30 Nov 2011 : Column 959
British Embassy (Tehran)
1.41 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague): With permission, Mr Speaker, I should like to make a statement about events in Tehran.
Shortly after 3 o’clock Tehran time yesterday, approximately 200 demonstrators overran the city-centre compound of our embassy in Tehran. The majority of demonstrators were from a student Basij militia organisation. We should be clear from the outset that that is an organisation controlled by elements of the Iranian regime.
The demonstrators proceeded systematically to vandalise and loot the homes of staff located on the site and the ambassador’s residence. They destroyed furniture, stole property, including the personal possessions of our staff, and set fire to the main embassy office building.
Simultaneously, our second embassy compound at Gulhaq in north Tehran also came under attack, and staff homes there were also attacked and looted. Our staff immediately evacuated the buildings affected and took refuge in safe areas of the compound. It was not until yesterday evening that we received confirmation that the Iranian diplomatic police had belatedly assisted at both compounds, and that all our staff were accounted for.
I wish to pay a fulsome tribute to our ambassador and his staff, who throughout those hours of danger behaved with the utmost calm and professionalism and followed well developed contingency plans. The Prime Minister and I have spoken to him several times in the past 24 hours and passed on our thanks to the UK-based and locally engaged members of his team.
It will be obvious to the whole House and the whole world that these events are a grave violation of the Vienna convention, which states that a host state is required to protect the premises of a diplomatic mission against any intrusion, damage or disturbance. This is a breach of international responsibilities of which any nation should be ashamed.
It is true, of course, that relations between Britain and Iran are difficult, as they are to varying degrees between Iran and many other nations. We publicly differ with Iran over its nuclear programme and on human rights, and we make no secret of our views. We have been foremost among those nations arguing for peaceful legitimate pressure to be intensified on Iran in the light of the International Atomic Energy Agency’s “deep and increasing concern” about the Iranian nuclear programme, including its “possible military dimensions”.
But we should be absolutely clear that no difficulty in relations can ever excuse in any way or under any circumstances the failure to protect diplomatic staff and diplomatic premises. Iran is a country where Opposition leaders are under house arrest, where more than 500 people have been executed so far this year and where genuine protest is ruthlessly stamped on. The idea that the Iranian authorities could not have protected our embassy, or that this assault could have taken place without some degree of regime consent, is fanciful.
Yesterday, I called the Iranian Foreign Minister to protest in the strongest terms about the events and to demand immediate steps to ensure the safety of our staff and of both embassy compounds. He said that he
30 Nov 2011 : Column 960
was sorry for what had happened and that action would be taken in response. The Iranian chargé d’affaires in London was summoned to the Foreign Office to reinforce those messages, and Cobra met yesterday afternoon and again this morning with the Prime Minister in the chair.
The UN Security Council issued a statement condemning the attack on our embassy in the strongest terms and calling on the Iranian authorities to
“protect diplomatic and consular property and personnel”.
I am grateful for the strong statements of concern and support from the United States, the European Union, Germany, Poland, Russia, China and many other nations. I particularly wish to thank France for the robust support that it has given us in every way, and for the practical assistance and accommodation that it has provided to our staff in Tehran.
Throughout Europe, Iranian ambassadors have been summoned to receive strong protests. In the words of the Foreign Minister of Austria:
“With the attack on the British Embassy, Iran is now on the verge of placing itself completely outside of the framework of international law. If Iran thinks it can undermine European solidarity through such actions, it is wrong.”
I am grateful to our other friends in the region itself, and particularly to the United Arab Emirates for its practical help. I am grateful also to the Foreign Minister of Turkey for his prompt and helpful intervention in these matters last night.
The safety of our staff and of other British nationals in Iran is our highest priority. We have now closed the British embassy in Tehran. We have decided to evacuate all our staff, and as of the last few minutes, the last of our UK-based staff has now left Iran.
We will work with friendly countries to ensure that residual British interests are protected and that urgent consular assistance is available to British nationals. We advise against all but essential travel to Iran. At present, there are no indications that British nationals outside the embassy are being targeted in any way. Those requiring urgent consular assistance will receive help from other EU missions in Tehran.
But that clearly cannot be the end of the matter, and the next few paragraphs of my statement are not in the written version being circulated to the House, because the timing of this announcement had to be consistent with the safety of our staff.
The Iranian chargé in London is being informed now that we require the immediate closure of the Iranian embassy in London, and that all Iranian diplomatic staff must leave the United Kingdom within the next 48 hours. If any country makes it impossible for us to operate on their soil, they cannot expect to have a functioning embassy here. This does not amount to the severing of diplomatic relations in their entirety. It is action that reduces our relations with Iran to the lowest level consistent with the maintenance of diplomatic relations.
The House will understand that it remains desirable for British representatives to be in contact with Iranian representatives—for instance, as part of any negotiations
30 Nov 2011 : Column 961
about their nuclear programme or to discuss human rights—but it does mean that both embassies will be closed. We wish to make it absolutely clear to Iran and to any other nation that such action against our embassies and such a flagrant breach of international responsibilities is totally unacceptable to the United Kingdom.
Later today and tomorrow I will attend the meeting of the EU Foreign Affairs Council in Brussels, when we will discuss these events and further action that needs to be taken in the light of Iran’s continued pursuit of a nuclear weapons programme.
As a permanent member of the UN Security Council and a leading member of the European Union, we are proud of the role that our country plays in maintaining international peace and security and in standing up for human rights all over the world. If the Iranian Government think that we will be diverted from those responsibilities by the intimidation of our embassy staff, they will be making a serious mistake.
Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab): I thank the Foreign Secretary for his statement and for allowing me advance sight of it. It is indeed right that we address the issues of the assault on the British embassy in Tehran along with other important business before the House today.
I, of course, begin by expressing my clear and unequivocal condemnation of the deplorable attacks that we witnessed yesterday in Tehran, and associate all Opposition Members with the words yesterday of the Foreign Secretary and of the Prime Minister on the issue.
Let me deal with the welfare of the UK diplomatic staff. I commend the British ambassador and his whole team on their handling of the situation and the unyielding professionalism and, indeed, bravery that they have shown at this extremely difficult time. Our thoughts are also with the staff and the families who were affected by yesterday’s assaults. Are appropriate steps being taken to safeguard locally engaged staff who have supported UK-based staff during the period in which the British embassy in Tehran has been operational?
With regard to responsibility for the assault, the Iranian Government clearly failed to take adequate measures to protect our embassy, our staff and our property. Their international responsibilities, including those under the Vienna convention, are well established. The demonstrations were co-ordinated, not coincidental, and the suggestion that the regime, or at least elements within it, were unaware of some of the actions stretches credulity. I welcome the right hon. Gentleman’s confirmation that he immediately summoned the Iranian chargé d’affaires to the Foreign Office yesterday and the condemnation issued by our colleagues in the European Union and the UN Security Council.
Let me turn to the context and consequences of yesterday’s events. The backdrop was the unequivocal International Atomic Energy Agency report published earlier this month, which made it clear that there is accumulating evidence for the possible military dimensions of Iran’s nuclear programme. In response to the report, the UK, along with Canada and the United States, sought to increase peaceful diplomatic pressure on Iran,
30 Nov 2011 : Column 962
and only last week the Chancellor announced the severing of all ties with Iranian banks, including the Central Bank of Iran. As a result of these measures, the Iranian Parliament approved a Bill three days ago requiring Iran and Britain to withdraw their ambassadors and downgrade the status of the two countries’ diplomatic ties.
That was the immediate context of yesterday’s assault, but what about the consequences? As we have just heard, British diplomats are thankfully on their way home and the embassy has been closed. The Foreign Secretary has just informed the House that, in response to the events, the Iranian chargé d’affaires has been told to leave the UK and Iran’s embassy in London will be closed forthwith. The safety and security of UK diplomatic staff and other UK nationals must be a paramount consideration, but can the Foreign Secretary set out how dialogue will be maintained in the light of these developments? If the effect of yesterday’s events is to extinguish dialogue—albeit that dialogue on human rights and the nuclear dossier is proving extremely difficult at present—the elements within the regime that seek conflict and confrontation would be strengthened. In the light of the diplomatic changes, what mechanisms for dialogue will remain open?
The Opposition agree that Britain’s national interest is best served by pursuing a twin-track approach to Iran and its nuclear ambitions, so will the Foreign Secretary be a little clearer when he responds on how the first part of that approach, the engagement strategy, will continue in the light of the downgrading of diplomatic relations? Does he agree that, notwithstanding yesterday’s truly deplorable assault on the embassy, a clear-eyed sense of Britain’s national interest would resist in the weeks ahead a descent into ever more bellicose rhetoric and instead seek to find new means of taking forward the difficult but necessary dialogue? Does he also agree that in that dialogue we must be clear that such deplorable assaults on our embassy will not and must not alter our determination to take forward the diplomatic work with others in the international community to ensure that Iran upholds its responsibilities and obligations under international law?
Finally, will the Foreign Secretary consider returning to the House in the weeks or months ahead to make a more wide-ranging statement on Iran in calmer times and the approach that the Government now intend to take, given not only the immediate events and their consequences, which he has rightly come to the House to address, but the stalled progress on the E3 plus 3 process and the growing anxiety about Iran’s nuclear ambitions?
Mr Hague:
I am grateful to the right hon. Gentleman, who has joined in the condemnation of these completely unacceptable acts and the commendation of our ambassador and his staff. He asked about the locally engaged staff. Other than security staff, locally engaged staff were not in the embassy compound yesterday because, in anticipation of the demonstrations, we had asked them not to come to work, so they were not involved in the violence and danger. We will, of course, look after them financially and have a continuing concern for their welfare, although it must be pointed out that, as former Foreign Secretaries will remember, our locally
30 Nov 2011 : Column 963
engaged staff in Tehran have unfortunately always been at some degree of risk because of previous unacceptable behaviour by the Iranian regime.
The right hon. Gentleman is right to remind us of the wider context of the IAEA report and the action the Chancellor announced last week to sever financial links between our financial institutions and those of Iran. He asked how dialogue is to be maintained. Clearly these events make that more difficult. We do not take such decisions at all lightly, but after the events we have come to the conclusion that no assurance the Iranian regime could deliver on the safety of our staff could be believed. We have an overriding duty of care for those staff.
It is still possible in other forums to pursue dialogue with Iran where appropriate and meaningful. We are part of the E3 plus 3 process—the six nations that wish to negotiate with Iran over its nuclear programme—as is the United States, which does not have an embassy in Tehran. We meet the Iranians at various multilateral forums and organisations. I met the Iranian Foreign Minister at the UN General Assembly earlier this year. As I have said, we are not advocating the severing of all diplomatic relations. It is important that dialogue about these issues can continue, but it is not possible to maintain an embassy under these circumstances and in the light of these threats and actions.
The right hon. Gentleman asked about bellicose rhetoric. Of course, that is something that comes from Iran, not the United Kingdom. We heard that on Sunday in the Iranian Parliament there were chants of, “Death to Britain”, and it is unimaginable that we would ever treat any country in that way in our deliberations here in the House of Commons. It is the bellicose rhetoric coming from Iran that should come to an end. I am of course open to making other statements to the House in future and more wide-ranging considerations of our future policy towards Iran.
Richard Ottaway (Croydon South) (Con): I share the Foreign Secretary’s sense of outrage and welcome his statement and the steps he is taking. Iran is propping up the regime in Syria, undermining peace efforts in Iraq and Afghanistan and supporting terrorism in a number of arenas around the world. Does he agree that there is only one language these people understand: the language of the firmest possible action? Yet does he agree that we must somehow maintain a degree of dialogue somewhere along the line?
Mr Hague: My hon. Friend is right that there have been no rewards for anything other than firm dealings with Iran. Many efforts have been made to induce the Iranians into a more substantial dialogue than we have enjoyed in recent years. The right hon. Member for Blackburn (Mr Straw), when Foreign Secretary, made valiant efforts to do so, to which we should pay tribute, but his efforts and those of other European Foreign Ministers have not been successful at any stage. It is important to respond firmly to such provocations and attacks, but to continue to seek meaningful negotiations on the nuclear programme, and that remains our position.
Mr Jack Straw (Blackburn) (Lab):
As co-chair of the all-party group on Iran, alongside the hon. Member for Wyre and Preston North (Mr Wallace), and as a former Foreign Secretary who sought better relations with Iran, as the Foreign Secretary has kindly noted, and who went to Tehran five times in pursuit of that, I begin by
30 Nov 2011 : Column 964
entirely endorsing his praise for our brave and skilful diplomats and the outrage we all feel at the Iranian Government’s egregious breach of their obligations to protect all diplomatic embassies and posts and their palpable failure to do anything, which they could easily have done, to protect the embassy against the organised demonstration. I appreciate just how difficult it is to make such decisions when faced with them, rather than having just to comment on them, but when the Prime Minister and the Foreign Secretary were thinking about the decision to sever all relations, how far did the Foreign Secretary consider the irony of the fact that what he believes is justified is exactly what the hard-liners in the Majlis want? Given that we are not talking about a single Government, as the Americans often forget, but a system that is in turmoil, to what extent does he believe that we will now be able to strengthen those, even within the Ahmadinejad regime, who are seeking a better path than that of some of the hard-liners in the Majlis?
Mr Hague: I am grateful to the right hon. Gentleman for what he said about our staff and how they have conducted themselves. He is right to draw attention to the difficulties and downsides of any way of proceeding in this situation. As a former Foreign Secretary, he will know that we must be able to be confident that we can look after our staff, and that assurances of host Governments can be believed. Sometimes our staff continue to operate in very difficult and dangerous circumstances. At the moment, Yemen is an example of that, but even there, where there have been two attempts on the life of our staff in the past 18 months, we do not suspect that parts of the regime there are implicated in attacks on our embassy. That makes life dramatically more difficult, and must be weighed heavily in any balance of the question.
We must also consider that the incident in Iran has happened in currently difficult diplomatic circumstances, but we cannot be confident that those circumstances will not deteriorate further over the next 12 months or so, so we must have regard to what might happen to our embassy in those circumstances. Having considered all those matters, the Prime Minister and I believe it is right to take this action, not to sever all relations, to put the right hon. Member for Blackburn (Mr Straw) right, because it is still possible to have diplomatic contact under what I have set out, but to close both embassies.
Mr Ben Wallace (Wyre and Preston North) (Con): I join the Foreign Secretary in paying tribute to the locally engaged staff and our diplomatic staff, whom I last met at the embassy when I visited in 2008. They have had to endure three incursions into the embassy in the past four years, and this is the most serious and obviously threatening to British interests and property.
The E3 plus 3 works best when it works as one in negotiating with Iran, and withdrawal of our embassy leaves much of the day-to-day contact with the Iranian Government in the hands of the Chinese and Russian E3 plus 3 members. What confidence does the Foreign Secretary have that those two member states will play their full part in ensuring that negotiations with Iran come to a successful conclusion?
Mr Hague:
It is not solely the Russian and Chinese embassies that will be there, because the French and German embassies are still in Tehran, although both
30 Nov 2011 : Column 965
France and Germany are taking very strong diplomatic action in the light of these events. I will not make their announcements for them, but they are outraged by the events and will follow with their own strong diplomatic action. Those countries are still in Tehran, and are an important part of the E3 plus 3 process. Although we have differences with Russia and China, the process is by no means wholly in the hands of those countries.
David Miliband (South Shields) (Lab): I join the Foreign Secretary in his utter condemnation of yesterday’s attacks on the embassy and its staff. However, he will know that the Iranian regime loves to trade shows of machismo and enjoys tit for tat, and that parts of it glory in Iran’s isolation. In that context, the presence of the British embassy in Tehran for much of the past 30 years has been wholly good, in contrast with the American position. This is a sad day for British diplomacy.
I have two questions for the Foreign Secretary. First, what will he do to ensure that this is not seen as a victory for those in the regime who would seek isolation—the so-called hard-liners? Secondly, what will he do to ensure that this series of announcements does not become part of the unwelcome drum beat of war that started in the last six weeks in respect of the Iranian nuclear programme?
Mr Hague: The international condemnation of Iran, the strong expressions of support for our staff, and the grave concern for what has happened have come from Russia and China, as well as from western nations, our European allies and the United States. Anyone in Tehran who thought they had won a victory in Iran in the light of the world-wide condemnation of the events would be very blinkered. We have been clear, as was the right hon. Gentleman when he was Foreign Secretary, that we are not advocating military action against Iran. We are calling for peaceful, legitimate pressure. It is as part of that peaceful, legitimate pressure that Iran has taken action that breaches international conventions, specifically the Vienna convention.
As I said to the right hon. Member for Blackburn (Mr Straw), we must weigh heavily those considerations and the disadvantages of embassies being closed, but the Government must make a decision, and our decision is that we cannot keep our staff safe in Iran, and its actions are so unacceptable that we have to take a very firm line. On the balance of such matters, we decided to take the action that we have.
Martin Horwood (Cheltenham) (LD): For the Liberal Democrats, I join the condemnation of yesterday’s events and support the Foreign Secretary’s response. I also express our relief that our staff are now safe, and our admiration for their courage and professionalism.
The Foreign Secretary listed many nations that had expressed concern and support, and included Russia and China. In the international context, does he regard that as a positive development, and perhaps the beginning of the foundation of a more consistent international approach to the regime in Tehran?
Mr Hague:
I am grateful to my hon. Friend for all his remarks. His question about whether there is a new development in the international handling of wider issues in Iran is interesting. It is too early to say yes, but
30 Nov 2011 : Column 966
I think the events will help to open the eyes of many people throughout the world to the nature and behaviour of the Iranian regime. If it has so little regard for such well established international conventions as the protection of diplomatic premises, one can imagine that it does not have much regard for other international agreements either.
Keith Vaz (Leicester East) (Lab): I join others in welcoming the Foreign Secretary’s action. He will know that about 70,000 Iranians live in the United Kingdom. What will be the practical consequences of his decisions? Where will entry clearance operations in Tehran move to now that the embassy is closed? Where will British Iranians who want to visit relatives in Iran make their applications for visas?
Mr Hague: It will of course be more difficult for them, because we will not have a visa section operating in Tehran. Iranian citizens can still obtain visas to come to the United Kingdom, but they will have to obtain them through other hubs of our diplomatic network, specifically Abu Dhabi, or other hubs of the visa network. We will ask another country to act on our behalf in Iran and to look after our interests there, and I imagine that the Iranians will ask a third country to do the same here in London and to provide whatever assistance is required for Iranian citizens here in the UK.
Mark Pritchard (The Wrekin) (Con): Is it not the case that President Ahmadinejad could do well to learn from Persian history, in particular King Cyrus, who created the first charter on human rights, which can be seen in the foyer of the United Nations building? He taught all his people the importance of respecting the rights not only of Iranian or Persian citizens but of foreigners.
Mr Hague: Yes. My hon. Friend makes a pertinent historical point. The King in question was rather better at sticking to his agreements than the current Government of Iran.
Mr Speaker: I have just been reminded that the hon. Member for The Wrekin (Mark Pritchard) is a learned and well-read fellow.
Chris Bryant (Rhondda) (Lab): No he is not—Division.
Mr Speaker: I do not know that anyone is as learned or well read as the hon. Member for Rhondda (Chris Bryant).
Chris Bryant: The Foreign Secretary referred to bellicose words. What counts as bellicose words in Iran is rather different from what counts as bellicose words from a Foreign Secretary in the House of Commons. I worry about the tone that the right hon. Gentleman has adopted today. I noted that on the radio a couple of weeks ago he refused to rule out military intervention. Will he do so today?
Mr Hague:
No. I always say that all options remain on the table, but I always make it clear, as did the previous Government, that we are not advocating military action against Iran. Our position is the same as that of the previous British Government—the hon. Gentleman was a Foreign Office Minister in that Government—and
30 Nov 2011 : Column 967
the same as that of France, Germany and the United States. It is a united international position, and we continue to adhere to the one to which he subscribed.
Mr John Baron (Basildon and Billericay) (Con): The Foreign Secretary is absolutely right to condemn the sacking of our embassy, which can only serve to inflame tensions generally. Given recent remarks by Israel, and the fact that there was no smoking gun from the recent International Atomic Energy Agency report, will he do what he can to restrain Israel from conducting any form of military strike, which would be catastrophic for the region? If Iran has set its mind on nuclear weapons, it will not be scared away, and if it has not, a military strike will encourage it.
Mr Hague: Clearly, from what I have said, we are not advocating a military strike by anybody. I have often said in the past that although the possession of nuclear weapons by Iran would be a calamity for the world, it is quite possible that military action against Iran would be calamitous. I absolutely stand by that.
I do not think that my hon. Friend should dismiss so lightly the IAEA report, which referred to the agency’s serious concerns regarding credible evidence about the military dimensions of the Iranian nuclear programme. My hon. Friend should weigh that a little more heavily.
Thomas Docherty (Dunfermline and West Fife) (Lab): I am slightly troubled by some of the triumphant cheering that we heard behind the Foreign Secretary when he announced the closure of the embassy. Government Members would do well to show caution about the path they seem so eager to head down.
The Foreign Secretary has briefly mentioned both Turkey and the United Arab Emirates. May I press him to say a little more about the Government’s dialogue with other Governments in the region, and particularly with the Gulf Co-operation Council?
Mr Hague: We are in constant touch with those nations, of course. I spoke to Turkey’s Foreign Minister twice last night. He spoke, as I did, to the Iranian Foreign Minister, expressing Turkey’s outrage about these events and asking for the protection of our diplomatic staff. We are in constant diplomatic touch with the Gulf states, which also share our outrage about what has happened. As I mentioned in my statement, the United Arab Emirates has been able to give us practical help in the evacuation of our staff. A large number of the flights out of Tehran go to the UAE, so we have been in close touch with it about that.
Mr Bernard Jenkin (Harwich and North Essex) (Con): May I explain to my right hon. Friend why I cheered during his statement? It was because he is absolutely right to show strength and resolution rather than surrender in the face of the provocation by the Iranian regime. May I also give him the fullest support for refusing to rule out the military option? There have been 10 years—more than a decade—of best intentions and positive diplomacy as we have tried to win the arguments with the Iranians. If this incident does not remove the rose-tinted spectacles from our eyes, nothing will.
Mr Hague:
All options, of course, are kept on the table. However, I stress, as I have to other hon. Members, that we are not calling for military action. But I am
30 Nov 2011 : Column 968
grateful to my hon. Friend: in the House of Commons, we show approval with cheers, grunts or movements of the head, and all are acceptable on this occasion.
Mr Nigel Dodds (Belfast North) (DUP): All Members would do well to remember the deplorable nature of this attack on British embassy property and staff. It demanded an appropriate response and I commend the Foreign Secretary for his swift, decisive and entirely appropriate response on this occasion. In relation to the twin-track approach that he has set out, what further practical steps—what further measures in addition to the sanctions already announced—can be taken to increase peaceful and legitimate pressure on Iran?
Mr Hague: I am grateful to the right hon. Gentleman for his remarks and support for the action that we have taken. At the European Foreign Affairs Council over the next 24 hours, we will be discussing further actions that can be taken—peaceful, legitimate pressure, as he says. I believe that we will agree on additional sanctions. I do not want to say now what those are going to be. I do not want to prejudge the deliberations with my European colleagues in Brussels, but the right hon. Gentleman can be confident that further measures are on their way.
