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I do agree with the hon. Lady, however, that the changes that the Government have suggested, such as increasing the child benefit rate for the oldest child and the proposed changes to housing and council tax benefit, are all good things and will make some difference. However, we should look at the overall background. The number of children in child poverty went up by 100,000 last year, so such changes will make nothing like the difference necessary to meet the target. Save the Children has done its figures and its spokesman on child poverty, Jason Strelitz, has made it clear that in its view, 450,000 children will still be in child poverty in 2010. Indeed, the Government’s own figures suggest that, so one cannot say that this target is likely to be met, but it is a very useful one to have, to
generate activity within the Government and press an important agenda. However, to say, “We’re pledging this and you’re aspiring to it,” is just a bit of party political nonsense.
Severe child poverty, on which Save the Children produced an extremely good report, is a key issue. Save the Children gave evidence to the Work and Pensions Committee on this issue and according to it, 1.3 million children are living in severe poverty, by which it means that they have less than 50 per cent. of the median income, and that particular necessities of life are not available to them. Severe poverty is increasing and has done so since 1997. Equally, there has been no improvement at all since 1997 for couples with a child living in poverty. So tackling severe poverty and the poverty of couples with a child is a great challenge.
Importantly, Save the Children pointed out that take-up of some of the most important benefits is very low. It said that the quids for kids scheme, which the Government ran last year, was an example of a take-up campaign that might make a difference. In considering child poverty, we should not just look at where the natural focus is because of the target—at nudging those who are just below the poverty line just above it, in order to meet a target. We should genuinely concentrate our efforts on the most deprived, where we do have a serious problem.
Social mobility is another very important issue that a number of speakers touched on. The Sutton Trust recently undertook two important studies, one of which looked at social mobility across the major developing countries. It showed that ours is one of the worst for social mobility, and that we are not providing really good opportunities for those in the bottom quartile to move up. The other study, which is quite interesting, looked at the social mobility of children born in 1958 and of those born in 1970. The 1970 group was far less socially mobile than the 1958 one, so we have lost ground on social mobility. Since 1979, no improvement has been made in social mobility during either Labour or Conservative years, and we must ask ourselves why.
Let me give an example of the scale of the task. About 38 per cent. of those whose parents were in the bottom quartile are still in that quartile when they hit 30 years of age. That is not a hopeless picture, because 62 per cent. of that next generation are moving up from the bottom quartile. The 38 per cent. who are not moving are an interesting group. We must examine why that group is not moving up generation on generation.
The Department for Work and Pensions has helpfully done some research examining the factors influencing social mobility. It found that education, which hon. Members from all parts of the House have mentioned, is an important factor influencing social mobility. If we examine what is happening in education in this country, we can see why there is a deprived group on local incomes and in poverty that does not do better in the next generation. I believe that the reason substantially relates to reading, writing and adding up—literacy and numeracy.
Each year, some 40,000 children leave school at 16 unable to read, write and add up properly—they are functionally illiterate. They could not write to their
bank to explain a change of address—that is what functional illiteracy is. It is good that the Government are trying to rescue some of those people. Some 300,000 young people in our country are functionally illiterate and innumerate, at a time when all the jobs are moving up a ladder of skills, and reports show that in a few years’ time there will be no jobs for people who do not have basic skills.
It is therefore right that the Government are putting money—£60 million in this Budget—into basic skills education, but that is not the answer because it merely rescues people whom the system has failed. The right hon. Member for North Tyneside (Mr. Byers) was saying how he would like secondary education to be improved. Obviously, improving education at any level is a good idea, but the real battle is still in the primary schools. By the time a child moves up from infants to junior school, they should have the rudiments of reading, writing and adding up. We must catch children at that point if they are not acquiring those skills and ensure that they do. The Government still need to make a strong effort at that point to get those young people reading and writing, so that when they reach secondary school they do not end up always bunking off or hiding at the back with their head down so that the teacher does not ask them a question.
Ms Keeble: Does the hon. Gentleman accept that in addition to the work on improving primary schools, educating adults is particularly important because they can help their children at school? An inspirational in-work scheme run by a bus company in Northampton has taken a woman from being a cleaner in that company to being a qualified social worker who has a university degree. That has been done in a short time through inspirational basic skills training.
Mr. Heald: I agree about rescuing people whom the system has failed. Councils run some very good schemes to give basic skills to some of the staff—the estates staff, the gardeners and so on—and there are many examples of people moving up the system as a result of such help. But in our society, the average reading age of those in prison is 11 and there is a very high incidence of bunking off school, truanting and persistent absence. I do not know whether the Minister is aware that the Government’s figures show that by year 11 some 60,000 children—11 per cent.—are persistently absent from school.
We have a serious problem with basic education. If we are to tackle the problems of social mobility, we need to tackle that. It would also help us with many social problems. For a Government who started out talking about “Education, education, education”, we are still a long way from succeeding on a vital issue. It is sad that synthetic phonics is not used more widely for teaching reading in schools to students who are struggling. I know that Ministers have said that synthetic phonics must always be part of the package, but it is used in special schools that teach reading to children with real barriers to learning, and much more could be done in that area.
