Holiday Pricing

Thérèse Coffey Excerpts

Monday 24th February 2014 Westminster Hall

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Will my hon. Friend confirm whether the previous rule used to be about 10 days or 10 sessions? I think he will find that a session is actually half a day.

[John Hemming]

My understanding was that it was 10 days.

[Dr Thérèse Coffey]

I think that is wrong.

[John Hemming]

My hon. Friend may be right, but that has been changed anyway.

There is also the issue of the new regulations, which we discussed with the Backbench Business Committee. A group called Parents Want a Say was established following the introduction of the new regulations, and it has a website. A number of e-petitions relate to the issue of school holidays. E-petition 49640 is entitled “Reverse the changes to school term time family holiday rules”.

E-petition 53002 states that it is

“calling on the government to help British families manage the ‘Parent Trap’ of inflated holiday prices in summer by suspending or reducing the rate of Air Passenger Duty (APD) for the annual school summer-holiday period of July and August.”

E-petition 45247 states:

“Relax the strict rules on term time holidays for school children.

Give parents the right to take their child on holiday in term time if the holiday would benefit the child.

Respect the rights of the child and bring term time holiday regulations in line with UNCRC (specifically article 3,4,5 and 31).

Standardise the criteria for term time holiday approval to prevent inconsistencies.”

E-petition 46455 states:

“Family time is so much more essential in the current working world, but so many people cannot afford holidays in school holidays. A break at home is not the same as getting away from it all where there isn't any house work or DIY to get done, instead focus is on family. Its time to stop the holiday companies cashing in on school holidays and let parents have some guilt free family time! Enforce action that caps the percentage increase on holiday prices in school holidays.”

There are also e-petitions 55426, 51533, 42884 and 23709, which I am not going to read out. This debate is a very good example of how effective an e-petition can be in getting an issue of considerable concern to many constituents across the country raised and debated in Parliament. It looks to me like an example of the success of the e-petition system.

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[Natascha Engel (North East Derbyshire) (Lab)]

Thank you, Mr Turner, for calling me to speak in this important debate. I also thank my colleague on the Backbench Business Committee, the hon. Member for Birmingham, Yardley (John Hemming), for securing it. When the e-petition came to us, we recognised its importance, not only because it reached 100,000 signatures, but because of the number of constituents who talked to us about the issue. His comprehensive speech—I hope I do not repeat any of it—highlighted how this is about individual cases. A big national policy that is supposed to apply to every single case will simply not work. I want to use a couple of examples from my own constituency to highlight how a more sensible policy would look at each individual case—each individual child and each individual parent—and give schools far greater discretion to allow people out of school and for how long.

We all agree that education is crucial and that the more time a child misses from its education, the worse it is for that child. Nobody is arguing for taking children out of school indiscriminately just because it is a little cheaper to go on holiday. We are talking about the people who are least able to afford to go on holiday, who have already got the greatest pressures on them.

A constituent of mine, Tim Farmer from Dronfield, has written to me. He and his partner share child care. One of them starts work at 6 am and the other finishes work at 11 am. They cannot afford to take their children on holiday during term time, and not spending time together means that the family is put under pressure. Heaped on top of that, they work absolutely punishing hours and never get the chance to spend time together as a family. That puts additional pressures on family life, and we are seeing, especially at a time of austerity, more and more families breaking up. We must look at the costs of not doing anything about it.

I have a distressing case in which the school’s response illustrates how a national policy does not really work in individual cases. The case involves a man who is separated from his wife. His seven-year-old daughter goes to a school in the constituency; he lives 120 miles away and visits on alternate weekends. The girl has just been diagnosed with a brain tumour, and they do not know what will happen to the child. He has asked the school whether he can take the girl on holiday for a week. The school has cited Government legislation to say there will be no unauthorised absences. It sounds quite threatening, but the school has no option, because of the rules. The school wrote:

“As from 1st September 2013 any holidays during term time will not be authorised, unless there are exceptional circumstances, for which there are set strict criteria. This is Government policy and parents who take their children on holiday without permission will incur unauthorised absences for their child. These remain on the child’s record and will be monitored for further action by the Education Welfare Service. Parents could be issued with a fixed penalty notice and/or court action.”

That is quite threatening language, but it is national policy. If a child with a brain tumour does not fall under the category of a special case, I do not know what does.

Tim Farmer’s children have got 99% to 100% attendance at school. He wants the best for them, but he also says that going on holiday with the family provides a cultural experience, a broadening of horizon and a stability for the children that helps them. Education is much wider than what people get at school.

[Dr Thérèse Coffey]

Has a teacher or head teacher approached the hon. Lady on this topic, and, in this particular case, has she had a chance to speak to the teacher at the school, because head teachers do have discretion?

[Natascha Engel]

Absolutely, and the case is ongoing. I was citing it as an example of using a massive hammer to crack a nut. Everything is with good intentions. We all want the best education for our children. We all know that the less time a child spends at school, the worse its outcomes will be, and there are lots of different reasons for that. There are children from chaotic families and children who truant, but we are talking about looking at an individual child and the family’s circumstances and seeing whether it would be possible, not to have a week a year taken out of school time, but to have a week occasionally to make sure that that family can spend some quality time together. I am so glad that we are having this debate, and I am looking forward to hearing about other individual cases from constituencies, because they will highlight the fact that we do need to revisit the matter.

Obviously, we cannot force holiday companies not to raise their prices during school holiday times, but we do need to have a far more sensible and pragmatic approach. We need to give schools greater discretion to allow families to have holidays together.

