Autumn Statement
Tom Clarke Excerpts(9 years, 5 months ago)
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Mr Osborne
My hon. Friend is right. The transformation fund is an important part of the NHS’s forward view, which has been looked at and endorsed by the Health Committee, which she chairs, the various health charities and the royal colleges. The head of the NHS, Simon Stevens, who drew up that plan, welcomed what we announced at the weekend and travelled with me to Homerton university hospital to explain how the transformation can take place. My hon. Friend is right that it is impossible to have a strong NHS unless we have a strong economy: we are delivering both.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Does the Chancellor agree with the Deputy Prime Minister that:
“There is not a single developed economy anywhere in the world that has balanced the books and only done so on the backs of the working-age poor, which Osborne has now confirmed several times he wants to do”?
Does the Chancellor realise how damaging those policies are to constituencies such as mine?
Mr Osborne
In constituencies such as the right hon. Gentleman’s and, indeed, in constituencies right across the country, unemployment has come down and people have come off the claimant count. That is a big positive development. The distributional analysis that we have published today, which was examined by the Treasury Committee, shows that the richest 20% in our society have made the biggest contribution to deficit reduction—bigger than the other 80% put together. Then there is the stamp—
Mr Osborne
The Deputy Prime Minister is unhappy because the Conservative party is trying to win his seats off him.
HMRC (Scotland)
Tom Clarke Excerpts(9 years, 10 months ago)
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Gregg McClymont
I will come to a couple of the hon. Gentleman’s points, but on the issue of HMRC jobs, I am sure he will agree that it is an arithmetical fact that Scotland has a significant dividend from UK HMRC jobs. That is because of the professionalism of staff in Scotland, but it is something that must be put on the record.
Let us tease out a little further these arithmetical facts and then, I think, what we might judge an outcome to be for Scotland after leaving the UK and ending our membership of HMRC. We know as a fact that Scotland has significantly more tax-collecting jobs relative to the UK as a whole. Is there any reason to imagine that an independent Scottish state would need those surplus tax-collecting jobs relative to the size of the UK tax-collecting system? It seems to me that it is hard to imagine why that would be the case. The jobs dividend in Scotland regarding HMRC posts does not reflect different Scottish conditions regarding tax collection, but simply historical decisions and the excellent work undertaken by the Scottish tax office staff.
I have also heard it said by those who might accept in a conversation the arithmetical facts around the number of Scottish HMRC jobs—perhaps by the hon. Gentleman and certainly by others—that there will be no compulsory redundancies, and of course new civil service posts will be needed in a separate Scottish state, the implication being that surplus tax-collecting staff would be transferred to those posts. As the hon. Gentleman said, the SNP Government have given a promise that there will be no compulsory public sector redundancies, but is that promise from Alex Salmond worth the paper it is written on? It is easy to promise something, as things stand, when it looks, as things stand further, as though that promise will never be tested, but let us think a little more about the state, the structure of the Scottish economy and the civil service and public sector jobs therein.
Scotland does not have a small public sector. Our public sector is significant— bigger than that of the UK as a whole. I was glancing through the Scottish Government’s most recent statistics, and they clearly show that Scotland has more public sector jobs and significantly more tax-related public sector jobs than the UK as a whole. I welcome that—it is a credit to the staff and their professionalism—but it suggests that the slack to absorb surplus tax-collection posts in a separate Scottish state will be hard to identify. I say that based on the arithmetical facts, but also as a judgment about the relative size of Scotland’s public sector. Indeed, if we add to that the difficulties that Scotland would inevitably face as it transitioned into an entirely distinct and separate state, as the Institute for Fiscal Studies and other independent experts have observed, one has to question, with some substance and credibility, what that would mean for those tax-collecting jobs in Scotland, and particularly in the largest tax office in the UK in Cumbernauld.
It is my judgment, based on those arithmetical facts, that defending existing public sector provision, not increasing the size of the public sector, is likely to be the reality faced by my constituents working for HMRC in Cumbernauld. In the end, the argument about what happens when we have a substantial surplus of tax-collecting jobs is about whether those posts can be absorbed in the wider Scottish public sector. That is a fundamental question in the referendum debate. There are facts, as I have set them out. There are also judgments, and the hon. Member for Perth and North Perthshire (Pete Wishart) takes a different view, but it is surely incumbent on all of us to give the Scottish people all the facts as they bear on the debate and to let them draw their own conclusions.
The role that HMRC plays is important for my constituency and for Scotland. The next Labour Government are committed to tackling the tax gap. It looks as though in the last financial year the tax gap widened again, despite the Government’s efforts to close it. In my judgment, closing that tax gap will not be achieved without using the professionalism and experience of Scottish HMRC staff.
I am not suggesting that this is the only issue we face in the debate before 18 September—not at all—but for constituents of mine who either work in the tax office or who have friends and family who work there, the issues need to be put on the record and the facts displayed; then a judgment can be made by the people of Scotland.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
As my hon. Friend knows, I share a very small part of Cumbernauld with him, and I know he is speaking for the people of the constituency. Does he agree that the problems he has identified, which are very clear, bring into focus the fact that in East Kilbride we have the headquarters of the Department for International Development, and there is no way that that can be sustained by a population reduced to 8.4% of the previous total?
Gregg McClymont
I thank my right hon. Friend for that typically wise intervention. Those are significant issues, and I think that it is incumbent on us all to put the facts on the table as Scotland approaches the decision it must make on 18 September. The role Scotland plays in an integrated United Kingdom, through DFID, HMRC and other public institutions, must be weighed, balanced and measured in that debate. I thank him again for his sagacious intervention.
