Childcare Payments Bill
Thérèse Coffey Excerpts(9 years, 10 months ago)
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Catherine McKinnell
I thank my hon. Friend for that intervention, which brings us back to the issue of child poverty and the importance of child care in supporting families and particularly children in getting out of that situation. She raises an important point, and I shall be coming on to ask some questions about the Bill’s implementation in that regard. Contrary to the impression given by the Minister, there is still a lack of clarity about who will and will not benefit from the changes. I shall reflect only momentarily, Madam Deputy Speaker, on the wider point that my hon. Friend raises. Our very flexible labour market can make it difficult for many parents to manage their child care arrangements. We know that many women, for example, are subject to zero-hours contracts, which can make it very difficult to plan for child care and the costs and availability of child care, when they might not know what hours they will be working from one week to the next. I hope that the Minister will take all those issues into account, particularly in respect of supporting families, which could be dependent on the interaction between the implementation of this policy and universal credit.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
The hon. Lady mentioned universal credit. Earlier, she was saying how difficult it was to plan for child care. Government Members were surprised that the Leader of the Opposition did not condemn last week’s strikes, because those are exactly the kind of issues that are a nightmare for parents.
Catherine McKinnell
I think that the hon. Lady is straying somewhat from the subject of the debate, but I also think that a number of the workers who were involved in Thursday’s strikes were among the very lowest paid, who we know need this child care support and who are struggling to make ends meet. That was one of the motivating factors in the action that they took last week. I therefore do not think that the hon. Lady’s point was entirely irrelevant, but let me now return to the issue that is under discussion, which is child poverty.
There is concern about the fact that much of the progress that has been made has been either halted or, even worse, reversed by the Government’s policies over the last four to five years. The Government are absolutely on track to miss spectacularly their statutory obligations in terms of eradicating child poverty. As their own child poverty adviser Alan Milburn said recently,
“The Government’s approach falls far short of what is needed to reduce, let alone end, child poverty in our country.”
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I had assumed that my hon. Friend the Member for Norwich North (Chloe Smith) would speak ahead of me, but it is a great pleasure to be called today. You are right to looked puzzled, Madam Deputy Speaker. Why is there nobody on the Opposition Benches? We all know that the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) spoke for 52 minutes to mask the fact that no one else on the Opposition Benches would be speaking. That contrasts with 19 and 20 November 2013, when we debated child care in the Chamber. I am slightly disappointed, because I had a good exchange with the hon. Member for Houghton and Sunderland South (Bridget Phillipson) and I am sure that we could have had a similar debate about statistics and measures. Nevertheless, it is great news that we are finally getting to the Childcare Payments Bill and I am pleased to support it today.
One of the big things about the Bill is that it puts matters into the hands of parents. Instead of having to rely on employers setting up schemes, which I believe only 5% of employers actually set up, we will have a system that is effectively direct. Families with two working parents who earn at least £50 a week will benefit in one way or another from Government help towards child care, recognising that we will not double-subsidise those who receive tax credits or universal credit.
On that note, it is my understanding that we will provide an extra £200 million to support those families claiming universal credit, so instead of having 70% of their child care costs paid, as they do today, they will receive 85%. I am sure that will be very welcome to all working families.
Of course, the very richest in our society—those who earn more than £150,000—will not benefit, but I am sure that they will recognise that we must target a welfare system at the broadest number of people.
Hywel Williams
Is the hon. Lady confident that when parents in deprived and rural areas are enabled as proposed, the market will deliver the places?
Dr Coffey
I do not pretend to know much about Welsh schools, although my cousin goes to school in Wales and I have many relatives there. I am not necessarily aware of the provision that exists, but I know that this Government are keen to work with schools in England to increase the number of schools choosing to make provision for young children. I do not know what the Welsh Assembly Government are considering, but the Under-Secretary of State for Education, my hon. Friend the Member for South West Norfolk (Elizabeth Truss), has consistently tried to introduce reforms that will make child care provision an attractive career. We are right to press ahead with some of the childminder agencies we are introducing, not through this Bill but separately, to remove some of the administrative burdens that might be deterring people from entering that career. I hope that the hon. Gentleman will encourage such agencies to set up in his area of Arfon, bringing new employment opportunities for both men and women and making provision for working parents.
It is great news that under this Government more women are working than ever before, yet we would like to see even more women—and even more parents—going into work. This scheme is part of our long-term economic plan. We recognise that the cost of our child care is the second highest in the OECD as a percentage of family income; only Switzerland’s is higher. I think that it is fair to say that under Labour the number of childminders decreased significantly and costs went up. Before the hon. Member for Newcastle upon Tyne North springs to her feet—if she is not following the latest reshuffle news on Twitter—let me say that I recognise that that trend has continued, but it is not going on at the same level. [Interruption.] I thank the hon. Member for Manchester Central (Lucy Powell) for referring to my haircut. It was nothing to do with the events that seem to be unfolding on Twitter. I merely got a phone call from my own mother complaining that my hair was too long and, as we know, in these situations mothers know best. I am not a mother, so I have to stick with what my mother tells me.
Let me give a few of the reasons why these things matter. A couple of years ago, the Conservative Women’s Forum undertook an inquiry, in which I think you might have participated, Madam Deputy Speaker, into the executive pipeline of talent. It focused not only on the number of women on boards, but on how we encourage women to get up the executive ladder and, more importantly, on what women can do for themselves, what Government can do and what companies can do. The issue of child care was a running theme throughout the inquiry, particularly for those in junior management. Once people are at a certain level, they probably receive a salary that means they do not have to think about the issue; they can pay for a nanny and even though it might be painful, the costs are not quite so prohibitive. We consistently received evidence that the voucher system was inadequate. It did not cover enough of the cost, it was very limited or, as my hon. Friend the Member for Tiverton and Honiton (Neil Parish) mentioned earlier, it did not help people such as the self-employed. I am pleased that the Bill extends the provision to almost anyone in work and it is right that we should do that.
It is also fair to say that no one magic bullet emerged as a result of the inquiry to solve some of the challenges in the pipeline of talent or in how we tackle child care, but nevertheless the discussions before the Budget announcements on how to help with tax relief were exactly the issues being brought up by senior executives. I was glad that the subsequent announcement was made in Budget 2013.
The proposals in Budget 2013 were limited to £6,000 of child care costs, which would have meant a maximum benefit of £1,200. I was pleased that after the consultation, to which significant contributions were made, we were able to change the age limit to 12 and, as my hon. Friend the Member for South Swindon (Mr Buckland) has pointed out, to change the age limit for children with disabilities. We also increased the limit to £10,000, with a maximum of £2,000 support. That was the right thing to do, because it recognised the costs of child care. Nevertheless, it is important that we have retained the choice for parents who are in employer-supported child care schemes to stay in that system while recognising that we will close it to new entrants, so to speak. I support that because, understandably, companies have gone to some expense to set up these schemes and they are popular. We should not withdraw one thing simply for the sake of simplicity for the Government.
The hon. Lady from Northern Ireland—I have forgotten her constituency—
Dr Coffey
Thank you. The hon. Member for South Down (Ms Ritchie) referred to the situation in which one parent was not working and asked why they would not get support with child care costs. As my hon. Friend the Member for Truro and Falmouth (Sarah Newton) has accurately pointed out, the consultation raised those points and we have extended the provision when there is a working person and somebody on carer’s allowance or employment and support allowance. When people are enjoying parental leave after having children, they should not be penalised if they have children in child care. We do not want any unintended consequences.
I am a strong supporter of the traditional family. I am sure that I am not the only person whose mother did not work initially after having me, although she did start to go back to work as a supply teacher. It is fair to say that although the Government have scarce resources, they are offering both parents the choice to get back into the workplace, as opposed to one person having to choose, for perfectly good reasons, not to return to the workplace. I therefore support the gist of what the Government are saying about restricting support to cases in which both parents are working or the other cases that have been alluded to.
I am surprised that there are no Members in the Chamber from the Scottish constituencies, because, of course, this is a United Kingdom measure, although I am delighted that we have had contributions and interventions from Members from Wales and Northern Ireland. Much has been made of the fact that National Savings & Investments will initially be providing the child care account. You may have read in the weekend press, Madam Deputy Speaker, that if the people of Scotland choose to go ahead with separation, NS&I will not be able to provide accounts to people living in Scotland, as they will effectively become foreign nationals. They might wish to consider that as another element of the question. I am sure that if somebody from the Scottish National party were here, they would leap up and say, “We will have an even better scheme and it will cost less than yours.” Nevertheless, I am sure that the good people of Scotland recognise that that is unlikely to be the case. The Minister might want to consider the issue in her regulations for this provision, but let us not prejudge the outcome of the referendum. I strongly believe that the people of Scotland will recognise that staying together is better for us all.