Bob Stewart (Beckenham) (Con): It is always sad when the Union Jack has to be pulled down in any country, because it is such a potent symbol for those of us who have been in hostile countries and for nationals in those countries. However, I rather wonder whether our interests may be served if the European Union has set up its embassy in Iran; it might have something useful to do if it has. It could look after our interests.
Mr Hague: The European Union has been very helpful. Baroness Ashton, the High Representative, issued a very strong and prompt statement about the issue and of course we will work with EU representatives on this matter. We have been fortunate in having such robust support from France, Germany and many other of the member states of the European Union.
Derek Twigg (Halton) (Lab): This is the second outrage against this country by the Iranians; the Foreign Secretary will recall what happened with HMS Cornwall a few years ago. I support what the Government have said today. They are right in the action that they have taken and I urge them to continue to be firm in a practical and sensible way.
May I ask the Foreign Secretary a specific question? When did the ambassador or his staff last meet the Iranian authorities to discuss the security of the embassy? Were any concerns raised at that meeting and was there a report back to the Foreign Office in London expressing those concerns? If he does not know the answer, will he write to me with the information?
Mr Hague: I am grateful for the support of the hon. Gentleman, who remembers well the United Kingdom’s previous incidents with Iran. There have of course been regular discussions, and concerns have regularly been expressed about the security of the embassy to the Iranian authorities, but I will have to write to him with the exact chronology that he is asking for.
30 Nov 2011 : Column 969
Tom Brake (Carshalton and Wallington) (LD): This morning, I met representatives of the Baha’i faith, who are clearly suffering greatly at the hands of the Iranians at the moment. Does the Foreign Secretary believe that Iran’s actions in relation to our embassy are symptomatic of a wider failure—a failure to observe not only international law but Iran’s national laws?
Mr Hague: My right hon. Friend makes an important point. In recent times, and particularly during the period this year that we now know as the Arab spring, Iran has become a more repressive system—with greater persecution of minorities, more widespread imprisonment and persecution of journalists, and the house arrest of the two leading Opposition leaders. The constant persecution of members of the Baha’i faith is a very sharp and terrible example of that. My right hon. Friend is right to point to the wider failure to observe the Iranians’ own laws and obligations.
Mark Durkan (Foyle) (SDLP): I join the Foreign Secretary in expressing regard for the personnel involved and in his unequivocal indictment of regime complicity in these deplorable attacks. On the respective embassy closures, do the Government have in mind particular conditions for their reopening—conditions that would be clearly and readily achievable? Otherwise there is the danger of a spiral of deterioration, of the UK’s position becoming conflated with that of the US and of the UK becoming dependent on the vicarious good offices of others.
Mr Hague: That is a fair question, but the hon. Gentleman will be aware that this has just happened and it is too early to set out such conditions. Clearly, any reopening of the embassies could take place only in a much improved situation in respect of relations with Iran. I would not want to set out those conditions prematurely; we will have to consider the matter over time.
Mr Robert Buckland (South Swindon) (Con): Yesterday’s dreadful events have attracted a proportionate and measured response from the British Government. In respect of seeking to maintain a dialogue with the Iranians, does my right hon. Friend agree that that dialogue should extend to all arms of Government and all shades of opinion within the governmental structures of Iran?
Mr Hague: In common with several other right hon. and hon. Members, my hon. Friend is right to draw attention to the fact that there are different shades of opinion even within the regime in Iran—of course, there are many more outside the regime. I believe, for instance, that the motives and concerns of the Iranian Foreign Ministry may have been quite different, yesterday, from the motives of other parts of the regime. We have to be conscious of that and, in our contacts with Iran, bear in mind that wide diversity of opinion.
David Morris (Morecambe and Lunesdale) (Con): Will my right hon. Friend clarify the initial part of his statement? Did I hear rightly that both north and south embassies were attacked simultaneously and that the attacks were possibly sponsored by the state?
Mr Hague:
Yes. The militia organisation, the Basij, is well known to be regime-sponsored. It is unlikely, therefore, that such events take place spontaneously or through
30 Nov 2011 : Column 970
something just getting out of control. The fact that those attacks on our two embassy compounds were simultaneous is probably further evidence that they were intentional and premeditated.
Neil Carmichael (Stroud) (Con): I welcome the Foreign Secretary’s statement and the resolute approach he has taken following such an outrageous development. May I ask him what measures he will take with the states neighbouring Iran to increase and enhance diplomacy?
Mr Hague: We are already engaged in that work. I mentioned the very intensive contact we have had with Turkey in the past 24 hours—nothing unusual in our case, but particularly intense yesterday—and with the Gulf states, many of which are deeply alarmed about the wider behaviour and intentions of Iran, quite apart from this incident. We shall continue and quite possibly step up our diplomatic engagement with all those countries about this most unfortunate turn of events.
John Glen (Salisbury) (Con): Will my right hon. Friend say what contact he has had over the past 24 hours with his US counterpart and what actions, diplomatic or otherwise, the US is considering to support the UK Government’s position?
Mr Hague: We are of course in constant touch with the United States. Secretary Clinton and President Obama have issued very strong statements about this incident. The United States does not have an embassy in Tehran, but the Americans are strongly supportive of the action we are taking and will, of course, reflect that in their wider diplomacy around the globe.
Michael Ellis (Northampton North) (Con): May I take the opportunity to commend my right hon. Friend the Foreign Secretary for the robust action that he has taken? It is clearly necessary in view of the hostile, belligerent, anti-Semitic regime in Tehran, which in many respects is clearly a force for evil around the world. I also take this opportunity to commend the sangfroid of the British ambassador in Tehran, who is clearly following in the finest traditions of the diplomatic service. Is there an option for compensation, which I understand the British Government could, under the Vienna protocol, insist on for damage done to its property, which was supposedly under the protection of the Iranian Government?
Mr Hague: I am grateful to my hon. Friend for his support. His comments, like those of many other Members, demonstrate the high regard of all parties in the House for the conduct of our diplomats, in particular our ambassador and our chargé d’affaires, both of whom did extremely well. We have already put the question of compensation and the financial liability of the Iranian Government to the Iranian chargé d’affaires, and we shall continue to pursue the matter.
Mr Philip Hollobone (Kettering) (Con): In my right hon. Friend’s view, is the Government-inspired assault on the British embassy in Tehran indicative of the weakness or the strength of the internal political leadership in Iran?
30 Nov 2011 : Column 971
Mr Hague: My hon. Friend asks a very pertinent and relevant question. Other hon. Members have asked about the increased general repression in Iran in recent months. To the extent that this incident is part of that, I think it is an indication of the weakness of the regime and its fear of local opinion, as well as of international opinion. It should certainly be seen as weakness rather than strength.
30 Nov 2011 : Column 972
Points of Order
2.23 pm
Dr Julian Lewis (New Forest East) (Con): On a point of order, Mr Speaker. I am sure that hon. Members on both sides of the House appreciated the almost unprecedented opportunity you gave them yesterday to interrogate a senior Cabinet Minister, the Chancellor of the Exchequer, at considerable length. May I ask whether that innovation is a practice that is likely to recur with any regularity?
Mr Speaker: I am grateful to the hon. Gentleman for his point of order. Each case is, of course, considered on its merits, but what I would say to him and to the House is twofold. First, I am always keen to ensure that as many Back-Bench Members as possible should have the opportunity to question Ministers of the Crown. Secondly, as the House will be conscious, I am insistent that statements of policy should first be made to the House of Commons, not outside it. There have been notable breaches of that established protocol and they are a source of concern. To the hon. Gentleman I say explicitly that yesterday I was particularly keen to ensure a full airing of the issues, not least because I wished to hear whether the Chancellor of the Exchequer had anything to say in the Chamber that he had not already said in the media. I hope that that response to his point of order satisfies the hon. Gentleman’s curiosity.
Mr John Spellar (Warley) (Lab): On a point of order, Mr Speaker. Yesterday, you said:
“All hon. Members, including Ministers, are responsible for the content and accuracy of the statements they make to the House. If an error has been made it is the responsibility of the Member who made it to correct it.”—[Official Report, 29 November 2011; Vol. 536, c. 848.]
On Monday, the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) said, reported at column 709 of Hansard,
“The shadow Foreign Secretary did not mention Libya once in this whole conversation, and one wonders why”.—[Official Report, 29 November 2011; Vol. 536, c. 709.]
Yet my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) had clearly dealt with Libya, as reported at column 695. Yesterday, I drew that to the hon. Gentleman’s attention, hoping that he would have the courtesy to apologise for inadvertently misleading the House and to set the record straight. I cannot see that he did so in yesterday’s Hansard. Has he indicated to you that he intends to do so today, Mr Speaker? If he has not, how can we ensure that the correct position is placed on the record?
Mr Speaker: I have had no such indication from the hon. Member for Shrewsbury and Atcham. When the right hon. Gentleman asks by what means he can secure redress, I think that he has found his own salvation, courtesy of his point of order. Although I am certainly not going to instruct anybody to come to the House—Members must take responsibility for what they do—there is nothing wrong with apologies from time to time. They are on the whole good for the soul, I think.
Richard Graham (Gloucester) (Con):
On a point of order, Mr Speaker. During questions on the statement from my right hon. Friend the Minister for the Cabinet Office and Paymaster General, the hon. Member for
30 Nov 2011 : Column 973
Derby North (Chris Williamson) accused this Government and my party of being anti-public service. Given the number of Members on this side of the House who have served our country, for example in schools, hospitals, embassies and all three armed forces, may I ask you whether his comment was in order or should be withdrawn?
Mr Speaker: I was indulgent to the hon. Member for Gloucester (Richard Graham) because I wished to listen to his mellifluous tone, but I have to tell him that nothing disorderly took place, and what he has just put to me—I say this in the most courteous possible way—constitutes not a point of order, but a point of outrage. We will leave it there for today.
Hugh Bayley (York Central) (Lab): It is many years since I raised a point of order, Mr Speaker, but further to the point of order raised by the hon. Member for New Forest East (Dr Lewis), may I say that one of the primary purposes of Parliament is to hold the Executive to account? I as a Back Bencher and, I believe, many Back Benchers on both sides of the House greatly value the opportunity to question Ministers on their statements. Had you not allowed the questioning to continue until after 3 o’clock yesterday, I would not have been called. I am incredibly grateful to you for allowing so many Back Benchers to put the points they wanted to put to the Government.
Mr Speaker: I thank the hon. Gentleman. The fact that there is a glow of contentment on his face warms the cockles of my heart. I think we should probably quit while we are ahead and move on.
30 Nov 2011 : Column 974
Hairdressers Registration (Amendment)
Motion for leave to bring in a Bill (Standing Order No. 23)
2.28 pm
David Morris (Morecambe and Lunesdale) (Con): I beg to move,
That leave be given to bring in a Bill to amend the Hairdressers (Registration) Act 1964 to provide for the mandatory registration of hairdressers with the Hairdressing Council; to empower the Hairdressing Council to issue and charge for licences to hairdressers holding certain qualifications; to provide for the removal of names from the register by the Hairdressing Council on the recommendation of its investigating and disciplinary committees; to introduce a scale of fines payable by those without a licence charging for hairdressing services; and for connected purposes.
It is a privilege to address the House on what I believe is a very important measure. This proposed amendment to the Hairdressers (Registration) Act 1964 is supported by the whole hairdressing industry and has attracted huge media interest. As hon. Members have probably seen in the newspapers—tabloid and broadsheet—the Bill has captured the imagination. Believe it or not, any one of us in the House, and indeed anyone outside it, could set up a hairdressing business tomorrow, practise as a hairdresser, and charge money for doing so.
As has been revealed in the newspapers, especially during recent weeks, hairdressers can use products that are very corrosive and dangerous and which, in some instances, can cause death. Unfortunately that has been happening for many years, and indeed it has happened during the past four weeks. Last night I met a lady to whom, thankfully, it had not happened, but she had had her hair straightened and dyed on the same day, which had caused burns to her scalp, made her hair snap off, and caused her face to puff up to twice its normal size. The poor girl, who was getting married in a week, had to get married a week later.
As I have said, the whole industry backs my Bill. There have been some quips in the media, and from certain Members of Parliament, but I want this to be an apolitical issue, and I have received much support from Members on both sides of the House. However, I ask every Member to bear in mind that the hairdressing industry in his or her constituency employs some 2,500 people who rely on that industry for their living. It puts £5 billion into the economy each year, and the amendment that I propose is supported by the Hair and Beauty Industry Authority, City and Guilds, the Freelance Hair and Beauty Federation, the Hairdressing and Beauty Suppliers Association, the Fellowship for British Hairdressing, and the National Hairdressers’ Federation, to name but a few.
Let me make clear that if there is a Division today, it will not be more of a division than a parting. [Hon. Members: “Oh!”] I had to get that one in before anyone else did.
Here are the facts. The 1964 Act came into being during the dying days of the Douglas-Home Government and has not been updated for nearly 50 years, although times have changed for the hairdressing industry. The Act set out a framework for education which governed my generation and which is now more or less standard—it is necessary to gain national vocational or, in my case, City and Guilds qualifications—but the Act has never been given teeth.
30 Nov 2011 : Column 975
As I said, my former industry has a turnover of £5 billion. It has been established that 245,000 people—1% of the United Kingdom’s working population—work in the industry at NVQ level 3 or above. There are 34,000 salons out there, and 50% of women have their hair coloured, as well as a number of men. I am sure that some Members who are present would attest to that.
The Bill is vital because, first and foremost, it would remove from the industry unqualified individuals who harm people. When someone goes to a hairdresser, they want to know that the person working on their hair is not just qualified but experienced in using products which, as I said at the outset, can cause serious damage and often do. I was a hairdresser for 28 years before I entered the House. I was known in my time as Mr Fixit, and believe me, I encountered some horror stories. Women came into my salon with their hair dyed sky-blue pink—if, that is, it was still on their heads. One can imagine the psychological impact that that can have.
When I toured the hairdressing colleges in the north of England, one lady said to me “Everyone uses the NHS—people know where to go when something goes wrong medically—but those who have a psychological problem because their hair has turned a funny colour, has snapped off or has been burnt, and who have thus effectively been assaulted, do not know where to go.” There is no registration to enable disciplinary procedures to be carried out, and to point people in the direction of those who can ensure that their hair is sorted out. The Association of Personal Injury Lawyers supports the Bill, not only because it will help to professionalise the industry but because it will cut out frivolous litigation.
It was good to see Members in all parts of the House attending the reception that I held here yesterday. It was a wholly apolitical occasion, and it was amazing to hear of the problems experienced by Members as well as staff. Some people who talked to me had been in the hairdressing industry themselves, and were able to tell good stories as well as bad.
We already have a charter in the form of the 1964 Act, but, although it contains some good legislation, it is defunct for today’s purposes. I want the Hairdressing Council to have mandatory powers to require state registration. I want the 6,500 hairdressers who have registered voluntarily, and who are very professional, to become 250,000. That would professionalise the industry. It took me five years to learn my craft, which is comparable to the time that it takes to qualify as a solicitor. I went on to study trichology for a further two years, which is comparable to the time taken to qualify as a vet or any other member of the medical profession. I believe that the hairdressing profession should be given more accolades and should be turned from an industry or vocation into a profession, because that is what it deserves. [Hon. Members: “Hear, hear.” ] I thank hon. Members for that.
Perhaps this will be my legacy to the profession that I joined, but let me stress that this is not about David Morris trying to introduce legislation for his old industry. I think it fair to say that I am the only hairdresser in the House—indeed, the only hairdresser ever to reach the House—so I can speak with authority about my former trade, or profession, but my point is this. It is now 2011; may we please give the Hairdressing Council full powers to keep a register of hairdressers who are professional, and to strike off those who are negligent?
30 Nov 2011 : Column 976
2.37 pm
Mr David Nuttall (Bury North) (Con): I oppose the motion because I consider the status quo to be entirely appropriate. I will not detain the House for long, because my arguments are fairly straightforward.
First, I believe that the Bill would place an unnecessary burden on hairdressers, and I do not believe that there is any demand for it. I can honestly say that I have not received a single inquiry about this since my election, and that not once during the many years for which I campaigned to win a seat in Parliament did a single person raise the issue of hairdressing regulation. I think that the last thing British business needs at present is yet more rules and regulations. We do not want to criminalise hairdressers for simply not having a licence.
No doubt the proposed office for hairdressing regulation will soon become known as Ofcut. What we have not heard is what the cost of a licence from Ofcut would be, but I do know that it would mean either reduced profits for hairdressers or, more likely, increased costs for those who wished to use a hairdresser.
I see no reason why the present situation cannot continue. Most people are quite capable of asking around and finding out who is the best hairdresser in the locality. It is, of course, currently possible for hairdressers to register voluntarily with the Hairdressing Council, and to display their City and Guilds and NVQ certificates on the wall so that potential clients can see what level of expertise they possess. Of course, there have been tragic cases in which treatments and hairdressing processes have gone wrong, but I would venture to submit that even if all this new regulation were introduced, such mistakes would still be made. We have only to look around other regulated professions to see that that is the case. I was formerly in the legal profession. Solicitors are highly regulated but, as we all know, many people have suffered either financial or other loss as a result of difficulties with solicitors.
The mere fact that some form of regulation is introduced will not rid the country of the problems that my hon. Friend the Member for Morecambe and Lunesdale (David Morris) described. If problems do occur at the hairdresser’s, anyone has redress through the criminal justice system. I believe that what we need is self-regulation and not state regulation, which is why I oppose the motion.
Question put (Standing Order No. 23).
The House divided:
Ayes 63, Noes 67.
[2.41 pm
AYES
Adams, Nigel
Aldous, Peter
Andrew, Stuart
Bayley, Hugh
Birtwistle, Gordon
Bottomley, Sir Peter
Brown, rh Mr Nicholas
Burden, Richard
Chapman, Mrs Jenny
Clarke, rh Mr Tom
Crausby, Mr David
Crockart, Mike
de Bois, Nick
Dinenage, Caroline
Dobbin, Jim
Donohoe, Mr Brian H.
Ellison, Jane
Esterson, Bill
Evans, Chris
George, Andrew
Glass, Pat
Hancock, Mr Mike
Harrington, Richard
Heaton-Harris, Chris
Hemming, John
Hilling, Julie
Horwood, Martin
Howarth, rh Mr George
Kirby, Simon
Lazarowicz, Mark
Leadsom, Andrea
Mahmood, Mr Khalid
McPartland, Stephen
Mearns, Ian
Mensch, Louise
Michael, rh Alun
Mitchell, Austin
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, David
Murray, Sheryll
Nandy, Lisa
Nash, Pamela
Newton, Sarah
Nokes, Caroline
Opperman, Guy
Reid, Mr Alan
Roy, Lindsay
Russell, Bob
Scott, Mr Lee
Sheerman, Mr Barry
Smith, rh Mr Andrew
Stewart, Iain
Tomlinson, Justin
Twigg, Derek
Vaz, rh Keith
Ward, Mr David
Watts, Mr Dave
Weatherley, Mike
White, Chris
Whitehead, Dr Alan
Williams, Roger
Wright, David
Tellers for the Ayes:
Charlie Elphicke and
Karen Bradley
NOES
Beith, rh Sir Alan
Bingham, Andrew
Bradshaw, rh Mr Ben
Brake, rh Tom
Bruce, Fiona
Cairns, Alun
Colvile, Oliver
Docherty, Thomas
Dodds, rh Mr Nigel
Ellis, Michael
Field, Mark
Freer, Mike
Gapes, Mike
Griffiths, Andrew
Hemming, John
Henderson, Gordon
Hermon, Lady
Hopkins, Kris
Huppert, Dr Julian
Jackson, Mr Stewart
James, Margot
Knight, rh Mr Greg
Latham, Pauline
Lee, Dr Phillip
Leech, Mr John
Leslie, Charlotte
Long, Naomi
Lopresti, Jack
MacNeil, Mr Angus Brendan
Mactaggart, Fiona
Main, Mrs Anne
Mann, John
Maynard, Paul
McDonnell, Dr Alasdair
Mercer, Patrick
Mills, Nigel
Morris, Anne Marie
Morris, James
Mulholland, Greg
Munt, Tessa
Offord, Mr Matthew
Paisley, Ian
Percy, Andrew
Pincher, Christopher
Poulter, Dr Daniel
Pugh, John
Reckless, Mark
Redwood, rh Mr John
Rees-Mogg, Jacob
Ritchie, Ms Margaret
Robertson, Mr Laurence
Shannon, Jim
Simpson, David
Skidmore, Chris
Stevenson, John
Stewart, Bob
Stuart, Mr Graham
Syms, Mr Robert
Turner, Mr Andrew
Tyrie, Mr Andrew
Walker, Mr Charles
Walter, Mr Robert
Weir, Mr Mike
Wharton, James
Whittaker, Craig
Williams, Mr Mark
Wilson, Sammy
Tellers for the Noes:
Mr Philip Hollobone and
Mr David Nuttall
Question accordingly negatived.
30 Nov 2011 : Column 977
30 Nov 2011 : Column 978
Opposition Day
Living Standards
2.52 pm
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab): I beg to move,
That this House believes that the Government is out of touch and does not understand the impact of its policies, including the Autumn Statement, on children, parents, women and hard-working families; and further believes that these policies have resulted in a squeeze on households’ living standards.
I speak for many in the House when I say that I feel a debt to the hon. Member for Morecambe and Lunesdale (David Morris) for his bringing his 10-minute Bill before the House. I had no idea that it was so dangerous to go into a hairdresser’s, and I certainly will not return to one until his Bill becomes law. I do not know if I can speak for the Secretary of State for Work and Pensions too, but it is good to start debates on a note of consensus.
The verdict is now in. It is time to put all the excuses of the past few months—the snow, the cold, the royal wedding, the Japanese earthquake—to one side. We now see the true extent to which the Chancellor has drained the life out of the economy and its recovery. The Government are fundamentally failing to get our economy back on the move, and they demand of working people, parents and children that they should pay the price of the Government’s economic failure.
Yesterday, the Chancellor could no longer hide behind excuses. The Office for Budget Responsibility laid out the truth. Families, pensioners and businesses across the country have known for some time that his plan is hurting, but yesterday they found out that it is not working.
Stuart Andrew (Pudsey) (Con) rose—
Claire Perry (Devizes) (Con) rose—
Mr Byrne: I will give way in a moment.
The Government are now set to put on the national credit card £158 billion more than they planned a year ago—£6,500 for every house in this country. Why? It is because they are planning to put on the dole another 250,000 people over the next year or two. They are bringing down the number of people in jobs by 300,000, and they have put up the benefits bill—that sign of welfare waste—by an incredible £29 billion over the forecast period.
Once upon a time, the Chancellor told us that we were all in this together. Not any more—it is back to the economics of, “You are on your own.”
Sajid Javid (Bromsgrove) (Con) rose—
Mr Byrne: I will give way in a moment. There are not too many speakers on the Treasury Bench today, so there will be plenty of time for interventions.
30 Nov 2011 : Column 979
Let us consider what the Chancellor’s proposals mean for jobs. The OBR now predicts that unemployment will rise next year, and unemployment forecasts for the years ahead are up year after year until 2015. The Government say that there is no alternative, because they still believe that unemployment is a price worth paying. Unemployment is bad this year, but it will be worse in the years ahead: the OBR said yesterday that it will rise up to 8.7%, while youth unemployment already stands at over 1 million. The brutal price that our young people are paying for the Government’s failure to get people back to work is now clear to hon. Members across the House. Those young people will be at the sharp end of rising unemployment in the years ahead. I will give way to the hon. Member for Devizes (Claire Perry), who will perhaps tell me how the Government can do more to get down youth unemployment in her constituency.
Claire Perry: Does the right hon. Gentleman think that the words, “There is no money,” were sufficient excuse, or is that actually a fact?
Mr Byrne: The Chancellor said yesterday that he is putting £158 billion more on the national credit card—£8 billion more borrowing than I and my right hon. Friend the Member for Edinburgh South West (Mr Darling) set out. The Government are set to borrow £37 billion more than we set out in the Budget before the election. The tragedy is that 7,700 people in the hon. Lady’s constituency will see their tax credits cut next year to pay for the failure of those on her Front Bench to get this country back to work.
Mr Byrne: I will give way in a moment.
There have been announcements in the past few days, not, sadly, from the Secretary of State for Work and Pensions, but from the Deputy Prime Minister, who announced the youth contract, which is set to be so successful that the OBR said yesterday that it cannot count on its getting any extra people into jobs. All that we have had this week from the Minister for unemployment is a decision to blame the figures—it is all down to the statistics, not his failure to get people back to work.
Long-term unemployment among young people is going through the roof—it is up 83% this year alone—but another jobs crisis is emerging up and down the country among our most experienced workers. Among the over-50s, long-term unemployment is more than 110,000—up 20% since the start of the year. People with experience to offer, who have worked hard and paid in all their lives, deserve better than to be thrown on the scrap heap.
Charlie Elphicke (Dover) (Con): The right hon. Gentleman’s premise is that the Opposition would not have borrowed more money, but that is fundamentally false, as the reality is that they would have borrowed billions more to deal with the eurozone crisis. In addition, interest rates would have been higher, costing home owners more money on their mortgages.
Mr Byrne:
I know that the hon. Gentleman takes these matters seriously, and that he will feel bad about the fact that 10,000 families in his constituency are seeing cuts to their tax credits to pay for the failure of his Front Bench to get people back to work. He is such
30 Nov 2011 : Column 980
an assiduous attender of these debates that he will know as well as I do that the OBR’s analysis of our last Budget showed that we were set to borrow £37 billion less than the Chancellor set out to the House yesterday. He should explain that to the 10,000 families in his constituency who are seeing a cut in tax credits.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): The right hon. Gentleman is being generous, as ever, in giving way. I remind him, however, that there is obviously a split between him and the shadow Chief Secretary to the Treasury, because on yesterday’s BBC programme “The Daily Politics”, she was asked this specifically:
“If you had been writing the autumn statement, borrowing would have been higher? Yes or no.”
Mr Byrne: We do happen to believe that further action is needed to get people back to work, because we are now seeing the costs of the right hon. Gentleman’s Government over the past year and a half. We have now seen the Chancellor set out £158 billion of extra borrowing because he has drained the recovery of growth and put the benefits bill up over the course of this Parliament by £24 billion. That is the only part of his budget that is growing.
Mr Dave Watts (St Helens North) (Lab): Does my right hon. Friend not find it strange that Government Members talk only about deficit? They do not talk about unemployment, poverty or growth. Do we not need a more balanced approach to the problem?
Mr Byrne: My hon. Friend is absolutely right—and that is why unemployment is set to spiral over the course of this Parliament, with £24 billion on the benefit bill, which means a £1,000 extra bill for every household in this country.
Angie Bray (Ealing Central and Acton) (Con): As I have found before, the right hon. Gentleman does not like history. The fact is that a note was left saying, “There’s no money left,” and that had consequences. This country is living and breathing the consequences of how Labour managed the budget. We are in deficit, which is why we talk about it so often, and it is about time the Labour party recognised the consequences of the way in which it managed this country’s finances.
Mr Byrne: Perhaps the hon. Lady’s memory of history is suddenly faltering, because she should surely remember that in the Chancellor’s emergency Budget, borrowing turned out to be £20 billion less than my right hon. Friend the Member for Edinburgh South West projected when he was Chancellor. Unlike his, the Conservatives’ borrowing forecasts have come in £158 billion higher than originally projected. That means thousands of pounds more for every household in this country—and of course, the price of the consequences is being paid by the hon. Lady’s constituents. More than 7,000 families in her constituency are now seeing their tax credits cut to pay the higher bills of higher unemployment.
Ms Karen Buck (Westminster North) (Lab):
Can we turn from history to current affairs? One of the key messages from the Government was that they were
30 Nov 2011 : Column 981
going to make work pay. Following from my right hon. Friend’s argument about how additional spending is being generated because of the failure of their policies, would he comment on the fact that in-work benefits for working households, such as housing benefit for those in work, have risen by 42% since the general election, as 115,000 more households have been forced on to in-work benefits?
Mr Byrne: That underlines an extremely important point, and I hope that in the Secretary of State’s response he will say a little more about how he reconciles the “Budget” that we heard yesterday with his own honourable intention to ensure that work pays. Right now, in my constituency, I have working parents, especially women, coming to me and saying that they are now giving up work—because the Government are cutting benefits, meaning that it is no longer economic to work. Surely that cannot be right.
Sammy Wilson (East Antrim) (DUP): Does the shadow Minister not find it strange that the Government argue that if we were to borrow to stimulate the economy the money markets would go mad and put up interest rates, yet the markets seem to have no problem in lending us money to pay for unemployment?
Mr Byrne: And this is a Government, of course, who have brought forward plans to borrow another £158 billion —a bill that, ultimately, will be paid by the rest of us. It is a bill for economic failure.
Andrew Percy (Brigg and Goole) (Con): May I take the shadow Secretary of State back to the subject of youth unemployment? Doubtless the previous Government did some very good things in that area—they did some very bad things as well—but does he admit that the present situation was not created overnight? When Labour left office there was an upward trend in unemployment—[Interruption.] For youth unemployment, there was an upward trend from 2004. Does he accept that under Labour the number of children brought up in workless families hit record levels and the gap between the best performing and the worst performing schools widened? What he is saying is political knockabout, but this is a long-term issue, which deserves to be treated seriously.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Interventions are getting longer, and a lot of Members wish to speak. Please let us not use up the time on interventions.
Mr Byrne: I am afraid that the hon. Gentleman is simply wrong. Youth unemployment was coming down before the election; it has now gone through the roof, since his party took office. It is now up through the 1 million mark for the first time. Long-term youth unemployment in this country is up 83% since the start of the year. He would surely admit that that is a badge of shame for this Government, and demands much more urgent action from them.
George Freeman (Mid Norfolk) (Con) rose—
Mr Byrne: I will give way to the hon. Gentleman, and then I will make a bit more progress.
30 Nov 2011 : Column 982
George Freeman: Does the Opposition spokesman agree that his authority to talk about this subject would be heightened if it were not for the fact that during the previous 10 years, before his party lost office, youth unemployment rose to a quarter of a million—and that was during a boom? His authority to talk about this is hugely reduced by that track record.
Mr Byrne: Youth unemployment came down to record lows under the Labour Government. It was coming down before the election, because we chose to act. Now the key back-to-work scheme for young people has been taken off the shelf for the past year and a half. What is the result? Youth unemployment in the hon. Gentleman’s constituency is going up. He should explain that to young people in his constituency, and he should apologise to them. The back-to-work scheme set out by the Deputy Prime Minister last week is not even planned to come into place until next April. That shows how much his party cares about getting young people back to work.
Mr John Redwood (Wokingham) (Con) rose —
Mr Byrne: I shall give way in a moment.
The weakness in the jobs market is not abstract; it shows up in people’s pay packets. That is exactly what the Office for Budget Responsibility confirmed yesterday. Earnings, it says, are now set to fall throughout the rest of this Parliament. By 2016 wages will be no higher than they were in 2001—£1,400 below their pre-crash peak—yet prices are not falling; they are rising. Prices are going up over the course of this Parliament. Wages are falling and prices are rising. That double whammy is now hurting families all over this country.
Not long ago, the Governor of the Bank of England said that we in this country now confront the worst squeeze on living standards since the 1920s. Yesterday, the Institute for Fiscal Studies said that the squeeze was “unprecedented”. This is the biggest fall in household income since records began. With our nation’s family budgets under such pressure, we would have thought that the Government would step in to help. Not a bit of it. Instead, working families are being asked to pick up the pieces.
Mr Redwood: The right hon. Gentleman is making a very important point—that a big squeeze on living standards started under his party’s Government. It is continuing under the coalition. As the forecasts make clear, a big element in that is energy and fuel prices. Does he have any proposals that the Government could adopt to tackle that problem?
Mr Byrne: We do think that Government should be doing more in the energy market to help to bring down prices. The right hon. Gentleman will, I know, feel strongly about that, because of the 6,500 families in his constituency who are now seeing cuts in tax credits.
When wages are falling and prices are rising, people would expect the Government to do more to help, but what we now have is a budget set out yesterday that tightens the squeeze on working families. Last Friday the Deputy Prime Minister blustered his way through an interview on the radio and said, once again:
30 Nov 2011 : Column 983
“We will not balance the books…on the backs of the poorest”.
That is an old line, and today it rings pretty hollow, because that is exactly what the Government are doing.
Yesterday, the Government rejected any new tax on bankers’ bonuses. Instead, it is children, women and working parents who are picking up the tab for the Government’s failure to get people back to work.
Bill Esterson (Sefton Central) (Lab): My right hon. Friend is making the case extremely well about the unfairness of what the Government announced in the autumn statement about targeting those on lower and middle incomes instead of targeting the bankers and the bonuses—a move that was successful under Labour and should be repeated by the present Government. He was asked about prices, and I am sure that he will soon say something about cutting VAT as an effective way of helping hard-pressed families through reduced prices.
Mr Byrne: I will indeed come on to that topic in a moment, but I first want to talk about the impact on children of yesterday’s Budget. We knew before yesterday’s Budget that all the gains made in reducing child poverty over the last decade were set to be wiped out by the decisions of just the last year. Once upon a time the Prime Minister told us he would not increase child poverty. That was the rhetoric, but today the Institute for Fiscal Studies has given us the reality. It has already said that almost one in four children will be in poverty by the end of the decade, thanks to this Government. That was before the attack on working families in yesterday’s Budget. A generation of children will not thank this Government because hundreds of thousands more of them are now destined to grow up poor.
Then we had yesterday’s Budget, reversing any improvement in child tax credit for the poorest, and robbing 5.5 million families of £110 per child. There will now be 13 cuts to children’s benefits beginning in March, which next year will take out £2.5 billion in benefits for children. That is almost eight times the level of benefit cuts this year. Almost £12 billion is coming out of children’s benefits over the course of this Parliament; that is £1.5 billion more than is coming off our nation’s bankers. I therefore have to ask this question: what kind of Government take more off children than they take off bankers?
Nick de Bois (Enfield North) (Con) rose—
Mr Byrne: Perhaps the hon. Gentleman would like to answer that question?
Nick de Bois: Does the right hon. Gentleman not recall that in his Government’s 13 years in office between 1997 and 2010 they increased personal tax allowances by only £2,400, whereas in only 18 months we have increased people’s earnings by raising those allowances by £1,800, and we will go further by the end of this Parliament by raising the figure to £10,000? Is that not a major contribution to addressing lower pay?
Mr Byrne:
No, because what comes with that is the biggest raid ever on the benefits of children and families. Let us consider the bill that will be paid by families under yesterday’s announcements. An average family on the minimum wage with two kids will lose £320 a year as a result of the changes made yesterday. They would only ever gain £120 a year through the increases in tax thresholds to which the hon. Gentleman referred.
30 Nov 2011 : Column 984
Overwhelmingly, poorer families and children in this country are now getting poorer as a result of his Government’s Budget.
No wonder Save the Children said yesterday:
“For many families the scrapped £110 increase in Child Tax Credit could mean the difference between putting food on the table for their children or having them go hungry.”
The Child Poverty Action Group said:
“Britain’s poorest families have been abandoned today and left to face the worst…the government has actively decided to let child poverty rise.”
Those on the Treasury Bench should be ashamed of themselves; they should be ashamed of what they have done to children in this country. Labour will be the party that stands up for a fair deal for working parents.
The scale of the cuts to children’s benefits is not the only story. There is more. Let us consider the cuts to working tax credits for working families. Working families are already in line for seven big cuts to their tax credits next year. That was going to lose them more than £1.7 billion, but that was not enough for the Chancellor, so yesterday they got an eighth cut to their working tax credits. They will now lose almost £2 billion next year. That is almost double the cuts they received last year.
Some 2 million families in our country now face a double hit, with the cuts to child tax credits and the freezing of the working tax credit. There is therefore a great deal of extra squeeze that will hit working families, but I want to flag up one cut in particular. It is the subject of a Westminster Hall debate secured by my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), and I want the Secretary of State to reflect on it further, as I think it will have consequences that he would not intend. One of the changes he will make next year is to increase the number of hours a working couple must work in order to get tax credits. At present, they can qualify for tax credits if they work 16 hours a week. From next April, they will need to work 24 hours a week. At present, however, companies are not handing out extra shifts. Many families that will be affected work in the retail sector. If anything, big retailers are cutting back on their employees’ hours, not increasing them. A family that is on the minimum wage for 16 hours a week might bring in just over £5,000. Working tax credits and child tax credit might increase their take-home pay to about £11,000. If they cannot get an extra shift, all of that working tax credit will be gone. Those families may well find themselves better off on jobseeker’s allowance.
We must not create a situation in which cuts to tax credits mean families are better off on benefits than in work. I am sure that is not the Secretary of State’s intention, and I urge him to look at this matter in more detail before those cuts bite in April next year.
The Minister of State, Department for Work and Pensions (Steve Webb): I am trying to follow the right hon. Gentleman’s reasoning. I think he has argued so far that people out of work should not face cuts and that people in work should not face cuts, so who should?
Mr Byrne: The Pensions Minister—[Interruption.] Government Front-Bench Members might think cuts to working families are funny, but I can tell them that families in their constituencies do not.
30 Nov 2011 : Column 985
Mr Byrne: The Pensions Minister should reflect on the following point. When we add together the cuts to children’s benefits and the cuts to families’ working tax credits, the total is £20 billion over the course of this Parliament. That is twice the amount of money his party is taking off the country’s bankers. Surely he would reflect on the wisdom of taking more off children and working parents than off bankers? I think he should reflect on that further.
Claire Perry: Will the right hon. Gentleman give way?
Sajid Javid: Will the right hon. Gentleman give way?
Mr Byrne: I shall give way to the hon. Gentleman, as I have given way to the hon. Lady before.
Sajid Javid: I thank the right hon. Gentleman for giving way. When he left office, why did he leave a note saying there was no money left?
Mr Byrne: It takes some audacity for a Member on the Government Benches to stand up after a Budget that has added £158 billion to the nation’s credit card and throw cheap jibes across the Chamber.
Mr Byrne: The hon. Gentleman should explain to his constituents how £6,500 for every household in his constituency has been added to the nation’s credit card. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The hon. Member for Devizes (Claire Perry) is pushing her luck today. She has already intervened, and I do not mind her rising to seek to do so again, but continually to stand up and barrack is not the way forward. She has a great future in this House, and I am sure she wants to protect it.
Mr Byrne: Finally, I want to talk about the impact on women of these Budget changes. The shadow Home Secretary, my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), will say more on this in her winding-up speech. She has already set out with clarity and force how the Budget changes made by this Government have, overwhelmingly, hit women harder than men. I would just highlight to Members, and especially those on the Treasury Bench, the comment made yesterday by the hon. Member for Calder Valley (Craig Whittaker). He put it very simply when he said that of course women are paying the price most. At least someone on the Government Benches has the honesty to tell it straight. He was right: women are being hit hardest by these Budget changes, not least through the changes to child care. Some 30,000 women in this country have had to give up work in the last year because they can no longer afford the child care. That is £50 million in lost tax to the Exchequer. What a shambles.
The tragedy in this debate is that there is a different way. We have set out a different way of jump-starting growth and getting people back into work. Yes, it does start with a tax—a fair and sensible tax—on bankers’ bonuses to help get 100,000 young people back to work.
30 Nov 2011 : Column 986
What have this Government proposed instead? They have proposed a fund of about one third of the size, paid for not by those with blessings to share, but by children and families who are already feeling the squeeze. That decision alone tells us everything we need to know about who this Government stand for. That decision alone tells us how out of touch this Government have now become, and it is for that decision if no other that I say this House should support our motion.
3.19 pm
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): I am tempted to ask, “Is that it?”, but perhaps I will not.
Yesterday, the Office for Budget Responsibility published its forecasts for the UK economy over the coming years, which painted a very difficult picture: Britain is expected to grow this year by 0.9% and next year by 0.7%; growth is forecast at 2.1% in 2013, 2.7% in 2014, 3% in 2015 and 3% again in 2016. The OBR showed that in 2009-10 borrowing was £156 billion a year. Last year, that fell to £137 billion. This year, the OBR expects it to fall again to £127 billion.
The OBR did not just publish forecasts. It did us a favour, because it looked back and reopened the books on the era of the previous Government, and an important factor emerged. It told us that an even bigger component of the growth that preceded the financial crisis was part of an unsustainable boom, and that the bust was deeper and had an even greater impact on our economy than previously thought, meaning that the effects will last even longer. It said:
“The peak-to-trough fall in output over the recession is now estimated to have been greater than previously thought at 7.1% rather than 6.4%”
That is a huge change to the figures. It found that from near the end of 2010 we were taking a serious hit from rising global food and energy prices.
I want to add a further quotation from the OBR as these matters form the baselines of our debate today:
“Most of the weakness can be explained by an external inflation shock”.
Its third point is that the eurozone crisis is
“likely to have contributed to weaker UK growth and business and consumer confidence.”
Mr Watts: What credibility will the public attach to the forecasts of the right hon. Gentleman and his advisers when despite every forecast they have made, the deficit and unemployment have gone up and growth has gone down?
Mr Duncan Smith: I hope they will attach no credibility if they were our forecasts. We set up the OBR—an independent body that Opposition Members accepted—and its forecasts are about as good as we shall get, so we should give it credibility for at least trying to get the forecasts right. That is a damn sight better than the past 12 years of gerrymandered Treasury figures, not one of which had any credibility.
Sheila Gilmore (Edinburgh East) (Lab):
The Secretary of State quotes from the OBR, so he might like to add that it stated that we came out of recession quicker and that growth had increased by the first part of 2010.
30 Nov 2011 : Column 987
The OBR made its predictions before the autumn statement. Last year, it made its predictions before the statement. Its predictions were wrong, because the Government’s policies were wrong. Its dire predictions this year were made before this new set of policies.
Mr Duncan Smith: I am grateful for the intervention, as it allows me to remind the hon. Lady that in looking back at the period in the run-up to and start of the recession the OBR said the depth of boom and bust was greater than was anticipated—by more than 1%. The baseline from which we started, therefore, was much lower, which means, as is seen by the Treasury, that the amount we would have had to borrow would have been more than £100 billion if we had not taken our decisions early on. Labour Members’ posturing about their own position is fundamentally incorrect, and they must recognise that.
The OBR said that the eurozone crisis is
“likely to have contributed to weaker UK growth and business and consumer confidence.”
I know that Labour Members do not like to hear that that is an issue, but it is seen by everybody, not least of which the OBR.
Stella Creasy (Walthamstow) (Lab/Co-op): We all welcomed the establishment of the OBR because of the independence it gives. The full quotation from the OBR states that
“an external inflation shock constraining real household consumption”
is the reason for the revision in growth forecasts. How does the Secretary of State think that bearing down further on family incomes will help our economy to grow again?
Mr Duncan Smith: The reality, as the OBR and the Institute for Fiscal Studies make very clear, is that you cannot borrow your way out of a debt crisis. I know that Opposition Members are indulging in voodoo economics—a fake religion—but almost every economist abroad and at home says that you cannot borrow your way out of a debt crisis.
Charlie Elphicke: I was just looking at Labour’s five points for growth, which would cost a lot, would require us to borrow from the markets, and would drive up mortgage rates for hard-pressed home owners. Would that not be irresponsible and reckless?
Mr Duncan Smith: The answer, very simply, is that, yes, it would be.
Yesterday, there was much jeering about the issue of Europe. The Opposition say one thing one day, move on and then say another. I remind the shadow Chancellor, who is not here today, of something he said in July:
“We need to face up to today’s problems. When you see Italian and Spanish bond spreads you can see the situation is incredibly dangerous”—
and that came from a man who yesterday said that we cannot blame anything on the European crisis. That is absurd, and the Opposition must get their act together over the reasons we are where we are.
30 Nov 2011 : Column 988
Mr Duncan Smith: I want to make a little progress, but then I will give way.
Whatever we say, in government or in opposition, I fancy that were the previous Chancellor in office he would be saying many of the things that my right hon. Friend the Chancellor said yesterday, because once in government people become strangely rational, and that leads to difficult choices. We can play party games, but I want to run through some of the choices we have had to make. We had to choose whether to invest more in supporting young people, and we chose to invest in the youth contract—about £1 billion over the next three years. That was an absolute priority for us, so we had to tighten two or three other areas to enable us to provide that support. These are tough choices. If we had a pot of money to raid, yes, we might have raided it, but there is none, as the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) reminded us on leaving office.
Unemployment is therefore a huge challenge for us—it is why we set up the Work programme. None the less, the OBR estimates that private sector employment will rise by 1.7 million by 2016, largely offsetting the forecast reduction in public sector employment.
Frank Dobson (Holborn and St Pancras) (Lab): Will the right hon. Gentleman give way?
Mr Duncan Smith: I will give way in a moment. I promised I would give way to the hon. Member for Sefton Central (Bill Esterson), too.
The growth plan proposes £6.3 billion of additional infrastructure, £1 billion for new regulated industries and moves, with the Association of British Insurers, to target a further £20 billion of extra investment.
Bill Esterson: I wonder whether the right hon. Gentleman believes in fairness. I expect he will say he does. If so, why do the Government’s policies target low income families much more than those at the top?
Mr Duncan Smith: I do not agree with the hon. Gentleman. I am talking about choices. I remember a great deal of debate, even in the Select Committee, about whether the working-age unemployed would see their benefits reduced. Everybody said it would happen; newspapers predicted it. In fact, my right hon. Friend the Chancellor has stuck to increasing them by CPI at 5.2%—just one good example of making a choice about who would be affected most direly by any change or any reduction. That was a bold choice and one on which we should congratulate him.
Mr Byrne: I am grateful to the Secretary of State and I am following his argument closely. Further to the intervention from my hon. Friend, the right hon. Gentleman will no doubt have seen the analysis from the Institute for Fiscal Studies this morning. If it is true that the Government are not hitting the poorest families harder, why has the IFS said that for 2012-13 the poorest three deciles in this country are being hit three times harder than the overall average?
Mr Duncan Smith:
According to the findings of the IFS and of the Treasury, the top decile pays a huge amount more in relative terms than anybody else. [Interruption]. Hon. Members should listen. Taking
30 Nov 2011 : Column 989
account of uprating, about 80% of households with children will see their tax credit awards rise at least in line with earnings next year. Members can pluck little bits out, but when they average it across, they will see that there have been some choices.
I am quite prepared to recognise that the pressure on the bottom deciles will always be tougher and harder because of where they spend their money. That is not the issue. The issue is, within the bounds of what we could afford, what were we trying to protect? The decisions we took and the changes we made, which I will come to in a moment, mean that we have protected the most vulnerable as well as we could and better than the Opposition would have done, had they been in power.