My final point concerns disabled children. The Select Committee has heard recently that child care provision for disabled children is not very good. Places with the specialist provision that disabled children need are not
available, and the costs are not properly reflected in the benefit system. It is time that Ministers had another look at that. The report “The best start in life?” has an important section on the benefits and help needed for disabled children. Given that 11 per cent. of the children in poverty are disabled, tackling the particular difficulties that they face is obviously an important part of the task of Government in trying to meet their targets on child poverty.
On the Budget overall, I ask whether we will see inflation coming back into the system, and I worry that the Government’s response to that threat is increasing taxes. At the same time, we are still a long way from achieving our aims in alleviating deprivation and tackling child poverty.
4.21 pm
Mr. Charles Walker (Broxbourne) (Con): I am grateful for the opportunity to speak in this important debate. At the start of the debate, I was slightly glum, especially after the opening speech by the Secretary of State for Work and Pensions. He is actually a very nice and decent young man, and his Ã1/4ber-partisan tone let him down somewhat. However, my mood has been immeasurably improved over the past four hours by the quality of contributions from Members on both sides of the House. I shall endeavour not to lower the tone.
My mood has been improved further by being able to welcome the Financial Secretary back to the Front Bench. I know that she has been back on the Front Bench for nine months, but this is the first chance that I have had to congratulate her on her return after a short period of retirement on the Back Benches. Clearly they did not suit her as well as the Front Bench.
I wish to put on the record the fact that I love capitalism. It is a wonderful thing. It pays for many of the things that we enjoy as a wealthy society and take for granted. My one regret is that I was not very good at being a capitalist. I wish that I had been better at it and entered this place with a deal more money that I currently have—indeed, my wife wishes that even more than I do—but my lot is not a bad one. So I am a capitalist, red in tooth and claw. But in October last year, I was pleased and proud when our shadow Chancellor, my hon. Friend the Member for Tatton (Mr. Osborne), said that as a party we would levy a small and not unreasonable tax on those people who take advantage of non-domiciled status while they live in this country.
I was genuinely delighted that the Chancellor picked up the ball and ran with it on that issue. Over the intervening six months, I have been amazed by the media reaction to those proposals. Anyone reading our media, especially the broadsheets, would think that they were read only by the 120,000 non-doms who live here, such has been the outrage of journalists at those modest proposals. Indeed, one would think that journalists in this country spent most of their time on swanky yachts and in the posh houses of Holland Park with non-doms, so vociferously have they fought the cause of that tiny minority of people. It has been fascinating how the Evening Standard—a very good newspaper—has reported breathlessly that 10 American non-doms will leave this country. Some
120,000 non-doms live in this country, of whom only 8 per cent. stay for more than seven years. I am sure that every week hundreds of non-doms leave this country and hundreds more come in again.
I do not want to attack the noble profession of estate agents, which stands somewhere above the equally noble profession of being a Member of Parliament. Again, the Evening Standard reported that estate agents feared that the property market above £5 million might collapse because non-doms were going to leave the country. That might not be a bad thing. We need property prices to go down a bit so that people born and bred in this country have a chance to get on the property ladder. Indeed, it might mean that our home-grown millionaires would have a fighting chance to get that home in Holland Park. I do not want to attack the press; I am sure that no matter how much I attack them they will attack me far more effectively. I shall move on quickly.
As the Member of Parliament for Broxbourne, I am not overly interested in the fate of non-domiciled people living in this country. I am glad that they are here and I welcome the great contribution that they make to our economy, but I am paid to represent hard-working men and women who have the franchise to vote in this country. Indeed, I represent about 72,000 people. As a Member of Parliament in this great mother of Parliaments, I am more concerned about the 200,000 British citizens who leave this country every year than I am about the 1,000 or so non-doms who might leave when the tax changes come into force. I doubt that more than a handful will leave. The media scaremongering will prove to be just that.
I am worried about the low earners in this country and about the fact that as of 1 April, or 5 April, 5 million people will start to pay quite a bit more in income tax. I am concerned that people on tax credits are still suffering huge marginal rates of taxation. Some 2.5 million people still suffer marginal rates of taxation of more than 60 per cent. I hope that I am not being partisan in mentioning that point, because it was raised eloquently by a number of Labour Members who have spoken.
I am also worried about my middle-class voters. Many feel disfranchised and many, not only in my constituency but in constituencies such as that of the hon. Member for Ealing, North (Stephen Pound), are choosing to pack their bags and leave this country. I want to know why they are leaving; I am sure that everybody in the Chamber does. Is it because they do not feel safe in their communities any more? Do they feel that they cannot access good and proper education for their children? Do they feel that they are paying too much tax? Are they afraid of increased crime levels? I am not trying to be partisan, but we need to understand what motivates the people who leave this country and to start to address their concerns.
A recent Ernst and Young report found that the middle classes’ disposable income has fallen significantly since 2003. In 2003, after taxes and bills, they had 28 per cent. of their income left to spend on the things that they like to spend it on. That figure is now 22 per cent. They are feeling squeezed. Wherever we come from, we represent the middle classes as well as those who are higher up or lower down the income scale.