Hywel Williams
Shall I indulge in some karaoke and repeat the words that the hon. Lady used herself? I am sure that Scotland will provide a much better scheme when it is independent.
Dr Coffey
The hon. Gentleman would say that, and he has been very loyal to his nationalist friends. I recognise that.
On the timing, I am sure that my hon. Friend the Minister agrees that if we could bring in the scheme tomorrow, we would do so. However, we do not want to repeat—[Interruption.] Does the hon. Member for Manchester Central want to intervene? I think she said that we have been in power for four years, and I recognise that we are bringing this into play rather late in our parliamentary term, but she will know some of the challenges of government from her previous experience. Nevertheless, I would rather we got this right than end up with the fiasco we had over tax credits, which were brought in in quite a rush, with all the accompanying problems. The hon. Member for Manchester Central might be slightly bemused by that, but overpayment of tax credits and trying to reconcile figures and help people out with that is one of the biggest issues in my constituency casework. She will, I think, recognise some of the challenges of bringing in a new system.
The Bill rightly provides that the connections between the different agencies will be updated quarterly. We are not going to get into penalties and going back and forth, but provision is made for recovery. It is important that parents recognise that they should anticipate the potential impact if their conditions change. To be frank, I think the biggest change will occur when people move from one salary bracket to another, or decide to stop claiming universal credit and simply to claim this instead. At least the hurdle or cliff edge when people have to change is fairly black and white.
Mark Durkan
Would the hon. Lady like to see a strong information and advice offer built into the scheme, so that people who are having to decide how to navigate between universal credit and the scheme will get advice and without-prejudice, better-off calculations?
Hywel Williams
I wish I could share the hon. Lady’s confidence. I remember when the tax credit was brought in warning the Government at the time that it was complicated. It was to be administered by HMRC, which was not good at giving people money instead of taking money off them. Despite the confidence displayed at the time, HMRC included in its letters such sentences as, “Even though we told you your assessment was correct, it was not reasonable for you to believe this.” That is a direct quote from a tax credit letter. I am afraid I do not share her confidence that HMRC or any agency of Government is completely competent to administer this scheme.
Dr Coffey
I understand what the hon. Gentleman is saying, based on the experience of tax credits. That is why I think the Bill deals with it rather well: the period of entitlement is three months. As it is split up quite well into quarters, it should be quite straightforward for parents to make that assessment of what is better for them to get support. Of course, I am sure we all share the aspiration of reaching a stage where everybody is earning over a certain threshold and does not need to make those calculations.
I will not repeat everything my hon. Friends have said about the excellent work being done through nurseries for three and four-year-olds. I will simply reiterate my view that the Bill brings the balance back into the hands of parents and recognises that child care is normally needed all year round. Something that will need to be tackled with child care provided through primary schools by extending their playgroup is how to ensure that continues through the school holidays, but instead of trying to devise a perfect scheme that meets the demands of every single scenario, which is rather difficult when dealing with millions of children and parents, the Bill simplifies and gives people, through the child care account, the ability to build up balances and use the money as and when they need it. What is important is that parents will not pay fees for the accounts. I heard what the hon. Member for Arfon (Hywel Williams) said about online access, but there will be assisted approaches available for those who cannot access the internet. Internet access is the general default in our efforts to get people on to digital services.
I have not been able to speak for quite as long as the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), but I am delighted to say that there are other Conservative Members here, and I did not spend 27 minutes talking about stuff that is not connected to the Bill. It gives me great pleasure to support the Bill. Today is an historic day in Parliament, as we embark upon a piece of legislation that will affect many working families. I hope the Bill has the unanimous support of the House.
Oral Answers to Questions
Thérèse Coffey Excerpts(9 years, 10 months ago)
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Sajid Javid
These pilots began in June, so they are very recent and it will take a number of months before any results are known. We have deliberately picked a number of different companies with different types of technology to ensure that we learn as much as we can. I envisage that we will have more information in six months.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
3. What steps he is taking to support the tourism industry.
The Secretary of State for Culture, Media and Sport (Sajid Javid)
The tourism industry is central to the Government’s long-term economic plan, which is why we are investing over £177 million, including partner funding, in the GREAT campaign and other international and domestic marketing campaigns. We recently re-launched the Tourism Council, a partnership between industry and the Government.
Dr Thérèse Coffey
The Suffolk coast is well known as a very attractive place to visit, with its open skies, beaches and cultural offerings. You are certainly most welcome—both you, Mr Speaker, and the Secretary of State—as the shadow Secretary of State will know. However, also adding to the long-term economic plan will hopefully be the construction of Sizewell C. My local businesses have understandable concerns about the impact of the construction phase on tourism in the area. Can he offer any helpful advice?
Finance Bill
Thérèse Coffey Excerpts(9 years, 10 months ago)
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Cathy Jamieson
If I did not know better, I would suspect my hon. Friend of having read my speech. I was just about to come to that very point. The infamous Lamborghini comment might have been made in jest, but that sort of joke is entirely lost on those who have already lost their savings because of poor or insufficient advice. My hon. Friend makes a very valid point indeed about people’s confidence in what they can do with their own resources. To an extent, the Government may have begun to acknowledge the need to expand the range of choices available and ensure that consumers have help to navigate those choices—I think that was the phrase used. That sounds pretty sensible and commendable, but we need to make sure that it actually happens.
The second test we have set is the fairness test—the new system has to be fair to those on low and middle incomes, which means they still should be able to access products that give them the certainty in retirement they want, and the billions we spend in pensions tax relief must not benefit only those at the very top. That is why we have called for restrictions on pensions tax relief for those earning more than £150,000 a year. The third test is the cost test: the Government have to ensure that the policy does not result in extra cost to the state. That point was made earlier, and I think the Minister, to his credit, understands that there is an issue with social care and pensioners having to fall back on means-tested benefits—housing benefit, for example—later in their life if they do not properly or sensibly manage their resources. As yet, however, the Government have not explained how all that will be joined up in policy terms. In our view, if the Government’s pensions reforms fail any of those tests, the negative impact on savers could be considerable.
In Committee, my hon. Friend the Member for Islwyn (Chris Evans) talked about protecting people from the “sharks in the market”. That brings us to the vexed question of guidance. Going back to the Chancellor’s no doubt innocent slip, there is a serious point to be made about definitions. When pressed subsequently, the Chancellor said:
“There is a technical distinction between advice and guidance. The budget document exists, I don’t get up and read it out because it contains all the technical details of the Budget and we publish it at the same moment. The speech needs to also communicate in English so people watching it can understand what is meant.”
I understand that, but as I emphasised strongly in Committee, there is a world of difference between advice and guidance in technical terms and in terms of legality. The Government need to deal with that.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I am listening carefully and trying to understand. Is the hon. Lady suggesting that the Government should be people’s financial adviser? I am not sure that is what the role of Government should be. I thought the reform was about opening up choices and making sure that people realise what steps they can take, not telling them what direction they should go in.
Cathy Jamieson
It is important that Government use language consistently and do not inadvertently mislead people about what they are going to get, whether it is guidance, advice or information, given face-to-face, over a telephone or through the internet.
The Red Book states:
“from April 2015, all individuals with defined contribution pension pots are offered free and impartial face-to-face guidance at the point of retirement”.
One might consider that a good and positive measure, but it raises some questions—questions that largely accord with the three tests we have set. First, there is a question about cost: the budget for guidance of just £20 million—£10 million each for 2015-16 and 2016-17—gives rise to some concern, as does its including no provision for this year. According to the tax impact and information note, the measures in the Bill will enable up to 400,000 people to draw down their pensions. I note that the Minister referred earlier to an updated tax impact and information note. Perhaps he can tell us whether he has revised any of those sets of numbers. We need to understand why nothing has been put aside for that free and impartial guidance in this financial year.