Finally, I want to ask the Minister a couple of questions. I was delighted by the recent news that up to 170 new permanent posts are to be filled at HMRC Cumbernauld. Can he update the House on where HMRC is in that process? At the same time, around 40 jobs are threatened in the regional post room in HMRC Cumbernauld, and a decision will not be made until the autumn. I hope that he will agree that for the staff working there, that uncertainty is unwelcome. I seek further clarity from him on those questions.
On that note, I thank the House for the opportunity to put on the record some of the arithmetic on the role of Scotland and my constituency in HMRC, and to make a plea for these issues to be discussed in a spirit of constructive debate and starting from the basis of facts.
Autumn Statement
Tom Clarke Excerpts(10 years, 5 months ago)
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Mr Osborne
I agree with my hon. Friend. She represents one of the greatest universities in the world. I met yesterday a professor of physics from Oxford university, Professor Walmsley, and he was very welcoming of the additional investment we are putting into quantum technology—£270 million in the coming years. It is cutting-edge technology and Oxford is a leader in it. I agree that we need to make sure that kids come out of our schools with the science and maths to take the undergraduate places that turn into the graduate research fellowships and the like. The school reforms being pursued by the Government are the best guarantee of that happening.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Is the Chancellor aware that the people I represent will have noticed that in his litany of constituency references, he did not include Coatbridge, Chryston and Bellshill? Could that be because he is ashamed to admit that though he says the economy is doing well, he did not take the opportunity to get rid of the hated bedroom tax, or could it be because he did not lay a finger on the excessive profits of energy companies while people are dying of hypothermia?
Mr Osborne
The people of the right hon. Gentleman’s constituency and across the country have of course been hit hard by the collapse in the economy in 2008-09 and we have had to take difficult decisions to recover our economy—[Interruption.] I am told by a colleague that unemployment in the right hon. Gentleman’s constituency has fallen by 15% in the last 12 months, and that points to the central argument we are making today—if we create jobs and give people opportunities to work, we can improve their standard of living. The only way we can create jobs is if we have economic stability and we control public budgets, including the welfare budget. That requires difficult decisions. If we duck all the difficult decisions, as the last Government did, it is an absolute disaster for the people he represents.
Economic Growth
Tom Clarke Excerpts(11 years ago)
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Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
As always, I listened carefully to the Queen’s Speech with the intention of examining how the new measures would affect my constituents. I was also looking for measures that would ease the strain on the families in my constituency who are worried about unemployment and the rising cost of living. I was sadly and expectedly disappointed.
Before listing my concerns, I will place on the record a couple of observations on how we got into the deep economic difficulty that is causing desperate hardship for many families in my constituency. The fundamental error of this stagnant coalition Government was to assume that they could clear the deficit in four years. Their plan was to use the final year in office to hand out sweeteners to the electorate, who would be so overwhelmingly grateful that they would elect a Conservative majority.
Dealing with the deficit is the defining issue facing this country. However, that should never have been conditional on or linked to the outcome of the next election. That was a political fix that was destined to fail. Everybody could see that it was politically too far-fetched, except for the opportunistic Liberal Democrats who disregarded their electoral mandate and traded their principles for government office.
The UK economy is 9% smaller today than was expected when this stagnant Government took over. In 2009-10, the deficit was £159 billion. It is now forecast to be down to £121 billion. However, the public debt overall is rising from £795.5 billion to a predicted £1.1 trillion.
On any reasonable analysis of our economic situation, two significant themes scream out loud and clear. The first is the continual anaemic economic performance and the second is our ability to pay off the debt, which is becoming increasingly strained as a consequence of the first point. While those two heads travel in opposite directions, our economy will never recover. The policies simply have to change. It is time that this stagnant Government chose to put the national interest first and their party political interests second.
Ordinary hard-working people and their families are struggling. Rents and mortgages have to be paid, as do ever-increasing energy and water bills. Families who spent £600 a month to cover those costs in 2005 now spend more than £800 a month. We have record fuel prices and record amounts of people in fuel poverty. We have 1 million young people out of work and left behind. Lending to businesses is continuing to fall. We have soaring unemployment. We have a Chancellor who has to borrow £245 billion more than he planned, who has failed his own economic test of retaining our triple A credit rating and who, over the course of this Parliament, will have delivered growth of a mere 1.7%. Ordinary working people are paying the price of this out-of-touch Government’s economic stagnation.
Mr Jim Cunningham
Does my right hon. Friend agree that one of the methods that the Government are using to make ordinary people pay for their incompetence is the bedroom tax?
Mr Clarke
My hon. Friend raises a very important point. While we witness the introduction of the second home subsidy, the effects of the bedroom tax are being seen in my constituency, where an estimated 2,128 individuals will be affected, two-thirds of whom are believed to have disabilities. Citizens Advice Scotland has revealed that nearly 800 victims of the welfare axe are desperately seeking its support. Welfare recipients are an easy target, but we should not point the finger too quickly because no job is safe in this economy.
To get our economy moving again, we need investment—investment for jobs, investment for the future and investment in the ordinary hard-working people of our country. We have been treated to a more-of-the-same economic plan, with no change on anything of importance. The Government are cutting taxes for millionaires while cutting support for our economy. Led by the Prime Minister and the Chancellor, this stagnant Cabinet of out-of-touch, upper-class millionaires has run out of ideas and run out of steam, while our country is running out of time. What a way to run Britain.
Finance (No. 2) Bill
Tom Clarke Excerpts(11 years, 1 month ago)
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Chris Leslie
This first group of new clauses to this year’s Finance (No. 2) Bill relates broadly to issues of housing policy. Sadly, new clause 6, which urged the Chancellor to focus on the availability of affordable housing particularly in the wake of the bedroom tax, has not been selected for debate. My hon. Friends will be delighted to know, however, that new clause 5 seeks the support of Parliament for a review of a mansion tax on properties worth over £2 million and the earmarking of revenues for a tax cut for low and middle-income households.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
My hon. Friend has just referred to the bedroom tax, and we all know that this has huge implications for the future finance of our country. Does he think that those implications are reflected in the Bill?
