It is interesting that the hon. Gentleman talks about that table because I have looked at the whole of annexe A of the document, which attempts to suggest that the changes will affect all income levels fairly and that we are all in it together. However, the tables extend only to 2012-13, which is only a couple of years hence. If the hon. Gentleman has a copy of the document in front of him, he will see that page 40 shows that cuts in benefits really start to bite in-guess when-2013-14 and 2014-15. There is more spin in the document than in any Budget document that I have seen before. If the hon. Gentleman would care to table a written
question to the Chancellor to ask for the tables to be extended beyond the short period to 2012-13, I would then be more than happy to debate fairness implications.
I would like to raise a few more of the many hidden elements in the Budget. The Budget will levy an extra £455 million of tax on the insurance bills that our constituents pay, such as for buildings and contents insurance, although I do not think that the Chancellor mentioned that in his statement. The Government will also scrap the saving gateway, which was due to be introduced in July. That initiative was designed to encourage the very poorest in society to save for the future, but it is gone as a result of the Chancellor's generosity. Given that the child trust fund is also being scrapped, we will have no measures to encourage the poorest in society to start the savings habit, so it is a great pity that Government Members will support such policies.
A further hidden element in the Budget is the Government's announcement that they will cut support for the payment of unemployed people's mortgage interest by £15 million in this financial year, although that support is given at the point of those people's lives at which they are in most need.
Gordon Henderson (Sittingbourne and Sheppey) (Con): Is the hon. Gentleman aware that the interest paid by the Government under the existing mortgage interest support regime is fixed at 6.08%, even though many people pay interest at 2%, which means that the Government give them 4% more than they need to? In addition, surely it cannot be right that those payments can cover mortgages of up to £200,000 over two years.
Chris Leslie: It can if a person who is made unemployed relies on the mortgage interest support to keep a roof over their head, because they will otherwise be in great jeopardy. The hon. Gentleman might think that people should simply cope with the situation, but I believe that we need to scrutinise the measure much further.
The housing benefit changes announced in the Budget are exceptionally complex, so it is difficult to assimilate their likely impact. However, the reduction of the local housing allowance to the 30th percentile of local rents will distort housing support for the poorest in society.
The hon. Member for East Antrim (Sammy Wilson) talked about the tax credit regime and the reduction in the time period for backdating changes in circumstances from three months to one month. That mean-minded reform is an attempt to claw back money by reducing the period in which people in changeable or almost chaotic circumstances may analyse their position and go through the bureaucratic process of reclaiming their tax credits by submitting correct arrangements. As all hon. Members know, many people will find it difficult to do that within 28 days, and the measure typifies the mean-spirited nature of the Budget.
Claire Perry: I am grateful to the hon. Gentleman for giving way again-he is generous with his time. He is eloquently highlighting many of the tough decisions that have to be taken. He seems to be ruling out almost all of the deficit reduction measures that we have proposed, so may I again ask what he or his party would do to get to grips with the deficit?
Chris Leslie: As I have said before, we need a pro-growth strategy. Sometimes we have to spend to save. Investment is exceptionally important at this point in the economic cycle. All borrowing is not evil, as the hon. Lady suggests. [ Interruption. ]
Chris Leslie: Absolutely-my hon. Friend is right. We need a mature debate about the economy, and the hon. Lady should listen to her hon. Friend the Member for Wycombe (Steve Baker), who said that there are differences of opinion. There is not just one particular view of these things.
There are risks to the economy from completely pulling the rug from under it by doing things such as imposing tax increases that go too far or cutting public expenditure too swiftly or harshly. If the hon. Lady thinks that we can cut public expenditure harshly without any ramifications for the economy, I shall just have to beg to differ.
I have been director of a local government research organisation for the past five years, and something that I suspected would be in the Budget looks as if it may be coming. Capital expenditure will reduce significantly, but many local authorities rely on public borrowing from the Public Works Loan Board, which has a prudential borrowing regime that offers considerable freedom to local authorities as a means of accessing capital for important projects in our constituencies. The Budget document reveals that the tap may well begin to be turned off for local authorities, and discusses monitoring that lending far more closely. Reading between the lines, the implication is that the Government are considering reviewing the prudential borrowing regime. I urge members of the Government, particularly the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), who helpfully has come into the Chamber especially to hear my contribution, not to change that prudential borrowing framework, because the implications may be severe.
Gavin Barwell: I thank the hon. Gentleman for giving way again. He has just made an important point, but I should like to take him back to his reply to my hon. Friend the Member for Devizes (Claire Perry). He said that he wanted a pro-growth strategy. I am sure that everyone in the Chamber wants growth, but does he accept that by definition, growth will not deal with the structural deficit, which is what is there, even when the economy returns to growth. How would he deal with that deficit?
Chris Leslie: I disagree. I think it is possible to deal with the structural and cyclical deficits through pro-growth strategy. The fact that the Government's so-called independent Office for Budget Responsibility has downgraded the growth forecast as a result of measures in the Budget shows that even it has had to admit that there are dangers in their strategy. I hope that they are absolutely confident about this-they seem to be-although I detect that a few Government Members may have doubts and questions in the evening when they are looking at the measures that will be introduced. I hope that they will look at them line by line, and not just hold their noses and vote regardless, especially Liberal Democrat Members.
