Budget Resolutions and Economic Situation

Rupa Huq Excerpts

Monday 21st March 2016 Commons Chamber

[Jon Trickett]

Of course. The Tories are not interested in looking after ordinary people and small businesses. They are interested in directing money at the privileged few.

Let me turn briefly to the subject of devolution, which the Secretary of State mentioned. In his Budget statement the Chancellor announced a number of devolution deals, about which concern has been expressed in all parts of the House. The Minister cannot say we did not warn him that there would be trouble on that from the Labour Benches. The whole process is far too top-down. The insistence on a single mayoral model has caused much resentment, especially in cities where the idea was recently voted down by local people in referendums.

It is not councils’ fault that there are these tensions—our councillors are under enormous pressure to get whatever they can for local residents. The fault lies entirely with the process imposed, not by the Secretary of State, but by the Chancellor, who is stubbornly refusing to allow ordinary citizens to have a say in how their areas should be governed.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

The idea of devolution setting people free from centralised diktat may sound good on paper, but how does it square with the forced academisation of schools?

[Jon Trickett]

I agree entirely with my hon. Friend’s point.

Let me make some progress on devolution. The average pot of money available to the metro mayors appears to be about £30 million a year, but that is dwarfed by the severity of the cuts that each of their councils has suffered. Top-down devolution, compounded by financial injustice, simply will not work as an enduring solution. Labour wants properly funded, real devolution, which would include, for example, the power for every council to open schools, build homes and regulate buses—mayor or no mayor.

That brings me to the Budget’s implications for the north of England. The Chancellor boasts about his northern powerhouse, but his Budget cuts to northern councils alone since 2010 add up to £3.9 billion being taken out of the northern economy. What do we get instead? A few million pounds for a scaled-down flood defence scheme in Leeds, and a few million more to fund not an electrified rail link, but a study that might report eventually on whether there should be electrification. None of that cuts the mustard—it is more of a power scam than a powerhouse.

Let me express my great admiration for councillors of all parties who do their very best across the nation, despite years of cuts, to protect services. Libraries, for example, are one of the most prized assets in any community, but they are frequently the first to go. On Friday, I visited Wyke library in Bradford. The council has managed to keep it open, despite the prospect of losing half its budget in a decade. The library is a beacon of hope and self-improvement, buzzing with learning. I met people there who were studying to better their lot in life. They told me there was no way on earth they could afford to buy the books they could borrow from a public library or to use the internet, which was also available. The priority had to be putting food on the table for their kids, but they were able to come to the library and have access to knowledge. I met one man who was using the internet—publicly provided in a public library—to complete his PhD. Cutting libraries, cutting museums, cutting theatres—all of this is nothing short of cultural vandalism.

The Secretary of State did a round of media interviews this morning. On ITN, he told Conservative Members to come together again; he said they should stop scrapping with each other. Well, good luck with that. Then he went on the “Today” programme and talked about the rough and tumble of Budget negotiations, as if that explained the resignation of the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith).

I think the Secretary of State is a decent man, and I suspect that, in his heart of hearts, he appreciates the value of local government services. He knows the role—how could he not?—that many of them play in supporting the vulnerable, but what does he really know about the rough and tumble of Budget negotiations? He was the first Secretary of State to sign up on the Chancellor’s terms.

On the radio this morning, the Secretary of State referred to the right hon. Member for Chingford and Woodford Green as his very good friend. My guess is that he may not want to follow the path of his very good friend and resign from the Government to defend local councils. I hope, however, that he will decide to fight his corner rather more strongly than he has this year against a Chancellor who has proved his judgment is nil.

Equitable Life

Rupa Huq Excerpts

Thursday 11th February 2016 Commons Chamber

[Melanie Onn (Great Grimsby) (Lab)]

I have been contacted by a number of constituents who were affected by the collapse of Equitable Life. One woman wrote to me to say:

“I myself have lost over £40,000, and have only received £12,000 in compensation. Does this sound fair to you?”

Successive Governments have failed to appreciate the anger that this issue has caused people. A couple who contacted me asked why the Treasury had provided 100% compensation to Icelandic bank depositors, when they had received only a fifth of the sum that they were due and had planned their retirement around. They said:

“In the years prior to our retirement we actually took money from our own savings to top up our pension payments and feel that we have lost twice over. We would have been better off being irresponsible and spent every penny we had and then relied on the State. It seems the government departments are hoping that we will die and the problem will go away.”

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

The Library briefing points out that there is a ticking time bomb because the beneficiaries of the scheme are elderly. Like my hon. Friend, I have received representations from many constituents. Has she heard the same sentiment that I heard expressed by Brian Watkins, who faces losing up to £40,000 and thinks that the Government are waiting until policyholders die, so that they do not have to deal with them? Surely, we should reassure those people, and the Chancellor should find that money down the back of the sofa.

[Melanie Onn]

I agree, and our constituents in London and the north of the country clearly share the view that this is a significant issue. People feel seriously let down by the Government’s failure to act on this matter in a timely fashion. I wonder whether the Minister is confident that the current regulations are strong enough to prevent any repeat of what happened. Future investors will be particularly keen to know that they are not going to fall into a similar trap and that if a similar situation were to come to light in the future, the Government would engage with the victims and allow their voices to be heard when trying to devise a solution.

Small Businesses: Tax Reporting

Rupa Huq Excerpts

Monday 25th January 2016 Westminster Hall

[Seema Kennedy (South Ribble) (Con)]

It is a pleasure to serve under your chairmanship, Mr Davies, and to follow the hon. Member for East Lothian (George Kerevan)—I made my maiden speech after he made his. I thank my hon. Friend the Member for Hertsmere (Oliver Dowden) for raising this important issue. I have had representations about it from many constituents. As somebody who has run a small business, I am happy to take part in the debate. I draw Members’ attention to my entry in the Register of Members’ Financial Interests.