The Chairman of Ways and Means
Order. Much as that issue might be in Members’ minds, we are unfortunately not going to discuss it. I allowed a little bit of sailing earlier in the opening comments, but we must now deal with what is on the Order Paper.
Air Passenger Duty
Tom Clarke Excerpts(11 years, 6 months ago)
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Priti Patel (Witham) (Con)
I beg to move,
That this House believes that the UK’s air passenger duty acts as a barrier to economic growth and deters both inward investment and inbound tourism; notes the financial impact on families of the rising costs of air passenger duty; further notes the impact on British businesses wishing to export and take advantage of business opportunities overseas; notes that the current air passenger duty regime is the highest air passenger tax in the world, which makes the UK less competitive than countries with lower aviation taxes; further notes that over 200,000 members of the public are calling for a review of the economic impact of air passenger duty; calls on HM Treasury to commission a comprehensive study into the full economic impact of air passenger duty in the UK, including the effects on jobs and growth, reporting in advance of the 2013 Budget; and calls on the Government to use the evidence from the study to inform future policy-making.
I am grateful to members of the Backbench Business Committee for granting this timely debate in advance of the autumn statement next month, and I pay tribute to the outstanding efforts made by the fair tax on flying campaign in securing the support of more than 200,000 members of the public who have lobbied right hon. and hon. Members on the matter. The campaign has given families and businesses across the country a strong voice to express their opposition to air passenger duty.
I also pay tribute to colleagues on both sides of the House who have supported the call for this debate, including my hon. Friend the Member for Crawley (Henry Smith) and the hon. Member for Blackley and Broughton (Graham Stringer), whose early-day motion influenced the wording of the motion. In addition, as part of its recent inquiry into the matter, the all-party aviation group, chaired by the hon. Member for Central Ayrshire (Mr Donohoe), has produced compelling evidence in support of an economic review into air passenger duty.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Of late, I have received more representations on this issue than on any other. It is important that the hon. Lady has been able to raise this issue, and she can count on considerable support.
Priti Patel
I thank the right hon. Gentleman for his remarks. All hon. Members feel very strongly about the representations we have received. The purpose of the debate is to give the issue of APD a thorough airing and to make those representations to my hon. Friend the Minister.
The motion calls on the Treasury to respond to the concerns of 200,000 members of the public and business representatives about the air passenger duty system. It specifically calls on the Treasury to conduct a comprehensive study of the system’s full economic impact and urges the Government to use the evidence gathered from the study to inform future policy making on aviation taxes.
The evidence that I have seen, the views of families and businesses in my constituency, and views from the aviation sector, suggest it is time that the Government considered aviation taxes.
Paul Goggins (Wythenshawe and Sale East) (Lab)
I congratulate the hon. Member for Witham (Priti Patel) on securing the debate and leading it as ably as she has this afternoon. She described how APD, from relatively modest beginnings, has become a real monster because of the economic problems that it creates and the burdens that it places on the aviation industry and our constituents when they seek to take a holiday. This is a tax on holidays. It is also a tax on the aviation industry and, as the hon. Lady argued so effectively, it is a barrier to economic growth.
Mr Tom Clarke
Like me, my right hon. Friend is a former Minister; in my case, I was a Minister for tourism. Is he worried by the representations we have received that indicate that APD at the current level—the highest in the world—is a disincentive for the kind of tourism that we expected after the Olympic games, the Paralympics and other events?
Paul Goggins
My right hon. Friend was a very able Minister for tourism and he did a superb job. He is right: APD is a tax on our constituents who seek to go on holiday, but it is also a tax on those who want to come here to enjoy the wonderful countryside and the great features of our society, with the associated benefit to our economy.
The APD, as hon. Members know, is the highest in Europe. Denmark, Norway and Holland have scrapped it. Ireland, as my hon. Friend the Member for Belfast East (Naomi Long) pointed out, has all but scrapped it—it intends to do so in the near future.
As the hon. Member for Witham argued, we have to look at this in terms of the wider economy. I wish to look at it particularly from the perspective of the Manchester city region, and it is good to see the hon. Member for Altrincham and Sale West (Mr Brady) in his place. I know that he has a great commitment to Manchester airport. I also see my hon. Friend the Member for Blackley and Broughton (Graham Stringer), who is a former chairman of the airport. It now serves more than 200 destinations, has 24 million passengers a year, and employs 19,000 people on the site, with many thousands more provided in the wider economy. It is estimated to bring in around £3 billion to the UK economy as a whole.
One of my principal concerns, which I have already mentioned, is that APD is a tax on our constituents. Let us reflect on that for a second. Hard-working families already paying tax on their hard-earned incomes have to pay tax again if they want to take their children on holiday. We ought to think about that. In particular, let us consider the economic problems that APD creates. There is clear evidence that airlines are not coming to Manchester airport because of APD. In particular, AirAsia X has dropped its plans for a route from Manchester to Kuala Lumpur and routed instead to Paris Orly. The airlines will go where the profits are greatest, and with those profits will go the jobs and all the additional economic value.
Oral Answers to Questions
Tom Clarke Excerpts(11 years, 8 months ago)
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Mr Osborne
As my hon. Friend knows better than pretty much anyone else in this House, we made a very firm commitment that we would not proceed with a third runway in this Parliament, but Howard Davies is now looking at all the options for airport capacity in the south-east. This issue has evaded Governments of all political colours for the past 30 years, and it is time that we tried to achieve some cross-party consensus, because I am absolutely clear—[Interruption.] If the Labour party was so good at building airports, where are they? Where are these additional airports that it built? The truth is that the south-east of England needs additional airport capacity. The question is where we place it and I think that Howard Davies is the right man to advise us all.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
4. What recent estimate he has made of the effect on pensioners of plans to end age-related tax allowances.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The impacts of the reforms to age-related allowances were set out alongside Budget 2012. Half of those over the age of 65 pay no income tax, and nobody will pay more tax in 2013-14 than in 2012-13 as a result of these changes. The Government remain committed to supporting pensioners and have introduced the triple guarantee for the basic state pension, ensuring that it will increase each and every year by the highest of earnings, prices or 2.5%.
Mr Gauke
The right hon. Gentleman will be aware that the policy announcements in the last Budget resulted in millionaires paying more in tax, not less. As far as this Government’s record on pensioners is concerned, let us not forget that the state pension is going up by £120 more compared with the Opposition party’s plans.
Mr George Osborne
My hon. Friend is right. It is precisely because we have taken difficult decisions—for example, to cut £18 billion from the welfare budget—that we are able to invest in rail and road improvements that will help to create jobs in Lancashire and across the north-west. The northern hub is a project that has been talked about for many years, but it is under this coalition Government that it is being delivered.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
May I specifically ask the Chancellor whether, notwithstanding the recent reshuffle, the Government are still committed to achieving 0.7% GNI for overseas aid? If so, when can we expect the Bill?
Mr Osborne
The short answer is yes, we are. It is not about legislation; it is about delivering the money. [Interruption.] Labour Members say “Ah”, but we can legislate as much as we like; the question is whether we are prepared to take the difficult decisions to deliver the money. [Interruption.] They say they do not trust us, but this is the Government who will deliver the 0.7% aid commitment that all parties signed up to.
IMF
Tom Clarke Excerpts(12 years ago)
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Mr Osborne
I absolutely believe that eurozone countries need structural reforms. This country needs structural reforms. The things that we have proposed to Parliament on welfare, education, planning and the like, are all part of reforms to make our country more competitive. We have not been talking about our economy here, but we came into government with the highest budget deficit of the lot and some real competitiveness problems. On mutualised debt, over a year ago, I said that I thought that the logic led the eurozone towards euro bonds. I have put that on the record, but ultimately that is a decision for the eurozone.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
The Chancellor is now in a position to tell us whether he intends to honour his commitment of 0.7% gross national income for overseas aid by 2013. When can we expect the legislation, which I understand is now sitting on the desk of the Secretary of State for International Development?
Mr Speaker
Order. I am sure that the Chancellor will relate the answer to the IMF, to which I feel sure the right hon. Gentleman was seeking indirectly, and without saying so, to relate the matter.
Amendment of the Law
Tom Clarke Excerpts(12 years, 1 month ago)
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Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
May I follow up the very important point that my hon. Friend made about the reduction of £12 billion in welfare? Does he recall that last week when we had the debate on women’s rights in Westminster Hall a number of our friends from Northern Ireland outlined just how serious that problem was? Does he think they will be in receipt of cuts as well?
Mark Durkan
Absolutely; that is the fear that we must have. The Chancellor has put forth the signal that such cuts would be needed and would have to be factored into the next spending review. Although this House has discharged its duties on the Welfare Reform Bill, we must ask what the changes will be. Contrary to what the Chancellor has said about support for families, the Government's direction of travel in everything they do is putting more of a squeeze on families—both low-income families on benefits and middle-income families given the pressures that they are facing.
The Chancellor also used the Budget to frame questions about moving towards regional pay in the public sector. Speaking from the Opposition Benches, I want to say straightforwardly that I know that he is not the first Chancellor to toy with the idea of regional pay and tinkering with the framework. I have heard that from previous Chancellors and Prime Ministers, so I am not in denial. I was as opposed to it then as I am now. I was intrigued to hear the Chancellor say that he had submitted evidence to the independent pay review body, so I went to the Library to see what that evidence was and I have the “Dear pay review body chair” letter from the Chancellor. Some 11 pages of evidence were submitted. I am not saying that it is dodgy dossier stuff, but in the material that it sources it really is dubious dossier stuff. It shorthands academic studies, possibly doing a disservice to the academics who completed them, in saying that the evidence suggests that the quality of public services would directly benefit if public sector pay became more responsive to local labour markets. It claims that one study
“found that over one quarter of hospital targets were negatively associated with the public/private wage differential.”
It said that another study
“found that a 10 per cent increase in wages outside of the nursing sector was associated with a 7.4 percent increase in mortality rates from heart attacks.”
When that is the quality of evidence that the Government are submitting to the pay review body, we need to examine it further.
Mr Russell Brown (Dumfries and Galloway) (Lab)
The Chancellor’s Budget statement yesterday was for the entire country, but for so many individuals, households and communities, it will result in many different outcomes. I want to concentrate on the impact that it will have on my constituency and the Dumfries and Galloway region as a whole. Yesterday, local people were looking for indications of potential growth in the economy and potential creation of jobs.
In the past 20 months unemployment in my constituency has risen month after month. It is a sad reflection that youth unemployment is at its highest level since 1996. Dumfries and Galloway is a rural constituency, which means that the two largest employers are the national health service and the local council. The shedding of jobs in those two specific areas has now been going on for four years, and for those who think that everything north of the border is fine under a Scottish National party Government, let me tell them that that is four years of cuts in the public sector. Yet the block grant that we all talk about—that Barnett formula, the Barnett consequentials—has been reduced only in the financial year that is about to come to an end. So there has been a lot of pain in Scotland that sometimes people do not read about in the wider UK press. The pain of loss of income spreads into the local economy. It spreads on to the high street. I regret to say that some of the pressure on households in my constituency is down to the fact that it is very much a low wage economy.
So the Budget statement cannot be taken in isolation, although that is what we are here to discuss today. We need to look at what has happened and what is about to happen. My hon. Friend the Member for Foyle (Mark Durkan) said that the welfare cuts would have an impact. That is happening at the moment. Let no one be under any illusion that only the current coalition Government have introduced welfare cuts and reforms. Our Government did on three occasions. They were trying to make those adjustments that said to people, “Work does pay. There is an opportunity there, despite any disability that you have. There is help and support to get you back into the workplace, perhaps not doing what you did in the past but it is there if you wish to seize the opportunity.” The big challenge will be in the next two weeks when so many households lose working tax credits. With the reductions in service provision through the voluntary sector that my local area has experienced, with welfare rights budgets being cut and with Citizens Advice services being cut, I am finding that more and more constituents are coming to my office for help and support.
Let me give the entire House a warning: colleagues had better batten down the hatches, because they are about to be inundated with households that are about to lose their working tax credit. The increase in tax allowance announced yesterday, which will mean £2 or £3 a week, will make not one iota of difference to households that will potentially lose £50, £60 or £70 a week. In no way whatsoever can the increase compensate for that.
The other point is that people will need to move from working 16 hours a week to 24 hours in order to avoid losing their tax credit. How on earth will that happen when people have voluntarily reduced their working hours over the past couple of years just to hold on to their jobs? Unfortunately, many of those people will be unable to keep a hold of their tax credit.
The granny tax grab, as it has been described today in the press, the changes to the age-related personal allowance, which when introduced took 680,000 pensioners out of tax altogether, is being done at the wrong time, if indeed it has to be done at all, with low interest rates and maturing annuities not delivering what people had expected.
In a rural locality fuel prices are vital, so I want to ask the Minister what has happened to the fair fuel stabiliser. FairFuelUK expected more from the coalition Government, who need to be honest about what has gone wrong. We were all inundated with e-mails from constituents about the report commissioned by FairFuelUK. I asked the Economic Secretary last week—she did not leak anything to me—what she and her officials thought of the report, but she said that she could not speak to me about it because the Budget was just a few days away. I would like to hear what Treasury Ministers and officials make of the report, because I have doubts about a 2.5p reduction in fuel duty creating 175,000 jobs; it verges on some sort of economic fantasy.
I would have loved to have seen, as I am sure would most of my constituents, an announcement yesterday of a temporary reversal in the VAT rise, because £450 extra for families would have been of real benefit to them and it would also have helped motorists. I am, and always have been, totally opposed to any kind of regional variations in these matters. I sat on the Committee that introduced the national minimum wage back in 1998 and—the Secretary of State for Business, Innovation and Skills is no longer in the Chamber—even then there were Liberal Democrat Members who wanted regional variations in the national minimum wage. It is not acceptable.
Mr Tom Clarke
Does my hon. Friend recall that the hospitality and tourism industries, which I know are very important in his constituency, were warned that the national minimum wage would cost them jobs, and does he agree that the opposite was the case?
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
The hon. Member for East Surrey (Mr Gyimah) might be persuaded that plan A is working but I can tell him that, even if it is working in his constituency and the rest of Surrey, it certainly is not working in Scotland. I hope to demonstrate that in my remarks. The truth of the matter is that we appear to be living, even in this Chamber, in two different worlds. Let us ignore the fact that, despite all the efforts of the Government and all the leaks that we debated earlier, we face a Budget that represents the reality of what the coalition means. This Government and this Budget will be remembered for cutting the top rate of tax for the rich while putting the boot into pensioners. I have already spoken to a number of my constituents and I have absolutely no doubt that that is their view.
It might seem odd for me to refer to a Foreign Secretary during a Budget speech, but some hon. Members might recall that some years ago a young representative at the Conservative party conference—a 16-year-old by the name of William Hague—addressed the conference, saying:
“Half of you won’t be here in 30 or 40 years”.
That may well be true, but what are we seeing in the Budget for the half who are left? While £30,000 a year is freely given to millionaires, the Chancellor is seeking to end age-related tax allowances, despite the evidence from HMRC, which says that 4.4 million pensioners will be £83 a year worse off in the long term. How can anyone defend that and give us the kind of nonsense we have heard about the so-called class war?
Let me address the real economy in our constituencies, which I believe the Chancellor had a wonderful opportunity to address but missed. Unemployment is by far the biggest problem we are now facing, certainly in constituencies such as mine where there has been a 54% rise in long- term unemployment and an 80% increase in youth unemployment. A league table of every constituency in Britain was produced last week, relating alcohol abuse to mortality, and it is with great regret that I have to say that my constituency came out as No. 1. Almost every professional who was consulted on those figures made the point that we cannot ignore poverty and its implications; we cannot ignore unemployment and what it means; we cannot say to young people that there are no jobs for them, whatever educational qualifications they might have attained, and not expect the kind of reaction that I have just described. Nearly a quarter of 16 to 24-year-olds in the UK are unemployed. That is a wholly unacceptable statistic and I make the point that we are talking not just about statistics but about people.
We can see from the unemployment figures that are available that in the UK there was a 22,000 increase in unemployment among women in the last quarter alone. I am seeing that in my constituency. Women are the bedrock of our society, as we are rightly told. They are at the heart of our families, whom the Government in earlier days told us were one of their priorities. Well, there is little evidence for that.
We need to restore the future jobs fund—initiative after initiative has been annulled by this Government—and we need to look at new opportunities in fresh sunrise industries, which I am happy to say exist in my constituency, particularly in solar energy. I welcomed what my hon. Friend the Member for Ellesmere Port and Neston (Andrew Miller) said a few moments ago, but I did not welcome the Government’s change to feed-in tariffs, which is frankly too deep and too fast. Home owners who seek to go along with developments in this sector now face soaring energy costs, and burgeoning industries such as AVC Sky in my constituency face enormous difficulties, which is bad for home owners, bad for jobs and bad for growth. The Government’s rhetoric is simply not matched by their actions, especially when the Government tell us that they are the greenest Government ever.
Mr Deputy Speaker—I beg your pardon, Mr Speaker; I welcome you to the Chair. We saw at points during the Budget speech yesterday Liberal Democrat Members waving their Order Papers. Were they waving them at the kind of measures that I describe?
Lorely Burt
We were waving our Order Papers with delight at the fact that our coalition Government are bringing the tax threshold towards our £10,000 target faster than we could ever have hoped.
Mr Clarke
They were waving their Order Papers at some of the most miserable measures that I have heard in the House. They reminded me of Jim Callaghan’s comment when he found that the Scottish National party—which is not even represented here today—was working with Mrs Thatcher to bring down his Government. He referred to SNP Members as “Turkeys voting for an early Christmas”, and deservedly in their case.
I wrote to the Prime Minister recently to draw his attention to the fact that Korean shipbuilders are given preferred bidder status for Royal Navy tankers, with almost £500 million involved. It simply cannot be right that, as we defend our country, as we should, defence orders exclude British and especially Scottish firms that are willing, able and skilled enough to respond to the task. I want to ensure that highly skilled workers are kept working for our nation’s security and for our people’s safety.
I finish with a reference to the Chancellor’s announcement of a £12 billion cut in welfare—a shameful figure that the Liberal Democrats were also cheering. That is added to the Remploy closures, which have never been fully explained. Hundreds of disabled people will be thrown straight on the dole. Two thirds of Remploy factories will close. We are seeing on top of that changes in benefits that are very much to the disadvantage of people with disabilities and their carers and families. We are seeing disadvantages even to disabled children and their families. It is not fair, not acceptable, and the Government deserve to be rejected and hounded by the British people.
Kate Green
My hon. Friend does indeed anticipate my first point. Although there is of course an attraction in lifting more people at the bottom of the wage spectrum out of tax, it makes little sense to introduce a measure that still favours more men than women when women have already lost out under previous Budgets and spending announcements.
Mr Tom Clarke
On that point, which I dealt with briefly in my speech, is it not a great worry that female unemployment has risen by 22,000 in the past year, adding to the problems that were already there?
Kate Green
It is of deep concern to me, as I am sure it is to you, Madam Deputy Speaker, that female unemployment is now the highest it has been in a quarter of a century and that it was female unemployment that rose most rapidly in the last quarter, considerably outstripping what is happening to men.
I find it difficult to understand the fairness or logic of introducing a higher tax threshold that lifts some low-paid workers out of tax while at the same time disincentivising many other low-paid workers who are seeing their tax credits frozen or lost altogether if they cannot reach sufficient hours, to the extent that work will become hardly worthwhile for them at all. I cannot see the logic of the Government telling pensioners that on the one hand they will give to them through the triple lock, which I welcome, but with the other hand they will take away from them by raising the threshold and bringing 230,000 of them into tax, while at the same time trying to take people in low-paid work out of tax.
I am struggling to understand how a Government who said that they wanted to be fair and to operate a system that was simple can have arrived at the decision they reached on child benefit, according to which a couple with an income just short of £100,000 will be able to keep all their child benefit but another couple where only one member of the household has an income, but it is in excess of £50,000, will not. How can that be fair? How can a system be simple when it starts to claw back at the rate of 1% for every £100? How will people know where they stand in relation to their child benefit entitlement, and where is the incentive to work more and earn more in such a context?
I am struggling to understand why a Government who want to be progressive, who say that that is their reason for moving away from universal child benefit, which I hugely regret—I want to put on record that I absolutely stand by universal child benefit—and who say that they think there needs to be more progressivity, as they see it, in the way they administer child benefit, then introduce less progressivity in income tax by cutting the top rate from 50p to 45p when, as the OBR has said, there is considerable uncertainty that such a measure will deliver the tax receipts that the Government seem to believe will be brought into the Exchequer. With respect, I think that the Chancellor was a little over-optimistic in his analysis of the OBR’s comments on the likely efficacy of that measure, and it is also unclear to business commentators that the measure will be good for our economy.
Let us be clear that our corporation tax, even before this Government took office, was by no means among the highest in the developed world. I am interested in how a Government who make great play of seeing small businesses as the future of increasing employment, who want to reduce corporation tax, who are on a downward trajectory in relation to it and who want to enable small businesses to employ more workers have failed to notice that the very smallest businesses are completely unaffected by the cut in corporation tax because they already have a tax rate of only 20%. What are the Government doing to support those businesses when what they would really like is effective measures on employers’ national insurance contributions, something that again the Government have managed to address only in a most limited way?
Sheila Gilmore
It definitely does.
Of course, that may not have been what people were cheering. They may have been cheering in relief at not having to do tiresome tax avoidance planning all the time. If the HMRC’s calculations are correct, high-paid employees are a bit like highway robbers who are holding a musket up to the rest of us and saying, “If you tax us, we are going to take our ball away and not play any more.”
Mr Tom Clarke
Is my hon. Friend as concerned as I am that the Government seem to pay little attention to HMRC’s informed views?
Sheila Gilmore
Clearly, the Government see tax planning as a perfectly rational and sensible reaction to tax changes. However, if a working couple who are about to lose £3,000 in tax credits make a sensible and rational decision to stop work because that will make them better off, will they be seen as merely making a sensible and rational decision, or will they be seen as lazy, as scroungers, and as people who prefer to watch daytime television than hold down a job? If they make that decision, which is rational for them, the outcome will be wholly irrational for the Government, because it will cost the Government more if that family stop work.