Catherine McKinnell
Well, it simply reinforces the impression—in fact, the reality—that the Government are perfectly well disposed to chopping and changing their policy and approach to the annual investment allowance. That is the point we are trying to make, and the point behind the new clause. The Government should stop and take a look. I have heard from businesses that they would rather have no investment allowance than have chopping and changing of the AIA, because that can be destabilising for investment decisions. They would rather have a more stable approach to policy making than that being displayed by the Government.
Returning to the history of the investment allowance, the previous Labour Government doubled it, recognising its importance to giving businesses confidence to invest for the future, and to be supported within the tax system to make such decisions. What happened after it was doubled? We know that, in his infinite wisdom, the Chancellor decided as part of his emergency Budget—or so he called it—in June 2010, to announce to great fanfare that the annual investment allowance would be cut. However, it would not just be cut. At a time when the economy was growing after the financial crisis, the Chancellor decided that the best way to secure the recovery and back British businesses and jobs was to slash the annual investment allowance to just £25,000 from April 2012, as in the Finance Act 2011. He sought to reassure us that the impact of that reduction from £100,000 to £25,000 would be limited because:
“Over 95% of businesses will continue to have all their qualifying plant and machinery expenditure fully covered by this relief.”—[Official Report, 22 June 2010; Vol. 512, c. 175.]
In other words, the Chancellor believed in June 2010 that only 5% of firms were receiving any benefit from the annual investment allowance. HMRC’s tax information note at the time stated:
“Over 95 per cent of businesses are expected to be unaffected as any qualifying capital expenditure will be fully covered by the new level of AIA (£25,000).”
It went on to clarify that
“between 100,000 and 200,000 businesses will have annual capital expenditure of over £25,000”.
Therefore, in the Chancellor’s terms, only 5% of businesses would have been affected by his decision to slash the allowance. In anyone else’s terms, however, that is somewhere between 100,000 and 200,000 firms. That is a significant number of businesses that are employing—or potentially employing—a significant number of people, while also indirectly supporting employment through their supply chains. That seems to ring true of the Government’s approach because when they speak about being pro-business, they seem to forget the many businesses out there that do not fit the Tory vision of what businesses are, and it seems that those 100,000 or 200,000 firms did not feature on the Chancellor’s radar.
Let us remind ourselves briefly of some of the views expressed at the time about the decision the Chancellor took. The independent Institute for Fiscal Studies commented that losers from the cut
“would be those firms with capital intensive operations—with long lasting equipment and machinery—that currently benefit most from the capital allowances. While this is likely to apply to more firms in the manufacturing and transport sectors, it may also be true for some capital intensive service sector firms.”
A senior economist at the manufacturers association, the Engineering Employers Federation, said that financing cuts to corporation tax by
“cuts to investment allowances will be a heavy price to pay, especially for smaller companies. It might be a positive signal for large companies, but not for their suppliers.”
In evidence to the Treasury Committee on the June 2010 Budget, John Whiting, then tax policy director at the Chartered Institute of Taxation and now director of the Office of Tax Simplification, expressed his concern that the measure would particularly hit medium-sized firms.
The June 2010 Budget cut the annual investment allowance to £25,000 from April 2012 on the grounds that, in the Chancellor’s view, only 5% of firms would be affected. We then had two autumn statements and two Budgets, at which we put these arguments to the Government, before the Chancellor announced in the autumn statement 2012, again to great fanfare, that he would “temporarily” increase the AIA—the one he had just cut to £25,000—to £250,000 from January 2013.
What happened to business investment between the June 2010 Budget and the 2012 autumn statement that drove the Chancellor to move from feeling perfectly comfortable in slashing the annual investment allowance, because more than 95% of businesses would be unaffected, to announcing in 2012 a significant increase in the AIA to £250,000? Let us cast our minds back to what the Chancellor said when he announced that decision in autumn 2012. He said he was increasing the annual investment allowance because:
“It is a huge boost to all those who run a business and who aspire to grow, expand and create jobs.”—[Official Report, 5 December 2012; Vol. 554, c. 881.]
What exactly does that say about the Chancellor’s cavalier approach back in 2010? Surely the complete opposite—[Interruption.] I see Government Members rolling their eyes, but unfortunately they need to face the truth.
Dr Thérèse Coffey
The hon. Lady is right—I should not roll my eyes; I should get up and engage in debate. We know about the note left by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne): “There is no money left”. Since then, the Office for National Statistics has confirmed that the recession was even deeper than expected. The Government made choices at the time, and there was a clear intention to start to reduce the rate of corporation tax in the grand fiscal regime. Nevertheless, there has certainly been a successful demonstration of industrial strategy, and many more millions of jobs are now being created. It is right that we put our backing behind reinvestment in capital allowances.
Catherine McKinnell
It is a little desperate to try to justify what is proven to have been a flawed decision-making process back in 2010. By the Chancellor’s own accounts, the measure was a huge blow to all those businesses that aspire to grow, invest for the long term and create jobs.
Chris Leslie
Government Members and Ministers do not understand how important it is that we ensure that the recovery is sustained and sustainable. A premature rise in interest rates has considerable risks. Three quarters of credit and debt is floating, so if interest rates do rise prematurely, significant harm will come to many householders. Even a quarter point rise in interest rates will cost the typical householder £240 per year. [Interruption.] The hon. Member for Suffolk Coastal (Dr Coffey) may be relaxed, as the Chancellor is relaxed, about interest rates. The Chancellor says that he is not bothered—that he is relaxed about rising interest rates. Is the hon. Lady relaxed about rising interest rates? I will give way to her if she is.
Dr Thérèse Coffey
All I will say is thank God we have not had a Labour Government for the past four years, because I expect that interest rates would now be at 10% and people would be handing back their keys and hoping that the hon. Gentleman does not get into power next year.
Chris Leslie
I do not know what evidence the hon. Lady has for that spurious assertion.
We will see what happens in the coming months. We will make sure that mortgage customers in the hon. Lady’s constituency know that the increases in interest rates are partly related to the condition of the housing market, which is causing significant risk. The Governor of the Bank of England is trying to deal with this very lopsided situation. Of course, it is a matter for him to decide on. Government Members need to speak to the Chancellor to get him to pull his finger out on the housing market and make sure that this is pursued correctly. They do not understand why it is important for the recovery to be fair for all—to be something that everybody in every part of the country benefits from. The richest 1% having been doing especially well in the past year.
The Economy and Living Standards
Thérèse Coffey Excerpts(9 years, 11 months ago)
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Ed Balls
I am very happy to say to the hon. Gentleman that not having transitional controls in 2004 was a mistake, and one that we all still deal with the consequences of. The question is whether we should have allies in Europe whom we can persuade to do things better for the future or walk away from our European partners and find that we are treated with disdain in the decision-making halls of Europe. That is the real question for statesmanship and politics in our country at the moment.
Our view on that question is clear. We say that there is no future for Britain in walking away from the European Union. It is the biggest single market for the companies, regions and countries of the United Kingdom. We have to reform Europe to make it work better for Britain, but we are much more likely to win the arguments if we are fully engaged, rather than having one foot out of the door.
The Prime Minister and the Chancellor used to agree with that argument. They came though the Lobby with us in 2011 to oppose an arbitrary timetable for an EU referendum. Then, they changed their minds. The Prime Minister flounced out of a summit and decided to appease Tory Back Benchers by performing a U-turn. In the memorable words of Lord Heseltine,
“To commit to a referendum about a negotiation that hasn’t begun, on a timescale you cannot predict, on an outcome that’s unknown, where Britain’s appeal as an inward investment market would be the centre of the debate, seems to me like an unnecessary gamble.”
Dr Thérèse Coffey (Suffolk Coastal) (Con)
On a point of order, Madam Deputy Speaker. Mr Speaker was very clear in his guidance earlier that we should speak to the amendment. I am struggling to find in the amendment any mention of a European referendum.
Madam Deputy Speaker (Dawn Primarolo)
Fortunately, that is a matter for me, and not the hon. Lady. The clear argument that is being advanced is about the importance of that matter to the economy. As long as the right hon. Gentleman stays on that point, he is in order.
Margaret Beckett (Derby South) (Lab)
The kindest thing that can be said about this Queen’s Speech is that it is simply inadequate to address the problems which, sadly, our country and its people still face, and about which it is evident that the Government parties are still in denial.
The Chancellor said in his speech that he had made the mistake of reading the record before coming to the House. I made the same mistake: I read the record of the Chancellor’s Budget speech on 22 June 2010. He said today that what we must now do is stick to our long-term economic plan, which is what Government Members continually say—they say it as if saying it were as good as having one—but today’s economy does not reflect the long-term economic plan that the Chancellor set out in 2010.
The Chancellor said today that the Government were “holding out the prospect”. Well, they held it out then. According to that plan, by this year debt was supposed to have fallen as a percentage of GDP, and the structural current deficit should have been eliminated. The public sector borrowing requirement should be down to £37 billion, falling to £20 billion next year. Growth this year was then projected to be 2.7%, but the plan was for growth of well over 2% in 2011, 2012 and 2013. As we all know, that simply did not happen. In other words, far from sticking to a long-term plan that is now delivering, which the Chancellor described as the “inescapable truth”, the inescapable truth is that Government Members have seen their plan and their forecasts fall to pieces around their ears.
Dr Thérèse Coffey
I do not recognise the picture that the right hon. Lady is painting, given the increased number of jobs and other improvements. Does she recall the statement by the Office for Budget Responsibility that the recession was even deeper than it had seemed to be when first analysed? That means that it has been even more difficult for us to fill the hole that was left by Labour and to achieve growth. That is finally under way, but the job is not yet done.
Margaret Beckett
I think the hon. Lady will find that the OBR’s argument does not account for the total discrepancy between what the Chancellor said would happen and what has actually happened. We have had the nonsense of Government Members claiming that we were wrong to say that their policies might curtail growth, when that is precisely what happened. As for the OBR, if the Chancellor is so proud of it—and I think that he has created a good institution—why does he not allow it to scrutinise our plans, rather than making up his own version?
The Queen’s Speech demonstrates the Government’s utter failure to address the difficulties that people face. The eventual return to growth has been as welcome as it was long overdue, but it is seriously alarming that Government Members do not seem to recognise the great difficulties that still confront so many. Only yesterday, we learned that Ofgem had written to the energy companies highlighting the fall in wholesale prices over the last 18 months or so, and asking them nicely if they ever intended to pass it on to their customers. Where is the legislative framework to underpin action to tackle the energy companies’ disregard for the interests of their customers?
Where are the proposals for reform of the banks, which demonstrate almost daily that for them too it is back to business as before, bonuses and all? Why is there nothing in the Queen’s Speech to address either the decline in housing starts or the increasing pressure and insecurity experienced by many tenants? And why, oh why, have no steps been taken to ease the increasingly intolerable pressures on the many people who have been forced by circumstance to rely on benefits to make ends meet? So many of those people are in work, albeit work that is low paid and insecure.
People with disabilities, in particular, are still being hit by the iniquitous bedroom tax. The Government must have been advised that people would not be able to move because there was not enough alternative accommodation. During the same week in which they introduced that tax, they cut taxes for those who were already the wealthiest.
The most noticeable aspects of the Queen’s Speech are the measures that are not in it and should be. Some of its proposals merit a cautious welcome, although as yet, in many instances, we have only the headlines. However, I want to single out the issue of pensions. I am pleased that the Chancellor mentioned it. I urge caution on all Members, but especially Opposition Members, because in this regard the Conservative party has form. Annuities have long caused concern, although an answer has not been easy to find, but the more that I listened to the Chancellor talking about giving people control of their own money and about the exciting new freedoms that were on offer—which, according to him, were heralding a revolution—the more uncomfortable I became, because, like the Conservative party, I have been here before.
It was in identical terms that the 1980s Tory Government sold so-called pension reforms to an unsuspecting public. That resulted in one of the greatest pension scandals of all time, the mis-selling of personal pensions. Shamelessly misleading advertising implied that if people left existing pension schemes and put their savings in the hands of the financial services experts, they could miraculously put less in and get more out. People were encouraged by the then Government to gamble with their retirement savings without their employers having to contribute, and without even the safety net of pooling their own risk—and it all ended in tears. I heard what the Chancellor said about the assurances that he had given and about whom he had consulted, and I advise my right hon. and hon. Friends to consider what he said in great detail. We have asked the Government to publish in full the assessment of the costs and risks of their proposal, but so far they have refused to do so. I hope that they soon will.
I have noticed that there is an incentive for the Government in this proposal, over and above the well-being of pensioners. The Chancellor stands to gain a few billions of pounds in extra tax. So there is something in it for the Treasury—probably rather more than there is for pensioners, in the short term—and the most careful scrutiny of the details will be required.
Over the past few days—and, today, in the excellent speech with which he opened the debate—the shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls), has drawn attention to our proposals to raise the minimum wage and encourage the use of the living wage so that work can be made to pay; to tackle the abuses of wage and employment law that enable employers to use immigrant labour to undercut the wages and conditions of others; to set up a British investment bank and regional banks to support small businesses, which—as was pointed out earlier—our existing banks are still failing to do; and to address the crises in housing and health care. We would have seen all those proposals in a Labour Queen’s Speech. There is much along those lines that the House and the Government should and could be doing, but clearly it will not be done under this Administration.
Stewart Hosie (Dundee East) (SNP)
The Queen’s Speech said that the stated objective of this legislative programme was to build a stronger economy. It said that it was to strengthen the economy. The Prime Minister used many of the same phrases in his speech last week, and spoke again, as the Chancellor did today, about this fabled long-term economic plan, which is a bit like a fabled unicorn: everybody knows what is meant, but no one has ever seen one. This long-term economic plan is much the same. Anyone with any common sense would assume that a long-term economic plan was predicated on substantial above-trend growth, yet the word “growth” did not appear once in the Queen’s Speech. Indeed, the Prime Minister only uttered it twice: once to chide the leader of the Labour party, not unreasonably, and another time in response to an intervention from his own side. Why the coyness? Where is the plan for real growth in the economy? When one looks at what is proposed in this legislative programme and at what has come before, particularly in the Budget, one can see that, at its heart, this is still an austerity Government. Yes, there are some helpful Bills, such as the national insurance contributions Bill and, potentially, the small business, enterprise and employment Bill, but there is nothing that anyone can point to and say, “That will make a real difference in delivering growth in the economy.” Perhaps the Government think that mining tunnels under people’s homes without permission to carry fracked gas qualifies as a growth measure.
Why are the Government so coy? Why are they giving us this convoluted formulation of words about long-term plans and a focus on a very narrow, although helpful, policy about national insurance? It is because they have failed and they know it. Nothing the Government said last week or this week changes the underlying direction of travel or the underlying shape of the economy as described to us in the Red Book only a few months ago.
Dr Thérèse Coffey
I am really interested in the hon. Gentleman’s contribution. The International Monetary Fund has confirmed that we are the fastest growing country in the G7. We have seen growth in all sectors of the economy in the past year. That must be welcomed. There is no unicorn. The only unicorn is the Scottish National party’s claims that Scotland will be better off out of the UK.
Stewart Hosie
That is because we would be. Although I welcome the limited growth that we have had, the actions taken by this Government since the last election stifled and strangled the recovery for some years, and that is the underlying problem with their plan.
Let me take Scotland as an example. What the Government are proposing—this was before the Budget—is an 11% fiscal expenditure cut, a 27% cut in capital and a real terms 9.9% cut in the overall budget. This year’s Budget made that position worse, and that applies to spending Departments throughout the UK. Nothing in the Queen’s Speech changes that. Nor does it change the fact that the Chancellor told us that for 2013-14, the current account deficit would be down to 2.3% of GDP, borrowing would be reduced to £60 billion and the net debt would be at 70% of GDP. He was forced to tell us this year that the current account deficit was higher, borrowing was actually £95.5 billion and the net debt was 75% of GDP. The short-term metrics were wrong.
What about the big targets the Chancellor set for himself? They were that the debt would begin to fall as a share of GDP by this year, that the current account would be in balance next year and that the same year borrowing would be down to £20 billion. Presumably, that is what the Prime Minister meant by financial security. Of course, as we know—nothing in the Queen’s Speech changes this—the debt will not fall until 2016-17, two years late. The current account will not be back in the black until 2017-18, two years late. Public sector net borrowing in 2015-16 will not be £20 billion but £68 billion, three and a half times higher.
Although the limited recovery we have seen in the past year is of course to be welcomed—this directly answers the question asked by the hon. Member for Suffolk Coastal (Dr Coffey)—not a single one of the Chancellor’s key targets has been met and his actions, as this is an austerity Government, stifled growth and delayed recovery year on year. No amount of convoluted formulations or warm words about long-term economic plans can change that.
What are the Government planning? It is there in black and white in the Red Book, on page 20 for anybody who wants to have a look. There will be a discretionary consolidation—that is cuts, and tax rises—next year to the tune of £126 billion. That is £2,000 per person in tax rises and cuts. That is what they are planning and that is what they have signed up to.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
It is a great honour to contribute to this debate on the Gracious Speech. Some Members have made their final contribution to such a debate, certainly in this House, but I am sure that some will reappear in the other place.
It is fair to say that the Queen’s Speech is an attempt to build on the Government’s good efforts over four years in order to make our country continue its journey towards a fairer society with a long-term economic plan. Unemployment, long-term unemployment and youth unemployment are all down. That is far from the misery that was predicted several years ago. Nevertheless, I am sure that the Chancellor would be the first to admit that we have not tackled the deficit as quickly as we would have liked. Of course the issue is that, as the Office for Budget Responsibility pointed out, the recession was deeper than was initially realised, and therefore it is taking longer to get out of.
Given the amendment we are considering and the guidance given earlier, I cannot talk about some of the Bills in the Queen’s Speech, but there is one that I think will be iconic and will I am sure receive the support of the whole House: the Modern Slavery Bill. I will keep to the guidance, but it is important that instead of having just a budget debate, we continue to consider the ideas that we will all contribute to in the next 10 months.
Earlier, the hon. Member for Huddersfield (Mr Sheerman) put a question to the Chancellor, to which my right hon. Friend replied, in which he rightly pointed out that productivity is not recovering. As the Chancellor said, however, to some extent choices have to be made. It is fair to say that keeping people in work—indeed, having more people in work—is probably a better choice at this moment in time, which will then allow us to focus on the productivity challenge that all of us in this country need to address in order to keep our economic plan going. However, that challenge is not unique to our country, which is why we continue to seek reform at the European Union level.
The Bills that we have put forward include the small business Bill. One of the things that the Government have been trying to do is to remove some of the barriers to growth, while enabling some of the activities that they would like to see. We will see that with export finance, and with finance being targeted at small businesses and the help in that sector. There is also the important measure adding a deregulation target—a commendable element that I think we will all enjoy passing.
Of course, there are important measures to help people with work and the cost of child care; child care payments will be addressed in the Child Care Payments Bill. The National Insurance Contributions Bill is really important. I am sure that many Members of this House have examples of companies having done the wrong thing, and we will set that right, just as we will on issues such as zero-hours contracts and removing the exclusivity clause.
On the infrastructure Bill, I welcome some of the plans related to housing. I give a cautious welcome to the Nationally Significant Infrastructure Projects regime, with Sizewell C hopefully being built in my constituency. However, I want to ensure that the voice of the community is still part of that NSIP regime, as it should be.
There is no doubt that the economic plan is working. In my own constituency, unemployment is now at 604, which is the lowest it has been since December 2007. These are all good things, but the journey is only halfway completed. That is why I am confident that the British public, having seen five good years of government, will make the right decision next May and allow us to propose another Queen’s Speech in 12 months’ time.
Oral Answers to Questions
Thérèse Coffey Excerpts(10 years ago)
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Sajid Javid
Again, I thank the hon. Lady for her warm welcome. We looked at the previous Government’s proposals. The reason we changed the policy was that, frankly, it was not working. Already under this Government, superfast broadband coverage has risen from about 45% when we came to office to 73%. The UK has better coverage than the other EU5 countries. I hope that she will join us in implementing these policies.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
16. The broadband programme in Suffolk is going rather well, but to reach the 95% figure and cover places such as Wangford and Yoxford, we need a bit more money from the Government. I hope that the Secretary of State and the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Wantage (Mr Vaizey) will welcome our representations.
Sajid Javid
My hon. Friend is passionate about this issue and has brought it up a number of times. I would be happy to meet her to discuss it further and to see how we can better use the existing resources that are available.
Finance (No. 2) Bill
Thérèse Coffey Excerpts(10 years, 1 month ago)
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Catherine McKinnell
I thank the Deputy Speaker for his clarification. The link is clear. It is to do with the allocation of resources and the agreement that has been made. It also goes fundamentally to the heart of the Liberal Democrats and how they intend to vote on the matter. We believe they are likely to abstain on the measure, although we have not had that confirmed. We hope and assume that although they will abstain on the Government’s motion in relation to implementing the marriage tax allowance, they will support our call for a review. If the measure goes through, they would have as much of an interest as we would in ensuring that it is properly reviewed and monitored in the months to come, and that the Government take seriously the proposals for possible alternatives that benefit a larger number of families throughout the country.
The Opposition believe that the money allocated to the marriage tax allowance could be put to much better use elsewhere. That is why we have pressed the Chancellor to scrap it, and to use the money to give tax help to many more working people instead, including more married couples and more families.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I am interested that the Opposition want to give tax cuts to hard-working people, yet they voted against the Second Reading of the Bill, which provided a tax cut for 25 million people.
Steve McCabe
I am afraid that is true. I know that some people will not be comfortable with having to be reminded of that, but it happens to be the case.
To return to the point that the Government’s position is slightly misleading, we know that the Prime Minister himself has been confused about it. Like his hon. Friends, he thought that he was introducing a policy for all married couples paying the basic rate of tax. I can imagine that, in this day and age, it is pretty hard for the poor Prime Minister to keep up with the all the shifts and machinations in his Government, but surely there is something wrong with a policy that deludes even the Prime Minister into thinking he is giving a tax break to all married couples paying the basic rate, which he is not. Thank goodness we have had the opportunity to set the record straight in this debate; otherwise the poor man might have gone around the country perpetrating that calumny. People might have begun to doubt his work on other things, as well—his whole judgment might have come into question. Thank goodness we have had the chance to challenge that idea.
We certainly need to review the policy, because were it to be extended to the nearly 9 million married couples who pay the basic rate of tax, as the Prime Minister implied, it would cost considerably more than the Chancellor’s projections. For that reason alone our amendment, which asks for a review, is crucial. We need to know exactly what the policy will cost and what it would cost were it to meet the Prime Minister’s aspirations.
As we have heard, the policy will give £200 back to 3.4 million couples, but other Government policies will have made the average family £974 a year worse off by the time of the election. Some 85% of the tax allowance will go to men. Perhaps that harks back to the good old days of Tory marriage—I do not know—but in this day and age I do not think the policy will be broadly accepted by women up and down the country. As we have heard, it will not be available to married couples whose income falls below the personal allowance. [Interruption.] I think the hon. Member for Suffolk Coastal (Dr Coffey) has something stuck in her throat. If she wants to intervene, I—
Dr Coffey
I thank the hon. Gentleman. This point has been made before, but we cannot have such a recognition in the tax system for people who do not pay tax. However, the Government have taken many other measures for them, including ensuring that Labour’s fuel duty escalator did not operate. If it had, fuel would be 90p a gallon more, or £450 a year for the average household.
Steve McCabe
The hon. Lady is right, and Government Members have attempted to make that point before. She is absolutely right that the VAT rise put enormous pressure on both petrol costs and all sorts of other family incomes.
At its best, the Government’s measure will reward about 3.4 million of the country’s couples who are married or in civil partnerships with £4 a week. That is the figure from the Institute for Fiscal Studies, but if the Government have better figures and want to challenge the IFS, that will be welcome. I would be interested to know not only the cost of the tax relief but the administrative costs of a £4 a week benefit for 3.4 million couples. It does not strike me as the best way to reduce the overall costs of tax collection or harmonise the system.
As was acknowledged earlier, the transfer of allowances reintroduces an element of joint taxation, a measure that the Tory party sought to abolish when it moved to individual taxation as long ago as 1990. The hon. Member for Enfield, Southgate (Mr Burrowes) talked about all the countries that recognise marriage, but the move to individual taxation is a much bigger trend in tax systems across the world. It seems to me that it is the Tory party that is moving in the wrong direction, because as we have heard in this debate, Conservative Members want to move to a fully transferrable tax system. They want to go back to the days of old, and that is exactly what they are going to do. [Interruption.] I think the hon. Member for East Worthing and Shoreham has something to say. Would he like me to give way to him?
Dr Thérèse Coffey
Let us consider the following words:
“I believe in marriage, I believe marriage should be recognised in the tax system. I see this as yes, a start of something I would like to extend further”.