The “Fixing the foundations” report by my right hon. Friends the Chancellor and the Business Secretary, which came out last July, focused on creating an even more competitive tax system. The aim is to cut corporation tax to make sure that we have the lowest rate in the G20 and attract inward investment, as well as to make paying tax simpler. The aim is that that

“will dramatically cut the cost of paying tax for business.”

As we all know, a record number of people—millions more of our constituents—are now self-employed and running small businesses. It is a generational shift, and this growing phenomenon will have an impact on many of our constituents.

As other hon. Members have said, the direction of travel—going digital—is laudable, and if the proposed system is properly implemented, it will increase the tax take, which is of course to be applauded. However, the stated aim is simplification, not only for the Revenue but for business, so I tentatively suggest that the Minister does not rush to make any changes. It is better that the switch takes places slightly later, but with fewer glitches. That would increase buy-in from the business community and reduce the frustration for constituents who are involved in making these quarterly reports—however we want to describe them. There are few more frustrating activities for small businesses, particularly sole traders without admin support, than being kept hanging on HMRC’s helpline.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

The hon. Lady’s point reminds me of a comment made by Richard Morse, the FSB’s representative in my area, who said that HMRC did not seem to realise that a lot of businesses in my constituency were sole traders and that the person doing the accounts—there is no separate accounts department—was also generating the business and doing the work. He fears that the proposed system will eat into profits and lead to less taxable income, and I hope the consultation can address his fears.

[Seema Kennedy]

The FSB has made submissions, and it will carry on doing so. Ministers will also be listening to all our representations, which is why it is important that we are here to speak on behalf of our constituents. I welcome HMRC’s commitment to make more use of digital help, such as webinars, webchat and YouTube videos, and I hope it will increase the use of those.

I am sure that the consultation went through this, but I have concerns about when tax would be payable and when penalties would be incurred. I understand that three months does not seem like a very long time, but a four-week or six-week penalty period could pass quickly for a sole trader in busy periods, such as the summer if they are involved in seasonal business. Will the Minister address that point?

My hon. Friend the Member for Morecambe and Lunesdale (David Morris) referred to test runs. Perhaps I missed this information, but I would like to know exactly who did those test runs and over what period. It is essential that the tests are done over an extensive period, with different sizes of business, so that glitches are eliminated and the system runs really well when it is in place.

I have a particular concern about adjustments for capital allowances. I am thinking particularly of my own business, which is in the building trade, as we have had to make large capital investments in the following year, and there are also issues such as amortisation. I know that the impact on working capital came up in the digital consultation carried out by the Petitions Committee.

In conclusion, the move to digital taxation is the right direction of travel if we are to meet business challenges of the 21st century, but it needs to be done after a thorough consultation, of which this debate is only one part, even if that means the current timescales are missed by a few months.

--- Later in debate ---

[Peter Kyle]

I am extremely grateful for that thoughtful intervention, and I have some sympathy with the hon. Gentleman’s points. However, when policies are thoughtful, intuitive and in the interests of business, businesses usually flock to take them up. In this case something has clearly gone wrong in one of two ways: either it is being communicated in the wrong way, but it is a great policy; or it is a poor policy that is being communicated in the right way but is not managing to hit home. The purpose of the debate is to decide which it is.

The policy needs to be tested and communicated better. We need to ensure that people who run businesses—smart people who want to do the right thing by paying their taxes and ensuring that their businesses are not disproportionately burdened—are fully involved as the policy is implemented in the long run. In my view it certainly should happen in the long run, because at the moment, people are being put off going into self-employment or setting up their own business.

Interestingly, on the train up here today, when I was speaking to my brother, who works as a postman in the Brighton, Pavilion constituency, he told me that one of his colleagues had seen on the news that this debate was coming up and had talked about self-employment. His colleague was self-employed for a number of years—more than a decade—but moved away from it because of the fear of the accounting, bureaucracy and regulation that was being heaped on to self-employed people.

The freedom that is associated with self-employment has diminished. As well as the burden of regulation, people fear not having the skills that they need, and they fear the unknown. Because they are not a trained accountant or an experienced administrator—rather, they are a skilled labourer—they fear that they might step outside regulatory measures without being aware of it. That was enough to drive my brother’s colleague away from self-employment and back into paid employment. We should be wary of that, because it would be a huge shame if entrepreneurship were to become the preserve of the middle classes. I do not believe that entrepreneurial spirit is class-based or education-based; it is evenly distributed, even though it is not evenly expressed in our economy.

Public policy on the self-employed needs to be got right, particularly for people who run small businesses or microbusinesses. At the moment, I do not believe that Government policy across the board is on their side. Let us take one example—the much vaunted, much hyped productivity plan, which I know the Minister is keen to refer to often in the Chamber and in the media. It is interesting that in the Government’s flagship productivity plan there is not one single mention of the self-employed, who make up 15% of the workforce and number 4.5 million people. The fastest-growing employment trend in our country does not warrant a single mention in the productivity plan.

In my constituency there is a fantastic business called Crunch, which has been set up specifically to supply accountancy services to people who are self-employed or running microbusinesses. I know that the hon. Member for Brighton, Pavilion, went to visit a couple of weeks ago, which was absolutely fantastic. It now provides services not only right across our city but right across the south of England, and it is great that people are starting to notice just how fantastic the business is and how important its services are. It provides light-touch, fast, responsive support to people setting up businesses. The great thing about being able to visit it is that because it has thousands of customers, it can harness insight into real-time trends in self-employment and see the impact of public policy on the small business and self-employed sector. I know that quite often, HMRC and Government Departments struggle to get real-time data on the impact of Government policy.

One prediction that Crunch makes about the negative impacts of policy is that the leap from 0% to 7.5% in basic rate dividend tax will hit lower-earning company directors the hardest. Those are probably self-employed people who are moving their company to limited status, have a very small number of employees and pay themselves through dividends. Everyone wants to make sure that the right people are paying tax, but the proposal could have the most negative impact on people on lower incomes who run microbusinesses. For example, a limited company director paying themselves primarily through dividends would pay £1,528 more tax a year on pre-tax profits of £48,000, whereas a director with £78,000 of pre-tax profits would pay only £1,343 more.

We can also see from the statistics that the change in income tax for a microbusiness from 2015-16 to 2016-17 will have a negative impact of 21% on somebody earning about £40,000. The equivalent impact on somebody earning £58,000 will be minus 1%. There is something regressive, not progressive, about the changes to dividend tax, and we need to shift the tax burden so that it is progressive, not regressive. If the Minister does so, I know that he will be met with support from both sides of the House. I would very much welcome his comments on that point.

[Dr Huq]

My hon. Friend’s point reminds me of something that Andrew Dakers, who is from West London Business in my constituency, has said:

“One can only assume the measure is being planned to speed up tax receipts, which is a duff basis for policy-making in this area.”

Will my hon. Friend comment on that?

[Peter Kyle]

I am extremely grateful for that intervention, and I have a lot of sympathy with my hon. Friend’s comments and the example that she has given. It is definitely worth mentioning that, and I am sure the Minister will respond to it.

Crunch, the company in my constituency that I mentioned, has a proposal for the Minister. I hope he will take it away with him, because Crunch represents a large number of self-employed people and microbusinesses. It says that the transition will be most challenging for microbusiness owners,

“as it leads to a steep hike in tax overnight.”

It proposes

“either deferring the introduction of these changes for at least 2 years”,

which would enable businesses to have time to adapt,

“or introducing a 3 year credit to keep dividend taxes at 0% for those business owners on the basic rate.”

I support those proposals, and I hope that the Minister will consider them in the same spirit.

It is difficult to devise policies that support self-employed people, because many people go into self-employment because they enjoy the freedom. Increasingly, however, we see a trend whereby larger employers are restructuring and people are being forced into becoming self-employed at a time when they would otherwise not have done so. This area of policy is not dissimilar to youth unemployment in the challenges it provides for policy makers. Self-employed people, like young unemployed people, are hidden away behind front doors in neighbourhoods and communities. They often work from home, so there are problems of connectivity and how they network as a group. It is certainly easy to overlook them. The fact that they are hidden and dispersed in neighbourhoods makes it difficult to target them as one group.

It would be welcome if the Government examined professional development, which would not be burdensome and would link directly with the policy that the Minister is considering. Self-employed people as a sector underinvest in their own professional development, and other spending trends among self-employed people include a fall in pension contributions every year for the past five years. The key measures of their long-term strategic thinking about their own professional development show that there are challenges that are intrinsic to the self-employed.

Anyone who goes into full-time employment with a company looks at the professional development that it offers. That is a key magnet for talent. Self-employed people are so worried about month-to-month living that they do not invest as they should. We must tackle the productivity challenge among the self-employed and microbusinesses. The Government should launch a consultation into that so that we can work cross-party to get deep into what trends are emerging and how we can support the sector. The challenge of professional development would then be won.

Oral Answers to Questions

Rupa Huq Excerpts

Tuesday 19th January 2016 Commons Chamber

[Mr Osborne]

We want a successful financial services industry, because hundreds of thousands of people across the country work in it. We also want a successful manufacturing and steel industry, which is why we have taken action to reduce energy costs—something that had not happened previously and which comes into effect today—and why we are taking action to change procurement rules so that the British Government and others are encouraged to buy British steel. Again, that never happened when the Labour party was in office. We are acting internationally to deal with the dumping of Chinese steel. That is what we are doing. Of course it is an incredibly difficult situation, but as the hon. Gentleman knows, and everyone in this House knows, steel jobs are being lost in every single country in the world at the moment. The question is: what can we do nationally to defend and protect our steel industry? We are doing everything we can. If the hon. Gentleman has constructive suggestions, he should put them to me.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

2. What discussions he has had with the Financial Conduct Authority on its decision to end its review of banking culture.

[The Economic Secretary to the Treasury (Harriett Baldwin)]

The Financial Conduct Authority is an independent regulator. No Treasury Minister or official had any discussions with the FCA before it took the decision to discontinue the review.

[Dr Huq]

Given that the popular image of bankers right now is probably on a par with used car salesmen or MPs even, does the Minister not agree with the hon. Member for Wyre Forest (Mark Garnier) that to abort the review now, which could have looked at regulating challenger banks as well as historical mis-selling, is a missed opportunity?

[Harriett Baldwin]

I find it hard to take lectures from the Labour party on regulating the financial sector. In fact, since my right hon. Friend became Chancellor, we have set up the Financial Conduct Authority and moved on from the failed regulatory system under the Labour Government. We made it a criminal offence to manipulate the UK’s key benchmark, we brought in the toughest rules on bankers’ pay of any financial centre, and we are bringing in a new criminal offence so that senior managers whose reckless decisions bring down banks can face up to seven years in jail.

Education (Student Support) (Amendment) Regulations 2015

Rupa Huq Excerpts

Thursday 14th January 2016 General Committees

[Mr Marsden]

The hon. Lady needs to look more carefully at the differential impacts. The point that I, and I am sure my hon. Friends, would make about this is that debt aversion depends on where someone is coming from. It is perfectly possible to have a situation with those common factors. It is not, however, at all clear from any of the evidence that has been put forward that that would not be a significant disincentive.

I was talking about the things that were said previously: those words will do little to enhance the Government’s alleged commitment to increasing social mobility. The Government and their predecessors set great store by the principle of “nudge”—actions that persuade people to change their behaviour for the better. I remind the Minister that is possible to nudge people away from desirable outcomes such as getting higher education, rather than towards them. The question that the Minister and his colleagues must answer is what attention they have devoted in the regulations, which are highly specific, to preventing that.

A new BIS study included in the impact statement by the Government says that more than half the applicants said they felt put off by the cost of university. Also, for poorer applicants, tuition fee loans and the income-contingent repayment threshold were more important in persuading them to apply, despite the costs. However, the Government seriously underestimate the effect that the grant and the cost of universities have on student decisions. That is backed up by what the Sutton Trust has said:

“Shifting grants to loans may move them off the balance sheet, but it could also put off many low and middle income students and tip the balance against their going to university. Since grants were reintroduced, there have been significant improvements”—

and we welcome that—

“in participation from full time less advantaged students, and this will be put at risk by today’s Budget plans.

The reality is that the Government has miscalculated the levels of repayments it will get from its student loans under the new fees system. Rather than penalising poorer students, it should have a fundamental review of the repayments system. We need long term solutions not a short term fix.”

Research from the NUS that was published yesterday by Populus shows that parents are concerned that the Government’s plans to scrap the maintenance grant will discourage their children from applying to university. Two fifths of those with a combined income of £25,000 or less believe that their children would be discouraged from applying to university if grants were replaced by loans. More than half the parents believed that the plan to scrap grants undermined the Government’s objective of increasing access to university for poorer students.

I want to deal with some other surveys that have been conducted. The changes may well pile even more pressure on to students to alter their work-study balance while pursuing a degree. According to the 2015 Endsleigh survey, produced by a company that has specialised in the area for many years, already 77% of students must work to help fund their studies, using time that could be spent on academic work. That already high number looks set to increase further with the removal of maintenance grants.

The Government claim that they want to strengthen our skills base and that they have given more support for postgraduates. The initial steps that were announced on that are welcome; but there is a risk that they will be undercut because of the debt aversion of the group of students who will lose their grants. The NUS found that after a student finished their undergraduate degree, access to a maintenance grant could also influence their post-study choices.

I want to turn my attention to the specifics of the equality impact assessment that BIS produced for the regulations. It concedes, for example, that black and minority ethnic students, in particular, will be disproportionately worse off than others following the removal of maintenance grants:

“We believe that the proposed changes will disproportionately affect people from ethnic minority backgrounds. This is based on evidence of debt aversion in this group and the increased likelihood for these students to receive the full maintenance grant. We have assessed that there is a small risk to the participation of students”—

given participation rates—

“both from high and low socio-economic backgrounds”.

Additionally, there is risk to the outcomes of these students if they choose not to take out the additional loan available.”

However, a recent BIS study also stated that non-white applicants were likely to cite the importance of maintenance grants in overcoming their concerns about costs. Thus the removal of the maintenance grant will seriously discourage BME students from attending HE institutions.

There is potentially bad news for older learners as well. The equality analysis states:

“Mature students will be disproportionately impacted by the policy proposals to remove the full maintenance grant and replace with additional loan as well as the freezing of targeted grants. The proportion of students aged 21 and over that claim maintenance grant support is significantly higher than their representation in the population of all student support claimants. The available evidence points to the cost sensitivity and debt averseness of this group. The policy change presents a risk for the participation of older students in higher education.”

The assessment has worrying words for disabled students as well:

“As for all students from low income backgrounds we expect the risk to participation of low income disabled students…to continue to be mitigated by the high average returns to HE investment and the repayment protection for low earning graduates.”

That, of course, assumes that current ratios quoted in that respect will remain the same with the massive expansion of the cohort entering full-time work in the next 10 to 15 years. There is no evidence whatever on that.

However, the Government have conceded in the assessment that disabled people will also be disproportionately affected by the decision not to protect the real value of disabled students’ allowances. The assessment says:

“Students from low income backgrounds will be able to access DSA at same level in cash terms but may be disproportionately affected by the freezing (real terms reduction)”—

a term the Government were reluctant to use at the beginning of the equality impact assessment—

“of DSAs and dependants grants.”

For all of the groups that I have cited so far, I and the rest of the Committee want to know what the Government propose to do to mitigate those disproportionate impacts, which their own equality impact assessment so candidly concedes will be the case.

In addition, there is the separate worrying implication that a significant number of would-be students may be discriminated against under these regulations because of their religious beliefs. The impact assessment states:

“There is evidence to suggest that there are groups of Muslim students whose religion prohibits them from taking out an interest bearing loan. This means that this group of students will no longer have access to funding for living costs as non-repayable finance is no longer available. This could lead to a decline in the participation of some Muslim students.”

The complacency about the failure to have available a sharia-compliant alternative to grants that will be withdrawn borders on discrimination. Does the Minister agree that the regulations as they stand will restrict Muslim students from accessing valuable finance, while the removal of grants threatens to weaken further their ability and capacity to carry through their higher education studies?

The Government claim that they are making an alternative to traditional loans available that is sharia-compliant, but it is not there yet, is it, Minister? Yet the Government have known about the issue since April 2014. Will the Minister guarantee that the change will not be implemented until there are firm regulations in law for an alternative finance proposal that will be acceptable to people of the Muslim faith?

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

I want to share my own example, because these matters are often seen as hypothetical. I started my undergraduate degree in 1990, the first year that voluntary loans were introduced. I did not take one of those because Muslim students are very risk-averse and debt-averse and do not want to carry interest-bearing loans. Does my hon. Friend agree that these are real people, not just hypothetical examples?

--- Later in debate ---

[Alison Thewliss]

We cannot tell exactly what will happen as a result of these further changes and what impact they will have. I speak from my own experience: I graduated from university in 2004, and only since taking this job have I been able to make any impact on paying back the loan that I took out then. That loan was relatively small compared with the loans that we are discussing. How long will people be saddled with debt, and what impact will it have on their life chances and their ability to make progress in their lives? It is an absolutely appalling circumstance, and it is creating an even more indebted generation than the one before it. It is ridiculous. The impact in Scotland will be greater, because we have four-year degrees rather than three-year degrees as in England.