Kate Green: It is absolutely right that the measures need to be examined in great detail to discover their true impact on individuals and families. Is it not the case that the distribution effects go beyond simply looking at income and expenditure deciles to groups that are especially vulnerable to poverty? My hon. Friend will agree that the damage done by linking benefits over the medium term to the consumer price index, and the attack on benefits such as disability living allowance will be particularly harsh for some of the most vulnerable members of society. It is important that we do not take a simplistic view of the impact of the measures but look at their effect on the most vulnerable groups.
Chris Leslie: I could not agree more with my hon. Friend, who knows a great deal about these matters. These are stealth cuts from the Government. When they were in opposition, they liked to talk about stealthy measures. Well, these are the stealth cuts. The change from retail price index to the consumer price index is not something that many of our constituents would necessarily notice in the small print, but there are vast reductions affecting them.
There are all sorts of tricks in the Budget, such as linking pensions to earnings-at a time when the Government are going to freeze public sector pay and they know that earnings will be deliberately depressed. With supposed generosity, they can of course link the two at that point in the cycle.
The change to the personal tax allowance was another part of the Liberal Democrat manifesto. It seems that they were not able to fulfil that manifesto pledge, so they have managed to change it a little, but they do not recognise that the people who earn an amount that is below the existing threshold will benefit not at all from the change. We have to think about the very poorest in society, and I urge hon. Members to do that.
Martin Horwood (Cheltenham) (LD): The hon. Gentleman must admit, however, that taking almost 1 million out of income tax altogether must be a good thing for some of the poorest in our society. If he is keen on looking at the small print and for stealth impacts on the poor, he need look no further than the Budgets that we used to get from the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), which included the supposed abolition of the 10p tax rate. That was cheered by Labour Members, because everyone thought that it meant reducing the rate to zero, but it was in fact being doubled.
Chris Leslie: This Budget makes the 10p tax rate issue look like a drop in the ocean. Some Members want to look at one particular measure on income, and nobody objects to a personal tax allowance change, but we cannot just look at income tax on its own. The Chancellor has shunted revenue generation from income tax to VAT, and that is a Liberal Democrat strategy. The Liberal Democrats prefer VAT now, we can see that, despite the posters.
Martin Horwood: Let us not look at income tax alone. Why do we not look at the comparison between increasing VAT and increasing duties, which the previous Labour Government always used to do? That hits people across the income bands, whereas VAT, although no one likes it to increase, is less regressive because it is not imposed on necessities.
Chris Leslie: If the hon. Gentleman feels that every single item of expenditure that has VAT imposed upon it is not a necessity, I must disagree. It is not simply a tax on luxury items, nor is it akin to duties. The VAT yield is astronomical: £12 billion annually, some of which comes from his constituents. We will see what their reaction is to the increase, and I urge them to write to the hon. Gentleman, because they need to convince him on that issue.
A couple of items in the Budget statement were definitely very confusing. Now that the Under-Secretary of State for Communities and Local Government is present, I must say that I am still at a loss to understand quite how the Government's council tax freeze will work. It sounds superficially plausible to say that the Government will give an amount equivalent to 2.5%-I think that that was the figure when it was last in the Conservative manifesto-to councils that keep their council tax increase below that level in order to reach a zero increase. That guarantee has been reduced from two years to one year, but with one hand they give a little and then, with the other, yank away a great chunk of the grant that local authorities receive.
Local authorities throughout the country will have to pull those two elements together, but how on earth that supposed council tax guarantee is going to work will be a mystery to them. They will delay their budget setting and budget planning until the spending review is clear, because until they know the departmental expenditure limit for the Department for Communities and Local Government, and until they know their grant settlement arrangements, they will be none the wiser about the Government's plans either on council tax or on how they should set their budgets. I urge hon. Members to speak to their local authority leaders and elected members about that point, because whether or not we agree with the strategy, if we are to believe in local democracy, the technicalities-the operational details of those matters-count a great deal.
Andrew Bridgen: The hon. Gentleman talks about the coalition Government's cuts, but he has forgotten about the biggest cut of all. We are going to cut the deficit, which is a millstone around the necks of current and future taxpayers. That will secure the future of our economy.
And everyone will live happily ever after-in the rainbow land that the hon. Gentleman inhabits. If he feels that the deficit reduction is the only issue that he needs to worry about, then he is looking at only a very narrow band of the issues that face our economy. Of course we need to have a pro-growth strategy in order gradually, over a longer period, to deal with our debt and deficit strategy, but not at the expense of the poorest in society and of economic growth or employment. The hon. Gentleman may well feel that
unemployment is a price worth paying, which was the famous mantra of the Conservatives, but Labour Members do not.
On a technical issue, will Ministers come back at some point to talk about the limit on savings as regards ISAs? There is a suggestion that they are going to be index-linked, but now that we are moving from RPI to CPI in terms of indexation, the Red Book is not clear whether the link will be made on that lower level.