They are not mine; I plagiarised them from my right hon. Friend the Prime Minister. I am surprised that the hon. Member for Bishop Auckland (Helen Goodman), who is no longer in her place, was trying to suggest that the Prime Minister did not support this policy, because it was certainly in our manifesto and he is the person who said that from the Front Bench.
I am not married. Do I feel disadvantaged, as a consequence, that I will not benefit from this transferable tax allowance? No, I certainly do not. I will have a warm heart voting for clause 11 to stand part of the Bill, because I believe that marriage is an important institution at the heart of a strong society, as the Government are indicating, and it has been clear for some time that we wanted to bring forward proposals to recognise marriage in the tax system. We have been hearing about how, “You can only spend the money once”, but the Opposition have managed to spend their version of the bankers’ bonus tax about 11 times. So it is a bit extraordinary to hear some of these comments. As has been said, this is about choices. The choices this Government made in this Budget were to reduce income inequality to its lowest level in 28 years, whether through council tax cuts, or through freezing or cutting fuel duty, as we have done in previous Budgets. This Government are certainly helping families of all models in this Budget.
We debated child care yesterday, and it is right that we start supporting marriage. Some are saying, “Oh, 4 million married couples. You are not helping people.” But of course we are helping 8 million people as a result of this measure, and that is to be welcomed. My hon. Friends will note that the Labour party is committed to reversing this tax transfer. It will come in before the election, so Labour is automatically saying to 8 million people, “We will be putting up your taxes because of our dogma.”
I appreciate that the Front Benchers still need to speak in this debate, Mr Caton. What I want to put across strongly is that there is no arbitrary disadvantage, marriage is a good thing and we should support it. We do the same for people who save, by increasing the individual savings account limit. We do it for people who put into pensions, whom we support with tax relief. We do it for businesses that invest in their businesses, helping to create jobs. That is what we are doing and although only a token amount of money is involved here, it will be very welcome.
Catherine McKinnell
The hon. Lady is making a powerful speech in favour of marriage, but does she not accept that the Government proposal does not recognise two thirds of marriages? Where both partners in the marriage are working to provide for their family, that marriage is not recognised as valid in terms of this policy.
Dr Coffey
They certainly do. This measure is a start. We do not have tons of money, and the fact that resources are scarce has been well pointed out. Nevertheless, we are doing things that reduce the income inequality for families across the country, using the long-term economic plan. It has meant that gilt rates have been able to stay relatively low, which means that mortgage rates have stayed low and that is probably doing more for people than anything else, along with our fuel duty freezes and indeed cuts in previous Budgets. Those kinds of things are helping families, be they married or not.
I appreciate that time is short and others are waiting to speak, Mr Caton. I just wish firmly to say that although I am a singleton—I thought I had met Mr Right 20 years ago, but it did not work out—I hope that every married couple benefiting from this will recognise that at least they can go and have a nice wedding anniversary with a little bit more cash from the Government.
Sheila Gilmore
We hear so much in this House about how little money there is and how hard it is, yet certain members of the Government support this measure. It appears that not all do—the Lib Dem part of the coalition may or may not support it; it said it did not previously. We are talking about only a small amount of money, but let us see what it is equivalent to. Many people in this country have been outraged by the Government’s bedroom tax. Even if that makes the savings the Government claim it will, which I doubt, it will save less than the amount this measure will pay out. That is the problem: the Government say that the issue that has to be addressed all the time is saving money, but clearly when it comes to some things saving money is not quite so important. There are priorities, and the Government have chosen to make this policy one of them.
I believe we should be giving particular help to families with children, and not just to couples because they happen to be married. Apart from in respect of the very poorest, I have not noticed any great appetite to do away with the couple penalty that probably does apply in terms of people in the benefits system. But if two people choose to marry, we have an independent taxation system here and they can choose to work or not work, so I do not see where any great penalty is being applied to marriage. For those who have children the situation may be different.
If the Government wanted specifically to help parents who are staying at home with children, perhaps that is what they should have done. This measure does not do that; it helps couples where one person is not working, but it has no relationship with the needs of any children they may be raising. If our main aim is to help people with children and make sure that children are brought up in stable relationships, I cannot see what this measure has to do with that. The reason many relationships break down, whether or not they are marriages, has to do with financial insecurity and the difficulties that causes. Those struggling through a cost of living crisis and those who have lost out because of many of this Government’s policies particularly include the low paid. We can all pick and mix our experts—some hon. Members have cited views of the Institute for Fiscal Studies—but if we really want to help low-paid people, we must examine things such as the proposed tapering for universal credit. We need to examine the structure in place for working people who will be in receipt of universal credit—the replacement for tax credits. Under the current structure there is a serious lack of support for second earners in the family who want to start building up their earnings. We could be looking at such things, including child care help for low-paid families.
Very briefly, let me tackle something that was mentioned by the hon. Member for Peterborough (Mr Jackson). He did not take my intervention, so I will deal with it now, and, as he raised the matter, it must be relevant to this debate. One statement that Government Members are always keen to make is that every Labour Government leave office with unemployment higher than when they arrived, but it is not true. In 1946 unemployment was 2%, and in 1951 it was 1.3%. In 1951, at the beginning of the Tory Government, unemployment was 1.3%, and in 1964 it was 1.7%, so it went up under a Tory Government. Between 1979 and 1997, which was again a Conservative Government, unemployment went up from 5.2% at the beginning to 7.4% at the end, but for 13 of those 18 years, unemployment was above 10%. Therefore, the statement is not true, and it also completely distorts the appalling unemployment record of the Government between 1979 and 1997. I will now sit down and allow others to speak.
Finance (No.2) Bill
Thérèse Coffey Excerpts(10 years, 1 month ago)
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Catherine McKinnell
I appreciate the hon. Lady’s point, but that help for families will not arrive until 2015 and beyond, after the next election. Many families could do with some support over the next 18 months, not just beyond 2015. There are also serious concerns about whether parents will actually be better off when the Government’s policy is introduced. I will say more about that later.
I shall turn now to the second part of new clause 1, which focuses on the impact of the tax and benefit changes introduced in this Parliament. Just last week, the Opposition published an analysis of figures produced by the independent Institute for Fiscal Studies, along with analysis by the House of Commons Library, which showed that working families with children, and one-earner families in particular, had been the hardest hit by the changes introduced since 2010. Those changes, which were voted through by Government Members, mean that on average, households will be a staggering £974 a year worse off by the next general election. It is worth listing what those tax and benefit changes will mean for families with children. The constituents of Government Members will no doubt be paying close attention to their household budgets when it comes to casting their vote in May 2015.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
Will the hon. Lady tell us whether that analysis includes fuel duty? Does she agree that if this Government had kept the Labour fuel duty escalator going, petrol would cost 90p a gallon more today, the equivalent of £450 a year for the average family?
Catherine McKinnell
On average, by the time of the next general election, a family in which both parents are working will be £2,073 a year worse off. A family in which one parent works will be a staggering £3,720 a year worse off, and a family in which no parents work will be £2,114 a year worse off. A lone parent in work will be £1,335 a year worse off, and a lone parent who is not working will be £1,901 a year worse off. These changes are in addition to the impact of wages falling in real terms, which has left working people an average of £1,600 a year worse off since 2010. Households have faced 24 Tory tax rises over the same period. However, while millions of families have seen their real household incomes go down since 2010, millionaires have been given a huge tax cut by this Government. The top 1% of earners—85% of whom just happen to be men, by the way—have been given a £3 billion tax cut worth an average of £100,000 for those earning more than £1 million a year.
Catherine McKinnell
A family’s child care requirements are a family’s child care requirements. If somebody has to go to work and they need child care, they need to invest in child care for however many hours they need it for. The Government’s child care proposal does nothing to address the supply side issues, which is why Labour proposes to increase the number of free hours available for three to four-year-olds to help increase the supply of child care, which we have seen diminish under this Government.
Dr Thérèse Coffey
We have had this debate before in Westminster Hall. Does the hon. Lady not recognise that the number of childminders fell under the previous Government? I realise that the point about quality has been made before; nevertheless, there were fewer childminders at the end of that Labour Government than at the start.
Catherine McKinnell
There are 3,000 fewer childminder places under this Government so I caution Government Members about trumpeting their success in this area, because it is far from a success for mums and dads who are struggling with soaring costs.
