example of someone on the minimum wage earning £13,000 a year, and assume that they are the only earner in the household and have two children. Taking into account the impact of the tax and national insurance paid and the benefits received, that person’s take-home pay will be £25,000. Their wages will be £13,000, but their take-home pay including benefits will be £25,000, which is nearly twice as much. The difference will not be so significant for people without children, but even someone who is single and earning the minimum wage will see an increase on the £13,000 being paid by their employer to a total of £17,600 in pay and benefits.

I do not want to question the level of Government intervention in the labour market, other than to say that a better outcome could be achieved if it were the employers who were paying the higher levels of wages that people need to achieve an adequate living standard. That outcome can be achieved in a number of ways. There will be uplift in the economy thanks to the measures that this Government are taking to encourage growth and boost the economy, and wages should increase over time as a result. It can be achieved through measures to increase the skills of our employees, to ensure that people can aspire to take on more complex tasks and earn higher wages as a result. It can also be achieved through innovation among our entrepreneurs as they create new higher sector employment, and through action on the minimum wage. I hope that all the political parties will think carefully about their policies on each of those points, so that we can make progress.

In the proposals in the Bill for the employment allowance, the Government have found a tool to tackle the additional costs that we place on labour. The chart on page 18 of the autumn statement shows that, since early 2001, employers’ social contributions as a share of total employee compensation have increased from 13% to 17%. The employment allowance will start to make a change in that regard, and I encourage the Minister to see it as a first step, with more still to come.

National Infrastructure Plan

Richard Fuller Excerpts

Wednesday 4th December 2013 Commons Chamber

[Danny Alexander]

As RWE said at the time, its decision about the project was a commercial one taken for a range of reasons. It was aware of the timetable for setting out the strike prices. I know that my hon. Friends in the Department of Energy and Climate Change had conversations with that company.

[Richard Fuller (Bedford) (Con)]

I have listened to the many questions from hon. Members, but none has referenced the fact that, despite making progress on the deficit, the Government’s finances are still not in balance. Having listened to the scepticism of a former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), does my right hon. Friend think that the Government would do better by being more modest in their scope, more effective in their delivery and more stringent in their evaluation of the projects?

[Danny Alexander]

The evaluation of all the projects is very stringent, and I ensure that that happens, but we have also taken some very difficult decisions to constrain public spending in other areas to make more investment available for infrastructure projects. I think that that is the right balance, because infrastructure projects are so important for the long-term future of the country. Under-investment in infrastructure has been a British disease for decades, and we need to end it.

Cost of Living

Richard Fuller Excerpts

Wednesday 27th November 2013 Commons Chamber

[Sajid Javid]

I give way to my hon. Friend the Member for Bedford (Richard Fuller).

[Richard Fuller (Bedford) (Con)]

I was concerned that the shadow Chief Secretary to the Treasury did not seem to understand the difference between deficit and debt, which I thought would be a prerequisite for talking about economics. Will my hon. Friend explain to the House what the circumstances were when this Government came to office?

[Sajid Javid]

My hon. Friend tempts me and I will do just that in a moment, after I have given way to my hon. Friend the Member for Burnley (Gordon Birtwistle).

--- Later in debate ---

[Richard Fuller (Bedford) (Con)]

I listened with great interest to the hon. Member for South Shields (Mrs Lewell-Buck), as I have to many Opposition Members, but on the question of what we should do, I have not heard much. The honourable exception was the right hon. Member for Oldham West and Royton (Mr Meacher), whose speech had some coherence, but I guess he is far too moderate to be included in the Labour party’s Government-in-waiting, assuming that position remains—we hold out that hope.

The motion is a listing of some of the pain points that many of our constituents are feeling as they look to balance their budgets each week. “I feel your pain” is an important expression of empathy. Empathy is important for politicians of all parties; we have to be empathetic with the constituents we represent. However, empathy is no substitute for policy, and Opposition Members have shown a complete absence of policy in dealing with the points of pain that they can so lucidly set down in their motions. That is why I shall support the Government in the Division later.

When we have seen a policy from the Opposition, it has often been about ways in which they would seek to intervene in markets. I suggest to Opposition Members that Government intervention should always be used sparingly and where it can be effective. The Leader of the Opposition has chosen as his flagship intervention policy one where he cannot be effective, and nor does it make economic sense. As the hon. Member for Redcar (Ian Swales) pointed out, the consequence of the Labour party’s position on an energy price freeze has been to crater the willingness of energy companies to invest in effective energy in the long term. It is very sad that just a few weeks after the Chancellor had been to China to secure investment in our energy sector—something that the Labour Government sadly missed out on year after year—the Labour party came up with another policy designed to make our energy more inefficient, rather than efficient, in the long term. If we are going to address some of the issues about the cost of living for members of the public, we have to be honest about what the Government can and cannot do.