I have still not had a satisfactory response from the Government to a question I asked in an earlier intervention. I also asked it of the Deputy Prime Minister earlier this week, because he is fond of telling us that Government can do two things at once. Why can we not retain the 50p tax rate and deal with tax avoidance? Apparently, in the previous year, when people were expecting more tax, they brought their income forward, so presumably this year, knowing that the measure has only a year to run, they will be able to put their income back to the following year so that they do not have to pay more. If we know that such things are happening, why are we unable to find a means of stopping it? Perhaps people’s incomes should be looked at over two or three years to ensure that they cannot engage in these blatant tax avoidance games, which many people on lower incomes cannot do.
When we had the discussions some months ago about bankers’ bonuses and executive pay, the Secretary of State for Business, Innovation and Skills told us, “Well, these people are paying 50% tax.” Either they are paying it or they are not. One moment we are told that we do not need to bother doing more about bonuses and high pay because the tax rate is dealing with it and the next we are told, “It’s not bringing anything in, so we shouldn’t bother.” There is a lot of smoke and mirrors.
It is clear from the Red Book and it is even clear from the Daily Mail—I am hardly a friend of that paper—that the Exchequer plans to forgo £3 billion in making this change to the tax rate. It hopes to get that back through people willingly paying more tax in various ways and through the relatively small amount that is expected from the changes in stamp duty.
Since May 2010, we have been told regularly by the Government that the way to achieve economic growth is to cut the public sector, which has been stifling the private sector, and then the private sector will spring to life and replace the jobs that are lost. Two years on, we are still asking where those jobs are. Yesterday at Prime Minister’s questions, the Prime Minister told us yet again how good it is that so many private sector jobs have been created. The figure that he used was 600,000, which was repeated a few minutes ago by the hon. Member for Mid Norfolk (George Freeman).
More than a year ago, we were told that 500,000 jobs had been created since the election. Many commentators have made it clear that most of those jobs were created in the first six months of the financial year that started in 2010, and that the likeliest cause for their creation was the previous Government’s economic stimulus. The Government cannot keep recycling the figures. The number of times that the Prime Minister has talked about those 500,000 jobs is incredible. I accept that it has gone up slightly and he is now talking about 600,000 jobs. He should get a prize for recycling, even if he does not get a prize for job creation. If those jobs were created as a result of the economic stimulus, the Government should look again at whether they should continue to rule out such a stimulus.
Do we even know that those private sector jobs are completely new jobs? In my city, there has been a lot of outsourcing and people have moved positions through tendering processes. For example, 2,000 care workers in Edinburgh will now be in the private sector because of the decisions that the council has taken. No doubt those jobs will move from the public sector side of the equation to the private sector side, but they are not new jobs that are driving economic growth. Once again, this is smoke and mirrors and there is no economic growth. That is the important point. If we do not get jobs and growth, we will not get out of the recession.
The Economy
Tom Clarke Excerpts(12 years, 5 months ago)
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Mr Alistair Darling (Edinburgh South West) (Lab)
I hope that the hon. Member for Skipton and Ripon (Julian Smith) will forgive me for not following him, given the short time I have available.
The real problem we face in this country, in Europe and, to a large extent, in America too, is the lack of growth. The Chancellor opened his remarks by saying that the previous Government had been too optimistic about some of their forecasts. He gave—how shall I put it?—a somewhat incomplete précis of my book. In that connection, I refer the House to my entry in the Register of Members’ Financial Interests. Surely the Chancellor would accept that forecasting is extremely difficult at a time like this. Perhaps when he goes back to No. 11 at night, he will reflect on the fact that he was wildly optimistic about both growth and borrowing. I do not imagine for one minute that he expected to be standing up a week ago to announce that he was borrowing £158 billion more than he thought he would be borrowing in the summer of last year. The reason for that, substantially, is that we have less growth, with fewer people paying tax, more people dependent on benefits and, as the Office for Budget Responsibility set out, incomes being squeezed.
All that was perfectly foreseeable. Many people—Labour Members and many others—said that this would happen. The problem was not just the rate at which public expenditure was being cut, but the fact that the mood music that the Government deliberately set out to orchestrate last year was that everything was full of gloom and doom, so it is not surprising that businesses did not invest and that individuals decided to hold back on their expenditure. That is precisely what is happening in this country and in Europe, to which I shall return shortly. All this was foreseeable.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Following on from my right hon. Friend’s point about cuts, is he particularly worried about the construction industry, not least because so many small businesses are dependent on it?
Mr Darling
I am, and I shall come on to that in a minute, but I want to make a further point. If the OBR comes out with another downward revision of its figures at the time of the Budget next March, does it mean that we are going to embark on yet another round of reducing expenditure? It this not the same sort of argument that we had in the 1930s? The prevailing orthodoxy did not work then, and it will not work now. My guess is that this argument is going to dominate politics and economics over the next few months—not just here, as I said, but in Europe.
My right hon. Friend mentioned the construction industry. I welcome some of the measures the Chancellor announced on infrastructure, but with this big caveat. First, if he looks at some of them, particularly the road announcements, he will see that they have been announced by successive Governments over many years. He will no doubt have been told by the Treasury that the problem with these big plans is the huge lag between the time they are announced and the time we see them. I remember opening the M6 expressway and a reporter said, “This must be a great triumph for the Labour Government.” I said, “Indeed, it was. Harold Wilson would have been absolutely delighted to see it built.” That illustrates the point.
Although this is not a transport debate, I am glad that the Government are looking at the issue of aviation, but they cannot escape from the consequences of the decision not to proceed with the expansion at Heathrow. I know this is no longer my party’s policy, but I believe that issue needs to be looked at again for the future prosperity of the country. The High Speed 2 line is no substitute for it.
The Chancellor has, of course, had to change course. He was very much against quantitative easing. When I introduced it, he said it was the last act of a desperate Government, but it now turns out that it is a jolly good thing and we can expect to get even more of it. I suspect we will need more as the economy slows down. As I said, he has also had to introduce the infrastructure projects to try to help—although not enough, in my view. I think he will have to do more, particularly about jobs for young people facing unemployment, which is going to be a real economic problem as well as a real social problem. Many of us here remember the lost generation in the 1980s. Many of those individuals never got over the experience of having no job when they left school, college or university. The Government are going to have to come back to this, no matter what the Chancellor says, because the outlook is such that the Government are going to have to at some stage accept that at a time like this only the Government can take the action necessary to stimulate the economy and restore confidence. That brings me to Europe.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
I have listened to this debate with interest. My experience is that the problems that my constituents bring forward for me to deal with are a reliable barometer of what is happening in our economy. At present my constituents are getting it tough—very tough. They are not alone. Earlier this month, The Guardian reported that half a million people will be forced off incapacity benefit. Additionally, child poverty, youth unemployment and fuel poverty have increased and are set to rise further. At the same time, fuel and food prices are rising to unprecedented levels.
Angela Smith
I wonder whether my right hon. Friend feels insulted that, given the seriousness of the debate, no Minister could be present on the Front Bench.
Mr Clarke
The Chancellor likes to hear himself, but I do not see him often when others are speaking.
We are entitled to be extremely worried given that over the past three months unemployment has reached its highest level in 17 years. There are now more women unemployed than at any time since 1988. All of this is a consequence of this Government’s austerity measures—and what improvement has there been as a result of the hardship?
Mr Bain
My right hon. Friend has been a champion of equality since being elected to this House in 1982. I wonder whether he has had an opportunity to consider the report issued by the Institute for Fiscal Studies this morning, which says that one of the biggest drivers of the lift in household incomes has been female employment. How does he believe the cuts announced by the Chancellor in the Budget and the autumn statement will contribute to living standards?
Mr Clarke
My hon. Friend, as usual, makes an interesting and relevant point. I hope to return to it later if time allows.
The Office for Budget Responsibility has forecast that growth will now be lower this year, and for every year until 2014. Unemployment will rise next year and be higher than previously forecast in every year until 2015. Consequently, Government borrowing, which we have heard so much about, is set to be £158 billion higher than was planned a year ago.
The coalition Government’s economic policy is simply not working. When Labour left office, the economy was growing. In the past 12 months, only Greece, Portugal and Cyprus have grown more slowly than Britain. That is not just because of the eurozone crisis. The British recovery was choked off more than a year ago. In the 12 months since the Government’s spending review the UK economy has grown, but by a mere 0.5%, while the EU has grown by an average of 1.4%. Their policy has starved us of growth.
Britain needs sensible public sector projects that will stimulate our economy, so that it is less dependent on a downward spiral of destructive cuts. Instead, the OBR forecasts more than 700,000 public sector job losses as a result of Government measures, and for anyone who remains, a ceiling of 1% is being put on pay rises for the two years following the spending review period.
Youth unemployment has exceeded the 1 million mark, and long-term unemployment among 18 to 24-year-olds is up by a shocking 83% since the start of 2011. What do the Government do in the face of that crisis? They scrap the future jobs fund and introduce three-year work placement subsidies, which will mean just over 53,000 funded jobs—a far smaller number than the 105,000 starts provided by the future jobs fund between October 2009 and March 2011. Those new placements are not even guaranteed. No wonder our young people feel cheated by society. That message certainly comes over to me in my constituency.
If we are not careful there will again be a lost generation of young people—just as there was in the ’80s, Mrs Thatcher’s time—which will lead to broken homes, broken relationships, dashed hopes and broken dreams. I would not for one second condone the riots that took place in England earlier this year, particularly as I am asking the House to reflect on what youth unemployment actually means. Indeed, I am pleased that they did not extend to Scotland. However, it would be naive in the extreme to think that we can continue with the figures and statistics that are a reality in Scotland and not expect young people to articulate their views.
We were first warned about these matters as long ago as during the war, when Sir William Beveridge wrote:
“If full employment is not won and kept, no liberties are secure, for to many they will not seem worth while.”
So what about the poor and people with disabilities? Since 2010 jobseeker’s allowance claimants have risen in the most deprived areas of my constituency—I underline the word “deprived”—from 26.3% to 28.1%, against a UK average of 3.9%. We are asking what the Government’s response will be, because that is a real problem. Additionally, Mencap has found that one in two families with a disabled child live in poverty. The Chancellor is playing with the lives of those people. As they teeter on the breadline, tax credits are being cut, Sure Start centres are closing at an alarming rate and the number of people able to claim disability benefit is being cut.
Jim McGovern
My right hon. Friend may be aware that last Friday, a Spanish wind turbine company called Gamesa abandoned its plans to locate in Dundee, my home city. It is a devastating blow for Dundee and means that a prospective 1,800 jobs will not be created. Does he agree that the UK Government and the Chancellor should work more closely with the devolved Administrations to ensure inward investment throughout the UK?
Mr Clarke
My hon. Friend makes an excellent point, with which I agree.
When it was promised that the coalition Government would protect the most vulnerable from the impact of spending cuts, what part of that commitment did the Chancellor not understand? Instead, the situation of those individuals will only worsen as the Government announce yet more and more cuts to make up for a lack of growth. It does not have to be that way. It should not and need not. The Government could change course and adopt Labour’s plans for jobs, to seek to grow the United Kingdom and take us out of debt. Our people deserve no less.