I will quote from the figures sent to me by the NUS in Scotland, which notes that in the academic year 2013-14, a total of £1.59 billion was awarded to applicants in all cohorts. In 2014-15, for post-2012 students, a provisional total of £1.5 billion was awarded. Assuming that that averages out over the three years, it implies an annual reduction of £500 million, contributing to a £50 million reduction in the cash DEL—departmental expenditure limit—available to Scotland per year. For comparison, Student Awards Agency for Scotland figures for 2014 show that the social grant and bursary awards made to Scotland for Scottish-domiciled students totalled £63.6 million. That is a significant impact.

On the impact on Scotland since the introduction of tuition fees in England, when direct cash DEL teaching grants provided by the Higher Education Funding Council in England to English universities were cut by more than £3 billion, assuming a straight consequential, the result is a £300 million reduction in cash DEL available to Scotland. The spending review proposes a further £120 million reduction in the teaching grant by 2019-20, which will result in a consequential to Scotland on top of the impact of these measures, including for nursing students.

The impact on us in Scotland is unfair. Decisions here by a Government we did not vote for and who have one MP in Scotland are resulting in decisions that John Swinney will have to make in our budget, which is decreasing. We have no impact on those decisions, and our Government cannot change them. The decisions taken by this Conservative Government and the previous coalition Government have had the effect of skewing the Scottish budget in further education. The departmental expenditure limit, which includes the teaching and research budget and the grant and bursary budget, has been reduced, and the annually managed expenditure budget, which goes on loans, has increased. We do not want an increase in loans; we want the DEL, but we cannot have that, because decisions here have reduced it. Those decisions affect the Scottish budget, and we must find the money that we want to spend on grants and bursaries from somewhere else within it. That is unfair. We want to support our students. Our students in Scotland deserve support, particularly where, due to demographic differences, they have not yet had the chance to go to university because they are put off by loans.

The point made by a Labour Member about minorities is true as well. It will particularly affect constituencies such as mine in Glasgow, Central, which is probably one of the most ethnically diverse constituencies in Scotland and contains Strathclyde University and Glasgow Caledonian University, as well as bounding on Glasgow University. All those universities could be affected by that decision.

[Dr Huq]

Does the hon. Lady agree that the difference between what is happening now and what happened for my generation is that I had a full grant and my fees paid completely? I pity this generation. It was doable not to have a voluntary top-up loan in 1990, but what is happening now is disastrous.

[Alison Thewliss]

I will finish by absolutely agreeing with that. When the hon. Lady and I went to university, we came out with some debt, but not a crippling debt of up to £53,000, which is an astronomical amount of money for anybody from any background to consider if they want to go to university. I urge the Government to reconsider and to speak directly to the Scottish Finance Secretary John Swinney and to the Scottish Government to assess the impact of these decisions on the Scottish budget. I doubt very much that the Minister has consulted the Scottish Government.

--- Later in debate ---

[Joseph Johnson]

Yes, indeed it does, and is motivating our decision to increase the amount of support that will be available to students going into higher education in this country. We want everybody who can benefit from higher education to be able to go to university.

We are delighted to see more people applying to university, more people getting in and more people getting on to their first-choice courses than ever before. Critically, we are delighted that more people from disadvantaged backgrounds are applying and going to university than ever before, and we want those trends to carry on.

[Dr Huq]

Has the Minister seen the research on these new arrangements for the Institute for Fiscal Studies? The poorest 40% will graduate with debts of up to £53,000 a year, as opposed to £40,000 at the moment. How does that square with his party’s claim to be the party encouraging fiscal responsibility and social mobility?

[Joseph Johnson]

Accessing university is a transformational experience for many students, especially for people from disadvantaged backgrounds. We want more people from disadvantaged backgrounds to go to university and receive the benefits that can bring. I will now explain exactly why—

--- Later in debate ---

[Joseph Johnson]

I am going to press on and conclude my remarks, because the shadow Minister needs to make his closing remarks, too.

Those who disagree with the provisions contained in the regulations should submit their proposals to generate equivalent grant savings from elsewhere. I note that the Labour party has in the past year proposed competing higher education funding policies, although they share one common feature—their significant cost to the taxpayer. Labour’s leader said in July that fees should be removed completely, with grants retained. That was costed by the Labour party itself at £10 billion. Ahead of the election, it was briefly proposed that fees be reduced to £6,000, which would have cost £3 billion. Those policies move us backwards. They are unsustainable.

I was therefore particularly interested to read Ed Balls’ comments in this week’s Times Higher Education, where he spoke about the “blot on Labour’s copybook”:

“We clearly didn’t find a sustainable way forward for the financing of higher education.”

He said that if the electorate

“think you’ve got the answers for the future, they’ll support you.”

We have set out a clear plan for the future to ensure that higher education finances are sustainable and that more people can benefit from higher education. Has the Labour party decided on its approach?

When the tuition fee reforms were made in the last Parliament, there were those who predicted a sharp fall in participation in higher education, particularly by those from disadvantaged backgrounds. However, that did not come to pass, and the latest application figures from UCAS, although provisional, show that, in spite of our proposed changes to maintenance, application figures are similar to last year’s figures.

The hon. Member for Blackpool South referred to the grant-to-loan switch in FE. Loans were introduced in the further education sector in 2013-14 to remove the barrier of meeting the upfront cost of tuition fees; we are debating loans for living costs in HE, and I do not believe that is a valid comparison.

[Dr Huq]

Will the Minister give way?

[Joseph Johnson]

I have only one or two minutes, so I will not give way. We should remember that switching support for living costs from grants to loans allows us to increase the upfront support provided to students from the lowest income backgrounds. In taking the decision to proceed with this policy, the Secretary of State and I considered an equality impact assessment, which we have published. That impact assessment sets out the risk to protected groups. It also explains that those risks will be mitigated by a number of factors, including the 10.3% increase to the maximum loan for living costs for the lowest income students, the repayment protection for low-income, low-earning graduates and the high average returns to higher education.

We will, of course, monitor the outcome of the policy through the data available from the Higher Education Statistics Agency and the Student Loans Company and the work of the Office for Fair Access. We will also continue to listen to stakeholders and colleagues in the House and the other place. In the meantime, I am grateful for the points that have been made by hon. Members today. However, the evidence from the coalition’s fee reforms has been that participation is fairly insensitive to greater debt. The equality analysis made the point that such changes have a

“limited impact on students decision making”.

Students understand that graduate debt is not the same as commercial debt. Graduate debt is paid back through a repayment system that takes account of ability to pay and, crucially, it allows individuals to make one of the best investments—in undertaking higher education.

The instrument allows us, in a time of fiscal restraint, to ensure that universities remain well funded so that they can continue to act as engines of our economy and of social mobility in a time of increased student numbers. For those reasons, I commend the regulations to the House.

Oral Answers to Questions

Rupa Huq Excerpts

Wednesday 9th December 2015 Commons Chamber

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

Q3. They are a great British institution and earn billions for our economy, so I am sure the Chancellor will share my concern that two curry houses a week are closing due to Government policies and the fact that the proposed specialist colleges have failed. As a fan himself, will he review the situation? He once likened the elements of a strong economy to those of a good curry, so will he take action to head off the coming curry crisis?

[Mr Osborne]

We all enjoy a great British curry, but we want the curry chefs to be trained in Britain so that we can provide jobs for people here in this country. That is what our immigration controls provide.

Royal Bank of Scotland

Rupa Huq Excerpts

Thursday 5th November 2015 Commons Chamber

[Jon Cruddas]

I will come to the question of demutualisation in a moment. I simply suggest that Government Members read a book called “The New Few” by Ferdinand Mount, who happened to be Margaret Thatcher’s head of policy. He argued for a more resilient capitalism, including a mixed economy in banking provision, with mutuals, local regional banks and a wider distribution of banking products for communities such as mine in east London. Therefore, I do not think that this is necessarily a left-right debate. I argue that this is a live debate on the right, which suggests that simple neutrality or abstention on the motion is not necessarily going with the grain of more innovative thinking across the right of the political spectrum.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

My hon. Friend is a renowned economist, but even before we get into the alternative models of banking, does he agree that one does not have to be an economist to see that buying something at one price and then selling it off for next to nothing—at the current market rate, shares are £3.21 each—does not make good economic sense? That from a party that prides itself on its so-called long-term economic plan. It is more like what George Bush senior called voodoo economics.

[Jon Cruddas]

A collective hit of £14 billion on taxpayers does not seem to be good, rigorous or empirically grounded economics, so my hon. Friend is absolutely right.

Let me return to the question of bank deposits. Apart from anything else, the lack of diversity in the UK’s banking system leaves us extremely vulnerable; all our eggs are literally in one basket. If we look at the international evidence on how those different types of bank perform, it quickly becomes clear that the Minister’s claims simply do not stack up.

Let us take shareholder owned banks first. Let us not forget that in 2008 it was shareholder-owned commercial banks that brought the global financial system to its knees. Yes, they were “innovative”—they created some of the most innovative toxic financial instruments the world has ever seen—but much of that innovation was what Adair Turner has termed “socially useless”; it served no real economic purpose except to inflate the profits of the banks that produced them while quietly spreading dangerous levels of risk to every corner of our financial system.

Members do not have to take my word for that. The Parliamentary Commission on Banking Standards concluded that the shareholder model itself had a large part to play in the story:

“Shareholders have incentives to encourage directors to pursue high risk strategies in pursuit of short-term returns... In the run-up to the financial crisis, shareholders failed to control risk-taking in banks, and indeed were criticising some for excessive conservatism.”

In other words, the ownership model to which the Government are so keen to return RBS is the same model that helped to bring the bank down in the first place.

Tax Credits

Rupa Huq Excerpts

Thursday 29th October 2015 Commons Chamber

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

I also add my congratulations to my right hon. Friend the Member for Birkenhead (Frank Field) on securing this debate in a week of such high drama on this subject. I am very encouraged by the things that I have heard from some Members on the Government Benches, and I hope that that is conveyed to their leadership.

Yesterday’s headlines made for confusing reading. The Guardian went for “Osborne ready to change tack on tax credits.” The Express plumped for, “Defiant Osborne says that tax credits will be cut despite defeat in Lords.” It is not the first time that there has been confusion over this issue. Before the election, the Conservative manifesto promised to “work to eliminate child poverty.” Two months later, the Government scrapped existing targets and child poverty measures. That is not just moving the goal posts, but ripping up the pitch.

The Prime Minister said:

“We must eliminate the scourge of poverty.”

That is difficult to reconcile with cuts set to put more than 200,000 working households into poverty. Those cuts are being put into effect to fund an inheritance tax cut that will benefit the 60,000 wealthiest estates, which probably explains why we no longer hear the words, “We are all in this together.” This is all such high drama, and we do not know what the next instalment will be.

[Christina Rees (Neath) (Lab)]

I have been a bit confused as well. The only thing that is clear is that in Neath we have more than 6,000 families on tax credits, and more than 5,000 families with children, and these measures will drive them into poverty.

[Dr Huq]

I think that we have a similar number—6,500 families—in Ealing Central and Acton. It is the children whom we should be thinking about. They are not just columns on a spreadsheet, but real people.

There was great drama at PMQs yesterday. The leader of the Labour party asked the Prime Minister six times about these plans and whether working people would be worse off next year, and six times, the Prime Minister refused to answer. Even The Sun—not the most Labour friendly paper—referred to that exchange. As my hon. Friend the Member for Islington North (Jeremy Corbyn) said:

“This is not a constitutional crisis; it is a crisis for 3 million families”.—[Official Report, 28 October 2015; Vol. 601, c. 339.]

We could go further, even further than this motion. The Chancellor could still perform a full U-turn, which I would welcome, as I did the rapid conversion to feminism in this place yesterday. As my hon. Friend the Member for Hayes and Harlington (John McDonnell) said, if the Chancellor were to make a U-turn, we would welcome it on the Labour Benches. We would not taunt the Government if they were to do that. There is still time.

The Chancellor has a choice before him. He can continue hell-bent on his tax giveaways to big corporations and to the wealthiest in our country, or he could reverse those tax breaks to the few and go for a lower surplus target in 2019-20 while still sticking to his self-imposed charter. He would still be in a position not to hit those 3 million working families with these tax credit cuts. After all, this is a Government who claim to be on the side of working people. The ball is now firmly in the court of the Treasury Ministers.

My hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) said that, often, the lifting of people out of taxation is used to justify these measures, but such a move is not as progressive as it initially appears to be. It helps dual earner households the most, but only those who earn enough. It makes no difference if the Government start taxing at £6,000 or £11,000, because there is little help for those on £5,000—the lowest paid on the distributional curve.

Studies have shown that the national living wage, which is not an actual living wage, will only affect a small minority of people and it will never help those under the age of 26. My right hon. Friend the Member for Don Valley (Caroline Flint) also pointed out that the childcare element is quite limited. In my own constituency, parents would be hard-pressed to find a nursery that could offer a place, because there is not the commensurate resource to match the policy.

People have been wondering, even before the mess of this week, how they can trust a Prime Minister who blatantly said one thing on TV as recently as 30 April and then quite a different thing just a couple of months later in July. He made a promise of no cuts to a voter on a phone-in programme. That was then followed up by David Dimbleby to check that what he said was clear. By July, that promise had gone. That must be the fastest U-turn in history. In PMQs yesterday, we heard some MPs say that they had claimed tax credits. I do not know whether that is true. Perhaps we can put that down to the theatre of PMQs.

[David Morris]

rose—

[Dr Huq]

I have already given way once, so I will not do so again. Reduced tax credits are being introduced alongside a gamut of other welfare changes, the cumulative effect of which is an assault on the lowest paid in our country.

[Jason McCartney (Colne Valley) (Con)]

Please stick to the motion.

[Dr Huq]

What I am saying is relevant to the motion, because we need some context.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. If the hon. Lady was not speaking to the motion, I would stop her.

[Dr Huq]

We need to look at tax credits in a wider context. There is the four-year benefit freeze, and the reduction in the household benefit cap. New claimants are no longer entitled to the “family element” of tax credits and, controversially, there is the proposal that, after April 2017, families will not be able to claim for their third child. I cannot imagine that happening in any other policy area. Can Members imagine the Government saying that a third child could not go to school? If such a policy had been in place, my sister Connie would never have been educated.

A number of millionaire Tory lords voted on Monday to cut help for Britain’s poorest workers. Lord Lloyd Webber was even flown in from New York for the vote. It did seem as though the Government were throwing the kitchen sink at this whole issue. There is growing awareness of the consequences of such a measure. Etched into the consciousness of those on the Government Front Bench should be the words of that caller who phoned in to that programme before the election, or the words of the woman who cried on “Question Time” the other night. Through old and new media, we have all received hundreds of messages on this point so we await the next instalment, the autumn statement. I hope that kids have been saved the unseasonable tidings of the notices that would have been plopping onto doormats at Christmas.

At the very least, the Government should publish a full impact assessment of their cumulative cuts to tax credits and benefits in the so-called emergency Budget. The Prime Minister said at his own conference that it is not pounds and pence but people that fire him up. Those 6,500 children in Ealing Central and Acton are real people with real lives, not columns on a spreadsheet. Some 70% of the money that the Treasury will save will come from working mums, so I urge the Government to reconsider their proposals and protect those on the lowest incomes.

Tax Credits

Rupa Huq Excerpts

Tuesday 20th October 2015 Commons Chamber

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

I know that this Government and this Chancellor in particular are fond of political cross-dressing, but robbing 6,500 children in 3,500 hard-working families in my constituency of £1,300 a year makes a mockery of all that—and that is in an affluent west London suburban constituency where the average property price is over £500,000. The Prime Minister pledged during the election campaign not to cut tax credits, but the fact that he is doing this only months after the election is not just a concern to the Opposition; it brings politics into disrepute.

We have heard about the so-called compensation that will come from the national living wage. It is not a living wage, and it is compensation for only 26% of people. Politicians like to go on about hard choices, but this is about whether to penalise people who are doing right and playing by the rules, or to give a tax cut to the 60,000 wealthiest estates at the expense of 200,000 working families. Some 6,500 families in Ealing Central and Acton are a chunk of 3 million families across the country. The fact that the notices informing them of the changes will arrive just before Christmas is deeply immoral. It shows the Scrooge-like attitude of this Government.

I have had dozens of emails about the cuts, both around the time of the emergency, that is the crisis, budget and now. I urge Members in suburban London seats like mine—the Comptroller of Her Majesty's Household, the hon. Member for Croydon Central (Gavin Barwell), the hon. Member for Harrow East (Bob Blackman), the right hon. Member for Carshalton and Wallington (Tom Brake), whom I can see, and the hon. Member for Twickenham (Dr Mathias), constituencies where those affected by the change outweigh the majority that those Members have—to join us in the Lobby tonight.

European Union (Finance) Bill

Rupa Huq Excerpts

Thursday 11th June 2015 Commons Chamber

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

Thank you ever so much, Madam Deputy Speaker. The hon. Member for North East Somerset (Mr Rees-Mogg) is a difficult act to follow, but I will try.

I have been a bit slower than some of my fellow 2015 intake at getting around to making my maiden speech, but as a former university lecturer who is used to speaking in one-hour bursts, and with 43 years in Ealing behind me, I wanted to do justice to the magnificent seat of Ealing Central and Acton. With this being a Thursday, I think I might get the time to do this. All hon. Members have assured us that their constituency is the best one in the world, but in my case it is true. As a lifelong local, I am honoured and humbled to be serving its people in this place.

My immediate predecessor was Angie Bray. Although we did not always see eye to eye politically, we did get on, and it was a mark of her generosity of spirit that when my two sisters—both constituents—and I lost our father last September, she handwrote a note of condolence to me. I wish her well.