Catherine McKinnell
I think we risk going down the road of debating the quality of child care and issues to do with Ofsted registration, but I would question some of the hon. Lady’s assertions about the requirements for regulation and the absolutely fundamental importance of ensuring the quality of all child care places, including those with childminders.
Let me return to the issue of child care costs, which is what our new clause 1 seeks to get the Government to address. Gavin Kelly, chief executive of the Resolution Foundation, has pointed out in relation to the Government’s recent increase in the cap from £6,000 to £10,000 for tax free child care:
“About 80 per cent. of the gains from this will flow upwards to those in the top half of the income distribution. It’s also the case that it’s low- and middle- income parents who find the costs of childcare the biggest obstacle to taking on more work—so targeting support at them would make sense.”
I should be interested to hear the Minister explain how effective the scheme will be in supporting the very parents who need help the most. I should also be grateful if she could clarify the Treasury sums on tax-free child care because, welcome though any extra support is for families struggling with child care costs, it is curious that the Government have managed to tweak their sums so that an almost doubling of Government support per child has not cost even a penny extra.
I am sure that the IFS would also be interested to hear the Minister’s answer to that question, as it has queried the matter. It said:
“Surprisingly, today’s announcements come with no new money. Extending the new Tax Free Childcare scheme to all children under 12 within its first year will cost money compared with a world where it was limited to children under 5, but the Treasury can make this announcement without altering its public spending plans because it has significantly revised down its estimate of how many families are likely to be eligible for the scheme (from 2.5 million to 1.9 million).”
It is not clear what has led to this dramatic change, so we cannot judge whether the new estimates are any more plausible than the initial ones, but the fact that the change is so large suggests that the Treasury would benefit from being more open about the way it costs new policies. Perhaps the Minister will elaborate on these figures and how her Department arrived at them.
Ultimately, the simple truth is that, even if people spend enough to receive the full support, this help will not come until after the general election. That means no help with child care in five years from the Conservatives or the Liberal Democrats. Instead, Ministers have presided over soaring costs and cuts to tax credits for thousands of families, meaning that, even when this help comes, most families will still be worse off than in 2010.
Dr Thérèse Coffey
I recognise the hon. Lady’s genuine concern about working parents and her ambition that the Government get on with increasing child care, but she must recognise that the number of hours of child care has increased under this Government. She should be gracious enough to accept that.
Catherine McKinnell
It is interesting that the hon. Lady mentions that, because I will quote directly on this issue a little further on in my submission.
We know that the Government are good at con tricks, giving with one hand but taking much, much more with the other. For example, they made a U-turn last month when they decided to support 85% of child care costs for all universal credit claimants. That was a welcome reversal after the coalition decided in 2011 to cut the support for child care through the working tax credit from 80% to 70%—a decision that led to an average loss of £570 a year for low-paid working parents. It is just another example of this Government taking with one hand and giving with the other.
As Alan Milburn, chairman of the Social Mobility and Child Poverty Commission, has said, low-income families will still lose out, despite this increase in support for those most in need. He told The Independent on Sunday:
“The Government has taken half a step forward. The announcement that 85% of childcare costs will be met under universal credit from 2016 will help work pay for low-income families. This is very welcome. The sting in the tail is that this £200 million expansion in childcare support will come from within the universal credit programme…That risks robbing Peter to pay Paul.”
Perhaps the Minister could also give a bit more detail on how she intends to pay for the increase in support. While she is at it, perhaps she could provide some clarity on when low-income families eligible for universal credit can expect to receive this support with their child care costs.
Under the original plans of the Secretary of State for Work and Pensions, most would have expected to receive the increased support when the tax free child care is introduced in 2015, but clearly that is not going to happen. Will the Minister clarify when the Government expect to introduce this support and whether it will be in the near future? Ultimately, as Opposition Members have made absolutely clear, parents facing a cost of living crisis will see through any child care con, because it does not make up for how much the families are now paying for child care under this coalition Government.
I come now to the first part of new clause 1 and the Opposition’s proposals for improving child care support, which we know will make a real difference to working parents. New clause 1 proposes that the Chancellor should undertake a review of the ways in which child care could be made more affordable before April 2015. We have done much of the work for him with our clear suggestions for supporting families on this pressing issue. We want to extend free child care for three to four-year-olds from 15 to 25 hours a week for working parents, which can be fully funded by increasing the bank levy. As with the 15-hour early-years entitlement, the new 25 hours would be for 38 weeks of the year, which would mean more than £1,500 of extra support per child each year. Perhaps most important, Labour’s plans will not demand that working parents spend £10,000 on child care in order to get the maximum promised help.
We also know that for school-age children, child care can become a logistical nightmare, with many parents increasingly struggling to find before and after-school child care, while the Government stick their fingers in their ears and hum. On the Government’s own record, 62% of parents of school-age children say that they need some form of before and after-school or holiday care in order to combine family life with work, but of those nearly three in 10 are unable to find it. To give parents of primary-age children peace of mind, the Opposition would set in law the guarantee that they could access wraparound child care from 8 am to 6 pm through their local school if they wanted it. This primary child care guarantee will benefit parents of primary-age children most, because those parents most need support. Of course, these plans will be in addition to all the support that parents will already receive, and they will not be contingent on spending thousands of pounds on child care in order to qualify.
At Prime Minister’s questions recently, following a Budget empty of any measures to address the problem now, I asked the Prime Minister to explain why his Government had failed to take the action to help parents with child care costs before the next general election. He answered:
“We are helping families with child care, not least by giving 15 hours…That is happening before the election; it has happened under this Government in this Parliament—15 hours of free nursery care for three-year-olds and four-year-olds…Opposition Members say it is not enough; it is more than Labour ever provided.”—[Official Report, 26 March 2014; Vol. 578, c. 344.]
That was not only a very complacent response but, unintentionally I am sure, misleading, and goes to show just how out of touch this Government are on this issue of child care.
The previous Labour Government introduced 12.5 hours of free nursery education for three to four-year-olds a decade ago, back in 2004, with the clear intention that that would be extended to 15 hours by 2010. Far from this being a coalition policy, the plan was inherited by the coalition from the previous Labour Government. As I set out, the future Labour Government will continue to build on this legacy, extend it to 25 hours a week for working parents, funded by an increase in the bank levy, and guarantee wraparound child care.
This was the Chancellor’s final opportunity to introduce policies that will really benefit parents before the general election, to give much needed support to working parents now, not in 18 months’ time. Parents have already seen their child care costs rise five times faster than their pay. They are already spending more on child care than on their mortgage. They have already seen the number of nursery places fall by thousands. They have already seen hundreds of Sure Start centres close, despite the Prime Minister’s promises to the contrary. Of course, most stay-at-home mums, as well as working parents, already see child care costs as one of the biggest barriers to their going back to work or increasing their working hours. A review of the issue is both due and urgent, and I commend new clause 1 to the Committee.
Finance (No. 2) Bill
Thérèse Coffey Excerpts(10 years, 1 month ago)
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Danny Alexander
I will not give way, because I want to make progress. The increase in the personal allowance will mean that a typical basic rate taxpayer will pay more than £800 less income tax per year than in 2010-11. That is real action to support the millions of people on low and middle incomes. It helps them to keep more of what they earn and rewards those who want to work hard. This Government and this Bill also recognise that people who rely on their savings income have been hit particularly hard by low returns in recent years. It is for that reason that we are cutting tax on savings for the lowest earners. From April 2015, the 10p starting rate of tax on savings will be abolished and a 0% rate will be extended to the first £5,000 of savings income above the personal allowance. That will benefit 1.5 million people with low earnings from some savings, and more than 1 million people will no longer pay any tax on their savings income at all.
It is no exaggeration to say that this Government have achieved sweeping reforms on pensions. Under the excellent leadership of my Liberal Democrat colleague, the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), our simplifications and reforms of the pensions sector will be one of this Government’s most enduring legacies. Automatic enrolment will see nearly 6 million people enrolled in workplace pension schemes by the end of this Parliament. The single-tier pension will provide millions of individuals with a firm foundation to support their saving, and it will particularly benefit those groups that, under the current system, have tended to build up low amounts of savings. I am talking about women with broken work records, the low paid and the self-employed. The triple lock has helped to protect the most vulnerable members of our society, and the recent Budget announcements provide us with the final thread of this coalition’s web of pension reforms.