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[Lorely Burt]

I should be delighted to do that. There is a large element of the Asian diaspora based in my constituency and that of my hon. Friend the Member for Birmingham, Yardley.

Maintained school and academy heads could previously authorise 10 days’ leave, but there is no jurisdiction over the private school sector. Academies normally work for 190 days a year, and private sector schools work, on average, 165 days. There is a measure of irony about that. The children with the wealthiest parents get most choice about when they can go on holiday.

[Dr Thérèse Coffey]

I hope to mention the issue of the 10 days in my speech, but the hon. Lady will recognise that the regulation makes allowance for “special” as opposed to “exceptional” circumstances, as set out in the previous regulations. What does she consider “special” circumstances?

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[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

It is a great pleasure to contribute to this debate. I had not planned to do so at 4.30 pm, but have been motivated by some of the speeches. I congratulate my hon. Friend the Member for Birmingham, Yardley (John Hemming), who was right to take up the debate, which is important, as recognised by so many parents signing the e-petition. It deserves time in Parliament.

With respect to my hon. Friend the Member for Solihull (Lorely Burt), in the closing paragraph of her speech she said that she wanted head teachers to have discretion, but she also wanted guidance from the Department on what constitutes “exceptional”. That is part of the issue, although a little bit of history might explain some of the situation.

The hon. Member for Corby (Andy Sawford) is still in his place, and he might be aware that section 23 of the Anti-social Behaviour Act 2003 introduced the power for education authorities to issue penalty charge notices in cases of unauthorised absence. To avoid confusion, I was mistaken in what I said earlier about 10 days, because the power is automatically triggered when there are 10 sessions—in effect, five days—of unauthorised absence. That is what triggers the penalty charge notice. That was the case before the more recent statutory instrument was introduced last year.

That takes us back to the idea of what is “special” and what is “exceptional”. The 2006 regulations refer to 10 days of leave—up to 10 days—to be granted by the head teachers in their consideration of what constitutes “special circumstances”. The 2013 regulations removed all the references to when people could be away, saying that the head teacher is the person who can grant leave of absence in “exceptional circumstances”. As was pointed out by my hon. Friend the Member for Solihull, the difference between “special” and “exceptional” is largely one of semantics. I am not sure that it is right for the Department for Education to define one word or the other, but as has been said consistently, it is appropriate for the head teacher to define whether people may take their child out of school.

[Andy Sawford]

The hon. Lady makes an important point. Notwithstanding the principle, part of the problem with making the change through a statutory instrument is that there was not the debate that there would have been otherwise—for example, if there was primary legislation with a proper consultation, or even informal debate in the Chamber—on the meaning of the terms. That would have been critical for head teachers and Members in understanding the statutory instrument and its effect.

[Dr Coffey]

I do not profess to be an expert on parliamentary procedure or on why certain bits of legislation are introduced under the negative or the affirmative resolution procedures. That tends to be defined in the original Act—in this case, I do not know who was responsible for the very original Act and whether it was 1944 or 2006. The original Act is when the process for the introduction of future secondary legislation is decided, but the hon. Gentleman is aware, as my hon. Friend the Member for Birmingham, Yardley pointed out, that any Member of the House or of the other place may trigger a stay on any regulation on negative resolution by signing an early-day motion. That is a mechanism available to us all. I recognise that MPs therefore have to be even more on the ball about checking what statutory instruments are up for affirmative or negative resolution. That information, however, is made available to every Member of the House in the vote bundle.

On “exceptional” or “special”, I do not have children, so I do not pretend that I have to face the issue. I have, however, had six parents contacting me, four of whom cited cost. In one of those situations, incidentally, teachers had given activities for the children to do while away from school. Another case involved getting time for the children with the other parent. The sixth person who contacted me did so about parental choice: it is for parents to decide when their children go on holidays, not schools, because teachers could make up the time, with the children given special projects. I am not sure that that is necessarily acceptable behaviour. I fully understand the issue about cost, but I have no idea why “special” versus “exceptional” makes a difference for the head teacher in assessing such a decision.

In my time, I have been involved in children’s education as a school governor in two different schools. I will not say which school, because it would be unfair on the head teacher, but in one we discussed the issue in lengthy detail. Parents had almost come to see it as a right to request the time off, and the head teacher would be given a hard time by the parents unless up to 10 days of leave were given. We felt that that was wrong, because it put pressure on the head teacher, as well as on the classroom teacher, who had to cope with the child missing 10 days of schooling.

There is no doubt of the strong link between a school’s attendance records and attainment at the school. That cannot, of course, be proved for every single child, but it is fair to say that, in the schools in my constituency where attendance rates are significantly below the average, I see a significant difference in the attainment of the children. We need to stand up for that consistently: it is not necessarily simply about the individual child—although that child’s education is important—but about all the children in the classes. We need to remember that.

I had not planned to speak and I do not wish to extend the debate unduly, but the regulations introduced last year still leave the head teacher with appropriate discretion. In cases of children with military parents, or those whose parents wish them to attend a funeral, the situation remains the same. There is no automatic right for parents to remove a child in such a case, unless they wish to go down the unauthorised absence route, but by changing the focus and putting in regulation that circumstances must be exceptional, the right expectations are set for parents. It is not therefore a right to take a child out of school for up to 10 days of holiday, as referred to in regulation. What is allowed is exactly what is said: if there is no other opportunity for a particular situation to happen, head teachers may use their discretion. Frankly, if MPs hear of cases in which that is not being applied, we should take them up on behalf of the parent.

[John Hemming]

Does my hon. Friend agree, as she probably does, that a funeral would be a valid use of exceptional circumstances? Perhaps we should be concerned about Ofsted possibly putting pressure on head teachers to reduce the numbers to such a low level that they cannot even take into account exceptional circumstances.

[Dr William McCrea in the Chair]

[Dr Coffey]

I am not aware that Ofsted is applying that particular pressure. I agree on one aspect, however. I would be surprised and disappointed were a head teacher to refuse a request in the case of a funeral. As a slight aside, however, I was disappointed when a Whip initially refused me permission to be away to attend a funeral—when I made my representation directly, he changed his mind.

We need consistently to support our teachers, who want to give children the best education possible. We should remove unnecessary pressures on head teachers. I welcome any talks there might be on seasonal pricing, but I encourage us to stand firm and ensure that we put education first.

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[Dr Thérèse Coffey]

I just want to make the Minister aware that not everyone present wants Parliament, the Education Committee or Ministers to determine schools’ term dates. We really should leave such decisions to be made locally. Schools currently manage to cope quite well. Different parts of the country already have different holiday dates for different traditions—for example, places such as Leicestershire and Wigan. We should allow local authorities to work with schools to recognise what is best for their areas.

[Jenny Willott]

I must confess that as an MP representing a Welsh constituency, I benefited significantly last week when Parliament was in recess because it was half term in England. When I went home to Cardiff, all the places I took my small children were mercifully empty because half term in Wales is this week. There is already a difference between some areas, and it is possible to enable that on a broader basis in order to extend the peak period, which would hopefully bring down prices across the sector.

To conclude, the Government are not convinced that higher prices in school holiday periods are the result of market abuse by the holiday industry. Rather, they reflect market forces in a very competitive sector, and are made worse by the fact that there is international competition as well. I recognise the fact that family holidays can be incredibly valuable, but they should not be at the expense of a child’s education. School attendance throughout the school year remains critical—we know that pupils who stay at school for longer do much better in their final exams.

Fairness and Inequality

Thérèse Coffey Excerpts

Tuesday 11th February 2014 Commons Chamber

[Guto Bebb]

The hon. Gentleman has made this point on numerous occasions. He is absolutely correct to say that the level of debt has increased under this Government, but for a party that says the level of debt should have increased at an even faster pace, it is hardly reasonable to argue that this Government have therefore failed. It should also be pointed out that we have an NHS that is, rightly, much more expensive and costly than it was in 1948, so that is a false analogy.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Dare I say it, but the comment by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) shows that until we balance our books and are in surplus we will never start to pay down debt. His motion contradicts his desire to reduce the debt to GDP ratio.

[Guto Bebb]

I fully accept and endorse my hon. Friend’s comments. It is important, when we debate public spending and the level of so-called cuts, to bear in mind that we are running a state that is not meeting its obligations. Even in this financial year, we are borrowing £110 billion. We are not out of the woods by any stretch of the imagination. It would be an irresponsible Government who would damage the opportunity for people to have more equality through a willingness to borrow more without any plan to reduce the country’s level of debt.

Banking

Thérèse Coffey Excerpts

Wednesday 15th January 2014 Commons Chamber

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

It has been widely trailed today that a future Labour Government, if elected, would try to force banks to sell off branches. That will cause great concern, particularly in rural areas, because it is their branches that would be most likely to be disposed of. How would his proposals help create competition for our high street businesses?

[Chris Leslie]

This is not about shutting branches; it is about making a more competitive sector. Time after time, we have tabled amendments to financial services Bills calling for more competition in the banking sector. The Independent Commission on Banking, chaired by Sir John Vickers, called for action to diversify the banking sector, but the Treasury’s approach to divestments of branches from NatWest and Lloyds was not exactly a raging success. It would have been better if the Government had taken our advice and gone for a competition review of the retail sector and not just the business banking sector. They often say “We are looking at competition”, but it is usually only in business banking. They need a more comprehensive approach; the customer needs better service and competition to bring down fees and charges.

There is still no obligation on banks to provide a basic bank account for all customers, even though we know it helps people on low incomes to save money and plan their budgets. The jury is out on whether the seven-day current account switching service will be enough or whether steps should be taken towards full portability of bank accounts for customers. The Government could introduce a fiduciary duty of care, explicitly putting the best interests of customers first and foremost in the financial services sector.

Today, banks are an essential utility; they are supposed to be there to help customers, not to hinder the economy or act like untouchable vested interests. We need to clean up the behaviour of the banks and end the culture of excessive risk and reward. Those are the traits of the old economy; the new economy that we need demands a more modern banking sector—more competitive and diverse, accountable to its customers, supporting long-term investment at home and delivering the sustained growth that we need. That will be the task of the next Labour Government.

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[Sajid Javid]

What I do accept is that badly structured and badly designed bonuses will lead to bad behaviour. I am sure that the hon. Lady herself accepts that if an arbitrary cap is imposed on bonuses and it leads to an increase in fixed pay but no overall fall in overall pay, the bad behaviour will actually worsen.

We are putting our house in order. We are learning from the huge mistakes of the last Government, and are ensuring that we create a country in which the public can trust that their money is secure and our banking sector can flourish.

[Dr Coffey]

My hon. Friend is making great progress in the debate. Will he also mention the fact that taxpayers are now benefiting from the fines that have been levied on the industry, and that the Chancellor has extended the arrangement to ensure that military charities and others benefit?

[Sajid Javid]

I am glad that my hon. Friend has referred to that. It was the right thing to do, and it demonstrates that we can take some of the money that is coming from the banking sector and use it for good causes.

Oral Answers to Questions

Thérèse Coffey Excerpts

Tuesday 10th December 2013 Commons Chamber

[Danny Alexander]

We have made a commitment to one-for-one replacement. Housing starts, under the planning system, cannot be started instantly, which is surely a lesson that the hon. Gentleman should have learned during his many years in this House. The commitment is there and every one of those homes sold will be replaced by a newly built home.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

10. What assessment he has made of the current level of the national deficit.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

Last week the Office for Budget Responsibility forecast public sector net borrowing on an underlying basis to be £111 billion, or 7.3 per cent. of GDP in 2013-14, down from 11 per cent. of GDP in 2009-10, the highest deficit in our peacetime history. By 2018-19 the OBR forecasts that the UK will be running a small surplus.

[Dr Coffey]

I thank my hon. Friend for that terrific answer. Does he agree that calls to abandon the Government’s long-term economic plan and to borrow and spend more would mean higher taxes and mortgage rates going up for hard-working families in Suffolk Coastal?

[Mr Gauke]

I thank my hon. Friend for her terrific question. Yes, I agree.

Autumn Statement

Thérèse Coffey Excerpts

Thursday 5th December 2013 Commons Chamber

[Mr Osborne]

I would be happy to meet the hon. Gentleman and other MPs local to my constituency. I know how important the second Mersey crossing is—he and I have joined forces over many years to try to deliver it—but I would draw a distinction: the A14 was an existing road that wanted upgrading, but of course it is controversial to put tolls on an existing road, whereas the bridge is a new bridge, and there is a long-established principle, from the Humber to the Severn estuary, that new bridges have tolls. Local people will have strong views on the level of the tolls, however, and I am happy to discuss that with my honourable neighbour.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I thank the Chancellor for his statement today. It shows how this Government are full of energy in driving forward British business and finding solutions. I want to give particular thanks for the A14 situation. Is it not important that we continue to dismiss the scaremongering and show that Britain is open for business?

[Mr Osborne]

Britain is very much open for business. We are now the destination for a huge amount of investment from around the world, and we have some very important ports, one of which in particular depends on the A14. That is an important strategic link. We have listened to representations from local people concerned about the prospect of tolling an existing road, albeit an improved one, and we will ensure that the road is improved, not just for local people, but for the whole country, but without imposing a road toll.

National Infrastructure Plan

Thérèse Coffey Excerpts

Wednesday 4th December 2013 Commons Chamber

[Danny Alexander]

Some things are beyond the ken of most of us in this world and the editorial decisions of the Financial Times are one such matter. There has been a very strong welcome from industry for this plan and its previous iterations, including, as we have heard, from constituencies where projects are being taken forward. That is precisely because this Government are the first to have a long-term plan for infrastructure with a clear pipeline of projects that are being delivered up and down the country. The hon. Gentleman should welcome that.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

There is so much to welcome in the updated national infrastructure plan, including the announcements about nuclear power stations and offshore wind. In particular, I want to thank my right hon. Friend for listening to the public consultation and the voice of business from Suffolk and cancelling the A14 toll. Like my hon. Friend the Member for Ipswich (Ben Gummer), I am very keen to get on with the project. Is there any chance of bringing it forward a few months?

Cost of Living

Thérèse Coffey Excerpts

Wednesday 27th November 2013 Commons Chamber

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I beg to move,

That this House notes that the Government has failed to meet its own economic goals over the last three years with prices rising faster than wages for 40 out of 41 months, average earnings for working people £1,600 a year lower in real terms than in May 2010, economic growth far slower than expected, the Government’s pledge to balance the books by 2015 set to be broken and the UK’s credit rating downgraded; further notes that growth of 1.5 per cent is needed in every quarter between now and May 2015 in order to catch up the lost ground from three damaging years of flat-lining growth; believes the Chancellor of the Exchequer’s Autumn Statement should take action to tackle the cost-of-living crisis which means that for most families there is still no economic recovery and to ensure recovery delivers rising living standards for all, is balanced and built to last; and calls on the Government to bring forward measures including an energy price freeze and long-term reforms to the energy market, an extension of free childcare for working parents of three and four year olds, action to boost long-term housing supply and a compulsory jobs guarantee for young people and the long-term unemployed.

On Thursday next week the Chancellor of the Exchequer will address this House in his autumn statement. My hon. Friends will know that we have come to expect a tin ear from this Chancellor, who in last year’s autumn statement cut tax credits and child benefit in the face of millions of people struggling to make ends meet while sticking firmly by his decision to deliver a millionaires’ tax cut for the richest 1%. This year, the time has surely come for the Chancellor to wake up to the chronic and unremitting cost of living crisis facing millions of households across the country. Never before have so many worked so hard for so little, working week after week only to find that their pay packet has shrunk in real terms and that they are unable to buy as much as the month before, with wages failing to keep up with prices and the pound in their pocket diminishing in value as everyday costs—rent, the weekly shop, child care, and gas and electricity bills—get higher and higher.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Does the hon. Gentleman welcome the fact that the Government have taken many people out of income tax, such that next April 4,041 people in Suffolk Coastal will no longer pay income tax, alongside the freeze in council tax that they have enjoyed for the past few years?

[Chris Leslie]

The hon. Lady makes her point. Unfortunately, a lot of Conservatives like to pretend that they are giving with one hand, yet they are taking away so much more with the other—not just the tax rises that they pretend never happened but the unremitting rise in the costs that people face daily.

Women and the Cost of Living

Thérèse Coffey Excerpts

Tuesday 19th November 2013 Commons Chamber

[Gloria De Piero (Ashfield) (Lab)]

I beg to move,

That this House believes that the Government is failing to deliver a recovery for women and is making women pay three times more than men to bring down the deficit, according to research by the House of Commons Library; notes that under this Government, women’s unemployment has reached its highest levels for a generation; further notes that wages are stagnating in jobs where women are predominant; and calls on the Government to support more women into decent work by extending free nursery places for 3 and 4 year olds from 15 to 25 hours a week for parents at work, provide a legal guarantee for 8am-6pm breakfast and afterschool club childcare, and bring in Make Work Pay contracts to provide a 12 months tax rebate for firms which sign up to pay the living wage.

The test of a successful economy is whether it improves the living standards of ordinary people: families and businesses who want to work hard and to get on. Today, official figures say that working people are on average £1,600 per year worse off than they were at the election. On this Government’s watch, we have seen the biggest fall in workers’ incomes in any G7 country. Families across the country are hurting and it is women who are on the front line of this cost of living crisis. More often than not, it is women who are left trying to make the family budget stretch that little bit further: when the weekly shop costs more each month, but the amount in the purse stays the same; when in the past three years the cost of keeping the kids in nursery has risen five times faster than wages; and when heating bills are 10% more expensive than they were last year. Women understand what it means for prices to rise faster than wages for 40 out of the past 41 months.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Does the hon. Lady welcome the fact that there are more women in work than ever before?

[Gloria De Piero]

There have never been more women saying that they are working part time and cannot get the hours to work full time. The female employment rate is lower than it was under Labour before the crash.

Oral Answers to Questions

Thérèse Coffey Excerpts

Tuesday 10th September 2013 Commons Chamber

[Sajid Javid]

I am sure the hon. Lady knows that the best way out of poverty is through increased pay and employment. I therefore do not understand why she does not welcome the fact that jobs are being created at a record rate throughout the economy, including in her constituency where I note that during Labour’s last term, youth unemployment rocketed by 120%. It is down by 14% under this Government.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

My hon. Friend is right to say that the way out of poverty is to work. Does he agree that by reskilling people we can ensure that British people fill highly skilled jobs, and not rely on mass immigration to fill the skills gap?

[Sajid Javid]

I agree with my hon. Friend. The best way to get more British people into British jobs is to ensure they have the skills to do those jobs. That is exactly what the Government are focused on.

Age-related Tax Allowances

Thérèse Coffey Excerpts

Monday 9th September 2013 Westminster Hall

[Kelvin Hopkins (Luton North) (Lab)]

I beg to move,

That this House has considered the e-petition relating to age-related tax allowances.

It is a pleasure to serve under your chairmanship this afternoon, Mr Hollobone. We have been allocated three hours, but my speech will not last that long or anything like it. I am, however, pleased to have the opportunity to speak about age-related tax allowances, setting them in their historical context and in the context of today’s pension provision.

I first declare an interest as a person of pensionable age and as chair of the parliamentary support group of the National Pensioners Convention, the radical and progressive campaigning organisation that has been fighting to advance the cause of pensioners for more than 30 years.

The NPC’s first president was Jack Jones, the late and great former general secretary of the Transport and General Workers Union. Forty years ago, I worked for Jack Jones as a TUC staff member servicing the TUC’s transport industries committee, of which Jack was the chair. Jack had no equal in his principled commitment to the pensioners’ movement, such that, when he retired from his union’s leadership, he donated his entire leaving gift of some thousands of pounds to the National Pensioners Convention.

Speaking today, I am acutely conscious of the history of the NPC and of the struggles of the pensioner movement over the decades. Today’s debate has been prompted by the online petition on age-related allowances initiated by Arthur Streatfield on behalf of the NPC and all pensioners. The petition was signed by considerably more than 114,000 people before its closure in March, and it demonstrated the strength of feeling generated by the Government’s freeze on age-related allowances announced in the Chancellor’s March 2012 Budget.

I speak not only for myself or the active members of the National Pensioners Convention—even the thousands who signed the petition are only a fraction of those affected—as we in this House should always be conscious of the fact that there are more than 11 million pensioners in Britain, or nearly 20,000 per parliamentary constituency. Pensioners are among those who follow politics most closely and are some of our most well-informed electors. They are most likely to vote in elections, so we would all be wise to take proper and full account of their views.

The moral case for pensioners and their interests, however, is most important. They have spent a lifetime serving the economy in employment, sometimes serving the country in times of war, and giving their all in raising families. Elderly pensioners often become frail and live on low incomes; they have earned the right to be treated well by the society to which they have given so much. We should respect and care for our elders and ensure that they have the incomes necessary to live in comfort and security.

I have a few things to say on the timing of today’s debate. It was originally tabled to take place before the freeze on the age-related personal tax allowances had come into force, but the proroguing of Parliament, and the Queen’s Speech, denied us that opportunity. By the time the Backbench Business Committee had been re-elected and was able to allocate time, we had reached the summer recess. Although a debate may now seem something of an afterthought, it at least gives MPs the chance to discuss the matter in detail, which was never the case when the Chancellor made his initial announcement. It also provides us with the opportunity to see how the policy relates to the much wider issue of older people and the effect of austerity on their living standards and general well-being.

For decades there has been an acknowledgement of the need to provide additional support through the taxation system to older people in retirement. In 1925, old-age relief was introduced to help those aged over 64 with incomes of £500 a year or less. The Chancellor at the time, Winston Churchill, said that the modest savings of pensioners should be exempt from tax. The basis of today’s age-related allowance was introduced in 1975, and in 1987 further assistance was given by the introduction of an increased allowance for taxpayers aged over 80—reduced to those aged over 75 in 1989.

The decision by the Chancellor in the March 2012 Budget to freeze the age-related tax allowances, therefore, not only went against a widely held consensus that had been in place for more than 50 years, but caused serious concern about the future income levels of older people throughout the UK. The Chancellor announced in the House that he would freeze the age-related allowances from 6 April 2013 at the level of £10,500 for someone aged 65 to 74 and at £10,660 for someone aged 75 or over until those allowances aligned with the ordinary personal allowance. People retiring after that date—in effect, those born after 5 April 1948—are therefore to receive a lower personal tax allowance of £9,205, which is £1,295 less than they would have been expecting. It is estimated that the measure will save the Exchequer £3.3 billion by 2016-17 and, according to Treasury figures, will result in 4.4 million existing tax-paying pensioners losing between £63 and £83 a year, while future pensioners will suffer a loss of between £285 and £322 a year after tax.

Understandably, the announcement caught the headlines the following day, but it came as a surprise to many, and it was unexpected for a number of reasons. Only the year before, the Chancellor had told the House that the allowances would continue to rise for the lifetime of the Parliament in line with the retail prices index. There was no indication that he was preparing a change of policy. Twelve months later, he clearly decided to break that promise.

Astonishingly, while announcing a freeze on the tax allowances of pensioners at the same time, the Chancellor said that he would give those earning more than £150,000 a year a 5% cut in their tax rate, from 50% to 45%, which was an enormous windfall to those on the highest incomes. Someone on an income of £1 million taxable at the highest rate stood to benefit to the tune of £50,000 a year. It is hardly surprising, therefore, that older people felt as if those on modest incomes, seeing the purchasing power of their tax relief decreasing, were effectively subsidising a tax cut for the super-rich and for better-off pensioners. One blatant unfairness arising from the Chancellor’s decision was that while pensioners with annual incomes of less than £25,000 saw their tax bills rise, those with incomes in excess of £29,000 saw their tax relief increase by £268.

At the time of the announcement, there had been much erroneous nonsense in the media suggesting that older people had somehow escaped the effects of the Government’s austerity measures and that they needed to feel the pain just like everyone else. Think-tanks such as the Intergenerational Foundation and the Nuffield Foundation were quick to point out that older people were a burden on society’s finances, and individual politicians from the Deputy Prime Minister to the shadow Chancellor mentioned how universal benefits would have to be taken away from Britain’s apparently greedy older generation.

Since 2010, an argument has been put in some quarters suggesting that we can no longer afford older people. No doubt that background noise had some influence on the Chancellor’s decision in the 2012 Budget. The revenue collected by the state from older people, however, whether directly through a range of taxes or through costs that older people bear that would otherwise be paid by the state, adds up to a staggering £175.8 billion every year, compared with total expenditure on older people through pensions, welfare payments and health care of £136.2 billion. The overall net contribution by pensioners to the economy is, therefore, almost £40 billion and is estimated to rise to almost £75 billion by 2030. Most importantly, that is more than enough to pay for the current range of age-related benefits, as well as the personal tax allowances that we are debating today.

We have only to look at the voluntary and charitable sector to see how older people are keeping many of its organisations going, and how without them many of the networks of support that hold our communities together would start to crumble. Not only that, but millions of working families rely on the help of grandparents to provide unpaid child care, enabling parents to go out to work. Through volunteering, caring and of course paying taxes, Britain’s pensioners continue to give back to the country, rather than simply taking from it, as some would have us believe. As history often shows, however, an economic crisis can provide the conditions in which sections of society are scapegoated and blamed for the problems that we face. This time it appears to be pensioners and the elderly who are being targeted as the source of our economic woes, rather than the activities of a largely unregulated and irresponsible finance industry and the feeble Government policies to deal with it.

One of the biggest problems with the debate over the freeze on age-related tax allowances has been the myths that it has promoted. Following the Chancellor’s Budget statement, the newspapers dubbed the freeze the “granny tax”, although the truth is that around 60% of those affected are men. It has been widely acknowledged that our poorest pensioners tend to be women, many of whom do not even have enough income to pay any tax at all. A lifetime of caring responsibilities, or of part-time or low-paid work, means that many of them now struggle on less than £10,500 a year. Even the inadequate minimum wage would give people an income of over £12,800. Therefore, many older women are among the 6 million pensioners in this country who do not pay tax because they simply do not have enough money. To argue that they have escaped austerity when they have been living in austerity for years is outrageous nonsense. To suggest that someone on £15,000 is well off and can afford to face an increase in their tax bill when older people are facing many other financial pressures is either naive or callous, or both.

The inflationary impact on older people is higher than that which the country as a whole is experiencing, largely because pensioners spend a greater proportion of their limited income on things whose cost is rising fastest, such as food, fuel and health. It is estimated that average living costs for those over 75 have risen by 6.2%, which is considerably higher than the official consumer prices index would suggest.

The Chancellor was disingenuous to suggest that the freeze in the tax allowance was a mere simplification of the taxation system, when many people rightly saw it as a tax increase. Within hours of the Budget, a petition was set up on the Government’s website by retired civil servant Arthur Streatfield and was promoted by the National Pensioners Convention. I pay tribute to the NPC for its work in bringing this issue to the fore and for promoting tirelessly over the years other issues, such as pensions, social care, fuel poverty and universal benefits. I am grateful to it for its advice and assistance to me for today’s debate.

When the petition was launched, NPC’s general secretary, Dot Gibson, said:

“Since the Budget announcement, we have been inundated by messages from pensioners like Arthur who are outraged that the Chancellor has given a tax cut to those earning over £150,000 whilst pensioners on little more than £11,000 are having their tax allowance frozen. There has been a lot of nonsense about pensioners having been cushioned from the government’s austerity measures, but they’ve already seen cuts to their winter fuel allowance, a reduction of their state pension increase because it’s now linked to the lower Consumer Price Index rather than the Retail Price Index, rationing of care services in the community, closure of day care centres, changes to disability benefits and caps on housing support.”

Dot continued:

“It’s time we came out fighting and this petition is just the start. The government needs to recognise that older people are an asset not a burden. We not only need to reverse this latest attack, but also to campaign for higher state pensions, proper care and an end to fuel poverty.”

I absolutely agree with Dot.

In the Government’s mid-term spending review on 26 June, the Chancellor announced that universal benefits for older people, such as the winter fuel allowance and the concessionary bus pass, would for the first time be included in an overall cap on welfare spending. That seems to be just a way of cutting universal benefits by the back door. At the same time, the Department for Work and Pensions released figures showing that between 1.9 and 2.1 million older people are living below the official poverty line, and the older the age of the pensioner, the greater the likelihood of low income.

Pensioners living in a household where someone is disabled are almost three times as likely to suffer material deprivation as those living in a household where no one is disabled. Pensioners from minority backgrounds—there are many in my constituency—are also more likely to live on low incomes. When more than 1 million pensioners tell the DWP that they would be unable to pay an unexpected bill of £200, it speaks volumes about the need for a higher basic state pension for everyone and the need to take another look at the decision to freeze age-related tax allowances.

Despite what many might assume, we do not treat our older people with sufficient dignity. The UK state pension remains among the least adequate in Europe, with the risk of poverty among older people ranked fourth of the 28 EU countries. Some 5.6 million older people have savings of £10,000 or less. Nearly 2.5 million pensioner households live in fuel poverty and spend more than 10% of their income on fuel. That figure is rising. Almost a quarter of all pensioners—24%—do not go out at least once a month; 41% do not take a holiday away from home; 10% are unable to have their hair cut regularly; 5 million older people consider the television to be their only source of company; and one in 10 pensioners say they feel completely cut off from society, family and friends. That does not strike me as an impressive advertisement for Britain being a great place in which to grow old.

Despite that picture, the Chancellor’s decision to freeze age-related personal tax allowances has, for at least the next few years, penalised more than 4 million older people who are already struggling to cope. I agree there is merit in the long-term policy objective of securing a single personal tax allowance based on income rather than age, but it must be recognised that age-related personal tax allowances were designed to help with the additional expenses, such as home maintenance, that older people face. Such allowances will continue to be relevant for as long as the state pension remains disgracefully inadequate.

We have as a society recognised the need to provide additional assistance to older people because they face additional challenges brought on by ageing. We also recognise that after a lifetime of contributing to society, which continues in retirement, there are ways in which older people should be rewarded and justly so.

If the Chancellor had thought a bit harder, he might have realised that a much fairer way of achieving a change in the personal tax allowances would have been to uprate age-related allowances by inflation, and increase the under-65 allowance by more than inflation so that over time the two would eventually harmonise and older people would continue to get an increase in their allowance.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Surely the hon. Gentleman accepts that one of the Government’s aims is to simplify tax allowances and have one allowance regardless of how old someone is. Is it sensible for an hon. Member over 65 to have higher take-home pay, simply because of age, than someone under 65?

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[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I did not intend to make a speech, but a year or so ago I co-authored a policy to try to simplify allowances and national insurance. I will not dwell on that today, but I thought it was important to put on record the fact that I support the Government’s proposals to simplify taxation, which is what this policy does.

I have received criticism from constituents because a quarter of them are over 65, which is a higher proportion than 10 years ago. Suffolk Coastal, like many coastal areas, is a place where many people choose to retire, partly because they are attracted by its wonderful scenery, lifestyle and so on. It is important to say that we will do what we can to help pensioners on low incomes, and also to make a start on tax simplification, which I believe this policy does.

I understand why the hon. Member for Luton North (Kelvin Hopkins) outlined pensioners’ concerns, including about inflation, but I am proud of what the Government have done, including by introducing the triple lock on pensions, meaning that they will rise by a minimum of 2.5%, by the consumer prices index or by average earnings, and through the pension reforms that will come into place in a few years whereby we move to a flat-rate system so that people will not be penalised for saving towards their own pension. That will also remove the burden of, and the embarrassment that some people feel about, trying to seek help through means-testing, credits and so on. I do not recognise the suggestion that the Government are turning their back on pensioners.

[Kelvin Hopkins]

I am following the hon. Lady’s speech with interest, but the fact is that some pensioners—more granddads than grannies, if I may say, and as a granddad myself, I feel this personally—will find that their incomes reduce as a result of the Government’s 2012 Budget, while those on the highest incomes will see their incomes increase. Is it right for pensioners on low incomes to see their income transferred to those on the highest incomes?

[Dr Coffey]

I hear what the hon. Gentleman is saying, but my understanding is that people will not be affected in cash terms, although they may be in real terms.

There is a significant increase in the number of people who continue to work beyond the age of 65. Some might say that that indicates that there is a pensions crisis as people cannot afford to stop working. It might be true that people have got used to a certain income and that, as other costs have risen, they continue to work if they can do so. They have been helped by the Government’s revolutionary change of scrapping the default retirement age, which was controversial on many fronts. To a large extent, people are working longer because we are healthier and living longer, which is why it is fixed in law that the default pension age will increase regularly.

As people will be working longer, I come back to the rather simplistic point of why somebody should have different take-home pay simply on the basis of their age, rather than any other criteria. I recognise that a number of people who have unearned income will be affected, but the hon. Gentleman will be aware that the age allowance is phased out when people’s income is above a certain amount.

I support the Government on the initiative. I do not believe in any way that old people are a burden—they are certainly not; they are an asset. However, everyone should do their bit to ensure that we continue to have a tax system that rewards appropriate levels of work and those who have worked, and we should continue to try to simplify the tax system as a whole. Although the hon. Gentleman talked about levelling up allowances, it has not been the policy of the Labour Opposition—or, certainly, of the previous Labour Government—significantly to increase tax allowances, as the coalition Government have done. We will get to an allowance of £10,000 sooner rather than later, and who knows what all the parties will offer in their 2015 manifestos? It was sensible to move to one tax allowance, on which point I shall conclude.

--- Later in debate ---

[Catherine McKinnell]

I thank my hon. Friend. The point that he and I make is that the concern about the Government’s change is the lack of notice that many pensioners have had of it. It has not been introduced gradually to give pensioners a chance to readjust their savings plans or earnings plans; they have not been given time to adjust to the change. I will go on to say just what a shock it was to many pensioners, and to the Office of Tax Simplification itself, when the change came about, but it is worth reflecting first on the number of pensioners affected.

We are talking about 4.41 million people who are worse off in real terms, with an average loss of £83. Those are the Government’s own impact figures, but in addition The Daily Telegraph has estimated that many people could be £479 worse off as a consequence, or £511 if they are aged over 75. It could cost a couple nearly £1,000. Those are not insignificant numbers for pensioners who are watching their household bills rise month on month. They are now watching their income diminish as a result of these changes.

It is also helpful to consider region by region the number of constituents affected by the changes. Many MPs have been contacted by constituents who are most aggrieved by the changes and, in particular, by the lack of notice that they were given of them. We know from written answers that the Minister was unable to identify exactly how many people would be affected by the change in the age-related allowance—the granny tax, as it has been dubbed, or indeed the granddad tax, as my hon. Friend the Member for Luton North rightly pointed out. However, Her Majesty’s Revenue and Customs has been able to produce figures for the number of people over 65 paying income tax by region. The House of Commons Library sensibly suggested that that could be used as a proxy to estimate the number of people in each region affected by the freeze, so we know that 170,000 of those affected live in the north-east, 480,000 in the north-west, 340,000 in Yorkshire and Humber, 320,000 in the east midlands, 370,000 in the west midlands, 450,000 in the east of England, 410,000 in London, 710,000 in the south-east, 460,000 in the south-west, 240,000 in Wales, 370,000 in Scotland and 90,000 in Northern Ireland. Those figures are something for everyone to consider when we think about the number of constituents in our own areas who are affected and the sheer volume of engaged voters up and down the country who, as my hon. Friend pointed out, will not forget these changes quickly.

However, the critical group of people whom we should be seriously concerned about are those reaching their 65th birthday this year. I would be grateful if the Minister could update us on whether the Treasury has undertaken any research to try to understand the true impact of the changes on that group, because it is a group of approximately 360,000 people who will be roughly £322 a year worse off as a result of being excluded from the age-related allowance. For that group, the incredibly short notice of the change has been completely unacceptable. We are talking about people who are very close to retirement age and have little chance to change their plans.

As I mentioned, at the time of the 2011 autumn statement the Chancellor made this categorical commitment:

“To ensure employers and older people do not lose out, for the duration of this Parliament the annual increases in the employer NICs threshold, and the age related allowance and other thresholds for older people, will be over-indexed compared to the CPI, and will increase by the equivalent of the RPI.”

Let me repeat that:

“To ensure...older people do not lose out, for the duration of this Parliament the annual increases in the...age related allowance....will be over-indexed compared to the CPI, and will increase by the equivalent of the RPI.”

And when was that statement made? It was made just four months before Budget 2012, when the Chancellor decided not to “over-index” the age-related allowance and not even to increase it by the RPI, but to freeze it permanently for those born before 6 April 1948 and scrap it altogether for those born on or after that date.

It was dressed up as a “simplification” measure. It was justified on the back of the Office of Tax Simplification’s interim “Review of pensioners’ taxation”. What the Chancellor did not mention at all in the statement was that that review stated:

“We would stress...that the OTS has not reached any conclusions as to the best way forward with age-related allowances, nor have we formulated detailed recommendations”.

Indeed, in his evidence on the 2012 Budget to the Select Committee on the Treasury, the director of the Office of Tax Simplification, John Whiting, commented:

“I was surprised that it was taken forward so quickly...The context is that we undertook to do a two-stage review of pensioner taxation. The first would document the problems and codify all the problems...Stage two was to go ahead and look at them and try to work out what might be the best way forward.”

Of course, we know why the Chancellor did not want to wait for the final OTS report, through which he could have properly understood the impact of the changes on current pensioners and particularly on those who are turning 65 this year. He needed a soft target for a tax grab to help to fund his indefensible tax cut for millionaires. This is a measure dressed up as tax simplification that will actually increase revenue to the Government by £360 million in 2013-14. That will rise to £1.25 billion in 2016-17.

[Dr Thérèse Coffey]

rose—

[Kelvin Hopkins]

rose—

[Catherine McKinnell]

I will give way to the hon. Lady and then to my hon. Friend.

[Dr Coffey]

Of course, the hon. Lady will recognise that the Government believe that they will increase the amount of tax that they take from the richest in society by reducing the rate, as opposed to trying to suggest that it is being taken from some of the poorest in our society.

[Catherine McKinnell]

I will give way to my hon. Friend the Member for Luton North and then deal with both points.