Mr Byrne: I am grateful to the Secretary of State. He is being most generous. The IFS was pretty clear this morning. It said that the richest decile would see an impact of just over 0.5%. The poorest decile would see an impact of minus 1.6%. So it is clear that the poorer families in this country are being hit much, much harder than the richer ones.
Mr Duncan Smith: I am sorry, those are not the figures that I have. The figures on the chart that I am looking at show that the richest decile has a greater proportion of its income taken, even in relative terms. Yes, I accept that, relatively, those in the bottom three deciles do quite badly in many senses, but the right hon. Gentleman should look at the Treasury figures, which show that the wealthiest decile do worse than anybody else, in absolute and in relative terms.
Mr Duncan Smith: I am going to move on.
The commitments made by the Chancellor in the previous Budget have to be taken into consideration, along with the ones that I have mentioned. The new offer on child care comes on top of our expansion of free nursery education for all three and four-year-olds. We are already set on a path of far-reaching reform in our welfare system, getting work incentives back in order and delivering a system that people finally understand. We will do this through the universal credit, which will in two years rebalance any of the out-of-work incentives that got out of balance, so that work pays.
The Opposition had 13 years to make the kind of changes that we are making. We have already got them under way. They will take about 350,000 children and more than 500,000 adults out of poverty. Some £7.2 billion has been invested in the fairness premium, including the pupil premium, to support the poorest in the early years and at every stage in their education. We have invested in 4,200 new health visitors.
Almost none of those changes is taken into consideration in the rather narrow way of measuring who is in poverty and who is not in poverty, particularly child poverty. This is an important point. I spoke earlier about the money and the effort that we are putting in for the poorest. The wide range of steps that we have taken is, on balance, positive. None of those has been taken into account because it is not possible at this stage to calculate the effect, but I want to do that and we ought to do so.
30 Nov 2011 : Column 990
Huw Irranca-Davies (Ogmore) (Lab): The right hon. Gentleman’s heart is in the right place, but his head is in the clouds. We can argue over definitions and data, but let me read to him the response of the chief executive of Citizens Advice, who says:
“The Chancellor has broken the promise he made in last year’s Budget to protect families on the lowest incomes from the impact of last year’s harsh cuts by increasing child tax credits above inflation, leaving them now with no protection at all… Make no mistake, this—
“means children in the poorest homes are at risk of going cold and hungry to pay for the new schemes the Chancellor has announced today”.
Why do the poorest in society have to pay for the schemes that were announced yesterday? The right hon. Gentleman’s heart is in the right place, but he has not thought this through.
Mr Duncan Smith: It is not just the poorest who are paying. Everyone will have to bear a proportion, because everybody is going to pay for this. Yesterday the Opposition claimed that the shocks that caused inflation are not relevant, yet today they stand there and tell us that it is all down to inflation. They need to make up their minds which case they want to mount first.
Mr Redwood: Will my right hon. Friend confirm that it is his strong intention always to make sure that it is worth while working, and will he bring us up to date on the progress and timetable on that?
Mr Duncan Smith: I will indeed. The point I was making was that, as the universal credit comes forward in the next two years, it will do huge amounts to ensure that the incentives to return to work are improved. Secondly—and this relates to complaints from Opposition Members about the tax credit—it will reset the baseline so that those incentives will be increased and improved. Had we remained in the same position as the previous Government with their tax credits, there would be no way back for us now.
Kate Green (Stretford and Urmston) (Lab): I am well aware that the Secretary of State has great hopes for the universal credit to incentivise people into paid employment, but does he accept that the cumulative effect of last year’s Budget and spending review, this year’s Budget and yesterday’s statement is that the incentives to work for low-paid employees have been worsened as a result of the reduction in support for child care costs through the tax credit, the cut in child benefit, the freezing of the lone parent and couples element of tax credits and the fact that it is all set against a rise in living costs that families cannot afford to meet?
Mr Duncan Smith: Seen over the whole period of this Parliament, and taking into account things such as lifting the tax allowances, the commitment of the coalition to lift them further before the end of the Parliament, and a whole variety of the points that I have already laid out, I do not agree with the hon. Lady. When Opposition Members look back, they will realise that the introduction of the universal credit will result in positive work incentives and we will get people back to work, as we are already doing.
30 Nov 2011 : Column 991
I have already mentioned some of the things that have been introduced in the past year and a half, and yesterday the Chancellor also announced reforms to support working families which no Opposition Member has taken into consideration. We have deferred the fuel duty increase planned for January and cancelled the inflation increase planned for August 2012. The tax on petrol will be a full 10p lower than it would have been without our action in the Budget this autumn, and that means that families will save £144 on filling up the average family car by the end of next year. Fuel and the cost of driving are a very big driver of poverty and we are doing something about it. We are also regulating the rise in fares on national rail, the London tube and London buses, and we have already offered councils the resources for another year’s freeze in council tax, which I hope they all take up. Our plans to raise personal tax allowances will pull over 1 million people out of tax altogether, which is a big incentive for people to go back to work. When the Opposition complain about changes to working tax credits, they should remember their punitive decision to abolish the 10p starting rate of tax. They did not care what happened to the poorest in society.
Neil Carmichael (Stroud) (Con): My right hon. Friend has mentioned the 900,000 people who are being lifted out of income tax altogether. Is that not a significant step in the right direction?
Mr Duncan Smith: I agree with my hon. Friend. The reality is that we are raising people out of tax, while what the Labour Government did by getting rid of the 10p starting rate was to drop more people into higher rates of tax. It was really dismissive, very regressive and attacked the poorest.
John Howell (Henley) (Con): Is my right hon. Friend as surprised as I am that there has been little or no mention from the Opposition of the benefit to living standards that comes from keeping interest rates low?
Mr Duncan Smith: I was going to come on to that. Had interest rates gone up and had we been paying more for our borrowing, we would all—including those paying mortgages—be poorer.
This debate about living standards is important. Of course, those standards are very tight, and I make no bones about the challenge that we face, but let us not forget where we came from. Let me take the House back to 2007, when personal debt had rocketed to about £1.3 trillion and we had the highest structural deficit in the whole of the G7. That was before the recession began. That is a completely unsustainable picture, and it required very painful readjustment. As my colleagues know, the problem was that we entered the recession ill prepared for the consequences. When Labour Members ratcheted up spending by a massive degree, they simply postponed the inevitable. After all, the IFS forecast for the period 2008-2011 was that living standards would fall by 1.6%. This was a case of a fall in living standards postponed, with pain pushed on to future generations. People do not have to take my word for it—the IFS said:
“Much of the impact of the…recession on UK living standards was not felt until after the economy had stopped contracting, but that…pain was most definitely delayed rather than avoided”.
30 Nov 2011 : Column 992
Claire Perry: Does my right hon. Friend agree that adopting the Opposition’s proposals would just delay that pain further for future generations, and that this debate would be irresponsible in the extreme if we did not think about the living standards of our children and grandchildren?
Mr Duncan Smith: My hon. Friend, not for the first time, hits the nail firmly on the head. The reality is—
Mr Duncan Smith: I will give way in a minute. [ Interruption. ] Relax—I will give way. The point is that there is a choice: we can either let this thing slide, with higher interest rates and all that goes with that, and let our children pick up the debt and the deficit, or we can deal with this ourselves and give our kids at least a fair chance.
Of course living standards are under a squeeze—we know that—but that is something we utterly regret. Nobody wants to stand here and say that that is the purpose of what we do—it is not—but it is part of what we are having to do, and we need to get living standards up again as fast as we can. The forecasts from the Office for Budget Responsibility show that that will be the case. If Labour Members were being realistic, they would accept that no matter who was in power, standing here, they would have to deal with exactly the same problem.
Catherine McKinnell (Newcastle upon Tyne North) (Lab): The Secretary of State and the hon. Member for Devizes (Claire Perry) talk about the children of the future, but I would like to bring their attention back to the children of today. Is the Secretary of State aware of recent Government figures that show that the number of children in need this past year has risen by 3,600, with squeezed living standards putting vulnerable families further at risk and pushing more cost on to the state?
Mr Duncan Smith: The children of today are also, more than likely, the children of the future, so we do not want to split hairs about this. Children are children, and as they become adults we do not want them to have to pick up the debt and the deficit that we leave behind. It is all about taking difficult decisions, being honest about what those decisions are, and recognising that if we do not take them now, we will have them forced on us by other people.
Mr Rob Wilson (Reading East) (Con): May I remind my right hon. Friend of the record of the previous Government, which included imposing a 100% rise in council tax on my constituents, upping the pension rate by a pathetic 75p for our old-age pensioners, and ratcheting up fuel prices? How did that help children and families across our country?
Mr Duncan Smith: I wish that we saw a little more realism from Labour Members in accepting that they were, in many senses, partly the architects of the difficulty that we are in.
Glenda Jackson (Hampstead and Kilburn) (Lab):
I find it absolutely incomprehensible that the Secretary of State is able to discard the real pain that is now being
30 Nov 2011 : Column 993
suffered by children because of his Government’s bizarre choices based on the argument that they are going to become adults and will then have to pay further down the line. Is he really equating the possibility of a child losing its home, its school, its friends, its family, its support system, and watching its parents having to give up work because they cannot afford child care, with what is going to happen further down the road? That is bizarre.
Mr Duncan Smith: Of course, the hon. Lady would be right if that were what I was saying. What I am saying is quite simple: it is that our responsibility right now is to get the economy back in balance so that children do not have to pick up the debts. Let us remember that the deficit that we are dealing with is the pump that fuels the debt, and that debt is the legacy that we will leave them.
Mr Duncan Smith: Wait a minute—I am trying to answer the hon. Lady. She may not like the answer, but I want to finish it. The reality therefore is, yes, of course, but I think that we have done as much as we can to protect those who are in difficulty.
In answer to the hon. Lady, I should like to list a few things that we have done. Bearing in mind the changes we have made to taxation, more than half of those who will be lifted out of income tax will be women. We are investing an additional £300 million in child care support on top of the £2 billion already being spent. There will be 5,000 mentors to support women entrepreneurs and we are creating the women’s business council to advise Government. There will be up to £2 million to support women to set up and expand businesses in rural areas. We are improving child tax credits this April with a £180 real-terms permanent increase in the child element. Next April, there is an increase of 5.2% and a further £135. We are doubling the number of two-year-old kids who receive 15 hours of free education a week. There is also the £2.5 billion pupil premium. I could go on and on. We are doing huge amounts to try to protect the poorest in society.
Mr Watts: Part of the help package that has been set out is the money that will go to London families to keep rail and bus fares down. Does the right hon. Gentleman have a similar package for my constituents?
Mr Duncan Smith: It is all rail fares, but I do not want to split hairs with the hon. Gentleman about whether he thinks it will help his constituency. I think it will.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab):
The Secretary of State talks about protecting women but he will know that House of Commons Library figures show that women are paying two thirds of the contribution in tax and benefit changes. He also said that the personal allowance increase benefits women more than men. Does he admit that the truth is that the Library figures show that while 13,500 women benefited from the personal allowance increase even though it was compensated for by other cuts, 16,800 men benefited,
30 Nov 2011 : Column 994
so in fact women are a minority, even from the personal allowance increase that he parades as a change to help women?
Mr Duncan Smith: I can look at the Library’s figures and decide whether they or our figures are correct. We will have a look at them. My view is that the figures that we have show that more women than men benefit from that change. We can debate that if the right hon. Lady likes, but at least she is admitting that, one way or the other, a significant number of women benefit dramatically. That is a good starting point.
I want to move to an important subject. Given that this is an Opposition day debate, I had rather hoped––
Sarah Newton (Truro and Falmouth) (Con): Before we move from the topic of hard-working women such as those in my constituency, especially those on the lowest incomes, who depend on informal care from grandparents, perhaps my right hon. Friend could share with the House the many things we have done to support grandparents on low incomes.
Mr Duncan Smith: I am grateful to my hon. Friend who, as ever, talks sense, and I agree with her.
This is an Opposition day debate and I had hoped to hear something about what they would do to fix things. My right hon. Friend the Member for Wokingham (Mr Redwood) asked a very specific question but never received an answer from the right hon. Member for Birmingham, Hodge Hill. We have today had to endure the usual waffle and confusion. On the one hand, the Opposition criticised us yesterday for borrowing too much, but on the other they seem to think that more borrowing is the only way to fix the deficit. The director of the IFS was pretty clear yesterday on the Opposition’s position on borrowing more to spend. He said:
“You would have to believe some pretty surprising things about the way the economy works to think that if you reduce tax by a pound then borrowing would go down rather than up.”
Does the right hon. Gentleman agree with the director?
Mr Byrne: Does the Secretary of State acknowledge that the benefits bill rising on his watch by £29 billion is a sign of failure? It is too high and it would come down if the Government helped more people back into jobs.
Mr Duncan Smith: With respect, that is not a policy; that is just a lot of waffle. In reality, what the right hon. Gentleman has to tell us—[ Interruption ] —and I will give way to him again or to theright hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper)—is whether he agrees with the shadow Chief Secretary to the Treasury, who yesterday said that if the Opposition had made the autumn statement, they would be borrowing more.
Mr Byrne: We think that we could get more people into jobs if we had a temporary cut in VAT to get shoppers back on to the high street; if we cut national insurance for small firms to hire extra workers; if we brought forward infrastructure projects, none of which we saw yesterday; if we cut VAT on home improvements; and if we had a tax on bankers’ bonuses to get 100,000 young people into jobs.
30 Nov 2011 : Column 995
Mr Duncan Smith: Borrowing, borrowing, borrowing. More borrowing—isn’t it wonderful? Interestingly, the Opposition were supposed to say that they would stick to the original Darling plan, but the measures just laid out involve borrowing way above that, because, as my right hon. Friend the Member for Wokingham has said, if we look at what the Opposition have opposed, out of all that that we have had to do, we find that the bill now stands at some £91 billion extra a year, or £326 billion for the next five years in which they might have been in government.
These are all the spending cuts that the Opposition have opposed; the VAT position—opposed; welfare savings—opposed; in-year spending cuts—opposed; local government reform—opposed; capital spending on education—opposed; two-year public sector pay freeze— opposed; cuts to capital investment allowances—opposed; increasing public sector employee contributions—opposed; Ministry of Justice reform—opposed; police reform— opposed; DEFRA reform—opposed; cuts to the HMRC budget—opposed. That is not a policy; that is a joke.
Mr Byrne: The truth is that the plan laid out by my right hon. Friend the Member for Edinburgh South West (Mr Darling) would have halved the deficit over four years and, according to the OBR, resulted by the end of this Parliament in borrowing £8 billion less than that which the Chancellor set out yesterday. It would have involved borrowing £37 billion less than the Chancellor over the forecast period. The truth is that he has put borrowing through the roof, because he has put welfare through the roof, because he has put unemployment through the roof.
Mr Duncan Smith: The reality is that the OBR yesterday told us categorically that the position in which the Labour Government left us was significantly worse than anybody expected. It also said that unless we had taken the decisions that we took last year, we would be borrowing more than £100 billion in each year of this Parliament. On top of that, the Labour party’s measures would have resulted in even worse, but at least we had a little honesty from the shadow Chief Secretary to the Treasury, who said that borrowing would rise because she would borrow more. Given the economic situation, the Treasury estimates that such measures would cost far more—on the back of the OBR figures.
We now know what the Government at the time were doing, and what the Opposition today are about. They are determined to put hard-won interest rates, which we have held down, at risk. Last April, under Labour, our interest rates were higher than Italy’s; 18 months later, we are the only major western country to have seen its credit rating improve. Italy’s interest rates are now about three times ours, despite it having a lower deficit—actually, almost half the deficit that the previous Government left us. So, while the rest of Europe is under intense pressure, the UK remains a safe haven and the Labour Opposition are completely confused.
Yesterday the shadow Chancellor insisted that low interest rates were the sign of an economy in trouble. That is the same man who, back in 2004, described long-term interest rates as
“the simplest measure of monetary and fiscal policy credibility”.
Hugh Bayley (York Central) (Lab): Will the Secretary of State give way?
30 Nov 2011 : Column 996
Mr Duncan Smith: Let me lay out the facts to make things simple for the Opposition before I give way. A 1% rise in our market interest rates would add £10 billion to mortgage bills; the average family with a mortgage would have to pay £1,000 more every year; the cost of business loans would increase by £7 billion; taxpayers would be forced to find an extra £21 billion in debt interest payments—and the ex-Chief Secretary to the Treasury has the front, the absolute front, to talk about squeezing living standards. If the Opposition had their way, living standards would collapse.
Hugh Bayley: Does the Secretary of State not recall that at the time of the general election Britain’s national debt was significantly lower than that of Italy, France, Japan and the United States? The reason Italy faces its economic problems is that its national debt is much higher than that which this Government inherited from the Labour Government.
Mr Duncan Smith: It is well worth reflecting on the fact that the previous Government’s debt cannot be detached from their deficit. In case the hon. Gentleman does not understand it, I will explain that what they did was ratchet up spending before the recession began. We had the largest structural deficit of any G7 country before the recession began.
Mr Duncan Smith: No, I will not give way. The previous Government then went on a spending spree, ratcheting up the deficit, which now pumps the debt. It is no good playing silly games—
Mr Duncan Smith: No, the hon. Gentleman can sit down. It is no good. He is not going to play games over the difference between the deficit and the debt. The reality is that Labour cannot weasel out of it. It left us with a tragedy that we are having to put right, which is why we will oppose the motion.
Mr Deputy Speaker (Mr Nigel Evans): Order. I remind the House that there is a six-minute limit on speeches.
3.56 pm
Ian Mearns (Gateshead) (Lab): I am grateful to be called to speak in the debate. The Government’s failure in economic policy is having a profound effect on our nation, but it is also having a disproportionate impact on regions such as the north-east and the poorest in our society. I have every sympathy for the squeezed middle, and many of my constituents are part of it, but I have much greater sympathy for the people who are the battered base in our economy, the very poorest in our society, who the Government’s policies are attacking the worst.
In March the Government launched their much-heralded “The Plan for Growth”. In the foreword, the Business Secretary and his new friend the Chancellor stated:
“This Plan for Growth is an urgent call for action. Britain has lost ground in the world’s economy, and needs to catch up. If we do not act now, jobs will be lost, our country will become poorer
30 Nov 2011 : Column 997
and we will find it difficult to afford the public services we all want. If we do not wake up to the world around us, our standard of living will fall, not rise.”
Fiona O’Donnell (East Lothian) (Lab): Does my hon. Friend agree that one area where we are missing an opportunity for growth is green growth, and that yesterday the Government finally shed any claim to be the greenest Government ever by threatening investment in green technologies and green jobs?
Ian Mearns: I am grateful to my hon. Friend for her comments, which are absolutely true. Certainly, companies in the north-east that have invested heavily in plant to develop photovoltaic cells for household generation and microgeneration have had the base of their work cut away by the Government’s slashing of input tariffs, which will have a disastrous effect on them.
The warning from the Business Secretary and his new friend the Chancellor was a call to action—fine words, but we all know that actions speak much louder. In my constituency and in the wider north-east the impact of the Government’s failure has been, and will be, enormous. Even before their economic sabotage, the Local Knowledge public sector employment survey predicted more than 287,000 public sector job losses in the north-east alone. As a consequence of the Chancellor’s statement yesterday, that figure will probably be higher. The Government claim that we are all in this together, but they know, as they knew before embarking on their failed economic experiment, that it will be the poorest and most vulnerable regions and people who will pay the greatest relative cost.
Jessica Morden (Newport East) (Lab): Does my hon. Friend agree that the spectre of regional pay, which the Government raised yesterday, will be a huge concern for workers in Wales and the north-east, who will end up doing the same jobs for less pay?
Ian Mearns: I could not agree more. If we want an economic race to the bottom, that is exactly the sort of policy to follow.
In September 2010 the BBC published a report that demonstrated clearly which regions would suffer most. Spending cuts were “to hit north harder”, it reported. BBC-commissioned research showed that industrial areas in the north-east and the midlands are least resilient to economic shocks. It showed that Middlesbrough is ranked as the most vulnerable, followed by Mansfield in Nottinghamshire, and Stoke-on-Trent. The Experian research suggests how England’s regions may cope or not cope with further public sector cuts. The study looked at the ability of each local authority area to withstand sudden changes in the economy, and a clear north-south divide is evident in the research. Elmbridge and Waverley in Surrey and St Albans in Hertfordshire are the most resilient places, and places such as those I mentioned are the least resilient.
Jim Shannon (Strangford) (DUP): Clearly, the changes in working tax credit and child tax credit will also affect people, and those who are not on the poverty line but are close to it will be pushed towards it. Does the hon. Gentleman believe that the Government’s changes in working tax credit and child tax credit will have a harsh impact on those people who can least afford it?
30 Nov 2011 : Column 998
Ian Mearns: That is exactly the case, and the impact will be felt more greatly in the regions outside the south- east.
The BBC’s research revealed a clear north-south divide, and a number of factors within the categories were analysed, including the number of vulnerable and resilient industries within an area, the life expectancy of residents, the earnings of workers, and the unemployment and crime rates. The Deputy Prime Minister even admitted at the time that Experian’s research showed that a north-south divide was already present in England. He said that large spending cuts to be announced in the following months should be seen as a broader effort to put the economy on to a more sustainable footing. He spoke about the need to “balance the books”, and to redress the balance. From the north-east’s perspective, can I thank the Deputy Prime Minister? I think not.
In the face of clear evidence of the north-east’s vulnerability, what was the Government’s action? In the last financial year, while the 12 least deprived authorities in England have suffered cuts of around £5 per head of population, Gateshead has lost £88 per head, and the 12 authorities in the north-east have lost an average of £84 per head in expenditure, so no one on the Government Bench should dare to come out with the usual mantra of “We’re all in this together.” It is clear that if we are all in this together, some are dipping their toes and some are in up to our necks.
In November 2010, the Office for Budget Responsibility predicted that 410,000 jobs would be lost in the public sector as a result of the coalition’s cuts. However, in October 2011, the Chartered Institute of Personnel and Development said that overall job losses are now expected to be between 600,000 and 750,000 between now and 2015-16. In the north-east already, local authorities have shed well over 10,000 jobs, and 30,000 jobs in the public sector have gone. Some 142,000 people are on the dole in a population of only 2.5 million, and between 12 and 15 people chase each job vacancy in the jobcentres of the north-east. We are not all in it together. There is clearly a divide in the nation.
Where are the jobs in the private sector? Where is the growth that was supposed to replace public sector job losses in the north-east? They simply have not happened, and they will not happen, because the Government’s policies are sucking spending power from the north-east’s economy. Our high streets are suffering, our shops are closing, and our local economy is shedding jobs. If anything, the private sector in the north-east is becoming poorer. Although there is much innovation, cuts in input tariffs are having an impact on green industries. Other industries, such as Allied Bakeries in my constituency have shed jobs, as has Waverley Vintners. The Alcan smelter in the constituency of my hon. Friend the Member for Wansbeck (Ian Lavery) has lost jobs. Things are getting bad up there, and we need a real rebalancing of the economy. Instead of borrowing money to spend on dole and benefit payments, why do we not use that borrowing to invest in our economy, to provide infrastructure growth and create jobs in construction? We are not all in this together, and clearly the Government must wake up to that fact.