From April 2015 we will allow individuals much greater choice about how they access their defined contribution pension savings. Individuals will be able to access their defined contribution as they wish, subject to their marginal tax rate, and no one will be forced to take out an annuity if they do not want to. We are well aware that this is the biggest shake-up of pensions in almost a century—since Lloyd George was the Liberal Minister in the Treasury. As such, we recognise that it is absolutely crucial that we get it right. We are consulting on the detail before making further announcements later this year.
In the meantime, the Finance Bill will make some initial changes to deliver greater flexibility with immediate effect. We are reducing the minimum income requirement for accessing pension savings flexibly from £20,000 to £12,000. We are increasing the annual withdrawal limit for individuals in a capped drawdown arrangement from 120% to 150% of an equivalent annuity. We are increasing the total pension wealth that can be taken as a lump sum from £18,000 to £30,000, and we are increasing the size of a pension pot that can be taken as a lump sum—regardless of other pension wealth—from £2,000 to £10,000. Taken together, these changes mean that more than 400,000 people will be able to access their pension more flexibly in the financial year 2014-15.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
My right hon. Friend is being very liberal with his praise for various coalition colleagues. This has been a tremendous Second Reading so far in that we are liberating pensioners to make the best decisions for them. That, combined with the single-tier pension, means that we are putting people back in charge of their future.
Danny Alexander
I am grateful to my hon. Friend for her contribution on these matters and for those specific comments. She is right that these are very liberal reforms. They are something of which we as a coalition can be proud. We have swept away the morass of means-testing of pensioners that built up under the previous Government and have ensured that every pensioner has a firm foundation from the state. They have a better basic state pension paid at the level of the single-tier pension. There is much greater flexibility for people to choose how to use additional savings in defined contribution schemes; after all, it is their money. I would go even further and say that this Government and this Finance Bill are about not only freeing up pensioners but providing additional freedom both for working people to keep more of the money that they have earned for themselves and for businesses that wish to invest.
Charlie Elphicke
The Labour Government were delusional. I recall them saying for a long time that they had abolished boom and bust. It is great shame that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), the former Prime Minister, is seen so rarely in these parts these days; it would be interesting to hear his take.
Charlie Elphicke
Since he was bundled out of Downing street, he has been in the attic of Portcullis House but has been in the Chamber very rarely indeed. That is a shame.
One might think that the Labour party, having had four years to reflect, might not only accept full responsibility but try to develop its own economic plan. Saying how dreadful everything is but having no plan to take things forward is no plan to take to the country in a general election.
As I listened to the comments of the shadow Chief Secretary to the Treasury, a question struck me: what does the Labour party have to say to the person who worries about their job, wants their business to succeed and would like their kids to do well? The party is adopting policies that are so anti-business and so unimaginative about any kind of job creation—other than spending the same money 10 times over and claiming that as a new pledge. It has so little to say to the country and about the future; all it can do is sink into a sea of negativity.
Amendment of the Law
Thérèse Coffey Excerpts(10 years, 1 month ago)
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Ed Balls
It was very interesting because we scoured the Chancellor’s speech and all the documents for one mention of the cost of living and living standards, and there were none at all—none! Conservative Members say that we are not talking about what is in the Budget, but they are not talking about what is undermining the living standards of people up and down our country.
Last year, the hon. Lady said:
“If we do not believe that the poorest are best served by our policies, we might as well give up and go and do something else.”—[Official Report, 20 March 2013; Vol. 560, c. 1023.]
I am afraid we are going to ensure that she has to give up and do something else.
It has been hard to understand what has been going on, but it is starting to make sense given all the Chancellor’s rebranding of recent weeks and months: the new less foppish hairstyle, the 5:2 diet, the new estuary accent, even photo opportunities down a coal mine—all part of his leadership business; the new working-class hero, not Gideon but George these days.
This weekend the Education Secretary took a further step in the Osborne rebranding. He said that it is “ridiculous”, and “preposterous” that Downing street is governed by a tight clutch of Etonians, and that that has got to change—we say “Hear, hear” to that, Mr Deputy Speaker. However, we all know what he was really trying to say through the pages of the Financial Times. He was saying, “Boris is a toff because he went to Eton, but George is a pleb because he only went to St Paul’s.” The Tory party is having a class war with itself. An Etonian elite has grabbed hold of the commanding heights of the economy, opposing the masses of Tories who went to lesser public schools. Old boys from Harrow and St Pauls, throw off your chains. What are they going to call themselves? The Bullingdon Bolsheviks? The Trust Fund Trots? Posh boys of the world unite?
In all seriousness, does the Chancellor really think that he can stand up for the interests of the energy companies, the hedge funds, Tory donors, deliver a massive tax cut to people earning more than £150,000, and then claim to be on the side of hard-working families—the party of the workers—just because he did not go to Eton? Posing as the posh boy proletarian will not wash when his own Budget ad campaign refers to working people as “them”, and when he will be remembered only as the Chancellor who cut taxes for millionaires while everyone else was worse off.
I know that many hon. Members wish to speak so I will conclude my remarks.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I do not think this clownish class warfare is fooling anybody, but does the right hon. Gentleman welcome the fact that 472 of his constituents will no longer pay income tax as a result of yesterday’s Budget?
Ed Balls
The problem is that they are all worse off because VAT went up to 20%. Is the hon. Lady worried that in her constituency there has been a 600% rise in long-term youth unemployment since 2010, which she is doing nothing about? As for the idea that class war will not wash, if I were the Chancellor I would try to find a different way to take on Boris, as I do not think this way will work.
There is a cost of living crisis, we do not have a balanced recovery, and all this complacent Chancellor does is play party politics in the Tory party. What a mess—a right old Eton mess! Surely we can do better than this. This was the Chancellor’s last chance, his final opportunity to tackle the cost of living crisis and make decisions that will directly affect people before next year, and he has blown it. Working people will be worse off in 2015 than they were in 2010, and the country now knows, especially after today’s patronising “them and us” advert for the Conservative party, that it will take a Labour Budget to put things right.
Oral Answers to Questions
Thérèse Coffey Excerpts(10 years, 2 months ago)
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Dr Thérèse Coffey (Suffolk Coastal) (Con)
1. What fiscal measures he plans to introduce to support young people into work.
The Chief Secretary to the Treasury (Danny Alexander)
The Chancellor of the Exchequer is at ECOFIN and I have been asked to reply.
Youth unemployment is falling and the number of young people on jobseeker’s allowance is 120,000 lower than in May 2010. No young person should be left behind in the recovery. That is why we have delivered 1.6 million apprenticeship starts so far this Parliament. We will abolish national insurance contributions for under-21s, which will help to support jobs for almost 1.5 million young people, and we are supporting up to half a million young people into education and employment through the Youth Contract.
Dr Coffey
I welcome the announcement in the autumn statement on the employers’ national insurance holiday for under-21s, which will be a big boost for many businesses in coastal towns such as those in Suffolk Coastal, and for pubs across the country, which regularly employ young people. Has my right hon. Friend estimated what impact the measure will have on youth unemployment?
Danny Alexander
We think the policy will have a significant impact. That is also the view of business organisations, which have warmly welcomed it. With the abolition of employer NICs for under-21s, it will become more than £500 cheaper to employ an under 21-year-old earning £12,000 a year, and more than £1,000 cheaper to employ an under 21-year-old earning £16,000 a year. Of course, employment is driven by a range of factors, but the wide welcome the measure has had suggests it will have a significant impact on employment.
Danny Alexander
I warmly welcome what the hon. Gentleman is doing to encourage employers in his constituency to offer work experience. The evidence of this Government’s work experience programme is that work experience is more effective than the future jobs fund and a great deal cheaper to deliver, so it is more cost-effective. He is on the right track in what he is doing in his constituency; his Front Benchers are on the wrong track.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
T7. A few weeks ago, I joined my hon. Friends the Members for Harlow (Robert Halfon), for Northampton South (Mr Binley) and for Waveney (Peter Aldous) in presenting to the Chancellor a Boost Bingo petition with over 300,000 signatures, calling for a cut in bingo duty. [Hon. Members: “House!”] Will the Minister give to those who, day in, day out, enjoy bingo—including those who like to shout “House!”—comfort from this House that their concerns are being addressed in the forthcoming Budget?
The Exchequer Secretary to the Treasury (Mr David Gauke)
At this point in the year, all I can say to my hon. Friend is, “Let me take that as a further Budget submission.”