I do not want to be accused of soaking the rich, but we need a tax system that is not just perceived to be fair but really is fair. We cannot have a Marie Antoinette society—a “Let them eat cake” society where the rich few float above the rest of the population and the poor bloody infantry work day in, day out to make ends meet. I want taxes to be reduced—I really do—but I want to make sure that tax breaks are spread evenly across the income groups and not just focused on the very rich.
I believe in enlightened self-interest. As a moderately successful, middle-aged, middle-class man on a good income, I would like my tax burden reduced—Mrs. Walker would love my tax burden to be reduced. More importantly, however, I would like the tax burden reduced for the least well-off in my constituency; they really are the most deserving of a tax break.
Will non-doms flee the country in droves? I do not believe that for a minute. Research by Taxation magazine suggests that only 8 per cent. of the 120,000 non-doms in the UK—between 9,500 and 10,000;—remain for more than seven years; the rest come and go.
Large American merchant banks use things called work-force management and work-force rotation. Many bright and talented people around the world are capable of earning £3 million or £4 million a year. I wish I was one of them, but clearly I am not. After five or six years, the human resources department will say to those star foreign exchange dealers, “In a year’s time you’ll be eligible to pay a £30,000 charge, or to sign up to UK taxes or leave. Let us know what you want to do so that we can start succession planning.” That is work-force management. In essence, the £30,000 tax is voluntary; no one will have to pay it if they do not want to do so. They can choose to pay, they can choose to leave the UK and go to another part of the world or they can choose to pay UK taxes. After all, after seven years people might actually want to stay in the country and make a proper contribution to its upkeep.
It does not matter who a person is—a multibillionaire walking down Knightsbridge, Charles Walker walking down Knightsbridge or someone struggling on the minimum wage walking down Knightsbridge; if they fall to the ground with a heart attack on Knightsbridge their life will be saved in an NHS hospital staffed by NHS workers, doctors and nurses. It is incumbent on people living in the UK, benefiting from our laws and protections and all the wonderful things that go with being in our country, to make a contribution. Seven years is generous. The period could be five years, but the Government have picked seven years, which is a credit to them. I would rather people signed up to our way of life and our tax system much sooner, but seven years is not an unreasonable expectation. That is where I am coming from. If people want to live in the UK almost indefinitely, it is not unreasonable that we expect them to pay their way and £30,000 a year seems pretty generous.
As a capitalist, I am fed up with people in the media arguing that we need to be nice to risk takers because they are special masters of the universe who deserve special treatment. Over the last few months, we have discovered that those risk takers have been taking risks
with our interest rates and our mortgages. When they are found out and removed from their positions, they leave with huge pay-offs, sometimes upwards of between £10 million and £20 million, or the equivalent in dollars. That is outrageous. It will bring capitalism into disrepute if failure on that scale continues to be rewarded so generously.
Thank you for your patience, Mr. Deputy Speaker.
4.34 pm
Mr. David Gauke (South-West Hertfordshire) (Con): It is a great pleasure to speak on the second day of the Budget debate. It is has been an interesting debate, although, unfortunately, it has perhaps not been as highly attended as it might have been, particularly by Labour Members. I do not know whether they found yesterday’s Budget speech less than inspiring. In recent years, one or two Budgets have been very well received at the time and subsequently become rather unpopular, and I am sure that the Chancellor will hope that the reverse can also be true. We have heard a limited number of contributions, but they have been of good quality none the less.
The hon. Member for Bradford, North (Mr. Rooney), the Chairman of the Select Committee on Work and Pensions, brought his great expertise to the debate. My hon. Friend the Member for Sevenoaks (Mr. Fallon) paraphrased Gary Player in saying that the Government have failed to prepare and therefore they must prepare to fail. My hon. Friend has played a rather prominent role in recent months and been very successful in holding the Government to account in his capacity as the senior Conservative on the Treasury Committee. I served with him for a number of months and know what a formidable figure he is. I congratulate him on having been recently voted on the ConservativeHome website as parliamentarian of the year—a thoroughly deserved accolade. He is developing into something of a cult figure, and I am sure that that will continue.
I suspect that most attention on the debate—at least on Back Benchers’ contributions—will go to the thoughtful speech delivered by the right hon. Member for North Tyneside (Mr. Byers). Of course, I did not agree with everything that he said—I am sure that he would be horrified if I did—but as someone who is new to deciphering the Blair-Brown dispute, I am sure that his rhetoric requires close examination. He argued that the days of big government are over, and I think that he is absolutely right. He called for an enabling Government and for devolving power to the ultimate user. It is encouraging that a senior figure on the Government Back Benches is making that case. He was critical of tax credits and described them as intrusive. He highlighted an important point, which was also made by my hon. Friend the Member for Tunbridge Wells (Greg Clark), about the high rates of marginal tax and the increase of 145,000 more families who will pay it at 60 per cent. or more next year.
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