John Bercow
Main Page: John Bercow (Speaker - Buckingham)Department Debates - View all John Bercow's debates with the HM Treasury
Spending Review and Autumn Statement
John Bercow Excerpts(8 years, 5 months ago)
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Mr Speaker
Order. Mr Lewis, get a grip of yourself, man. Calm. Take up yoga—you will find it beneficial, man. Now look, the record shows that the Chancellor stays for a very considerable period after his statement to respond to questions, and Members will always find the Chair a friend if they wish to question a Minister—[Interruption.] Yes, they will. Those who have questions to ask will be heard. Meanwhile, the Chancellor will be heard.
Mr Osborne
Mr Speaker, I am looking forward to it.
On that new measure, debt was forecast in July to be 83.6% of national income this year. Now, today, in this autumn statement, the OBR forecasts debt this year to be lower at 82.5%. It then falls every year, down to 81.7% next year, down to 79.9% in 2017-18, then down again to 77.3%, then 74.3%, reaching 71.3% in 2020-21. In every single year, the national debt as a share of national income is lower than when I presented the Budget four months ago.
This improvement in the nation’s finances is due to two things. First, the OBR expects tax receipts to be stronger—a sign that our economy is healthier than thought. Secondly, debt interest payments are expected to be lower, reflecting the further fall in the rates we pay to our creditors. Combine the effects of better tax receipts and lower debt interest, and overall the OBR calculates that it means a £27 billion improvement in our public finances over the forecast period, compared with where we were at the Budget.
This improvement in the nation’s finances allows me to do the following. First, we will borrow £8 billion less than we forecast, making faster progress towards eliminating the deficit and paying down our debt—fixing the roof when the sun is shining. Secondly, we will spend £12 billion more on capital investments, making faster progress to building the infrastructure our country needs. Thirdly, the improved public finances allow us to reach the same goal of a surplus while cutting less in the early years. We can smooth the path to the same destination.
That means that we can help on tax credits. I have been asked to help in the transition as Britain moves to the higher-wage, lower-welfare, lower-tax society the country wants to see. I have had representations that the changes to tax credits should be phased in. I have listened to the concerns. I hear and understand them. Because I have been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether. Tax credits are being phased out anyway as we introduce universal credit.
What that means is that the tax credit taper rate and thresholds remain unchanged. The disregard will be £2,500. I propose no further changes to the universal credit taper or to the work allowances beyond those that passed through Parliament last week. The minimum income floor in universal credit will rise with the national living wage.
I set a lower welfare cap at the Budget. The House should know that helping with the transition obviously means that we will not be within that lower welfare cap in the first years, but the House should also know that, thanks to our welfare reforms, we will meet the cap in the later part of this Parliament. Indeed, on the figures published today, we will still achieve the £12 billion per year of welfare savings we promised. That is because of the permanent savings we have already made and further long-term reforms that we announce today.
The rate of housing benefit in the social sector will be capped at the relevant local housing allowance—in other words, the same rate that is paid to those in the private rented sector who receive the same benefit. That will apply to new tenancies only. We will also stop paying housing benefit and pension credit payments to people who have left the country for more than a month. The welfare system should be fair to those who need it and fair to those who pay for it.
Improved public finances and our continued commitment to reform mean that we continue to be on target for a surplus. The House will want to know the level of that surplus, so let me give the OBR forecasts for deficit and borrowing. In 2010, the deficit we inherited was estimated to be 11.1% of national income. This year, it is set to be almost a third of that, 3.9%. Next year, it falls to less than a quarter of what we inherited, 2.5%. The deficit is down again to 1.2% in 2017-18 and down to just 0.2% the year after that, before moving into a surplus of 0.5% of national income in 2019-20, rising to 0.6% the following year.
Let me turn to the cash borrowing figures. With housing associations included, the OBR predicted at the time of the Budget that Britain would borrow £74.1 billion this year. Instead, it now forecasts that we will borrow less than that at £73.5 billion. Borrowing falls to £49.9 billion next year and then continues to fall. It falls to lower than was forecast at the Budget in every single year after that: to £24.8 billion in 2017-18 and down to just £4.6 billion in 2018-19. In 2019-20, we will reach a surplus—a surplus of £10.1 billion.
That is higher than was forecast at the Budget—Britain out of the red and into the black. In 2020-21, the year after that, the surplus rises to £14.7 billion.
So the deficit falls every year; the debt share is lower in every year than previously forecast; we are borrowing £8 billion less than we expected overall; and we reach a bigger surplus. We have achieved this while at the same time helping working families as we move to the lower-welfare, higher-wage economy, and we have the economic security of knowing our country is paying its way in the world.
That brings me to our plans for public expenditure and taxation. I want to thank my right hon. Friend the Chief Secretary, our other ministerial colleagues at the Treasury and the brilliant officials who have assisted us for the long hours and hard work that they have put into developing these plans.
We said £5 billion would come from the measures on tax avoidance, evasion and imbalances. Those measures were announced at the Budget. Together we go further today, with new penalties for the general anti-abuse rule, which this Government introduced, and action on disguised remuneration schemes and stamp duty avoidance, and we will stop abuse of the intangible fixed assets regime and capital allowances. We will also exclude energy generation from the venture capital schemes, to ensure that they remain well targeted at higher-risk companies.
Her Majesty’s Revenue and Customs is making efficiencies of 18% of its own budget. In the digital age, we do not need taxpayers to pay for paper processing or 170 separate tax offices around the country. Instead, we are reinvesting some of those savings, with an extra £800 million in the fight against tax evasion—an investment with a return of almost 10 times in additional tax collected.
We are going to build one of the most digitally advanced tax administrations in the world in this Parliament, so that every individual and every small business will have their own digital tax account by the end of the decade in order to manage their tax online. From 2019, once these accounts are up and running, we will require capital gains tax to be paid within 30 days of completion of any disposal of residential property. Together, these things form part of the digital revolution we are bringing to Whitehall with this spending review. The Government Digital Service will receive an additional £450 million, but the core Cabinet Office budget will be cut by 26%, matching a 24% cut in the budget of the Treasury, and the cost of all Whitehall administration will be cut by £1.9 billion. These form part of the £12 billion of savings to Government Departments that I am announcing today.
In 2010, Government spending took up 45% of national income. This was a figure we could not sustain, because it was neither practical nor sensible to raise taxes high enough to pay for that, and we ended up with a massive structural deficit. Today the state accounts for just under 40% of national income, and it is forecast to reach 36.5% by the end of the spending review period. The structural spending that this represents is at a level that a competitive, modern, developed economy can sustain, and it is a level that the British people are prepared to pay their taxes for.
It is precisely because this Government believe in decent public services and a properly funded welfare state that we are insistent that they are sustainable and affordable. To simply argue all the time that public spending must always go up and never be cut is irresponsible and lets down the people who rely on public services most.
Equally, to fund the things we want the Government to provide in the modern world, we have to be prepared to provide the resources. So I am setting the limits for total managed expenditure as follows. This year, public spending will be £756 billion. Then it will be £773 billion next year, then £787 billion the year after, then £801 billion, before reaching £821 billion in 2019-20, the year we are forecast to eliminate the deficit and achieve the surplus. After that, the forecast public spending rises broadly in line with the growth of the economy and will be at £857 billion in 2020-21.
The figures from the OBR show that over the next five years, welfare spending falls as a percentage of national income while departmental capital investment is maintained and is higher at the end of the period. That is precisely the right switch for a country that is serious about investing in its long-term economic success.
People will want to know what the levels of public spending mean in practice and the scale of the cuts we are asking Government Departments to undertake. Over this spending review period, the day-to-day spending of Government Departments is set to fall by an average of 0.8% a year in real terms. That compares with an average fall of 2% over the last five years, so the savings we need are considerably smaller. This reflects the improvement in the public finances and the progress we have already made. Indeed, the overall rate of annual cuts that I set out in today’s spending review is less than half of those delivered over the last five years. So Britain is spending a lower proportion of its money on welfare and a higher proportion on infrastructure; seeing the budget balanced, with cuts half what they were in the last Parliament; making the savings we need, no less and no more; and providing economic security to the working people of a country with a surplus that lives within its means.
This does not, of course, mean that the decisions required to deliver these savings are easy. But nor should we lose sight of the fact that this spending review commits £4 trillion over the next five years. It is a huge commitment of the hard-earned cash of British taxpayers, and all those who dedicate their lives to public service will want to make sure it is well spent. Our approach is not simply retrenchment, it is to reform and rebuild.
These reforms will support our objectives for our country: first, to develop a modern, integrated health and social care system that supports people at every stage of their lives. Secondly, to spread economic power and wealth through a devolution revolution and invest in our long-term infrastructure. Thirdly, to extend opportunity by tackling the big social failures that for too long have held people back in our country. Fourthly, to reinforce our national security with the resources to protect us at home and project our values abroad. The resources allocated by this spending review are driven by these four goals.
The first priority of this Government is the first priority of the British people—our national health service. Health spending was cut by the Labour Administration in Wales, but we Conservatives have been increasing spending on the NHS in England, and in this spending review we do so again. We will work with our health professionals to deliver the very best value for that money. That means £22 billion of efficiency savings across the service; it means a 25% cut in the Whitehall budget of the Department of Health; and it means modernising the way we fund students of healthcare. Today there is a cap on student nurses—over half of all applicants are turned away, and it leaves hospitals relying on agencies and overseas staff. So we will replace direct funding with loans for new students, so that we can abolish this self-defeating cap and create up to 10,000 new training places in this Parliament.
Alongside these reforms, we will give the NHS the money it needs. We made a commitment to a £10 billion real increase in the health service budget, and we fully deliver that today, with the first £6 billion delivered up front next year. This fully funds the five-year forward view that the NHS itself put forward as the plan for its future. As the chief executive of NHS England, Simon Stevens, said,
“the NHS has been heard and actively supported.”
Let me explain what that means in cash. The NHS budget will rise from £101 billion today to £120 billion by 2020-21. This is a half a trillion pound commitment to the NHS over this Parliament—the largest investment in the health service since its creation.
So we have a clear plan for improving the NHS. We have fully funded it, and in return patients will see more than £5 billion of health research in everything from genomes to antimicrobial resistance, a new dementia institute and a new, world-class public health facility in Harlow. And more—800,000 more elective hospital admissions; 5 million more out-patient appointments; 2 million more diagnostic tests; new hospitals funded in Cambridge, in Sandwell and in Brighton; cancer testing within four weeks; and a brilliant NHS available seven days a week.
There is one part of our NHS that has been neglected for too long, and that is mental health. I want to thank the all-party group led by my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), the right hon. Member for North Norfolk (Norman Lamb) and Alastair Campbell for its work in this vital area. In the last Parliament we made a start by laying the foundations for equality of treatment, with the first ever waiting time standards for mental health. Today, we build on that with £600 million of additional funding, meaning that by 2020 significantly more people will have access to talking therapies, perinatal mental health services and crisis care—all possible because we made a promise to the British people to give our NHS the funding it needed, and in this spending review we have delivered.
The health service cannot function effectively without good social care. The truth we need to confront is that many local authorities will not be able to meet growing social care needs unless they have new sources of funding. That, in the end, comes from the taxpayer, so in future those local authorities that are responsible for social care will be able to levy a new social care precept of up to 2% on council tax.
The money raised will have to be spent exclusively on adult social care, and if all authorities make full use of it, it will bring almost £2 billion more into the care system. It is part of the major reform we are undertaking to integrate health and social care by the end of the decade. To help to achieve that I am today increasing the better care fund to support that integration, with local authorities able to access an extra £1.5 billion by 2019-20. The steps taken in this spending review mean that by the end of the Parliament, social care spending will have risen in real terms.
A civilised and prosperous society such as ours should support its most vulnerable and elderly citizens. That includes a decent income in retirement. More than 5 million people have already been auto-enrolled into a pension thanks to our reforms in the last Parliament. To help businesses with the administration of that important boost to our nation’s savings, we will align the next two phases of contribution rate increases with the tax years. The best way to afford generous pensioner benefits is to raise the pension age in line with life expectancy, as we are already set to do in this Parliament. That allows us to maintain a triple lock on the value of the state pension, so never again will Britain’s pensioners receive a derisory increase of 75p.
As a result of our commitment to those who have worked hard all their lives and contributed to our society, I can confirm that next year the basic state pension will rise by £3.35 to £119.30 a week. That is the biggest real-terms increase to the basic state pension in 15 years. Taking all our increases together over the past five years, pensioners will be £1,125 better off a year than they were when we came to office. We are also undertaking the biggest change in the state pension for 40 years to make it simpler and fairer by introducing the new single-tier pension for new pensioners from April of next year.
I am today setting the full rate for our new state pension at £155.65. That is higher than the current means-tested benefit for the lowest income pensioners in our society and another example of progressive government in action. Instead of cutting the savings credit, as in previous fiscal events, it will instead be frozen at its current level where income is unchanged.
So the first objective of this spending review is to give unprecedented support to health, social care and our pensioners. The second is to spread economic power and wealth across our nation. In recent weeks, great metropolitan areas such as Sheffield, Liverpool, the Tees Valley, the north east and the west midlands have joined Greater Manchester in agreeing to create elected mayors in return for far-reaching new powers over transport, skills and the local economy. It is the most determined effort to change the geographical imbalance that has bedevilled the British economy for half a century.
We are also today setting aside the £12 billion we promised for our local growth fund and I am announcing the creation of 26 new or extended enterprise zones, including 15 zones in towns and rural areas from Carlisle to Dorset to Ipswich. But if we really want to shift power in our country, we have to give all local councils the tools to drive the growth of business in their area and the rewards that come when they do so, so I can confirm today that, as we set out last month, we will abolish the uniform business rate. By the end of the Parliament, local government will keep all of the revenue from business rates. We will give councils the power to cut rates and make their area more attractive to business, and elected mayors will be able to raise rates, provided they are used to fund specific infrastructure projects supported by the local business community.
As the amount we raise in business rates is in total much greater than the amount we give to local councils through the local government grant, we will phase that grant out entirely over this Parliament and we will also devolve additional responsibilities. The temporary accommodation management fee will no longer be paid through the benefits system. Instead, councils will receive £10 million a year more, up front, so they can provide more help to homeless people. Alongside savings in the public health grant, we will consult on transferring new powers and the responsibility for its funding, as well as elements of the administration of housing benefit.
Local government is sitting on property worth a quarter of a trillion pounds, so we will let councils spend 100% of the receipts from the assets they sell to improve their local services. Councils increased their reserves by nearly £10 billion over the last Parliament. We will encourage them to draw on those reserves as they undertake reforms.
That amounts to a big package of not only new powers but new responsibilities for local councils. It is a revolution in the way we govern this country and if we take into account both the fall in grant and the rise in council incomes, it means that by the end of the Parliament local government will be spending the same in cash terms as it does today.
The devolved Administrations of the United Kingdom will also have available to them unprecedented new powers to drive their economies. The conclusion last week of the political talks in Northern Ireland means additional spending power for the Executive to support the full implementation of the Stormont House agreement. That opens the door to the devolution of corporation tax, which the parties have now confirmed they wish to set at a rate of 12.5%. That is a huge prize for business in Northern Ireland and the onus is now on the Northern Ireland Executive to play their part and deliver sustainable budgets so that we can move forward. Northern Ireland’s block grant will be more than £11 billion by 2019-20 and funding for capital investment in new infrastructure will rise by more than £600 million over five years, ensuring that Northern Ireland can invest in its long-term future.
For years, Wales has asked for a funding floor to protect public spending and now, within months of coming to office, this Conservative Government are answering that call and providing that historic funding guarantee for Wales. I can announce today that we will introduce the new funding floor and set it for this Parliament at 115%. My right hon. Friend the Secretary of State for Wales and I also confirm that we will legislate so that the devolution of income tax can take place without a referendum. We will also help to fund a new Cardiff city deal. So the Welsh block grant will reach almost £15 billion by 2019-20, while the capital spending will rise by more than £900 million over five years.
As Lord Smith confirmed earlier this month, the Scotland Bill meets the vow made by the parties of the Union when the people of Scotland voted to remain in the United Kingdom. It must be underpinned by a fiscal framework that is fair to all taxpayers and we are ready now to reach an agreement. The ball is in the Scottish Government’s court. Let us have a deal that is fair to Scotland, fair to the UK and built to last. We are implementing the city deal with Glasgow, and negotiating deals for Aberdeen and Inverness too. Of course, if Scotland had voted for independence, it would have had its own spending review this autumn. With world oil prices falling, and revenues from the North sea forecast by the OBR to be down 94%, we would have seen catastrophic cuts to Scottish public services.
Thankfully, Scotland remains a strong part of a stronger United Kingdom, so the Scottish block grant will be more than £30 billion in 2019-20, while the capital spending available will rise by £1.9 billion through to 2021—the UK Government giving Scotland the resources to invest in its long-term future. For the UK Government, the funding of the Scotland, Wales and Northern Ireland Offices will all be protected in real terms.
We are devolving power across our country, and we are also spending on the economic infrastructure that connects our nation. That is something that Britain has not done enough of for a generation. Now, by making the difficult decisions to save on day-to-day costs in departments, we can invest in the new roads, railways, science, flood defences and energy that Britain needs. We made a start in the last Parliament, and in the last week Britain topped the league table of the best places in the world to invest in infrastructure. In this spending review, we go much further. The Department for Transport’s operational budget will fall by 37%, but transport capital spending will increase by 50%, to a total of £61 billion—the biggest increase in a generation. That will fund the largest road investment programme since the 1970s—for we are the builders.
That means that the construction of High Speed 2 to link the northern powerhouse to the south can begin and that the electrification of lines such as the trans-Pennine, the midland main line and the Great Western can go ahead. We will fund our new Transport for the North to get it up and running, London will get an £11 billion investment in its transport infrastructure, and having met my hon. Friend the Member for Folkestone and Hythe (Damian Collins) and other Kent MPs, I will relieve the pressure on roads in Kent from Operation Stack with a new quarter of a billion pound investment in facilities there. We are making the £300 million commitment to cycling that we promised, we will spend more than £5 billion on roads maintenance this Parliament, and thanks to the incessant lobbying of my hon. Friend the Member for Northampton North (Michael Ellis), Britain now has a permanent pothole fund.
We are investing in the transport we need, and in the flood defences too. The day-to-day budget of the Department for Environment, Food and Rural Affairs falls by 15% in this spending review, but we are committing more than £2 billion to protect 300,000 homes from flooding. Our commitment to farming and the countryside is reflected in the protection of funding for our national parks and for our forests—we are not going to make that mistake again. In recognition of the higher costs they face, we will continue to provide £50 off the water bills of South West Water customers for the rest of this Parliament—a Conservative promise made to the south-west, and a promise kept.
Investing in the long-term economic infrastructure of our country is a goal of this spending review, and there is no more important infrastructure than energy. So we are doubling our spending on energy research with a major commitment to small modular nuclear reactors. We are also supporting the creation of the shale gas industry by ensuring that communities benefit from a shale wealth fund that could be worth up to £l billion. Support for low-carbon electricity and renewables will more than double. The development and sale of ultra-low emission vehicles will continue to be supported, but in light of the slower than expected introduction of more rigorous EU emissions testing, we will delay the removal of the diesel supplement from company cars until 2021.
We support the international efforts to tackle climate change, and to show our commitment to the Paris talks next week, as the Prime Minister just explained, we are increasing our support for climate finance by 50% over the next five years. The day-to-day resource budget of the Department of Energy and Climate Change will fall by 22%, we will reform the renewable heat incentive to save £700 million, and we will permanently exempt our energy intensive industries, such as steel and chemicals, from the cost of environmental tariffs, so we keep their bills down, keep them competitive and keep them here.
We are introducing a cheaper domestic energy efficiency scheme that replaces the energy company obligation. Britain’s new energy scheme will save an average of £30 a year from the energy bills of 24 million households, because the Government believe that going green should not cost the earth. And we are cutting other bills too. We will bring forward reforms to the compensation culture around minor motor accident injuries, which will remove over £l billion from the cost of providing motor insurance. We expect the industry to pass on this saving, so that motorists see an average saving of £40 to £50 per year off their insurance bills.
We are a Government who back all our businesses, large and small, and Conservative Members understand that there is no growth or jobs without a vibrant private sector and successful entrepreneurs. So this spending review delivers what business needs. Business needs competitive taxes. I have already announced in the Budget a reduction in our corporation tax rate to 18%. Our overall review of business rates will report at the Budget, but I am today helping 600,000 of our smallest businesses by extending our small business rate relief scheme for another year.
Businesses also need an active and sustained industrial strategy. That strategy, launched in the last Parliament, continues in this one. We commit to the same level of support for our aerospace and automotive industries, not just for the next five years but for the next decade. Spending on our new catapult centres will increase. We will protect the cash support we give through Innovate UK—something we can afford to do by offering £165 million of new loans to companies instead of grants, as France has successfully done for many years. That is one of the savings that helps us reduce the budget of the Department for Business, Innovation and Skills by 17%.
In the modern world, one of the best ways to back business is to back science, and that is why, in the last Parliament, I protected the resource budget for science in cash terms. In this Parliament, I am protecting it in real terms, so that it rises to £4.7 billion. That is £500 million more by the end of the decade, alongside the £6.9 billion capital budget. We are funding the new Royce Institute in Manchester, and new agri-tech centres in Shropshire, York, Bedfordshire and Edinburgh. And we will commit £75 million to a transformation of the famous Cavendish laboratories in Cambridge, where Crick and Rutherford expanded our knowledge of the universe. To make sure we get the most from our investment in science, I have asked another of our Nobel laureates, Paul Nurse, to conduct a review of the research councils. I want to thank him for the excellent report he has just published. We will implement its recommendations.
Britain is not just brilliant at science; it is brilliant at culture too. One of the best investments we can make as a nation is in our extraordinary arts, museums, heritage, media and sport. Now, £1 billion a year in grants adds a quarter of a trillion pounds to our economy—not a bad return. So deep cuts in the small budget of the Department for Communities and Local Government are a false economy. Its core administration budget will fall by 20%, but I am increasing the cash that will go to the Arts Council, our national museums and galleries. We will keep free museum entry and look at a new tax credit to support their exhibitions. I will help UK Sport, which has been living on diminishing reserves, with a 29% increase in its budget, so we go for gold in Rio and Tokyo. The right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), a former Home Secretary,has personally asked me to support his city’s year of culture, and I am happy to do so with a grant. His campaign has contributed to the arts, while his Front-Bench team contributes to comedy.
The money for Hull is all part of a package for the northern powerhouse that includes funding the iconic new Factory Manchester and the Great Exhibition of the North. In Scotland, we will support the world famous Burrell collection, while here in London we will help the British Museum, the Science Museum and the V&A move their collections out of storage and put them on display, and we will fund the exciting plans for a major new home for the Royal College of Arts in Battersea. We are also increasing the funding for the BBC World Service, so that British values of freedom and free expression are heard around the world.
All this can be achieved, as my right hon. Friend the Prime Minister said, without raiding the Big Lottery Fund, as some feared. It will continue to support the work of hundreds of small charities across Britain. So too will our £20 million a year of new support for social impact bonds. There are many great charities that work to support vulnerable women, as was mentioned in Prime Minister questions. My hon. Friend the Member for Colchester (Will Quince) has proposed to me a brilliant way to give them more help. Some 300,000 people have signed a petition arguing that no VAT should be charged on sanitary products. We already charge the lowest rate—5%—allowable under European law and we are committed to getting the EU to change its rules. Until that happens, I will use the £15 million a year raised from the tampon tax to fund women’s health and support charities. The first £5 million will be distributed between the Eve Appeal, SafeLives, Women’s Aid, and The Haven, and I invite bids from other such good causes.
It is similar to the way we use LIBOR fines—and today I make further awards from them, too. We will support a host of military charities, from the organisation for guide dogs for military veterans to Care after Combat. We renovate our military museums, from the Royal Marines and D-Day museums in Portsmouth to the National Army museum, the Hooton Park aerodrome, and the former HQ of RAF Fighter Command at Bentley Priory. In the Budget, I funded one campaign bunker, but more have emerged since then.
At the suggestion of my right hon. Friend the Member for Mid Sussex (Sir Nicholas Soames), we will support the fellowships awarded in the name of his grandfather by funding the Winston Churchill memorial trust. We will fund the brilliant Commonwealth War Graves commission, so it can tend to over 6,000 graves of those who died fighting for our country since the second world war; and we will contribute to a memorial to those victims of terrorism who died on the bus in Tavistock square 10 years ago. That is a reminder that we have always faced threats to our way of life, and have never allowed them to defeat us.
We deliver security so we can spread opportunity. That is the third objective that drives this spending review. We showed in the last five years that sound public finances and bold public service reform can help the most disadvantaged in our society. That is why inequality is down, child poverty is down, the gender pay gap is at a record low and the richest fifth now pay more in taxes than the rest of the country put together. The other side talks of social justice; this side delivers it because we are all in this together.
In the next five years, we will be even bolder in our social reform. It starts with education, because that is the door to opportunity in our society. This spending review commits us to a comprehensive reform of the way it is provided from childcare to college. We start with the largest ever investment in free childcare, so working families get the help they need. From 2017, we will fund 30 hours of free childcare for working families with three and four-year-olds. We will support £10,000 of childcare costs tax free. To make this affordable, this extra support will now be available only to parents working more than 16 hours a week and with incomes of less than £100,000. We will maintain the free childcare we offer to the most disadvantaged two-year-olds. To support nurseries delivering more free places for parents, we will increase the funding for the sector by £300 million. Taken together, that is a £6 billion childcare commitment to the working families of Britain.
Next, schools. We build on our far-reaching reforms of the last Parliament that have seen school standards rise even as exams become more rigorous. We will maintain funding for free infant school meals, protect rates for the pupil premium and increase the cash in the dedicated schools grant. We will maintain the current national base rate of funding for our 16 to 19-year-old students for the whole Parliament. We are going to open 500 new free schools and university technical colleges, and invest £23 billion in school buildings and 600,000 new school places. To help all our children make the transition to adulthood—and learn about not just their rights, but their responsibilities—we will expand the National Citizen Service. Today, 80,000 students go on National Citizen Service. By the end of the decade we will fund places for 300,000 students on this life-changing programme pioneered by my right hon. Friend the Prime Minister.
Five years ago, 200 schools were academies: today, 5,000 schools are. Our goal is to complete this school revolution and help every secondary school become an academy. I can announce that we will let sixth-form colleges become academies, too, so that they no longer have to pay VAT. We will make local authorities running schools a thing of the past, which will help us save around £600 million on the education services grant.
I can tell the House that as a result of this spending review, not only is the schools budget protected in real terms but the total financial support for education, including childcare and our extended further and higher education loans, will increase by £10 billion. That is a real-terms increase for education, too.
There is something else I can tell the House. We will phase out the arbitrary and unfair school funding system that has systematically underfunded schools in whole swathes of the country. Under the current arrangements, a child from a disadvantaged background in one school can receive half as much funding as a child in identical circumstances in another school. In its place, we will introduce a new national funding formula. I commend the many MPs from all parties who have campaigned for many years to see this day come. The formula will start to be introduced from 2017, and my right hon. Friend the Education Secretary will consult in the new year.
Education continues in our further education colleges and universities—and so do our reforms. We will not, as many predicted, cut core adult skills funding for FE colleges; we will instead protect it in cash terms. I announced in the Budget that we would replace unaffordable student maintenance grants with larger student loans. That saves us over £2 billion a year in this spending review, and it means we can extend support to students who have never before had Government help.
Today I can announce that part-time students will be able to receive maintenance loans, helping some of our poorer students. We will also, for the first time, provide tuition fee loans for those studying higher skills in FE, and extend loans to all postgraduates, too. Almost 250,000 extra students will benefit from all this new support that I am announcing today.
Then there is our apprenticeship programme—the flagship of our commitment to skills. In the last Parliament, we more than doubled the number of apprentices to 2 million. By 2020, we want to see 3 million apprentices. To make sure they are high-quality apprenticeships, we will increase the funding per place, and my right hon. Friend the Business Secretary will create a new business-led body to set the standards. As a result, we will be spending twice as much on apprenticeships by 2020 compared with when we came to office.
To ensure that large businesses share the cost of training the workforce, I announced at the Budget that we will introduce a new apprenticeship levy from April 2017. Today I am setting the rate at 0.5% of an employer’s pay bill. Every employer will receive a £15,000 allowance to offset against the levy, which means over 98% of all employers and all businesses with pay bills of less than £3 million will pay no levy at all. Britain’s apprenticeship levy will raise £3 billion a year and will fund 3 million apprenticeships, with those paying it able to get out more than they put in. It is a huge reform to raise the skills of the nation and address one of the enduring weaknesses of the British economy.
Education and skills are the foundation of opportunity in our country. Next we need to help people into work. The number claiming unemployment benefits has fallen to just 2.3%—the lowest rate since 1975. But we are not satisfied that the job is done; we want to see full employment. So today we confirm we will extend the same support and conditionality we currently expect of those on jobseeker’s allowance to over 1 million more benefit claimants. Those signing on will have to attend the jobcentre every week for the first three months. We will increase in real terms the help we provide to people with disabilities to get them into work. This can all be delivered within the 14% savings we make to the resource budget of the Department for Work and Pensions, including by reducing the size of its estate and co-locating jobcentres with local authority buildings. It is the way to save money while improving the front-line service we offer people and providing more support for those who are most vulnerable and most in need of our help.
We cannot say we are fearlessly tackling the most difficult social problems if we turn a blind eye to what goes on in our prisons and criminal justice system. My right hon. Friend the Lord Chancellor has worked with the Lord Chief Justice and others to put forward a typically bold and radical plan to transform our courts so they are fit for the modern age. Under-used courts will be closed, and I can announce today that the money saved will be used to fund a £700 million investment in new technology that will bring further and permanent long-term savings and speed up the process of justice.
Old Victorian prisons in our cities that are not suitable for rehabilitating prisoners will be sold. This will also bring long-term savings and means we can spend over £1 billion in this Parliament building nine new modern prisons. Today, the transformation gets under way with the announcement that the Justice Secretary has just made. I can tell the House that Holloway prison—the biggest women’s jail in western Europe—will close. In the future, women prisoners will serve their sentences in more humane conditions, better designed to keep them away from crime.
By selling these old prisons, we will create more space for housing in our inner cities, for another of the great social failures of our age has been the failure to build enough houses. In the end, spending reviews like this come down to choices about what your priorities are. I am clear: in this spending review, we choose to build. Above all, we choose to build the homes that people can buy, for there is a growing crisis of home ownership in our country. Fifteen years ago, around 60% of people under 35 owned their own home. Next year, the figure is said to be just half that. We made a start on tackling this in the last Parliament, and, with schemes such as our Help to Buy, the number of first-time buyers rose by nearly 60%, but we have not done nearly enough yet, so it is time to do much more.
Today we set out our bold plan to back families who aspire to buy their own home. First, I am doubling the housing budget to £2 billion a year. We will deliver, with Government help, 400,000 affordable new homes by the end of the decade. Affordable means not just affordable to rent, but affordable to buy. That is the biggest house building programme by any Government since the 1970s. Almost half of them will be our starter homes, sold at 20% off market value to young first-time buyers, and 135,000 will be our brand new Help to Buy: Shared Ownership, which we announce today. We will remove many of the restrictions on shared ownership—who can buy them, who can build them and who they can be sold on to.
The second part of our housing plan delivers on our manifesto commitment to extend the right to buy to housing association tenants. I can tell the House that this starts with a new pilot. From midnight tonight, tenants of five housing associations will be able to start the process of buying their own home.
The third element of the plan involves accelerating housing supply. We are announcing further reforms to our planning system so that it delivers more homes more quickly. We are releasing public land suitable for 160,000 homes and re-designating unused commercial land for starter homes. We will extend loans for small builders, regenerate more run-down estates and invest over £300 million in delivering at Ebbsfleet the first garden city in nearly a century.
Fourthly, the Government will help address the housing crisis in our capital city with a new scheme—London Help to Buy. Londoners with a 5% deposit will be able to get an interest-free loan worth up to 40% of the value of a newly built home. My hon. Friend the Member for Richmond Park (Zac Goldsmith) has been campaigning on affordable home ownership in London. Today we back him all the way.
The fifth part of our housing plan addresses the fact that more and more homes are being bought as buy-to-lets or second homes. Many of them are cash purchases that are not affected by the restrictions I introduced in the Budget on mortgage interest relief, and many of them are bought by those who are not resident in this country. Frankly, people buying a home to let should not squeeze out families who cannot afford a home to buy. So I am introducing new rates of stamp duty that will be 3% higher on the purchase of additional properties, such as buy-to-lets and second homes. It will be introduced from April next year and we will consult on the details so that corporate property development is not affected. This extra stamp duty raises almost £1 billion by 2021, and we will reinvest some of that money in local communities in London and places like Cornwall, which are being priced out of home ownership. The funds we raise will help build the new homes.
This spending review delivers: a doubling of the housing budget; 400,000 new homes, with extra support for London; estates regenerated; and right to buy rolled-out, paid for by a tax on buy-to-lets and second homes, and delivered by a Conservative Government committed to helping working people who want to buy their own home. For we are the builders.
The fourth and final objective of this spending review is national security. On Monday, the Prime Minister set out to the House the strategic defence and security review. It commits Britain to spending 2% of our income on defence, and it details how these resources will be used to provide new equipment for our war-fighting military, new capabilities for our special forces, new defences for our cyberspace, and new investments in our remarkable intelligence agencies.
By 2020-21, the single intelligence account will rise from £2.1 billion to reach £2.8 billion, and the defence budget will rise from £34 billion today to £40 billion. Britain also commits to spend 0.7% of our national income on overseas development, and we will reorientate that budget so that we both meet our moral obligation to the world’s poorest and help those in the fragile and failing states on Europe’s borders. It is overwhelmingly in our national interest that we do so, so our total overseas aid budget will increase to £16.3 billion by 2020.
Britain is unique in the world in making these twin commitments to funding both the hard power of military might and the soft power of international development. It enables us to protect ourselves, project our influence and promote our prosperity. We do so ably supported by my right hon. Friend the Foreign Secretary and our outstanding diplomatic service. To support them in their vital work, I am today protecting in real terms the budget of the Foreign and Commonwealth Office.
But security starts at home. Our police are on the frontline of the fight to keep us safe. In the last Parliament, we made savings in police budgets, but thanks to the reforms of my right hon. Friend the Home Secretary and the hard work of police officers, crime fell and the number of neighbourhood officers increased. That reform must continue in this Parliament. We need to invest in new state-of-the-art mobile communications for our emergency services, introduce new technology at our borders and increase the counter-terrorism budget by 30%. We should allow elected police and crime commissioners greater flexibility in raising local precepts in areas where they have been historically low. Further savings can be made in the police as different forces merge their back offices and share expertise. We will provide a new fund to help with this reform.
I have had representations from the shadow Home Secretary that police budgets should be cut by 10%, but now is not the time for further police cuts. Now is the time to back our police and give them the tools to do the job. I am today announcing that there will be no cuts in the police budget at all. There will be real-terms protection for police funding. The police protect us, and we are going to protect the police.
Five years ago, when I presented my first spending review, the country was on the brink of bankruptcy and our economy was in crisis. We took the difficult decisions then. Five years later, I report on an economy growing faster than its competitors and public finances set to reach a surplus of £10 billion. Today we have set out the further decisions necessary to build this country’s future. Those decisions are sometimes difficult, yes, but they build the great public services families rely on; build the infrastructure and the homes people need; build stronger defences against those who threaten our way of life; and build the strong public finances on which all these things depend.
We were elected as a one nation Government. Today we deliver the spending review of a one nation Government. The guardians of economic security, the protectors of national security, the builders of our better future—this Government, the mainstream representatives of the working people of Britain.
John McDonnell (Hayes and Harlington) (Lab)
Mr Speaker, like me, you have witnessed many autumn statements and other statements by the Chancellor of the Exchequer. You will know that there is the iron law of Chancellor’s statements: the louder the cheers for the statement on the day, the greater the disappointment by the weekend when the analysis has been done. From what we have heard today, we do not need to wait until the weekend for the statement to fall apart. Over the past five years, the Chancellor has barely set a target that he has not missed or ignored.
Five years ago, the newly elected Chancellor and Prime Minister came to the House and warned us that the dire economic situation that our country faced meant that a five-year programme of austerity measures was needed: job cuts, wage freezes and cuts in public services. But we were promised, specifically by this Chancellor, that by today the deficit would be eliminated and debt would be under control and falling dramatically. People put their trust in that commitment. [Interruption.]
Mr Speaker
Order. I said earlier that the Prime Minister would be heard; the shadow Chancellor will be heard too. If people think that they are being clever when they are shouting their heads off, they need not bother to try to ask a question, but they should at least try to have the sense to realise the conflict between the two.
John McDonnell
The Prime Minister also assured us that although it was going to be hard and sacrifices had to be made, we were all in it together. Today, five years on, the Chancellor must have some front to come to the House and lecture us about deficit reduction. Today is the day when he was supposed to announce that austerity was over and the deficit was under control. Given what people have heard today, I think that they will feel absolutely betrayed. The reality is that, after five years, the deficit has not been eliminated, and this year it is predicted to be over £70 billion. Instead of taking five years to eliminate the deficit as the Chancellor promised, it is going to take 10. Furthermore, debt-to-GDP will not be the 69% that he promised five years ago. As he said today, it will be 82.5%.
We are now potentially to bequeath to our children a debt of £1.5 trillion. That will be their debt. The Chancellor —[Interruption.] The Chancellor—[Interruption.] The Chancellor continues to miss—
Mr Speaker
Order. Both sides are still shouting their heads off. It is very downmarket, it is very low grade, and it is very widely deprecated by the public. How people can think it is legitimate to behave in that way while trying to reconnect with an electorate who are disillusioned with politics is just bizarre. If some people are so unintelligent that they still cannot grasp the point, I pity them.
John McDonnell
After five years as Chancellor, with that level of debt, there is no one else for him to blame. Past Governments can be blamed for only so long; there are no more excuses for this Chancellor after five years.
We were also promised that if sacrifices had to be made to tackle the deficit, we were not to worry, because we were all in this together. No, we are not. Eight-five per cent. of the money saved from tax and benefit cuts in the last Parliament came directly out of women’s pockets. Disabled people were hit 18 times harder than anyone else. Moreover, 4.1 million children now live in absolute poverty, an increase of 500,000 since 2009-10. The fiasco over tax credits demonstrated once and for all that we were not in this together. At the same time as the Chancellor was planning to cut tax credits for working families, he cut inheritance taxes for some of the wealthiest families in the country.
When the Chancellor and the Prime Minister were first elected to their current positions, they were attacked for being “posh boys”. I disagreed with that strongly. People do not choose the class that they are born into, or the wealth that they inherit. Nevertheless, if people are fortunate enough to have wealth or good incomes, like all Members of Parliament, the onus is on them—on us—to take particular care when making decisions about the lives of those who are less fortunate than themselves.
What shocked and, indeed, angered many, not just in the House but throughout the country, was the fact that the Chancellor made no attempt to understand the effects of the decision to cut tax credits. For many families, it would have meant a choice between the children being able to go on that school trip like the other children, and having a decent Christmas or a winter coat. Today the Chancellor has been forced into a U-turn on his tax credit cuts, and I congratulate the Members on both sides of the House who have made that happen. I congratulate the Members in the other House as well. I am glad that the Chancellor has listened to Labour, and has seen sense.
As ever with this Chancellor, however, we await further clarification of the details, particularly if the limit to two children remains, and we are aware of the impact on universal credit. It appears that the 14,000 families who are already on universal credit will still suffer the full cut, and that all families who would newly qualify for tax credits in 2018 will suffer the full cut under universal credit; so this is not the full and fair reversal that we pleaded for. Moreover, the Chancellor remains committed to £12 billion of welfare cuts over the course of this Parliament. We know that they will fall on the most vulnerable, the poorest, and those who are just struggling to survive.
Some believe that the Chancellor is using the deficit and austerity to reshape the role of the British state, and that this is some well-thought-through Machiavellian scheme. Well, I do not think that any more. I am convinced that it is sheer economic illiteracy, built on incompetence and poor judgment. Only four weeks ago, the Chancellor brought his charter for fiscal responsibility to the House. An essential part of it was adherence to his welfare cap, which we supported. Today he has broken his own welfare cap, although he said himself when he introduced it last year that breaking it would be a
“failure of public expenditure control”.—[Official Report, 26 March 2014; Vol. 578, c. 380.]
He is condemned on his own terms, in his own language.
The Government are cutting today, and not investing in the future. The Chancellor is putting us all at future risk. I congratulate my right hon. Friend the Member for Leigh (Andy Burnham) on his campaign against policing cuts, which has forced a U-turn, but we do not forget that we face the highest level of risk from terrorist attack in a generation. We have already lost 17,000 police officers as a result of the cuts that have been made under this Government. We know that the first line of intelligence collection, prevention and response consists of the local police officers in the community, so we claim today another Labour gain and victory. However, there are now concerns about the impact of the local council cuts and freezes in expenditure on other emergency services. We fear for the people’s safety as more firefighters’ jobs are cut and fire stations close as a result of today’s settlement.
The Chancellor has announced that he is front-loading part of the additional £8 billion of funding for health. In reality, that will plug only some of the gap in the huge deficits that health trusts are reporting, but the Government are also relying on the finding of £22 billion of unrealistic savings. The extra money seems to be coming from nurses’ training, the public health budget, and other aspects of local authority support for care. That will be a false economy, which will simply cause more burdens to fall on the NHS. All the signs are that we are facing a massive winter crisis in our NHS, and that, yet again, we will have to rely on the professional dedication of its staff. The Health Secretary’s refusal to go to ACAS to settle the junior doctors’ dispute is no way to maintain morale among our NHS professionals.
One of the greatest scandals under this Chancellor has been the attack on social care. Three thousand beds have been lost already and according to the Association of Directors of Adult Social Services, the 2% care precept announced by the Chancellor is not nearly enough to fill the funding gap this Government have created. The result is that some of the most vulnerable people in our society will be at risk and more people will be forced to resort to their local hospital for their care.
We also know much more about the scale of people suffering from mental health problems. We welcome the additional funding today devoted to mental health, but it is no use funding mental health support through the health service when local authority support is being cut as a result of this settlement. More people will be left vulnerable.
In education, the Government claim that schools budgets will be protected, but we fear that the Government will use the new funding formula to take funding away from the pupils who need it most—the most deprived. We will monitor the funding formula carefully to ensure equity.
In today’s statement, the Chancellor has announced that for further education there will be a settlement that restricts it to cash protection. In effect, that means that around the country sixth forms and FE colleges will be under threat and at risk of closure. At a time when the economy is crying out for a skilled, educated workforce, the Government are denying young people access to the local courses they need. On today’s announcements on childcare, we note there is a delay yet again—for another two years. That is another delay following a commitment given.
The Chancellor’s much vaunted pledge on house building is cobbled together from reheated promises from the past. The vast majority have already been announced. The Tories should be judged by their actions, not their words.
The Chancellor’s first act in office was to slash housing investment by 60%. His plans today could still mean 40% less to build the homes we need, compared with the investment programme he inherited from Labour. As a result, house building remains at its lowest peacetime level since the 1920s. As my right hon. Friend the Member for Wentworth and Dearne (John Healey) said this morning,
“if hot air built homes, then conservative ministers would have our housing crisis sorted.”
I worry that the vast majority of young people hoping for a new home will be disappointed by the Chancellor’s failure to deliver. His record on building anything so far does not inspire confidence at all. Over the past year, he has forced himself on to building sites throughout the country to secure a photo with a high-vis jacket. When he did his Bob the Builder speech at the Tory party conference, what he did not tell delegates was that his investment record is abysmal. Only 9% of the projects have started under his infrastructure pipeline in two years. In 2012, he announced a £40 billion guarantees scheme. Three years on, only 9% of that sum has been signed up. In 2011, he announced a £20 billion pensions infrastructure platform but four years on only £1 billion of commitments have been secured. The construction industry is actually shrinking this year and going into recession.
The Chancellor has also failed to invest in skills. The Royal Institution of Chartered Surveyors has said that the UK’s biggest infrastructure programmes could grind to a halt unless the Government adopt new measures to tackle the skills and funding issues. The most ironic cut of all must be the virtual closure of large sections of the Department for Business, Innovation and Skills. There are 146,000 unfilled vacancies due to the lack of skilled workers, so naturally the Government’s solution is to move to effectively close the very Department tasked with improving skill levels.
On the environment, the Government have announced today various measures but let us be clear. Ministers can go to the Paris summit on climate change with the proud record of nearly killing off the UK’s once flourishing solar renewable energy sector. On international aid, let me caution that the international aid budget was supposedly protected, but now it is to be raided for defence spending.
On defence, the Government commissioned an aircraft carrier last year. A few years ago, they at least woke up to the fact that it needed aircraft as well. But the funding for the defence review is to come from £1l billion-worth of cuts, with the inevitable loss of thousands of defence workers’ jobs, whose specialist skills will be lost forever.
Alongside those cuts and many more to help dig himself out of the financial hole he has got himself into, the Chancellor is selling off whatever public assets he can. It is no longer the family silver up for sale—the furniture, fixtures and fittings are now being sold. We know who is the first in line to buy. I never envisaged that when it came to nationalising I would be outdone by a Conservative Chancellor. The only difference between us is that I would like to bring services such as rail back into the ownership of the British people. The Chancellor wants to sell them to the People’s Republic of China. Nationalisation is okay for him as long as it is by any state but ours.
To assist Comrade Osborne in his dealings with his new found comrades, I have brought along Mao’s little red book. Let me quote—[Interruption.]
John McDonnell
I think the Chancellor will find this invaluable. [Interruption.]
Mr Speaker
Order. The hon. Member for Kingswood (Chris Skidmore) is a historian, if a rather excitable one.
John McDonnell
I thought this would help the Chancellor. Mao is rarely quoted in this Chamber. The quote is this—[Interruption.] Behave.
“We must learn to do economic work from all who know how, no matter who they are. We must esteem them as teachers, learning from them respectfully and conscientiously. We must not pretend to know when we do not know.”
I thought it would come in handy for the Chancellor in his new relationship.
I am sure that Tory Back Benchers will be under instruction to shoehorn into their speeches at every opportunity references to the mythical long-term economic plan. What we have been presented with today is not an economic plan but a political fix. It is not a plan when you ridiculously commit yourself to unachievable policies and leave yourself no room for manoeuvre. It is not a plan when you sell off every long-term asset you have for short-term gain. It is not a plan when you leave important industries to go to the wall—as we have seen with steel—and it is not a plan when you cut the support for those in work, leaving working families to rely on food banks. It is not a plan when you force councils up and down the land to close the very services that people depend upon, and it is not a plan when you invest so little in skills and infrastructure that our future is put at risk.