[Mr Stewart Jackson (Peterborough) (Con)]

On the subject of honesty and admitting the failures of the past, is it not strange that last week the shadow Chancellor told a National House Building Council lunch that a future Labour Government would deliver 200,000 new homes a year when, in their last year in office, the previous Labour Government presided over the lowest number of homes built since 1923? Is there not a huge chasm between Labour’s promises and its record in office?

[Richard Fuller]

My hon. Friend is absolutely right to point out the chasm between reality and certain things promised by Labour. There is also an absence of a basic understanding of economics. It is nice to see the shadow Chief Secretary in his place again. It was not clear from his opening speech whether he understood the difference between deficit and debt, which is quite an important thing to know for someone who wishes one day to hold an important Treasury position.

[Chris Leslie]

Will the hon. Gentleman give way?

[Richard Fuller]

I am very happy to give way. I recognise that the shadow Chief Secretary has been for his economic tutorial, so perhaps he can enlighten us.

[Chris Leslie]

That is very funny and droll, but does the hon. Gentleman know that borrowing accumulates and forms at the stock of national debt? Has he figured that much out? If he has, will he tell us whether it is true that, during his time in Parliament, his party has presided over the accumulation of £430 billion of borrowing? Is that not right?

[Richard Fuller]

Boy, has the hon. Gentleman picked the wrong person with whom to have an argument about debt and the Labour party’s record on debt. Let me enlighten the hon. Gentleman on that record. He will never be Chancellor of the Exchequer, but were he ever to achieve that position—

[Chris Leslie]

Answer the question.

[Richard Fuller]

I am answering the question. I know it is hard for the hon. Gentleman to follow the argument, but I will put it in bite-sized pieces so that he can keep up. It is important for a Chancellor of the Exchequer to look at not just the indebtedness of the Government, but at the way in which the entire economy is accumulating debt, which is one of the things that the previous Labour Government signally failed to understand.

If we look at the United Kingdom’s debt in the mid-1990s and take into consideration Government debt, household debt and corporate debt, we will see that that total indebtedness was, like that of many other OECD countries, two times the size of our national economy. Over the intervening 15 years—which in this country were spent mostly under a Labour Government—other OECD countries saw their total debt go from about two times to about three times the size of their economy, and that includes all of the impact of the financial crisis. One country in the G8—and only one—increased its total debt from two times to five times the size of its economy, and that was the United Kingdom under the previous Labour Government. It is the consequence of that pervasive debt in the economy that is the real cost of living crisis in this country.

Every family knows that when they have significant debts that they cannot avoid and that they have to pay, their monthly income will be less because they will have to pay back the debt of the past. They are paying the consequences of the Labour party’s failure when in office.

[Alec Shelbrooke]

Does my hon. Friend agree that, against that backdrop, it is commendable that under this Government and this Chancellor of the Exchequer, the gap between the richest and the poorest in society is the smallest it has been for 30 years? [Interruption.]

[Richard Fuller]

I see that the shadow Chief Secretary has left for more education on economics. My hon. Friend raises a point about income levels. There is an issue about how we increase the incomes of people at the low end of our economy. How do we make sure that work pays for those people who go out and work very hard?

Over the past 10 years, the United Kingdom has created a massive level of state intervention to support wages at the low end of the income spectrum. In order to try to improve living standards for people at the low end, we have to encourage employers to somehow pay higher wages. References have been made to the living wage. One of the issues about changing people’s income from the minimum wage to the living wage is that the change to their take-home pay, including any benefits they receive, becomes a very small change in their net income level, because the tapering of benefits takes away nearly all the impact of the increase in wage rates. A change to the living wage is therefore a transaction involving additional cost to the employer and additional benefit for the Exchequer; it does not result in additional pay to the employee.

We have to be clear about what we are truly promising people as we seek certain changes. It would be good to hear from my hon. Friend the Economic Secretary, who I presume will wind up the debate, what answer the Government can give people about their income and about making work pay. What are we doing about their tax and their benefits? For people in work who wish to take on additional hours or to increase their responsibilities and get more pay per hour, what are we doing to ensure that their benefits are not taken away so rapidly? If we do that, in the next period of Conservative Government we can continue the battle to make sure that work pays, which is the true answer to any cost of living crisis.