Before its boundaries were redrawn, my seat included areas now represented by my hon. Friend the Member for Hammersmith (Andy Slaughter) and my hon. Friend the irrepressible Member for Ealing North (Stephen Pound). I therefore succeed and join Bray, Slaughter and Pound, which sounds like a vaguely pugnacious firm of solicitors. I am happy now to be Huq in the mix.

Previous Conservative MPs for my seat include Kenneth Baker, immortalised for a generation of school users back when teacher training days were known as Baker days. Then came Sir George Young, “the Bicycling Baronet”, from whom I received an 18th birthday card reminding me of my newly enfranchised status and politely suggesting that I might want to vote Conservative. Members will not be surprised to learn that I did not take his advice.

I never imagined in those days that I would be one of three Ealing Labour MPs supported by a council of the same complexion. A leading Tory at Ealing town hall remarked the other day that we were living in a one-party socialist super state. If only! On the subject of mixing, which I referred to, I can now claim to be the only one of the trio of Ealing Labour MPs to have been a DJ, and, interestingly, I am the only one of the three of us who has never been a bus conductor. In part, that is a function of my age—but hey, never say never.

Transport is a key issue for my constituents. In fact, large parts of my constituency would not have existed without the electrification of the railways. Ealing, Acton and Chiswick feature strongly among the stops on the London tube map. I want to use my position to speak up for the suburbs, which are neglected parts of our nation. If our great cities drive our nation, the suburban districts fuel it.

To sketch a pen portrait of Ealing Central and Acton in 10 minutes is no mean feat. As well as the two towns in its title, it comprises bits of NW10, bordering Harlesden in Brent, near the constituency of my hon. Friend the Member for Brent North (Barry Gardiner), and bits of W4 in Chiswick. Madam Deputy Speaker, you have probably seen my seat before without even knowing it. In the opening titles of “Only Fools and Horses”, the tower blocks of Del Boy’s Peckham were actually the South Acton estate. For sci-fi fans, it featured in several episodes of “Doctor Who”, including the classic 1970 episode, “Spearhead from Space”, which depicts zombies taking over tranquil Ealing green. I think they were called Autons, or something like that.

[Alison McGovern (Wirral South) (Lab)]

They were called Tories.

[Dr Huq]

Yes, Tories. That’s it.

The whole episode, with people marauding over Ealing green, eerily prefigured the events that unfolded in August 2011, when rioting sadly hit parts of London and further afield. It hit almost the same spot as depicted in the episode.

The seat’s cultural footprint goes wider than on screen; it also covers musical matters. If Members exit Ealing Broadway station, they will see a blue plaque marking the club where the Rolling Stones played their first concert, and The Who formed at Acton County Grammar School, now known as Acton High. At the University of West London in my constituency, there is a Freddie’s Bar, named after Freddie Mercury, who studied at its former incarnation, Ealing Art College. I was reminded of that by Brian May, from the same band, the week before last in this place when he came to lobby against animal cruelty.

The cumulative effect of 43 years in Ealing meant that the 18 months I spent as a candidate knocking on doors in some ways felt like watching my whole life flashing past me. I never knew who I would get behind those doors—would it be my mum’s friends from the swinging Ealing of the ’60s, or my own teachers from the ’70s and ’80s who I never even dreamed had first names, or people I see every day nowadays as a mum on the school run?

The constituency has seen pioneering social experiments. In Bedford Park suburb W4, we had the world’s first garden suburb, while in W5 we have the Brentham estate, which was the birthplace of co-operative housing, where Fred Perry learned to play tennis in the communal facilities. I know that MPs have been fond of the so-called John Lewis list, but they might like to know that its offshoot Waitrose opened its first branch in 1904 in Acton High Street.

Although we witnessed riots in 2011, the spontaneous broom army that came together in the aftermath of the disturbances demonstrated the resilience of what is a mixed community. It is a seat with lush suburbia of Victorian, Edwardian and 1930s-style varieties at one end and the more post-war urban densities and high-rise properties at the other.

My 18 months as a candidate opened my eyes to things I had never seen before in 43 years there. Some of my visits were to places such as the Ealing food bank, the Ealing soup kitchen, the Ealing churches’ night shelter and the Ealing Samaritans—all of whom report an unprecedented take-up of their services. In this day and age in Ealing, which was once known as “Queen of the Suburbs”, that cannot be right. While our victory in Ealing was a great result against the tide, it was tempered with sadness that my dad never lived to see it and disappointment at the broader national results.

I note that my predecessor’s maiden speech pledged to campaign for keeping local A&Es open. She will have been disappointed that we lost Central Middlesex and Hammersmith in September. Maternity at Ealing hospital—we are talking about the London borough with the third highest birth rate out of 33—is about to go at the end of this month, with the last projected birth on 24 June. That can be only a precursor to the A&E going, and Charing Cross A&E is also under threat. With west London’s population going up, not down, that is just plain wrong.

The two immediately preceding maiden speeches for my constituency both praised its multi-faith, multi-ethnic nature. Of course, I shall do the same, as I am a product of it, as can be seen from looking at me. Old and new Europe live side by side and have done for a long time in this seat. I went to school with kids—and teachers—from the immediate post-war Polish ex-servicemen generation, who long predated the 2004 EU expansion. The seat, then, spans tradition and modernity; continuity and change; urban and suburban: it is a microcosm of London at large. Enormous opportunity is coming our way with the regeneration of the Old Oak district, with some 24,000 dwellings, which is being touted as the Canary Wharf of the west; the Crossrail link, which will have two stops in Ealing and Acton; and HS2 is planned to come through, too. It is important that these opportunities serve local people. We do not want to see unaffordable flats being bought off plan by absentee overseas investors. That is buy to leave, not buy to let. As the area’s MP, I will press for the UK to maximise EU funding for these major infrastructure projects, as it is needed to support them. That seems an appropriate point for a debate on EU finance—I did get it in somehow—and the subject of today’s Bill.