Instead what we have seen today is the launch of a manifesto for the Conservative leadership election. Our long-term economic security is being sacrificed for the benefit of one man’s career. I want to tell both the Home Secretary and the hon. Member for Uxbridge and South Ruislip (Boris Johnson), my neighbour, who has now left the Chamber, not to worry. The economic reality that is emerging in our economy will mean that this will be seen as the apex of the Chancellor’s career.
The hon. Member for Uxbridge and South Ruislip exudes classical references in his speeches. He will recognise in the Chancellor Icarus the boy who flew too close to the sun and burned and crashed. I fear that for the Chancellor it is all downhill from here. Labour Members will do all we can to ensure that he does not take this economy and our country down with him.
In the end this debate is about what sort of society we want to live in. The Government are systematically dismantling all those aspects of our society that make our community worth living in and celebrating. The Chancellor is not just cutting our services today—he is selling off our future.
But there is an alternative. Our alternative is that we will eliminate the deficit but we will do it fairly and effectively. We will do it by ensuring that we end the tax cuts to the rich, that we tackle tax evasion and avoidance, and that we invest to grow. We will grow our economy on the basis of investment in skills and infrastructure. In addition to becoming the financial centre of Europe, under a Labour Government research in science and technology will enable us to become the technology centre of Europe. That means high skills, high investment and high wages. That is what Labour Members are committed to, and that is what we will secure when we return to office.
Several hon. Members rose—
Mr Speaker
Order. On present trends, if I were to call everybody, as I aspire to do, it would take another hour and a half. That is rather long, from which Members should deduce—whether they are Back Benchers or the esteemed Chancellor—that pithiness is the order of the day. We will be led in that mission by Mr Thomas Brake.
Tom Brake (Carshalton and Wallington) (LD)
I welcome the Chancellor’s decision to scrap tax credit cuts. Does he intend apologising to the people who were unnecessarily scared by his original plans, and does he intend disciplining his peers in the House of Lords who, had they supported the Liberal Democrat motion there, would have saved him from this embarrassing U-turn?
Several hon. Members rose—
Mr Speaker
Order. My wish to accommodate all interested colleagues has to be balanced against the pressure of subsequent business. If I am to accommodate colleagues, what is now needed is a single, short supplementary question, without preamble. If a colleague can deliver that, great; if not, reconsider.
James Morris (Halesowen and Rowley Regis) (Con)
As the chairman of the all-party group on mental health, may I welcome the Chancellor’s announcement of additional money for mental health? Does he agree that that is a first step in delivering our manifesto commitments on mental health, which not only is right in principle, but will put mental health at the centre of our national health service in the future?
Alison Thewliss (Glasgow Central) (SNP)
First, I associate myself with the comments made by our Labour sisters about the tampon tax. I am glad to see that the Chancellor is helping the SNP to implement at least one aspect of our manifesto.
I have been asking the Chancellor since his statement in July how he intends to make women prove that they had their third child as a result of rape. There are still no answers on that and the two-child policy still applies, despite his U-turn on the tax credit cuts.
I would also like to ask about the limiting of housing benefit and pension credit to four weeks for claimants who go abroad. Will there be protection for people who have to go abroad as a result of a bereavement in their family?
Mr Speaker
All those matters are of the highest importance and I know that the Chancellor will respond diligently, but sometimes Members suffer short-term memory loss, so perhaps I should just remind the House of the merits of pithy questions.
Mr Osborne
The last point that the hon. Lady raised was a perfectly fair one. At the moment, people can leave this country for up to 13 weeks and continue to receive housing benefit and pension credit, without any explanation of why they left. That is a very long time for the people she represents and the people I represent to pay the housing benefit of someone who is not even in the country and is not living in the house for which the housing benefit is being paid. We are reducing that to a month, which is still quite a long period. There will be arrangements and discretionary support to help people who face exceptional circumstances of the kind that she describes, such as a bereavement.
As part of the Welfare Reform and Work Bill, we will come forward with the results of the work and consultations that we have undertaken on the issue she raises about rape and violence.
Several hon. Members rose—
Mr Speaker
Order. The hon. Member for Wealden (Nusrat Ghani) has perambulated around the Chamber, which of itself is perfectly legitimate, and we enjoyed hearing from her earlier. May I just ask, was she here throughout the statement?
Nusrat Ghani
Thank you, Mr Speaker.
A good education not only enables our children to reach their full potential but is empowering, and we now have 1 million children attending good or outstanding schools. May I thank the Chancellor for protecting our schools budget and for the good news about the commitment to a new funding formula, which will mean so much to my rural constituency?
Mr Osborne
It is now SNP policy that it wants a higher oil price, so presumably all the motorists would have to pay more for their car journeys in SNP Members’ constituencies and all the non-oil businesses would have to pay more as well. The truth is that not even the Scottish nationalist party is in control of the world oil price. It changes, and we have to ensure that that brilliant industry in the North sea is supported through the ups and downs of the world oil price cycle.
We have made huge cuts to North sea oil taxation this year and provided additional support for exploration. We have stepped in, with the industry, to create the Oil and Gas Authority for the UK and make sure it does everything it can so that we get every drop of oil we can out of the North sea, and indeed get the gas out too. I would have thought the hon. Gentleman wanted to work with us to make that possible. Of course, that kind of support would never be possible if Scotland were independent.
Jim Shannon (Strangford) (DUP)
Thank you, Mr Speaker. It is always a pleasure to speak in the House. I thank the Chancellor for the good things that he is doing for Northern Ireland, which have been confirmed today. Other Members have spoken about them.
Next Tuesday will be World AIDS Day. The latest figures for the United Kingdom show a rise in HIV and sexually transmitted diseases. In the news today, the talk was that many clinics where diagnosis of sexually transmitted infections takes place would have their funding reduced. Can the Chancellor confirm that the extra moneys set aside for health will ensure that those clinics remain open so that STIs can be diagnosed at an early stage?
Mr Osborne
The hon. Gentleman is right to draw attention to World AIDS Day, and to the fact that we are funding the national health service and so can support screening for and research into sexually transmitted disease and provide support for people with HIV/AIDS. We have included in our announcements this week the £1 billion Ross fund, named after Ronald Ross, a Nobel laureate of this country. That will go towards disease research, which could well include the disease that the hon. Gentleman mentions.
Mr Speaker
I thank the Chancellor, the shadow Chancellor and all colleagues. Three hours and 10 minutes later, subject to their other commitments, they can have a cup of tea.
Royal Assent
Mr Speaker
I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:
Northern Ireland (Welfare Reform) Act 2015.