"But what I can tell you is any cabinet minister if I win the election, if we win the election, who comes to me and says, "Here are my plans" and they involve frontline reductions, they'll be sent straight back to their department to go away and think again."
In Nottingham, we know that the services people rely on most will be severely hit, and that is only from the £6 billion of changes that have been announced so far. The tidal wave-the tsunami-of spending cuts that is coming in the autumn will be shocking indeed. In Nottingham, we know that £2.7 million is being taken out of education expenditure, with savings from one-to-one tuition, school transport, and provision for special educational needs. We know that £1.2 million is being taken from the working neighbourhoods fund, which includes back-to-work programmes, literacy and numeracy support, and welfare rights advice. That is the front line in Nottingham-cutting by the Conservatives. We know that they have even scrapped the right to see a GP within 48 hours: again, changes to arrangements for which they have no substitute, affecting the front line in Nottingham. They have chopped £350,000 off the road safety budget in Nottingham, as well as the £2 million taken from the transport capital plans. In my constituency, the Conservatives have frozen-I hope that they will reverse this decision and allow the project to go ahead-£5.9 million of housing renewal money for Stonebridge Park, where more than 250 old homes were to be cleared and the same number of family-sized one and two-bedroom units constructed to help to take some pressure off the 15,000 people on housing waiting lists. Again, I fear that that is the front line in Nottingham.
This unholy alliance between the Liberals and the Conservatives-I suppose that one could characterise it as an axis of the axe-will be absolutely to the detriment of my constituents. It makes me concerned about the potential merging of the Liberals and the Conservatives around a right-wing, ideological pole that has shown a clear divide between the parties in this country. I hope that hon. Members on the Government Benches will listen to their consciences, look at the detail in these proposals, recall their election promises-particularly those of the Liberal Democrats on VAT-and vote against this dreadful Budget.
Richard Fuller (Bedford) (Con):
I rise for my maiden speech to applaud my right hon. Friend the Chancellor for his courage in meeting the challenge of the most parlous state of our public borrowings, and for proposing
a series of measures that attempts to deal with that problem while striving to protect the most vulnerable. I know it is a task he does not relish, but it is a burden he shoulders on behalf of us all.
I appreciate the opportunity in this robust debate to have a brief interlude-a commercial break, if you wish, Madam Deputy Speaker-to say good things about my home town and constituency of Bedford. I hope that in so doing, I can do as good a job for Bedford as my hon. Friend the Member for Dewsbury (Simon Reevell) did for his constituency in his maiden speech. I shall of course thereby lose the enticing opportunity to correct some of the breathtaking assertions I have heard from the Opposition Benches, not least from the hon. Member for Nottingham East (Chris Leslie), who strains the credulity not only of those of us on this side of the House but of a great proportion of the British public, who really do not understand where he is coming from.
I am the first Member to represent Bedford who was born there since the Liberal Member, Mr James Howard, in 1868. I truly love my home town. It is a wonderful and diverse community, and I am extremely honoured to be able to represent the people of Bedford and the neighbouring town of Kempston. It is an honour that I share with my predecessor Patrick Hall, who was a tireless advocate on behalf of the constituents of Bedford and Kempston. I can say honestly that his work on their behalf knew few limits. He was their constant companion in their navigation of the bureaucratic state that has come to bedevil the lives of so many of us. Patrick was the first Labour MP for Bedford to be re-elected, and in fact he secured a second re-election, a feat so remarkable that I doubt it will ever be repeated by a Labour politician in Bedford.
I also pay tribute to Patrick's predecessor, Sir Trevor Skeet, who represented the constituency for 27 years. I remember him fondly as I began my political career delivering leaflets for him in 1979. I am happy to say that 150,000 deliveries later, the post finally arrived.
Bedford is a town remarkable for its diversity, both in ethnicity and in culture. It is a most harmonious town and has much to teach the rest of our country about the power and potential of diversity. It can truly be said that a child in the course of their school career in Bedford may well meet other children whose parents come from every single nation in the world. What a fantastic start that gives children in my home town, and what a wonderful job the teachers of my town are doing to ensure that those children have a world-class education.
We are very proud of our education in Bedford, and it is very important to us because we are a town of young families. We embraced the legislative freedoms that the previous Government provided through the opportunity for schools to set up their own trusts. We are also looking forward to September, when two of our finest institutions, Bedford college and the Bedford Charity, join together to establish the John Bunyan academy. I know that many parents and teachers in Bedford look forward to the legislation that my right hon. Friend the Secretary of State for Education will propose, and we intend Bedford to be at the forefront of the free schools initiative.
Great schools beget great Bedfordians. Archbishop Trevor Huddleston was born in Bedford and was a relentless campaigner against apartheid. He was so strong in his actions, against such great odds, that he earned the nickname in South Africa of "the dauntless one". John Le Mesurier, better known as Sergeant Wilson of "Dad's Army", was another Bedfordian and a great man of comedy, who penned his own obituary in The Times thus: