Phil Wilson (Sedgefield) (Lab): May we have a debate in Government time to congratulate the previous Labour Government on their ability to attract inward investment? The announcement on GlaxoSmithKline that was made in the Budget yesterday is a result of what we introduced in 2009. Similarly, the Hitachi train-building factory

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which, as announced last year, is going to be built in my constituency comes as a direct result of Labour’s growth strategy. Does the Leader of the House think that we should have that debate, given that the only aspect of yesterday’s Budget that referred to growth was the result of Labour policy?

Sir George Young: I have seen the Glaxo press notice and, like the hon. Gentleman, I welcome the creation of new jobs. The press notice mentioned the confirmation in yesterday’s Budget of a specific regime for patents. I am not sure that the hon. Gentleman is entirely correct in claiming the credit for the company’s decision. I think that Government Members can share in the glory.

Mark Garnier (Wyre Forest) (Con): Next week, I am holding a jobs fair in Kidderminster to provide practical support not just for the unemployed, but for local businesses that are seeking to expand. Will my right hon. Friend find time for a debate on how the Government can support local initiatives, such as my jobs fair, to stimulate the economy at a grass-roots level?

Sir George Young: I commend my hon. Friend’s initiative in Kidderminster to bring together employers and those looking for work. He may have an opportunity during the debate on the Budget to develop his point further. With the Work programme, which is helping more than 3 million people, the more than 400,000 apprenticeships this year, the youth contract and the work experience programme, there are a lot of initiatives that the Government are taking. It is up to each Member of Parliament to ensure that the benefits of those programmes filter through to their constituency. I commend him for the initiative that he has taken.

Ann Coffey (Stockport) (Lab): The Chancellor announced yesterday that the Government plan to legislate to suspend the Sunday Trading Act 1994 for eight Sundays to coincide with the Olympics. There is concern that that is less to do with the Olympics than with testing the water for a permanent repeal of the Act. Will the Leader of the House confirm that it will be limited legislation, as announced by the Chancellor yesterday?

Sir George Young: I confirm exactly what the hon. Lady has said. Any legislation will have to pass through both Houses and will be subject to discussion through the usual channels. It will apply only to the Sundays during the Olympics and Paralympics, so it will be strictly confined to that period. It is not our intention at this stage to go for the wider reform to which she referred.

Mr Julian Brazier (Canterbury) (Con): May I urge my right hon. Friend to grant a debate on the European arrest warrant? My constituent, Graham Mitchell, was acquitted 18 years ago of attempted murder in Portugal, after being held in prison for more than a year. The prosecutor fell asleep during the course of the trial and the assailant did not identify Mr Mitchell as his attacker. Eighteen years on, a new application has been made to take him to Portugal on a charge of murder, when the victim is alive and well and playing golf, I believe, in Germany.

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Sir George Young: I commend my hon. Friend for championing the cause of his constituent. The case has received some publicity recently. He will know that I cannot comment on an individual case. I gather that it has been adjourned until 28 March. My right hon. Friend the Home Secretary is looking at the Scott Baker report and hopes to make her conclusions available shortly. In the meantime, we are asking EU countries to observe the principle of proportionality in considering whether such an arrest warrant is appropriate.

Andrew Miller (Ellesmere Port and Neston) (Lab): I have received a letter from the Department of Health explaining that it is not yet in a position to respond to the report of the Select Committee on Science and Technology on alcohol. Yesterday in the Budget, at column 803 of Hansard, the Chancellor said that the Government would make an announcement on the subject shortly. Will the Leader of the House ensure that the Select Committee receives a proper reply from the Government ahead of that statement, in time for us to have a proper discussion and respond to the Government’s response?

Sir George Young: I commend the work done by the Select Committee. I will make inquiries, but I cannot give a categorical undertaking that we will respond in what will probably be a short time scale, given that we want to make progress with our alcohol strategy. However, I will make inquiries and write to the hon. Gentleman.

Andrew Stephenson (Pendle) (Con): The Leader of the House may be aware that last year I tabled early-day motion 1518, following the assassination of the Pakistani Minister for Minorities, Shahbaz Bhatti.

[That this House condemns the assassination of Shahbaz Bhatti, the Pakistani Minister for Minorities, who was the only Christian in the cabinet; notes that this comes only days after the government of Pakistan’s retention of a minorities representative in the new cabinet and the Ministry for Minorities Affairs as an independent ministry; recognises the significant advances made in the interests of minority rights and interfaith dialogue by the Federal Minister Shahbaz Bhatti through this ministry; expresses concern at the ongoing misuse of the provisions of section 295 of the Pakistan Penal Code, known as the blasphemy laws, and the threats posed to all who challenge this legislation; and urges the government of Pakistan to reconsider reviewing the blasphemy laws as a matter of urgency.]

After speaking with the British Pakistani Christian Association earlier this month, I tabled early-day motion 2807 to mark the anniversary of Mr Bhatti’s death and to continue to raise awareness of the plight of minority communities in Pakistan. Will the Leader of the House find time for a debate on that important issue?

Sir George Young: My hon. Friend refers to an appalling and cowardly assassination, which struck at the heart of democracy and freedom of expression in Pakistan. Alongside our European partners, we will continue to intervene on human rights issues in Pakistan, where we believe we can make a positive difference. We engage regularly with the Government of Pakistan on this particular matter, along with broader matters that raise the same issues.

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John Robertson (Glasgow North West) (Lab): Following the written statement on military afloat reach and sustainability—MARS—ships that was sneaked through Parliament and my debate on the matter on Monday night, may I ask the Leader of the House for a statement or a debate on the Floor of the House so that we can discuss grey ships and warlike ships and the Government’s policy on protecting the jobs of maritime workers?

Sir George Young: I know that the hon. Gentleman had an Adjournment debate earlier this week. If we had another debate, I am not sure whether the Government would be able to add to what the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk) said in response to the hon. Gentleman. I will raise his concerns again with my hon. Friend and see whether there is anything that he can add to what he said earlier this week.

Andrew Jones (Harrogate and Knaresborough) (Con): Work has started on a building project to create a new cancer care centre at Harrogate district hospital. It will be called the Sir Robert Ogden Macmillan centre and is named after a generous benefactor. Further funding has come from Macmillan Cancer Support and the local foundation trust. It will be a welcome addition to patient support in the area. May we have a debate on improving cancer care across our NHS?

Sir George Young: I applaud the generosity of Sir Robert Ogden in making those funds available. It is right that the building should be named after him. My hon. Friend will have read “Improving Outcomes: A Strategy for Cancer”, which was published in January last year. It outlines our commitment to improve outcomes for cancer patients and to save 5,000 additional lives every year by 2014-15. I understand that the new centre to which my hon. Friend referred is being funded jointly by Macmillan Cancer Support, the local NHS foundation trust and the donation. That is exactly the sort of progress that we want to see to enable us to hit our cancer targets.

Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab): My constituents in Cumbernauld, Kilsyth and Kirkintilloch were delighted to learn this week that the Olympic torch will be relayed through Cumbernauld on 13 June. That is particularly appropriate given that the British female handball captain hails from Cumbernauld. May we have a further debate on how we can ensure that everyone in the United Kingdom can get involved in these great Olympics? That is very important for the good of the country.

Sir George Young: We have just had questions to my colleagues at the Department for Culture, Media and Sport. I am not sure whether the hon. Gentleman was able to intervene in those exchanges. The issue of how we will ensure that the benefits of the Olympics are broadly shared throughout the country has been debated in recent exchanges and debates involving DCMS. I will see whether there is anything that we can say to the hon. Gentleman that impacts directly on his constituency. I hope that the handball captain leads her team to success.

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Jake Berry (Rossendale and Darwen) (Con): May I start by saying that I have given notice to the right hon. Gentleman to whom I will refer in this question? I join my hon. Friend the Member for Warrington South (David Mowat) in calling for a debate on the morally repugnant use of service companies by those in public life to avoid paying their fair share of tax. In that debate, can we look in particular at the tax arrangements of the Labour candidate for Mayor of London and the recent publication of the accounts for the Office of Gordon and Sarah Brown Ltd?

Thomas Docherty (Dunfermline and West Fife) (Lab): On a point of order, Mr Speaker.

Mr Speaker: The point of order will come after the business question. The hon. Gentleman should hold his horses. I am sure that he will.

Sir George Young: I hear what my hon. Friend says. We are, of course, having a debate on the Budget. My right hon. Friend the Chancellor made clear his views on tax evasion and what he called “aggressive tax avoidance”. I am sure that it would be in order to talk about the tax loopholes that are being closed by the Government during the Budget debate, as long as one remains within order.

Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op): May we have a Government statement to clear up the confusion about the cut to the top rate of income tax? A study published during the Budget suggests that it will cost the country billions of pounds if the Government’s assumptions are incorrect. If we are going to clear that up, perhaps the Leader of the House will also accept the suggestion of the shadow Leader of the House that he may wish to put in the Library a list of the Cabinet members who will benefit personally from this give-away, so that we can see from where the motivation for it might have come.

Sir George Young: This country has never adopted the practice that they have in the United States, whereby all those who stand for public office have to file their tax returns. If that is the hon. Gentleman’s proposition, I am sure that he can make the case during the Budget debate, but it is not our intention to introduce it. On the 50p tax rate, I just make the case that for 13 years, the Labour party did not introduce a 50p rate of tax. It left it to us, along with a letter saying that no money was left in the Treasury.

Alun Cairns (Vale of Glamorgan) (Con): The Chancellor made the excellent announcement yesterday that Cardiff was to be included in the urban broadband fund. May we have a statement by the Secretary of State for Culture, Media and Sport on the details of the procurement and roll-out of that fund, to see whether neighbouring authorities can benefit from the investment in that area?

Sir George Young: There has just been an exchange on the Government’s broadband policy in Culture, Media and Sport questions, but I will follow up my hon. Friend’s question by asking the appropriate Minister to write to him to see to what extent companies and people outside the immediate area can benefit from the roll-out of broadband in Cardiff.

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Kevin Brennan (Cardiff West) (Lab): Further to the question asked by my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), can we have a statement on the Cabinet and the higher rate of tax? The Twitter account of The Sun is reporting that friends of the Prime Minister say he pays the higher rate of taxation. We have not heard anything from friends of the Chancellor—or does he not have any left after mugging the nation’s grannies yesterday?

Sir George Young: Why should this outbreak of openness be confined to Members on the Government Benches? I hope that the hon. Gentleman will try to persuade all his friends in his party to be as open and transparent as he apparently wants us to be.

Neil Carmichael (Stroud) (Con): Many constituencies such as mine have a large number of houses that are vulnerable to flooding. Can we find a way of ensuring that flood maps demonstrate and clearly indicate the impact of flood defences and natural defences when flooding risk assessments are made, so that home owners and insurers can make sensible judgments?

Sir George Young: My hon. Friend raises an important issue. Those maps can have a devastating effect on people who are trying to sell their houses, and it is important that they are up to date. He will know that the Government and the Association of British Insurers are committed to ensuring that flood insurance is available to everyone who needs it, and there is an ongoing programme of discussions with the insurers to ensure that we can achieve that objective. I will draw the issue of flood maps to the attention of my hon. Friends at the Department for Environment, Food and Rural Affairs, to ensure that the maps that are used are as accurate as possible and there is no collateral damage to people whose properties are not really at risk of being flooded.

Ian Lavery (Wansbeck) (Lab): I have written to the Secretary of State for Business, Innovation and Skills and the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), with regard to the urgent situation of the alarming unemployment statistics in my constituency. I asked for an urgent meeting, and one refused and the other said I would have to wait in excess of 30 days for a reply. Due to the urgency of the matter, will the Leader of the House make time to discuss unemployment rates in the north-east, and particularly in my constituency?

Sir George Young: The hon. Gentleman does a first-class job of championing the cause of those in his constituency who are out of work. Of course he is entitled to a response to the letter or questions that he sent to my colleagues, and I will do what I can to chase that up and ensure that he gets a prompt reply.

Bob Blackman (Harrow East) (Con): Among the excellent measures announced in the Budget yesterday was £70 million of additional funding for London for the Growing Places fund, which will help Mayor Boris Johnson produce 200,000 new jobs over the next four years. That brings into sharp contrast the choices before Londoners on 3 May. May we have an urgent debate on those choices?

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Sir George Young: I would welcome such a debate, but I am not sure I can find time for it out of the Government’s allocation in the remainder of this Session. We will be debating the Budget from now until Monday evening, and it would be perfectly in order for my hon. Friend to raise the matter at greater length in the debate and get a response about the £770 million of funding for the Growing Places fund, some of which has been allocated to London. The Mayor of London will complement that with his own resources, to give new opportunities to those who live in London who are looking for a job.

Several hon. Members rose

Mr Speaker: As usual, there is a lot of interest. I am keen to accommodate that interest, but we do now require extreme brevity—not preamble, but short, single-sentence questions, please.

Paul Flynn (Newport West) (Lab): As the person who perpetrated the terrible atrocities in Toulouse claims to be a former al-Qaeda bomber who escaped with 500 others from Kandahar prison with the collusion of Karzai and his army and jailers, may we now debate why we tell our brave soldiers to dismantle bombs? The only reason is so that the perpetrators can be identified and jailed. As that is now a futile occupation, because the perpetrators escape almost at will, should we not debate the issue now and allow our soldiers to destroy bombs at distance?

Mr Speaker: I think that sentence contained a lot of commas and semi-colons, but I do not recommend that it be imitated by other colleagues.

Sir George Young: I say to the hon. Gentleman, who has pursued this issue with dogged ferocity, that there will be questions to my right hon. Friend the Secretary of State for Defence on Monday, which might provide him with an opportunity to pursue it with Ministers who have the answers at their fingertips.

Simon Hart (Carmarthen West and South Pembrokeshire) (Con): May we have a statement or a debate on the Government’s plans for gift aid? A number of charities are finding it difficult to access the gift aid that they are due.

Sir George Young: I commend my hon. Friend for the question that he asked, I think, yesterday, and I commend the work of the air ambulances. We are committed to an online filing system for charities to claim gift aid, which will come online in 2012-13. I hope that will make it easier for charities to reclaim the money that they are owed and drive up the resources available for the causes that they promote in his constituency and others.

Diana Johnson (Kingston upon Hull North) (Lab): Can we please have a debate on the Government’s plans to introduce VAT on holiday caravans? Their impact assessment states that that will probably result in a 30% reduction in demand for holiday caravans, which will have a particular impact in Hull, where we manufacture a lot of caravans. It will also have an impact on families who want to go on holiday and spend a week in a rented caravan, because hire prices will go up.

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Sir George Young: If such a measure requires legislation, the Finance Bill has its Second Reading when we come back and there may be an opportunity for the hon. Lady to raise the matter.

Jeremy Lefroy (Stafford) (Con): May we have a debate on the importance of the teaching of foreign languages to export performance, so that we can ensure that young people such as those who participate in the excellent Stafford and Stone young enterprise programme can spearhead the UK’s export growth in future?

Sir George Young: I very much hope that schools and colleges give priority to foreign languages that will help us win exports in competitive world markets. I commend the work in my hon. Friend’s constituency, where that is clearly seen as a priority.

Valerie Vaz (Walsall South) (Lab): May we have an urgent debate on how we can extend the Freedom of Information Act to commissioning support groups? Under the Health and Social Care Bill they will not be statutory bodies, so no one will be able to get access to the information that they have, and they are set to be privatised by 2016. How will the public find out information that was previously available from primary care trusts but will not be available from commissioning support groups?

Sir George Young: The hon. Lady raises a good question. There will be Health questions on Tuesday, when there may be opportunity for her to ask it, but I will in any event raise it with the Secretary of State for Health and ask him to write to her, to ensure that information that should be in the public domain remains so.

Angie Bray (Ealing Central and Acton) (Con): Many of my younger constituents will be delighted with the news about the enterprise loans announced in yesterday’s Budget, which will help them set up their own businesses. May we have a debate on how we can build on such measures to help our young entrepreneurs?

Sir George Young: We can indeed have such a debate, and it will commence when business questions finish. I am delighted to hear that the enterprise loans scheme is alive and well in my hon. Friend’s constituency, with which I have some acquaintance. We all have a role to play in making information about it available in our constituencies, so that young people can get access to those loans, build their own businesses and help build a thriving community in west London.

Matthew Hancock (West Suffolk) (Con): We on the Government Benches care deeply about tackling tax avoidance, so when will the legislation come in to tackle the offshore gambling tax loophole? That was announced in the Budget yesterday and is vital for many of my constituents.

Sir George Young: I cannot anticipate what may or may not be in the Queen’s Speech on 9 May, but my hon. Friend is right that measures were announced that need legislation. As Leader of the House, I can say that they are on my radar.

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Stephen Hammond (Wimbledon) (Con): In the Budget yesterday, £130 million extra for London’s infrastructure was announced. May we have a debate on the coalition’s continuing commitment, combined with that of the Mayor of London, to the continual improvement of London’s infrastructure?

Sir George Young: As my hon. Friend knows, Crossrail is under way, and it would be wholly in order for him to develop that point at greater length in the Budget debate—perhaps tomorrow, if he is around. The Minister who replies to that debate will set out the coalition Government’s view on infrastructure. My hon. Friend will also have seen what the Prime Minister said in his speech on Monday about developing new models for financing infrastructure in this country.

Chris Williamson (Derby North) (Lab): Can we have an urgent debate on the implications of the Government’s decision to cut the Environment Agency’s budget for flood defence work, because that is having a significant impact on my constituents in Darley Abbey and Chester Green, who are potentially exposed to devastating flooding and escalating—indeed, rocketing—home insurance bills?

Sir George Young: As the hon. Gentleman will know, the Government have had to take difficult decisions in order to get expenditure back under control, but I will pursue the issue he raises through the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury (Richard Benyon), and see whether the Environment Agency, which might be the funding body, has resources available to tackle it.

Karen Bradley (Staffordshire Moorlands) (Con): The town of Leek—spelled with two Es rather than an E and an A—has been at the forefront of the arts and crafts movement and was a centre for silk printing for more than 100 years. However, sadly, that silk industry died out about 20 years ago. I am therefore delighted to learn that British clothes maker, Bonsoir of London, has started printing silk in Leek again. Will the Leader of the House find time for a debate on how we promote economic growth and prosperity by reviving traditional trades such as silk printing in Leek?

Sir George Young: I am delighted to hear of the revival of that industry in my hon. Friend’s constituency. It will be possible to raise that during the Budget debate. The Government have launched a number of programmes to assist manufacturing, including a £75 million programme to help small and medium-sized enterprises to take on apprenticeships. We have also set up the

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launch of a series of high-value manufacturing technology centres and a programme of manufacturing fellowships, and, of course, we have the regional growth fund and other initiatives. The Government recognise the challenge to which my hon. Friend refers, and a number of funding sources are available to promote progress.

Glyn Davies (Montgomeryshire) (Con): We all depend on the regional media to spread public understanding of serious politics and activities in the House, and we must all be concerned when a reduction in regional media coverage is threatened. In Wales, we are particularly dependent on BBC Wales. Will the Leader of the House arrange an early debate on the plans of our regional media in the nations and regions of the UK to ensure that we have proper, serious coverage of politics?

Sir George Young: I agree entirely with what my hon. Friend says on the importance of regional media. We have just had Department for Culture, Media and Sport questions, when there might have been an opportunity to raise that. We have put the BBC’s funding on a more stable basis for the foreseeable future, and I will ensure that the BBC hears what my hon. Friend says and see whether appropriate resources are being allocated to the regional media that cover his constituency.

Mr Speaker: Just before we move to the next business, there is one matter with which I should like to deal. In the course of business questions, the hon. Member for Rossendale and Darwen (Jake Berry) prefaced his question by indicating that he had notified the right hon. Member to whom he was about to refer in advance of coming to the Chamber. I simply want to say this to the hon. Gentleman and the House: advance notification to a Member of an intention to refer to that Member is, of itself, not sufficient; much depends on what is then said. I say for the benefit of the hon. Gentleman and the House that where an accusation or implication of possible improper conduct is made, that must be done either by a reference to the Parliamentary Commissioner for Standards or upon a substantive motion. It should not be done in the course of a question. That was wrong, and a discourtesy—unintentional, I am sure—to the House. Therefore, I invite the hon. Member for Rossendale and Darwen to apologise to the House for that discourtesy. He should now rise from his seat and apologise for that discourtesy, which I accept and am sure was unintentional.

Jake Berry: Mr Speaker, I apologise for an unintentional discourtesy to the House.

Mr Speaker: I am grateful to the hon. Gentleman for his apology. I think that deals with the matter.

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Ways and Means

Budget Resolutions and Economic Situation

Amendment of the Law

Debate resumed (Order, 21 March).

Question again proposed,

(1) That it is expedient to amend the law with respect to the National Debt and the

public revenue and to make further provision in connection with finance.

(2) This Resolution does not extend to the making of any amendment with respect

to value added tax so as to provide—

(a) for zero-rating or exempting a supply, acquisition or importation,

(b) for refunding an amount of tax,

(c) for any relief, other than a relief that—

(i) so far as it is applicable to goods, applies to goods of every description, and

(ii) so far as it is applicable to services, applies to services of every description.

12.55 pm

Ed Balls (Morley and Outwood) (Lab/Co-op): The British economy is stagnating, unemployment is rising month by month, the Government’s deficit reduction plans have gone wildly off track, middle and lower-income families and pensioners are facing rising petrol prices, rising energy bills and falling living standards—and what did the Chancellor do in his Budget yesterday? Did he admit that his economic plan has failed? Did he act to kick-start the stalled recovery? Did he give any hope to young people facing long-term unemployment? Did he set out any vision of how, over the next 20 years, Britain can compete in the world and win the investment and skilled jobs we need? Did he ease the pressure on families by cutting fuel duty, or by cancelling perverse and unfair cuts to tax credits and child benefit? No. The centrepiece of the Chancellor’s Budget, his top priority, and the political imperative for this oh so political Chancellor, was to spend more than £3 billion next year cutting the top rate of income tax for existing top rate taxpayers. People earning more than £150,000 a year—300,000 of them—are getting an average tax cut of £10,000 a year. How out of touch can he get?

To add insult to injury, the Chancellor sprung another surprise tax rise by freezing the age-related personal allowance for 4.5 million pensioners and abolishing it entirely for soon-to-be pensioners. People on modest incomes who have worked hard and saved hard all their lives will be hit by the Chancellor’s tax grab on pensioners while he gives a £40,000 tax cut to 14,000 millionaires. What can we say about that?

Andrea Leadsom (South Northamptonshire) (Con) rose—

Michael Fallon (Sevenoaks) (Con): Will the right hon. Gentleman give way?

Ed Balls: I will in a moment.

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Let me say to the Chancellor today: some of the electorate he really cares about—the selectorate in his own Conservative party—may be cheering, although after this morning’s headlines, I am not so sure.

Andrea Leadsom: Will the right hon. Gentleman give way?

Ed Balls: I will in a second—I look forward to it.

As the Financial Times reports this morning:

“Some Tory backbenchers offered support for the measure”—

on pensioners—

“although they refused to be identified for fear of alienating their elderly constituents.”

Perhaps in a second some of those Conservative Back Benchers will break cover and back the pensioners tax grab in the Budget, but they are right to be worried, because all across the country, the real electorate will be thinking, “A tax cut for millionaires, paid for by millions of families and pensioners across this country? Same old Tories: looking after their friends while families and pensioners pay the price.”

Andrea Leadsom: Will the right hon. Gentleman give way?

Ed Balls: I will happily give way to the hon. Lady. Perhaps on behalf of the thousands of pensioners in her constituency who will lose from the tax grab, she will tell us whether she supports the Chancellor.

Andrea Leadsom: I am grateful to the shadow Chancellor. Is he as delighted as I am that we will be introducing within the next couple of years a single, unmeans-tested pension at a significantly higher rate than the current one?

Ed Balls: We will have to wait to see the details. There will be some winners and some losers, but the one thing that we can categorically confirm today is that thousands of pensioners in the hon. Lady’s constituency will lose up to £300 a year as a result of yesterday’s Budget. She did not say whether she supported that—hardly a clarion call of support for the Chancellor’s pensions tax grab.

Michael Fallon: Could the shadow Chancellor make it absolutely clear—yes or no—whether he would restore the age-related allowance if he came to power?

Ed Balls: I will make it absolutely clear: we will vote against the change in the Budget debates and I hope that he will join us in the Lobby. We will vote against it, but the Chancellor knows very well that I will not go through every tax rate, relief, allowance or spending commitment and make commitments for three years’ time. But if the election were called tomorrow, our manifesto would be clear—we would rescind the measure and the Government would go ahead with it. That is the difference.

Lindsay Roy (Glenrothes) (Lab): I am a relative newcomer to the House, so can my right hon. Friend explain what he means when he says, “The same old Tories”?

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Ed Balls: The same old Tories who thought in 1988 that it was right to cut the top rate of tax for the richest people in our country and who now think that having a second Lawsonian Budget is a good idea. It is important to remember that after hubris comes nemesis. It did not take long for Nigel Lawson to find out the error of his ways.

We set two tests for this Budget. First, does it kick-start the recovery and boost growth and jobs? Secondly, is it fair? The Chancellor has failed them decisively. On growth and jobs, I remind the House what the Chancellor said a year ago in his Budget speech:

“we will create jobs and support families. We have put fuel into the tank of the British economy.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]

Since then, our economy has ground to a halt and thousands of people have lost their jobs.

I remind the Chancellor of what he said in August, when Parliament was recalled:

“Those who spent the whole of the past year telling us to follow the American example…need to answer this simple question: why has the US economy grown more slowly than the UK economy”?—[Official Report, 11 August 2011; Vol. 531, c. 1108.]

What has happened since? Spurred on by the Obama stimulus, the US economy has been growing and unemployment falling. Here in Britain, our economy has flatlined and unemployment has been rising month after month. It does not look much of a safe haven to me.

What did we get in the Budget? We got a gaping hole when we so badly needed action to kick-start the recovery—Labour’s five-point plan for jobs and growth. We will not get the deficit down unless we have a plan for jobs and growth to get our economy moving and get people off the dole. When we needed a vision for the future, a modern industrial policy, what did we get? Roads privatisation and a credit-easing scheme that even the Office for Budget Responsibility says is not large enough to have any material impact.

Just look at the verdict from the OBR. The Chancellor claims it was a Budget for growth. But the OBR has downgraded its forecast for growth next year. What did it say about the ragbag of measures he announced? It said:

“We have made no other material adjustments to the economy forecast as a result of Budget 2012 policy announcements.”

It will have no impact as a growth plan.

The Chancellor claimed that it was a Budget for jobs, but not only does the OBR expect to see unemployment rising, it has increased its forecast for unemployment compared to November by 100,000—100,000 more people out of work at the end of the forecast period. As for the budget deficit, the OBR forecast confirms that the Chancellor is now set to borrow £150 billion more in this Parliament compared to his forecast at the time of the spending review. So much for “expansionary fiscal contraction”. To put it politely, that is oxymoronic. In plain language, it is just moronic.

On fairness, the Chancellor has failed too. Twenty-four hours after the Chancellor rose in the House, the full reality of the Budget is sinking in. At a time when fuel and food bills are going up for families on middle and low incomes, the Chancellor has added to them all. Whatever he says about the personal tax allowance, a family with children earning £20,000 will lose £253 a

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year from April. Nearly 4.5 million pensioners—




I am sorry for the stammer. Nearly 4.5 million pensioners who pay income tax will lose an average of £83 next April, and people turning 65 next year will lose up to £322.

At the very same time, the Budget gave a tax cut to the richest people in our country. The money could have been used to cut fuel duty or reverse perverse cuts to tax credits. It could have been used to put police officers on the beat. Instead, the Chancellor chose to cut taxes for the 300,000 top rate taxpayers.

Stephen Hammond (Wimbledon) (Con): I must have missed it, but for the sake of clarity does the shadow Chancellor intend to put the top rate of tax back up to 50%?

Ed Balls: I am just coming to the issue of the top rate of tax. The Chancellor tries to claim that the top rate of tax does not raise any money, and that he is raising in stamp duty and tax avoidance five times the cost of cutting the top rate of tax. But his own HMRC report makes the true position clear, in table A2 on page 51. It says that next year he will give £3.01 billion in tax cuts to existing and legitimate top rate taxpayers, paid more than £150,000. That is a fact. That is six times more in tax cuts to the richest than he is raising in the stamp duty and tax avoidance measures. He is gambling that this will then bring in £2.9 billion in new tax revenues from people currently not paying tax, without any hard evidence to justify that claim—an estimate that the OBR says in the Budget documentation is “highly uncertain” and could lead to a much higher cost.

The head of the OBR said last night:

“This is a judgement based on not even a full year’s data based in terms of how people have responded to the 50p rate, in particular in terms of those self assessment tax-payers.

The costing of these sorts of changes is by no means unarguable”.

Just a few weeks ago, the Institute for Fiscal Studies said:

“If the future of the 50p rate is to be determined on the basis of evidence...then Budget 2012 will be too soon to form a robust judgement.”

Another expert has said on these matters:

“Some believe that if taxes on the wealthy are cut, new revenue will miraculously appear. I think their reasoning is this—all those British billionaires who demonstrate their patriotism by hiding from the taxman in Monaco or some Caribbean bolt-hole will rush back to pay more tax but at a lower rate. Pull the other one.”

That was the Business Secretary speaking to the Liberal Democrat conference last September. Pull the other one indeed. A £3 billion tax cut giving £10,000 each to 300,000 taxpayers and we are supposed to believe that all these people in tax havens are suddenly going to say, “I want to pay more tax.” Let me say to the Chancellor, “Pull the other one, it’s got bells on.”

Harriett Baldwin (West Worcestershire) (Con): May I therefore assume that a 50p tax rate will be in the shadow Chancellor’s next manifesto?

Ed Balls: There will be a vote next week, and we will vote against the 50p change. It is the wrong tax cut at the wrong time. I have always said that no tax rate is set in stone, but how can anyone believe it is right to take tax credits from working families, child benefit from

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middle-income families and more tax from pensioners, but give £10,000, on average, to every top rate taxpayer in the country? If there were a general election tomorrow, our manifesto would state clearly that we would reverse it. That is the clearest answer I will give.

Thomas Docherty (Dunfermline and West Fife) (Lab): Does my right hon. Friend think it would be helpful, ahead of next week’s debate, for the Prime Minister to place in the Library a list of which members of the Government will benefit from that cut in the top rate?

Ed Balls: I think we should leave people’s trust funds out of this. I will come back to that in a moment, but I will not press the Government on it.

The Chancellor took a reckless gamble on jobs and the economy, the Prime Minister and the Chancellor have taken a reckless gamble on NHS reform and police cuts, and now the Chancellor is taking a reckless gamble with the fairness of our tax system by handing out massive tax cuts to legitimate taxpayers in the hope—based on no evidence—that the cuts will pay for themselves by somehow bringing all the tax avoiders back into the fold. That is a fact.

Angie Bray (Ealing Central and Acton) (Con): Will the right hon. Gentleman confirm that under the previous Labour Government the 50p tax rate applied for just 37 miserable days and that for the rest of the time their tax on the highest income earners was lower than under the coalition Government?

Ed Balls: In reply, let me quote what the Chancellor said in October 2010:

“The public must know that the burden is being fairly shared. That's why I said last year: we are all in this together. And I am clear…that those with the most, need to pay more. That is why… I have stuck with the 50p tax”—

the Chancellor of the Exchequer, Conservative party conference, October 2010. Eighteen months on, what has changed? The public still want the burden to be fairly shared, but far from keeping the top rate of tax, he is ditching it.

Let me read another quote. In October 2009, the Chancellor said:

“we could not even think of abolishing the 50p rate on the rich while at the same time I am asking many of our public sector workers to accept a pay freeze to protect their jobs. I think we can all agree that would be grossly unfair.”

We can all agree on that. What has changed? What is the truth? It was all a con. The mask has slipped. To 200,000 families struggling on less than £17,000 a year, he says, “I’m going to cut your tax credits to make you work harder”, but to the highest earners, he says, “I’m going to cut your taxes because if I don’t, you won’t work hard and pay your taxes.” That is it. To make the poor work harder, the Chancellor makes them poorer. To make the rich work harder, he makes them richer. Does that not tell us everything we need to know about the Chancellor? He is cutting tax credits for the poor, cutting child benefit in the middle, cutting tax help for pensioners and cutting taxes at the top. That is his priority.

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Christopher Pincher (Tamworth) (Con): It is apposite that the shadow Chancellor used the word “con”. If he believes that the top rate of tax is about economics, not politics, why, in 13 long years, when they had the money, time and majorities, did the Labour Government not introduce that top rate of tax?

Ed Balls: We all agree that, after the global financial crisis, tough choices need to be made on tax spending and pay to get the deficit down, and we all agree that it needs to be done fairly. Two years ago, the Chancellor said that he had a plan—with tax rises and spending cuts, the economy would grow and unemployment would fall—but he has had to come back to the House and announce further tax rises because his plan is not working. But who is paying more tax? The pensioners. And who is getting a tax cut? The millionaires. That is the reality.

The Liberal Democrats call this a Robin Hood Budget, but they have got it the wrong way around. Robin Hood took from the rich to give to the poor, but the Budget takes from lower and middle-income families to give to the rich. Do they not see? The Chancellor is not Robin Hood; he is the Sheriff of Nottingham. As for jobs and growth, he could not give a Friar Tuck. As for Maid Marian—trapped in the castle, desperate to escape—we all feel sorry for the Business Secretary, and not just because, as a result of the pensions tax grab, he is probably the only member of this millionaire Cabinet who will be not better off but worse off as a result of the Budget—possibly with the Justice Secretary as well. I am not sure. But he cannot say he was not warned.

Chris Skidmore (Kingswood) (Con): I would be interested to know whether the shadow Chancellor has actually read the Budget and chart B5, which shows that the effect is worst on the top quintile? If he could be bothered to look at that and read the Budget, he might want to come back and change his mind.

Ed Balls: The hon. Gentleman should have read the small print. It is fine for him to accuse me of not having read the Budget, but is the effect of the 50p tax cut in that chart? I think not. I have read it. He has not. It is not there. If it were, the benefits would be off the scale.

After that disastrous and woeful intervention, let me return to the Business Secretary. The Business Secretary cannot say that he was not warned. In fact, he did the warning. On deficit reduction, before the election, he said:

“The IFS is right to point out that cutting spending further this year would be extremely dangerous given the weakness of the economy.”

He also said that

“it’s very difficult to believe that large sudden cuts would do anything other than a great deal of harm”.

He was right in his analysis of the dangers of going too far, too fast, and he is right today. In his devastating leaked letter to the Prime Minister, he said that the Government were without a

“compelling vision of where the country is heading beyond sorting out the fiscal mess”.

So why has he signed up to this completely vision-free Budget?

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Andrea Leadsom: Will the right hon. Gentleman give way?

Ed Balls: No.

I am going to read again what the Business Secretary said on the top rate of tax, because it is such a great quote:

“Some believe that if taxes on the wealthy are cut, new revenue will miraculously appear. I think their reasoning is this—all those British billionaires who demonstrate their patriotism by hiding from the taxman in Monaco or some Caribbean bolt-hole will rush back to pay more tax but at a lower rate. Pull the other one.”

I have to ask him then: why is he going to stand here today and defend a Budget that tries to do just that?

We all know what the Deputy Prime Minister said last September. Let me tell the House—if anyone is interested in what he says. He said:

“I do not believe that the priority at a time like this is to give a tax cut to a tiny, tiny number of people who are much, much better off than anybody else.”

Let us be honest. None of us is remotely surprised that the Deputy Prime Minister has completely capitulated, just as he did on VAT, tuition fees and the NHS, but the Business Secretary is another matter. He knows that our proposal to kick-start the recovery is right because he told the Chancellor to do it. He knows that our proposal to set up a business investment bank is right because he told the Prime Minister to do it. And he knows that cutting the top rate of tax now is the wrong priority, deeply unfair and a betrayal of his and his party’s values and progressive tradition.

We all know all we need to know about the Deputy Prime Minister, but we all had—and have—higher hopes for the Business Secretary. I have to say to him—and to his colleagues—that I understand the incredibly difficult position he is now in, but I have to ask him: what on earth would the Vince Cable of five years ago think of what he is doing now? As the sketch writer in The Independent wrote last week:

“Vince has been so hammered by events…It isn’t clear any more that he could ‘press the nuclear button’ hard enough to make it go off.”

Prove us all wrong, Vince—prove us all wrong.

The Chancellor used to say, “We’re all in this together.” Not any more. In tough times, the choices that this Tory-led Government are making tell us everything we need to know about them and how totally out of touch they are with what life is like in our country. Here are the facts. The Chancellor’s plan has failed. Trying to raise taxes and cut spending too far and too fast has backfired. The country needs a Budget for growth and jobs. Instead, we got more of the same, and with his tax cut for millionaires, he is piling insult upon injury for millions of families and pensioners across this country.

1.21 pm

The Secretary of State for Business, Innovation and Skills (Vince Cable): The central issue on which this Budget—and, indeed, the coalition Government—will be judged is how we cope with the fallout from the massive financial collapse and the destruction of wealth, with the loss of approximately 10% of our national income, and put the economy back on a sustainable path.

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The shadow Chancellor made some very kind and considerate remarks, and I thank him for his concern about my personal finances. Perhaps I can take him back to a toe-curling interview he gave a few days ago, when he described his two-decade relationship with his former boss, mentor, guide and friend as “unbelievably debilitating”. That is relevant to this debate, because it gets to the heart of the problem of who is responsible for the legacy that we are having to manage. We inherited not merely a large fiscal deficit, but the largest in the G20 and the largest amount of household indebtedness of any developed country.

We inherited an economy in which the share of the banking sector—the banking assets—had doubled in Labour’s period of government, to become the largest of any major economy, and in which, simultaneously, the share of manufacturing had contracted by almost a half, from 18% to 10%. We have heard a long speech about equality and fairness, but we also inherited an economy in which, throughout Labour’s period of government, the share of income of the top 1% and the top 10% of the population inexorably rose, and in which wealth became progressively more unequal.

Sheila Gilmore (Edinburgh East) (Lab) rose

Vince Cable: I will take the intervention in a moment.

A narrative has developed in which one man was responsible for this fiasco, but it was a genuine team effort, and the shadow Chancellor was an absolutely key member of that team. Being lectured now on how to manage an economy is a little bit like being given a talk on seamanship by the captain of the Costa Concordia—another believer in light-touch steering.

Mr Russell Brown (Dumfries and Galloway) (Lab): The Secretary of State talked earlier about indebtedness. Can he share with the House how much of the debt was down to the previous Government having supported the banks and the finance houses to get through the potential economic crisis?

Vince Cable: It was actually on the back of an uncontrolled housing boom. Personal indebtedness as a share of people’s incomes doubled in the period of the last Government. Of course the process of deregulation beforehand did not help, but the core increase—the fundamental problem of indebtedness—arose when the shadow Chancellor was a key decision maker in that Government.

I want to talk about the Government’s basic economic strategy, but before I do, I want to address the issue of unfairness and distribution. There were two allegations. One was that the policies have had a damaging effect on the so-called squeezed middle; the other was about the millionaires. Let me deal with each in turn. On the squeezed middle, if hon. Members look at the distribution charts, they will see that the squeezed middle has been squeezed a great deal less than the squeezed top. The major cash impact of the Budget was on low and middle-income families, as a result of lifting the threshold to over £9,200, with £220 for more than 20 million taxpayers. That was right, not just because of the fairness involved, but because it gives a significant economic stimulus, and at the margin—the 1 million people being lifted out of tax—it is a major incentive to work. The

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policy also contrasts favourably with the strategy that the Labour Government adopted in office—which we discussed many times—of using tax credits. By increasing tax allowances in the way we have, we are giving people the freedom to choose how to spend their own money, not taking it from them and then giving it back to them, through a complex, means-tested system, with high marginal rates of withdrawal.

Sheila Gilmore: Is the Secretary of State disappointed that he lost the battle to rescind the cuts to working tax credit for couples working 16 hours, given that they do not benefit at all from raising the tax threshold, because they already do not pay tax? Did he lose that battle or did he not fight it?

Vince Cable: The shift from a system based on tax credits to one based on tax allowances obviously benefits the middle and low-income population as a whole. The impact on particular groups depends on a variety of things, including the minimum wage, which we have just uprated, and the complex interaction of tax and tax credits.

However, let me turn to the point about pensioner income. I find it quite extraordinary to hear the shadow Chancellor expressing such alarm about the impact of the Budget on pensioners. I do not know whether he has looked at the scorecard, but it is clear. In 2012-13, the effect of the increase in the basic state pension and the pension credit minimum income guarantee will be to transfer £1.75 billion to pensioners. The impact of the changes on age-related allowances is £360 million—one fifth of the additional funding going to pensioners as a consequence of this Budget. When we look at the pensioner population, we of course see big differences. There are 5 million pensioners who do not pay tax, many of whom are poor, and who are not, of course, affected by the changes at all. There is a small group of people—frankly, my contemporaries—who have high retirement incomes and considerable asset wealth, and it is right in principle that they should pay a bit more. There is a group in between, as the shadow Chancellor rightly said, of people who are not wealthy and do not have particularly high incomes, but who could be affected to a limited extent, as a result of inflation eroding the value of the allowances—inflation is currently estimated at 2.5%. Those people will benefit enormously from the increase in the basic pension.

Let us just remind ourselves what is happening. We have an increase of £5.30 in the basic state pension for a single person. On top of the increase last year, we are talking about a £10 increase in the basic state pension, as a result of the protections that this Government have introduced. For many years, the pension steadily fell behind earnings as a result of de-linking, and, despite numerous promises, the previous Government did absolutely nothing about the problem. More and more pensioners were sucked into means-testing. This Government have corrected that problem. We have a triple lock system and, as a result of that, and of this Budget, the vast majority of pensioners on low and middle incomes will be considerably better off than they were before.

Angela Smith (Penistone and Stocksbridge) (Lab): What does the Secretary of State have to say to the Institute for Fiscal Studies, which has today described

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the Budget as a “hotch-potch of reforms” that are risky because they might be “less fiscally neutral” than the Chancellor is claiming?

Vince Cable: I am sorry; I do not follow the logic of the question. The Budget is of course fiscally neutral. I have just quoted figures, which the Office for Budget Responsibility has validated, which show that pensioners as a whole will gain five times as much from the increase in the pension and from pension tax credits as from the change in allowances.

Kate Green (Stretford and Urmston) (Lab): What will the Secretary of State say to people who have saved into a pension all their working lives and who have only modest additional pension provision to rely on, but who will now, completely unexpectedly, see the reward for making that effort to save wiped away?

Vince Cable: There is a genuine issue about pensioners with limited income, much of it savings income, which has been progressively ignored over the years. I have fought very hard in Parliament on the issue of annuities reform, as have many colleagues, particularly on the Government Benches. Many of the people the hon. Lady describes are annuitants who have been severely squeezed by the very low interest rates. Despite numerous appeals to the previous Government, absolutely nothing was done about annuity reform. We have made an absolute commitment to end compulsory annuitisation, which will offer far more practical help than any of the things that she and her colleagues are describing.

Let me turn to these millionaires. I agree with the Chancellor that the decision to cut the top rate of tax from 50p to 45p was economically the rational thing to do. I want to focus the debate not on symbols but on substance. I share the emotional reaction of the many people who are disgusted to hear pampered financiers whinging about their taxes. On an emotional level, nobody can sympathise with that. However, we have to deal with the practical realities that were burned on my consciousness as a result of sitting in my place on the Opposition Benches for 13 years, exchanging views on the top rate of tax with successive Labour Ministers from Blair to Brown to Balls. Year after year, they would tell the Liberal Democrats that it was economically stupid to raise the top rate of tax above 40%. That was their message, year after year. Then, a few weeks before the end of their Government—I think it was 57 days—they introduced the 50p rate in order to create a political dividing line. That decision had nothing whatever to do with economics. The point that they had been making over all those years was that raising the top rate in that way would raise relatively little revenue.

Despite the casuistry of the shadow Chancellor’s intervention a few moments ago, in trying to argue that vast sums of money had been sacrificed, line 3 of the scorecard makes it absolutely clear that we are talking about a revenue loss of £100 million a year. That figure has been endorsed by the Office for Budget Responsibility. The changes that have been introduced in the Budget, including increased taxation of high-value property, plugging loopholes and much tougher anti-avoidance rules, will bring in at least five times that amount.

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Ed Balls: The HMRC report states that, in 2013-14, the static cost—that is, the cost to existing top rate taxpayers—will be £3 billion, rising to £3.35 billion, then £3.7 billion and £4.2 billion. It then states that that will be offset by a behavioural impact of £2.9 billion, £3.2 billion, £3.6 billion and £4 billion, which I think is heroic. The document states that behavioural responses are often “highly uncertain”, and the Business Secretary himself said that such assumptions were utter nonsense. He said, “Pull the other one!” Is he now saying, “Mea culpa—I got it totally wrong”?

Vince Cable: I am just trying to deal with the facts. I believe in evidence-based decision making. The information in the Budget document, which has been validated as the best central estimate by Robert Chote of the OBR, suggests that we are talking about a revenue loss of £100 million. I think that the right hon. Gentleman is fundamentally underestimating the financial significance of something that happened on an epic scale when his Government moved on the top rate, which involved simply switching from one year to another. The underlying impact on revenue has been independently estimated at £100 million.

Ed Balls: The document from HMRC makes it absolutely clear in section A.19 that that is not HMRC’s view but the Government’s view. It was a ministerial decision on those estimates. But that does not take away from the fact that a £3 billion cost—£10,000 on average for top rate taxpayers—will be offset by a behavioural impact that is huge and, in the Business Secretary’s own words, absolute nonsense. Let us deal in the complexity of the facts, not the simplistic nonsense that the Chancellor told the House yesterday. Does the Business Secretary, with his integrity, look at those numbers—£2.9 billion, £3.2 billion, £3.6 billion and £4 billion—and say, “Yup, I agree”?

Vince Cable: I think we are talking about integrity and statistics. Of course there has been a big change under this Government, compared with their predecessor. The numbers that the shadow Chancellor used to use were his own numbers. The numbers we are quoting here are independently verified by the Office for Budget Responsibility. We will analyse the underlying assumptions in those figures. The figures in the Budget document are absolutely unambiguous and they have been endorsed by an independent assessor—something that the right hon. Gentleman was never used to when he was in government—which confirms the value of the numbers that we have described.

George Freeman (Mid Norfolk) (Con): Is not the shadow Chancellor’s knockabout class warfare much more to do with appeasing Labour’s union paymasters? The truth is that all the evidence shows that a competitive personal and corporate tax rate is a powerful driver of entrepreneurship. We proved in the 1980s, when we last had to dismantle Labour’s tax time bomb, that lower marginal rates of tax increased revenue. The announcement today from GlaxoSmithKline of inward investment in this country is a sign that this is working.

Vince Cable: It is certainly true. My hon. Friend’s central point, which was made very effectively by the Labour Government when they were in office, is that in

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a highly mobile world, we have to take account of marginal rates of tax in comparable countries. The current top rate of marginal tax in Canada, Australia, France and Germany is around 45%, and that is the level to which we have moved.

Seema Malhotra (Feltham and Heston) (Lab/Co-op): Does the Secretary of State acknowledge that business leaders, who will benefit from the tax cut, said yesterday that the priority should have been to cut taxes for those on low and middle incomes in order to stimulate consumer spending? Does he agree that that should have been the priority, rather than cutting the 50% rate?

Vince Cable: I do not know where the hon. Lady has been for the past 24 hours. The central feature of the Budget was a very large tax cut for exactly the group of people she describes, and it will have exactly the consequences that she describes.

Let me get back to the core issue, which exercises me and the shadow Chancellor. The basic economic strategy of the Government is to get back to a stable, sustainable form of economic growth. I want to address head-on his central criticism, which he has made many times. It can be summarised in the phrase “too much, too fast”. This Government have a deficit reduction programme that was developed following the autumn statement, and it involves removing the structural deficit over a period of six years.

The Darling plan, which the last Government set out, involved a deficit elimination programme of seven years. What I am not clear about, particularly in view of the stridency of the shadow Chancellor’s views, is: what is the Balls plan? Is it for seven years, eight, 10, 20 or never? What is the alternative speed of deficit reduction that the Opposition are urging on us?

We are acting, successfully, on good advice. A few weeks ago, the head of the International Monetary Fund, Christine Lagarde said:

“Those countries that have fiscal space, and that can slow down their fiscal consolidation efforts are very few, and I’m afraid Britain is not in that particular group.”

That is because of the sheer scale of the structural deficit that we inherited.

Ed Balls rose

Vince Cable: I will give way in a moment.

The CBI, quoted in evidence by the Opposition, was equally clear, as reflected in its view that we cannot afford to slow down the austerity programme. That is what authoritative people have to say about “too much, too fast”.

Ed Balls: The Business Secretary is a former chief economist. He read out a quote from the head of the International Monetary Fund. On the previous day, the chief economist of the IMF said exactly the opposite—that if growth was “undershooting”, a country like Britain should

“slow the pace of deficit reduction”.

Is the Business Secretary really saying that he is ignoring the advice of Olivier Blanchard, the chief economist of the IMF? I would have thought that the right hon. Gentleman would have recognised Mr Blanchard’s economic credentials.

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Vince Cable: I think Mr Blanchard is very firmly on record as endorsing the strategy that we have adopted.

There is, of course, a fundamental dilemma, which any Government in this situation would face. If a deficit is cut very fast, it clearly has an impact on demand; and if it is cut too slowly, we lose the confidence of international creditors and markets. That is what we have not done. Unlike many eurozone countries that are now introducing budgets in panic and under pressure, we have introduced a politically and financially stable approach to deficit reduction. The underlying theme has to be one of financial discipline.

I cannot resist quoting an excellent statement of what this Government are about, and of what any Government should be about. It says that

“we must ensure we pass the test of fiscal credibility. If we don’t get this right, it doesn’t matter what we say about anything else.”

That was the shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves). She is absolutely right and has brought fiscal rigour to the Opposition Front Bench for the first time. I just wonder what kind of response she has made privately to some of the commitments that the shadow Chancellor, and indeed the Leader of the Opposition, have been making in the last few weeks. They have been promising to get rid of the fuel duty changes, child benefit changes, child tax credit changes and the changes to public sector pay. I think the total volume of commitments is something in the order of £30 billion. Before we proceed any further with a debate on the Budget, we need to have absolute clarity about which of those measures the Opposition are committed to and to which they are not—and if they are committed, we need to know what else they are going to cut to make way for them.

Let me summarise where we as a Government are proceeding. Unlike many other countries in Europe, we have not introduced our Budget in an environment of panic or under pressure from financial markets. Unlike in the United States, we do not have political paralysis; we have stable government. This is our strategy: we have, and we will retain, fiscal discipline and we will stimulate the economy. There has to be demand—the shadow Chancellor is absolutely right about that—but this is coming through monetary policy. In order to have a monetary policy that stimulates the economy, we need the confidence of the central bank. The central bank has made it absolutely clear that the Government have to be fully committed to fiscal discipline in order to allow that to happen. Thus we have a combination of low interest rates, quantitative easing, now credit easing and a substantial devaluation. This is where the stimulus to demand comes from.

The third element is fundamental: we are dealing with a broken banking system—something we inherited. The banking system was massively expanded under the last Government, but collapsed with disastrous consequences. There is a continuing problem of credit supply. That is a very real problem—and every small and medium-sized enterprise would tell the same story. We have introduced a whole series of initiatives. The Chancellor has taken this forward with credit easing, while my Department has a new programme building on the Breeden report relating to non-bank finance. I have no doubt that we shall have to come back to this, because the banking system is still not functioning, but this is at the heart of the economic crisis that we are

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trying to manage. For the first time in our lifetimes, the financial system has collapsed—with disastrous consequences—and we are having to put that right.

The fourth and final element in the story is rebalancing the economy and putting it on a proper sustainable basis. That is why the Chancellor underlined in the Budget our commitment to the growth review and to improving infrastructure. We need to recognise that banks have to be properly regulated, which is why we have increased the bank levy, but in addition, we need to give backing to our successful industries, particularly our export industries—aerospace, creative industries, the oil and gas sector, and pharmaceuticals. Over the last few weeks and months, we have been correcting some of the long-standing errors of policy pursued by the Labour Government—the way in which, for example, public procurement took no account of supply chains; we are putting that right. We are beginning to see serious positive commitment by overseas investors—we are seeing it in the car industry and in pharmaceuticals—as a result of this industrial strategy.

Clive Efford (Eltham) (Lab): With all due respect, we have heard it all before. In May last year, the Business Secretary said:

“I will fight, and do fight…for manufacturing industry…It is leading this country out of recession”.—[Official Report, 24 May 2011; Vol. 528, c. 793.]

Will he tell us what went wrong with manufacturing?

Vince Cable: Has the hon. Gentleman followed what is happening? The car industry, for example, has grown by approximately 20% over the last year, and all the major producers are investing in the UK.

Several hon. Members rose

Vince Cable: Let me finish my summary. Hon. Members can make their points in their own speeches.

We are dealing with an extraordinarily dangerous and difficult situation. Quite apart from our own horrendous legacy, we have to contend with the threat of high oil prices and the currently stabilised but continuing crisis in the eurozone. As a consequence, our economic position is very difficult. The economy is not, of course, growingly rapidly. Ever since we came into office, I seem to recall the shadow Chancellor predicting a double-dip recession, which has not happened. This year, growth is not spectacular, but it is higher than Germany’s and significantly better than the eurozone’s.

We acknowledge that we undoubtedly have major problems to deal with. Unemployment is far too high, but it is the same rate as in the United States, which is often regarded as providing a role model of how to deal with a crisis. We recognise the seriousness of the problem; what we will be judged by is our effectiveness in digging this country out of the enormous economic hole that we inherited. We are on track to do it, and we will stick with the policies that we have adopted.

1.48 pm

Mr Nicholas Brown (Newcastle upon Tyne East) (Lab): It is a pleasure to follow the Secretary of State, if only because he has confirmed me in my long-held prejudices about Liberal Democrat politicians. I think he redeemed himself in the last part of his speech about the financial services sector, which is where I would like to begin my remarks.

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In his BBC business lecture, Bob Diamond observed:

“We stand today at the end of a long cycle of excess borrowing: borrowing by financial institutions, by governments, by consumers and by businesses.”

The Chancellor made a similar point yesterday when he referred to the

“days of large deficits and the illusion of cheap finance.”—[Official Report, 21 March 2012; Vol. 542, c. 797.]

As we all move in the opposite direction, there are obvious dangers in the cumulative impact of collective repositioning. We should focus our attention on the significant differences between the output forecasts and the actual outcomes. The differences are striking. Corporate tax cuts, for example, marginally help corporate profitability; they do not of themselves stimulate growth or create jobs.

The second feature to focus on is the public expenditure cuts that have not yet taken place. In the autumn statement, a further £8 billion in cuts was announced for 2015-16 and a further £15 billion in cuts for 2016-17 —that £15 billion alone is equivalent to a 3p rise in VAT—and yesterday the Chancellor announced a further £10 billion in public expenditure cuts. This represents an unprecedented challenge.

In referring to external uncertainties, both the Chancellor yesterday and the Business Secretary today mentioned the eurozone and a spike in oil prices. I would add that the secrecy and complexity of the unregulated financial services sector in the United States is a further cause for concern, not least because of its size.

The overall Budget stance is fiscally neutral, but, of course, the impact of the Budget changes is cumulative. VAT is still at 20%. A combination of wage freezes and inflation will reduce real earnings—again, the effect is cumulative. A cut in the top rate of tax is useless for those who do not earn £150,000 a year—and most of us do not. Similarly, a change in lower income tax thresholds is useless for the one third of households that do not have anyone resident who pays income tax because they are too poor. The regressive impact of all this is even greater if the citizen’s housing costs are being driven up by 7% or more a year, which is what has happened to social housing rents. Again, the effect is cumulative.

Pensioners may appreciate the simplification of the age-related personal allowances, but not their collective loss of about £1 billion per year resulting from the freezing of those personal allowances. That does not hit the poorest; instead, it is a nasty assault on people who, in the main, are not particularly wealthy, but have tried to look after themselves in their retirement years. It is a sneaky and disreputable measure. Even the Government seem ashamed of it, since they coyly describe it as a “simplification” and, significantly, it is one of the few bits of the Budget that was not briefed beforehand.

The Chancellor said a lot about the money he is spending, but less about the public expenditure cuts that are going to pay for the fiscally neutral Budget stance. Given the times, it would be reasonable for the Government to look again at whether big-ticket items should be dropped as unaffordable. I urge them to think again about the Trident renewal programme. Why do we need to duplicate a strategic weapon that is already in NATO’s armoury? Nor am I convinced that the high-speed rail link between London and Birmingham is worth the expenditure in the current circumstances. I urge the Government to look at whether valuable tasks

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carried out in the public sector can be discharged in less ponderous and more proportionate and cost-effective ways, rather than to look at abolition as the only way of making the savings.

In a significant move, the Chancellor announced a general anti-avoidance measure in the context of the move to the 45p top rate and the widespread avoidance of stamp duty on expensive houses. He announced other tax avoidance legislation as well. The obvious danger is that, having gone to the expense of setting up an anti-avoidance device, the avoider gets a taste for it. The lower rate at 45p is a certainty, but the effectiveness of the anti-avoidance devices is less certain. There are further dangers in a general anti-avoidance measure. If it is necessary, it should be focused on the rich and powerful, and not be used in a disproportionate way against small and medium-sized businesses.

My final point is about the impact of all this on the north-east of England. Our region is a net exporter. Whatever might be the case for the country more generally, a broadening and deepening of the private sector employment base of our region is the right way forward for us. The Government do not disagree with this point in principle, but the economic development structures they have put in place are the wrong ones for delivering the stated policy, and I urge the Government—and in particular the Business Secretary, whose responsibility this is—to consider the alternative Minister-led approach to regional economic development that I and other Members set out in our regional debate last year.

I also urge the Government not to go ahead with the regionalisation of public sector pay. This is a “blue herring.” As well as being manifestly unjust, it will cost more than it saves and will throw up a range of unintended and unwelcome consequences. It is a myth that high public sector pay is undermining the creation of less well-paid private sector jobs. I challenge anybody, both in this House and outside, to point out a job vacancy in the north-east of England for which no candidate can be found at the going rate. Why should public sector workers suffer austerity measures longer because of where they live? They are already on the receiving end of wage freezes, job losses, rent rises, general inflation and long-term reductions in their pensions—and are hit even harder if they are trying to help their children through university, and harder still if they have lost their tax credits. Between 2011 and 2015, the average public sector worker will see their wages increase by 2% while the consumer prices index increases by 14%. Now is not the time to depress demand in the most vulnerable regions of the United Kingdom. As well as both the uncertainties to which the Chancellor referred in his address and those to do with the transnational unregulated financial services sector, he has left us with a further set of uncertainties all of his own: the substantial public service cuts that are yet to come. Of course the poor are hurt by this Budget, but it is middle-income Britain that is disproportionately the loser.

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. Before Mr Brown’s speech, I should have announced that there is an eight-minute time limit on speeches. He is so astute that I knew he would realise that, but I now say to the rest of you that there is an eight-minute limit.

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1.56 pm

Mr David Evennett (Bexleyheath and Crayford) (Con): I am grateful to have this opportunity to participate in the Budget debate, in order to highlight the financial and economic issues that are of concern to my constituents, and in particular to raise the topics of families, fairness and the future. I congratulate my right hon. Friend the Chancellor of the Exchequer on his Budget, which I believe is fair, innovative and effective. There are a lot of very good measures in it: tax cuts, help for business, increases in pensions and personal allowances, and investment in infrastructure. That is all good news for our country. For my constituents, the key concerns are the cost of living, keeping their jobs, taxation and dealing with the appalling economic mess left to us by the last, unlamented Labour Government.

This Budget goes a long way towards dealing with the issues facing the United Kingdom, and I believe it will be strongly supported across the country. It is good news for hard-working people on moderate and low incomes. It helps families and businesses, and, most importantly, it encourages aspiration.

Shortly, I shall address families, businesses and taxation, and how this Budget will assist and encourage our economic recovery. Before doing so, however, I want to state that the infrastructure plans announced in the Budget will create jobs and opportunities for businesses and enhance our economy. In particular, I welcome the Chancellor’s announcement of a possible new river crossing in east London. As my constituents and others travelling to and from south-east London know, the Blackwall tunnel is inadequate and congested and still prone to vehicles breaking down on the approach roads or in the tunnel.

Damian Collins (Folkestone and Hythe) (Con): My hon. Friend makes a valid point about the east Thames crossing. That will also be of great benefit to my constituents in Kent.

Mr Evennett: I am grateful for my hon. Friend’s support. As the Mayor of London has said, a new crossing at Silvertown is essential. It will enable commuters and business traffic to get to their destinations quicker, and it will relieve the pressures on the Blackwell tunnel. In order to ensure the regeneration of south-east London, such public sector projects and investment are essential, and I welcome the Government’s commitment to look further into this crossing and to support other investment to improve our infrastructure.

I commend my right hon. Friend the Chancellor on his measures on taxation and families. Conservatives instinctively believe in lower taxation, not only because it allows people to keep more of their own money, but because they then have more choice in how their money is spent. Government do not always know best. They have a role to play, but people will spend their own money more effectively; it is not for Government to tell people what to do. Unlike the Labour party, which always believes in increasing taxation, we believe that people who have worked hard should have the opportunities to get on with their lives and careers, and to spend their money as they want. I therefore welcome the Chancellor’s aspiration to raise the personal tax allowance to £10,000 as soon as possible. That is good news for all working families on low incomes.

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In government, Labour professed sympathy for working families on low incomes but did little to help them—in fact, Labour hindered. We did not hear anything in the shadow Chancellor’s speech about the failings of his Government. They allowed families to get worse off, and the increase in poverty was greater under Labour. This Government do not believe that people should be allowed to remain on benefits for ever because benefits are more attractive than working and earning. That is unacceptable. We are, therefore, grateful that we are changing the benefits regime and helping people with the tax regime, so that work does pay. That is fundamental.

Under this Government, great progress has been made in the past two years, with personal allowances going up by 25%. This year there is to be another rise and next year, in April 2013, there will be an additional rise in the personal allowance of £1,100. That is a real, positive advance for people on low incomes, allowing them to keep more of their money. I particularly welcome the fact that some 2 million people will no longer pay any income tax; they are on low incomes and they should not be paying income tax. It is the Conservative-led Government—a coalition Government—who are doing this, and I welcome the Business Secretary’s speech, which highlighted what the Government are doing and the logic behind it.

Kate Green: I note the hon. Gentleman’s welcome for families being lifted out of income tax. How does he react to the fact that 230,000 pensioners are being brought into the ambit of taxation for the first time by this Budget?

Mr Evennett: The whole aspect of what we are looking at is increasing pensions and helping pensioners. This Government have done a lot more than the Government whom the hon. Lady supported—they gave a miserable 75p increase in the pension a few years back. Our Government are putting up the pension this year by more than 5%, which is a record and an achievement for this Government. We will take no lectures from the hon. Lady, because her Government let pensioners down.

Nationally, a total of 24 million people will receive a tax cut thanks to this Budget. That is good news for individuals, for families and for the economy. This Conservative-led coalition is proceeding to help working people, and the Opposition do not give us credit. I was disappointed with the shadow Chancellor’s speech. I usually listen to him with great interest, but he did not allude to anything that Labour would do if it were in government or to Labour’s failures when it was in government.

The family is the backbone of our society, and the issue of child benefit is always difficult. Fairness remains the key, and the original changes proposed caused considerable difficulty. I am pleased that the Chancellor listened to our concerns, and those of constituents, that the proposed changes were not really acceptable. By amending the proposals and tapering the benefit from an annual income of £50,000, some 90% of families will continue to benefit from financial support during these difficult financial and economic times. This Government are listening and changing policies after representations have been made, and that is to the credit of the Chancellor and the Treasury team.

Red tape, bureaucracy and taxation all adversely affect businesses. I welcome the news that more is being done to support small businesses and manufacturing.

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The investment in apprenticeships, lower corporation tax and extra support for start-ups will make a real difference. In addition, we heard the innovative idea of a student-style loan for young people to allow them to start up their own businesses, and I welcome the fact that the Chancellor is examining it. It would allow 18 to 24-year-olds who are keen on a business career to be helped. We all know that university is not for everybody; people may not want to go there and may want to go into business instead. So we need to provide the same sort of help for young entrepreneurs, whom we desperately need in this country, to enable them to go forward to make their name and their fortune. I welcome the fact that the Government are willing to examine that.

My constituency contains a number of innovative manufacturers, such as Texcel Technology in Thames road, Crayford, which I visited last month. I was really impressed with the dynamism of its leadership and its focus on high-tech products. I recently nominated it for the Made by Britain project. The NEPTUNE project, for which the company has provided power and switching solutions, will help to develop our understanding of the ocean and of many biological, chemical, physical and geological events that take place. I am pleased that such a successful firm in my constituency has designed and manufactured such innovative components for this international project. People at the firm were looking to the Government for some action and will be delighted with what the Government have proposed in the Budget to enable small firms like theirs to prosper and develop.

I know that the firm is concerned about regulations, bureaucracy and, of course, tax, so it will welcome the parts of the Budget dealing with business. Business is vital to our society; it makes the money and creates the wealth that allows us to invest in education, hospitals, all the other public services, pensions and all the rest that we want to invest in. If we do not allow business to flourish, we cannot make that wealth and we cannot have the taxes that come with it. This Government are focusing on those issues, to make sure that we are getting the wealth creation and the taxes from innovative small firms such as the one I mentioned.

We need to consider the whole of this Budget, as it works together as a rounded Budget, looking to the future. That is the great thing about what we saw yesterday from the Chancellor and the team; the Budget is looking to the future to make Britain better. It seeks to make Britain great again, as that will not come from the Opposition, after their 13 years. We remember how they “ended” boom and bust, and we remember all the things they had—the result was a disaster and it left us with the mess to clear up.

In conclusion, the Chancellor has been effective in looking to policies to solve our economic and financial situation. The Budget demonstrates that this Government are firmly on the side of those who aspire to do the right thing for themselves, their families, their businesses and this country, and I strongly back it.

2.6 pm

Mark Durkan (Foyle) (SDLP): Unlike Government Members, I am not in a rush to gush about how much this Budget does for families or firms in my own or anybody else’s constituency. However, I am also not here to pretend that everything in this Budget is bad, as it contains measures that will help some sectors and areas. Moving on general anti-abuse rules to deal with

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tax avoidance is good in principle and welcome. Obviously, we have to see the exact detail to know whether the effects will match up to the stated intent. Similarly, tax simplification for small businesses is a good thing in principle, but again the devil will be in the detail, as it will be in respect of removing borderline anomalies. Many of us have been lobbied by our local chippies and others about removing some of those anomalies, but of course there is always the danger that we end up redrawing the margins in particular businesses or sectors.

The Budget makes new provisions for the carbon price floor. Coming from Northern Ireland, I am sorry that the Government have not seen fit to open a window to relieve the serious competitiveness and investment problems that will be caused to our generating industry, because, in the context of the single energy market in Ireland, the carbon price floor will, in effect, incentivise investment to go south of the border and not stay in the north.

There are other issues to address, such as fuel duty. Again, I regret that the Government have not done more to help firms and families, who have both been affected deeply by these problems. The Government have boasted greatly about the measures that they have taken to date to protect people from the price surge, but that surge protection is still needed and now is not the time to let it go on the assumption that the other tax changes that the Government have announced will somehow carry people through or forward.

Obviously, not least in the context of Northern Ireland, I support the further moves in relation to “above the line” research and development tax credits and the tax reliefs in the creative sector, not least in film and high-end television, where Northern Ireland has recently been doing well.

On corporation tax, we in Northern Ireland are faced with the highly competitive corporation tax rate on the other side of the border and we have been looking for reductions and modifications there. I have no argument in principle with moves to reduce corporation tax, but I wonder about the Government’s measures on the control of foreign companies and the full reform that is there. Previously, I have asked about the impact that that would have on the moves to restrict the incentives towards using tax havens, and I remain concerned that while the Government have perhaps redressed some of the concerns that have been raised about the possible loss to business and revenue in the UK, there will still be a loss to developing countries’ revenue, which they absolutely need, as a result of the measure.

The Government are making much, not just in the Budget but more widely, about what they are doing for business lending. We have all heard this before. All the measures that are made relying on quantitative easing and now credit easing depend on the banks. We are told about the £20 billion guarantee, so that some banks—those that opt into the scheme—might give businesses credit at 1% less than they would otherwise have given. If yet more billions are being spent just to make that marginal difference, one has to wonder whether that is the best way of gearing support towards growth and the economy. More direct uses of that money could yield a much readier growth impact.

On the tax side, we have the hit on pensioners, with the move in the allowance and more people being brought into taxation. At a time when we are again

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encouraging people to save towards pensions and we again have a reform and recasting of the pension system, for the Government to come along and make another tweak that appears to hit pension provision and pension plans sends the wrong signal. It gives people the idea that the Government engage in jiggery-pokery—that they encourage people to save pensions but that then when they do so they will be clobbered. It is just a bad and unnecessary measure at a time when we are trying to encourage people to save more for pensions. Other people whom we are asking to save for their pensions are middle-income earners: we are asking them to make strong provision for their pensions and to make provision for their children’s third-level education. Many of them are still being hit by the change to child benefit. That will hit some of those people’s capacity to save for their own pensions as well as to support their children.

The Chancellor has told us of the Adam Smith principles of tax being simple and predictable, supporting work and being fair, but the tax charges being introduced in relation to child benefit go completely against that. It is a very complicated and clumsy system that is going to cause problems, and not just for those families who are affected—it will cause serious problems for employers. It will not be long before employers’ bodies will be coming to Government and saying, “You have created a very serious problem here”—a much bigger problem than the 50p tax ever created for those firms in how they could incentivise rewards and repay people. The Chancellor also mentioned the £10 billion cut in welfare coming after the next election, which he has been framing as necessary if other cuts are to be sustained.

Sheila Gilmore: Will my hon. Friend comment on the initial speculation in today’s edition of T he T imes, which is hardly a bastion of left-wing politics, that those cuts might affect attendance allowance, means-tested disability living allowance or mean the taking away of carers’ allowance?

Mark Durkan: Of course, these cuts could affect anything. We were told when the Welfare Reform Bill went through Parliament that that was the final destination of welfare reform. Now it is clear from the Chancellor that it is simply a staging post for further cuts. We were told about the spoonful of sugar—the extra money going into making universal credit work in the transition period—but is it the Chancellor’s plan to remove some of that, and to pull back the extra investment that has gone into making universal credit work and more acceptable, or will other benefits such as those for people with disabilities be affected? We know that families with disabilities are already being squeezed. Are they going to suffer more?

In the light of people in the Chamber teasing others about what they will put in their next manifesto, will the Government parties tell us what they will be putting in their manifestos about the £10 billion-worth of further cuts in welfare? Who will be hit? There is no point in people asking one party what they are going to put in their manifesto unless others are going to follow through. The Government are saying that such cuts will be needed after the election; will they say during the election campaign where those cuts will be made?

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Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): May I follow up the very important point that my hon. Friend made about the reduction of £12 billion in welfare? Does he recall that last week when we had the debate on women’s rights in Westminster Hall a number of our friends from Northern Ireland outlined just how serious that problem was? Does he think they will be in receipt of cuts as well?

Mark Durkan: Absolutely; that is the fear that we must have. The Chancellor has put forth the signal that such cuts would be needed and would have to be factored into the next spending review. Although this House has discharged its duties on the Welfare Reform Bill, we must ask what the changes will be. Contrary to what the Chancellor has said about support for families, the Government's direction of travel in everything they do is putting more of a squeeze on families—both low-income families on benefits and middle-income families given the pressures that they are facing.

The Chancellor also used the Budget to frame questions about moving towards regional pay in the public sector. Speaking from the Opposition Benches, I want to say straightforwardly that I know that he is not the first Chancellor to toy with the idea of regional pay and tinkering with the framework. I have heard that from previous Chancellors and Prime Ministers, so I am not in denial. I was as opposed to it then as I am now. I was intrigued to hear the Chancellor say that he had submitted evidence to the independent pay review body, so I went to the Library to see what that evidence was and I have the “Dear pay review body chair” letter from the Chancellor. Some 11 pages of evidence were submitted. I am not saying that it is dodgy dossier stuff, but in the material that it sources it really is dubious dossier stuff. It shorthands academic studies, possibly doing a disservice to the academics who completed them, in saying that the evidence suggests that the quality of public services would directly benefit if public sector pay became more responsive to local labour markets. It claims that one study

“found that over one quarter of hospital targets were negatively associated with the public/private wage differential.”

It said that another study

“found that a 10 per cent increase in wages outside of the nursing sector was associated with a 7.4 percent increase in mortality rates from heart attacks.”

When that is the quality of evidence that the Government are submitting to the pay review body, we need to examine it further.

2.17 pm

Michael Fallon (Sevenoaks) (Con): I remind the House of my interests on the Register of Members’ Financial Interests. One of the most remarkable things about the Opposition’s response to this Budget is that we have not heard a single pledge to reverse any of the changes being proposed. We have heard a lot of carping and that they are going to vote against some of the measures on Monday, but they are not actually going to change them should they ever come back to power. When they do carp, they seem to be carping on behalf of some rather strange interests. They want the top 10% of households to keep their child benefit. They want the better-off pensioners to keep their age-related allowances. Indeed, they want the super-rich to go on enjoying

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some £65 million-worth of evasion of stamp duty and abuse of tax reliefs. That seems to me an extraordinary position for the Opposition to get into.

Mr Sam Gyimah (East Surrey) (Con): Is it possible that the opposition to these measures we are hearing, which my hon. Friend has outlined, is opportunistic politics dressed up as principle?

Michael Fallon: My hon. Friend is on to something. We note that the shadow Chancellor could not answer the questions on whether Labour would restore the age-related allowances, the changes to which its Members have been moaning about today.

Where I hope there is common ground across the House is that we all want a dynamic, high-growth economy. In my view, that can be built only on sound public finances, fully flexible labour markets and rising productivity in both the private and public sectors.

I shall begin with the public finances. I welcome confirmation in the Budget that we remain on track to eliminate the structural deficit, with the result that, even in difficult trading circumstances both in the eurozone and globally, the Chancellor was able to avoid big increases in taxation or further increases within this spending round. A broadly neutral Budget confirms that we are on course, but keeping our public finances on course will require continued firm control of public spending.

I note that in cash terms public spending continues to rise each successive year that is illustrated in the Red Book. It may be that we have to have a fresh look at some of the entrenched spending targets of the previous Government. We may well need to ask ourselves whether specific targets, for example on child poverty or climate change, are the best way of focusing our spending where it is most needed.

I welcome moves towards flexible labour markets and more local pay. The hon. Member for Foyle (Mark Durkan) is right—this is not a new announcement. If you look back at the spending review of 2002, Mr Deputy Speaker, you will see that the then Government were committed to more flexible local and regional pay. You will find it in the Budget documents of 2003. You will also see it in the previous Prime Minister’s last Mansion House speech as Chancellor in 2006. Of course, the Labour Government did nothing about it; their union paymasters would not allow it. But local pay has applied for the past 25 years at least across the private sector, and it would be wrong to continue to rope off the public sector from the real differences in the associated costs of labour up and down the United Kingdom.

It is unfair to local businesses to have to compete for labour with public bodies and offices that pay well above the market rate. It is certainly unfair to the jobless in those labour markets, who are priced out of jobs as a result. I hope that the Chancellor will go on to tackle some of the other inequalities, such as the big differences in sickness pay between the public and private sectors and the real difficulties that young people under 25 have in getting that first job. One third of the unemployed are under 25. That is the legacy of the Labour party, and we have to do everything possible to help those people to get their first job, not least when at the moment we control their wages and other conditions that create so many disincentives for small companies to

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take on a single extra member of staff. Why should the state make it so difficult for young people to get into employment?

The test of all the Budget measures in the end is whether they will improve our productivity, as so many Labour Budgets and so much Labour spending signally failed to do. The Office for National Statistics figures for 2010 say it all and are a good summary of 13 years of Labour government. In terms of GDP per hour, France is 18% more productive, Germany is 19% more productive and the United States is 24% more productive. That shows the importance of improving incentives at every level and it is why I welcome the new incentives for the lower paid and middle earners that will be created by the changes to the personal allowance. Taking 2 million people out of tax altogether in two years will improve those incentives. That is a coalition achievement in which both parties on this side of the House can take real pride.

Sound public finances, more flexible labour markets and higher productivity are the keys to the future and to the jobs that our children need. I welcome the progress being made in this Budget towards them.

2.24 pm

Mr Russell Brown (Dumfries and Galloway) (Lab): The Chancellor’s Budget statement yesterday was for the entire country, but for so many individuals, households and communities, it will result in many different outcomes. I want to concentrate on the impact that it will have on my constituency and the Dumfries and Galloway region as a whole. Yesterday, local people were looking for indications of potential growth in the economy and potential creation of jobs.

In the past 20 months unemployment in my constituency has risen month after month. It is a sad reflection that youth unemployment is at its highest level since 1996. Dumfries and Galloway is a rural constituency, which means that the two largest employers are the national health service and the local council. The shedding of jobs in those two specific areas has now been going on for four years, and for those who think that everything north of the border is fine under a Scottish National party Government, let me tell them that that is four years of cuts in the public sector. Yet the block grant that we all talk about—that Barnett formula, the Barnett consequentials—has been reduced only in the financial year that is about to come to an end. So there has been a lot of pain in Scotland that sometimes people do not read about in the wider UK press. The pain of loss of income spreads into the local economy. It spreads on to the high street. I regret to say that some of the pressure on households in my constituency is down to the fact that it is very much a low wage economy.

So the Budget statement cannot be taken in isolation, although that is what we are here to discuss today. We need to look at what has happened and what is about to happen. My hon. Friend the Member for Foyle (Mark Durkan) said that the welfare cuts would have an impact. That is happening at the moment. Let no one be under any illusion that only the current coalition Government have introduced welfare cuts and reforms. Our Government did on three occasions. They were trying to make those adjustments that said to people, “Work does pay. There is an opportunity there, despite any disability that you have. There is help and support to get you back into the

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workplace, perhaps not doing what you did in the past but it is there if you wish to seize the opportunity.” The big challenge will be in the next two weeks when so many households lose working tax credits. With the reductions in service provision through the voluntary sector that my local area has experienced, with welfare rights budgets being cut and with Citizens Advice services being cut, I am finding that more and more constituents are coming to my office for help and support.

Let me give the entire House a warning: colleagues had better batten down the hatches, because they are about to be inundated with households that are about to lose their working tax credit. The increase in tax allowance announced yesterday, which will mean £2 or £3 a week, will make not one iota of difference to households that will potentially lose £50, £60 or £70 a week. In no way whatsoever can the increase compensate for that.

The other point is that people will need to move from working 16 hours a week to 24 hours in order to avoid losing their tax credit. How on earth will that happen when people have voluntarily reduced their working hours over the past couple of years just to hold on to their jobs? Unfortunately, many of those people will be unable to keep a hold of their tax credit.

The granny tax grab, as it has been described today in the press, the changes to the age-related personal allowance, which when introduced took 680,000 pensioners out of tax altogether, is being done at the wrong time, if indeed it has to be done at all, with low interest rates and maturing annuities not delivering what people had expected.

In a rural locality fuel prices are vital, so I want to ask the Minister what has happened to the fair fuel stabiliser. FairFuelUK expected more from the coalition Government, who need to be honest about what has gone wrong. We were all inundated with e-mails from constituents about the report commissioned by FairFuelUK. I asked the Economic Secretary last week—she did not leak anything to me—what she and her officials thought of the report, but she said that she could not speak to me about it because the Budget was just a few days away. I would like to hear what Treasury Ministers and officials make of the report, because I have doubts about a 2.5p reduction in fuel duty creating 175,000 jobs; it verges on some sort of economic fantasy.

I would have loved to have seen, as I am sure would most of my constituents, an announcement yesterday of a temporary reversal in the VAT rise, because £450 extra for families would have been of real benefit to them and it would also have helped motorists. I am, and always have been, totally opposed to any kind of regional variations in these matters. I sat on the Committee that introduced the national minimum wage back in 1998 and—the Secretary of State for Business, Innovation and Skills is no longer in the Chamber—even then there were Liberal Democrat Members who wanted regional variations in the national minimum wage. It is not acceptable.

Mr Tom Clarke: Does my hon. Friend recall that the hospitality and tourism industries, which I know are very important in his constituency, were warned that the national minimum wage would cost them jobs, and does he agree that the opposite was the case?

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Mr Brown: My right hon. Friend is absolutely right. In 1996 and 1997, when the Labour party was talking about a national minimum wage, the Conservative Government and others were saying that we would lose 1 million jobs as a result. In fact, the opposite happened and it created around 1.5 million jobs, especially in the service sector, so he touches on a relevant point.

My right hon. Friend mentions tourism, and it is on that point that I will bring my remarks to a close. I represent a rural constituency, and for many of my constituents using public transport is an absolute impossibility and they depend on their cars. The area is heavily dependent on agriculture and forestry. Hidden away on page A101 of “Overview of Tax Legislation and Rates” is the bombshell—it is a bombshell—that as of this October VAT will be levied on static holiday caravans. A £40,000 van will cost £48,000. There are many of these businesses in my constituency—nowhere in my constituency can someone be more than eight to 10 miles away from a static caravan site. Owners of these sites will find it much more difficult to upgrade and invest in their businesses and, importantly, those holidays will become much more expensive for hard-working families.

2.34 pm

Lorely Burt (Solihull) (LD): As a Liberal Democrat, I am as delighted as any of my colleagues or, indeed, any of our coalition colleagues by the further and faster move yesterday towards the realisation of our flagship tax policy—raising to £10,000 the threshold at which people start to pay tax. It was something that the shadow Chancellor would not acknowledge, and that was a little churlish. As the Liberal Democrat spokesperson for business, innovation and skills, however, I want, in the short time at my disposal, to focus on a small number of highlights and what the Budget means for business.

Much of the good news for business was announced in the autumn pre-Budget statement, and that is a good thing, because what business needs as much as anything is predictability, stability and simplicity. We knew that corporation tax was due to be cut to 25% this April, but I am sure the news that we will now cut it by a further 1 percentage point is good news that business will be able to deal with.

I also welcome simplifying on the basis of cash turnover the tax on our smallest businesses. What a difference that is going to make for them, as will integrating income tax and national insurance. Business has other things to worry about without collecting tax through two separate systems for the Government.

Despite the tough decisions that we had to take because of the “no money” legacy of the previous Government, we have managed to create an environment of low interest rates, and that has been vital to business. We only have to look over the channel at our European neighbours to see what a shocking state we could have been in if we had not been as tough and as firm as we have.

So, despite the tough going, we have been getting going and literally rebuilding our economy. The building trade has suffered badly during the recession, despite historically low mortgage rates, but we are helping, through the NewBuy system, by expanding the get Britain building fund to provide up-front finance to construction companies and by reforming planning.

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For small businesses, the national loan guarantee scheme started operating this week, making £20 billion of guarantees available. That is all well and good as long as banks are prepared to lend, so it is important that their seeming intransigence is challenged by competition from alternative sources of finance, such as the £1 billion that we have made available to funds that lend directly to mid-cap businesses. We are also increasing funding to the business finance partnership by 20%.

The Green investment bank opens for business next month—a step towards our aspiration to become the greenest Government ever; greener business cars will get a series of tax breaks; and hauliers’ vehicle excise duty has been frozen. But most importantly, there will be £4.5 billion less in burdens on the motorist with the cancellation of the fuel duty escalator and the confirmation of the fair fuel stabiliser.

Business needs support in many ways. We are very clever and inventive—[ Interruption ] all of us, as a nation, and we need to do much more on patent protection, but I welcome the cut in taxes on patents and was delighted to hear the news this morning that GlaxoSmithKline will now invest heavily in the UK and, as a result of that announcement, continue its valuable and lucrative life sciences work here.

The support for science announced yesterday was also very well received. The extension of tax credits to the creative industries, as well as to films, is also welcome. There was some banter yesterday when the Conservatives were compared to “Downton Abbey”, and perhaps the Labour party does include Wallace and Gromit, although which one out of the shadow Chancellor and the Leader of the Opposition is Wallace and which one is Gromit is something on which we have been speculating. As for the Liberal Democrats, let us not be left out. I fear that our signature film will be “Four Weddings and a Funeral” if we are not careful. [ Laughter. ] But these tax credits, joking apart, are most welcome.

Research and development tax credits make a big difference to companies, especially when they are deciding where to locate their R and D functions, so I welcome in particular the movement to above-the-line credits—a simpler system, which ensures that tax implications can be more easily factored into the decision-making process.

In a global world we really need to brush up on our technology and, especially, on our broadband speeds, so the provision for ultra-fast broadband and wi-fi in 10 cities, including my own of Birmingham, is very welcome, as is the extra help for smaller cities.

Overall, I am very happy with this coalition Budget. However, there is an issue on which the Chancellor and I disagree—the belief that we need a new airport in the south-east. Clearly, we need to be able to service all passenger requirements, but there is a pledge in our coalition agreement that there will be no new runway at Heathrow. Why does the Chancellor not raise his eyes a little further north? Birmingham airport’s runway is currently being extended and will be easily accessible when High Speed 2 comes in. It has spare capacity of 40 million passengers a year. In the midlands, we have the answer to the need for an English airport hub.

Our business focus is paying off. We are now in the top 10 most competitive places in the world to do business. However, we need to change the culture in this country. I am so concerned that too many young people

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leave school unready and unprepared to earn a good living. We must tackle that issue. We must enthuse and open the eyes of our youngsters to the opportunities out there, including starting their own businesses. I fully back the idea of enterprise loans for young people. I started my first business venture at the age of 10, and I think that it is never too early to feel the excitement of doing it oneself. I commend the Budget to the House.

2.41 pm

Andrew Miller (Ellesmere Port and Neston) (Lab): It is a great pity that the Chancellor is not here; I would love to look him in the eye and ask whether we are genuinely all in it together. He and I represent Cheshire constituencies, but I do not think that his position is quite the same as that of the good folk living in the Westminster ward—one of the country’s most disadvantaged—in my constituency. I would really like him to say to those people that he was in the same boat as them. That is manifestly not the case. The media have picked up on that and realised that the story that we were told yesterday is full of half-truths that present the facts differently from what is really happening on the ground.

In these tough times, what the Tory-led Government are doing tells us everything that we need to know about them. It proves that the Chancellor and Prime Minister are totally out of touch with what life is like for people in this country. At a time when bills are going up for families on middle and low incomes, the Chancellor has added to them all. Fuel duty is going up, even though petrol prices are at a record high.

I am glad that some Liberal Democrats are in the Chamber. In the west country, there is already a blog about the new pasty tax. The Lib Dems should watch out; that is not the only thing that they are under attack for. They will be the real losers on the issue of regional pay, raised by my hon. Friend the Member for Dumfries and Galloway (Mr Brown) and the hon. Member for Foyle (Mark Durkan). Areas where Liberal Democrats have traditionally been strong would duck out compared with places such as my county of Cheshire, which is also the Chancellor’s, or Oxfordshire, which is where the Prime Minister is. The Liberal Democrats have a real problem when they start looking at regional pay.

Andrew George (St Ives) (LD): There is a debate to be had on regional pay, and my position is well known. On the sublimely fundamental and seriously important issue of pasty taxes in Cornwall, let me reassure the hon. Gentleman that we will be fighting them on the beaches.

Andrew Miller: So when I go to Ann’s pasty shop, I’ll be all right, will I?

The Lib Dems are supposed to be strong on matters related to solar power. This morning, the chief executive of the Solar Trade Association said:

“We cannot understand why solar has been singled out for rough treatment on Capital Allowances when it is a popular technology which will soon reach grid parity and provide businesses with a real alternative to dependence on fossil fuels.”

Again, the Liberals have bought into something that is totally contrary to their own policy position. At the same time, the Budget gave a tax cut to the very richest people in our country, with just 14,000 people earning £1 million or more getting a Budget boost of over

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£40,000 each year. No wonder the Centre for Policy Studies, which is advised by the Minister for Universities and Science, among others, says that the Budget amounted to small-scale tinkering, regional handouts, and a rearranging of the deckchairs. To be fair to the Minister, there is a lot that I do not agree with in the CPS’s press release. Nevertheless, the Government have chosen to cut taxes for 300,000 people earning over £150,000—the richest 1%. How can that be the priority now?

The Chancellor looked quite smug when he sat down yesterday, but I bet he did not feel so smug when he read today’s papers.

Stephen Lloyd (Eastbourne) (LD): I had the pleasure of sitting in the Chamber yesterday to hear the Chancellor and the Leader of the Opposition, and then some of the later speeches. There was a lot of noise going backwards and forwards about the veracity of the figures on how much will be raised from the different wealth taxes. It is not that I do not trust Labour Members, but last night I thought that I would go and check the figures on Channel 4 FactCheck, which I think we all recognise is very accurate, and it confirmed independently that it estimated that five times more money would be raised from the very wealthy as a result of the various taxes.

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I hope that the hon. Gentleman is going to save something for his speech. I remind him that interventions are meant to be short.

Andrew Miller: If the hon. Gentleman had been here earlier for the shadow Chancellor’s speech, he would have heard that point put down very firmly.

Let me refer to today’s papers. Did the Chancellor expect to wake up this morning to a 33 mm-high headline—

Mr Iain Wright (Hartlepool) (Lab): Did you measure it?

Andrew Miller: Yes, I got the tape measure out. It said: “‘Granny tax’ hits 5m pensioners”. The papers referred to a £3 billion tax raid on pensioners over the next four years, and pointed out that nearly 4.5 million pensioners who pay income tax will lose an average of £83 per year next April and that people turning 65 next year will lose up to £322. As you are in the Chair and know me rather well, Mr Deputy Speaker, I suppose I should declare an interest, as it is my 63rd birthday tomorrow. Whatever the Chancellor says about increasing the income tax personal allowance, a family with children, earning just £20,000, will lose about £253 from this April. Shockingly, he slipped out that £3 billion tax raid on pensioners over the next four years. All this comes from a Government whose economic policies on growth, jobs and the deficit have utterly failed.

Of course, there have to be tough decisions on tax, spending and pay; otherwise, we would not get the deficit down. However, although the restoring of the cuts in the science budget is one of the few measures I agree with, a lot more funding is needed if we are to retain the quality of British science. I agree with Imran Khan, the director of CaSE—the Campaign for Science and Engineering—who said today:

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“I suspect the Government realises that the multi-billion pound, 50% cut made to research capital in 2010 simply is not sustainable. Despite difficult times, they are trying to put it right, and it is not going to go unnoticed.

However, simply reversing the cuts isn’t going to be a game-changer for the UK. We need to be far more ambitious if we’re serious about having a high-tech future. The Chancellor should re-invest the windfall from the auction of 4G mobile spectrum, due later this year, into science and engineering.”

The Budget said nothing about that.

Damian Collins: Will the hon. Gentleman give way?

Andrew Miller: No I will not.

I also agree with the Engineering Employers Federation. Although it welcomed the changes to research and development tax credits, it stated:

“Whilst there are some helpful measures, they fail to send a strong enough signal to growing manufacturers”.

This morning’s Financial Times states that John Longworth of the British Chambers of Commerce said that

“small and medium-sized companies felt the Budget measures would ‘overwhelmingly benefit the biggest businesses’ and were disappointed he did not do more to boost confidence across the economy.”

Finally, as the shadow Chancellor said, the Chancellor’s plan has failed. Trying to raise taxes and cut spending too far has backfired. With his tax cut for millionaires, the Chancellor is piling insult upon injury for millions of families and pensioners across Britain. This is a Budget full of failed promises that will fail the country. I urge the House to vote against it on Monday.

2.50 pm

Sir Peter Bottomley (Worthing West) (Con): The House will appreciate that parts of the speech by the hon. Member for Ellesmere Port and Neston (Andrew Miller) were his own words and that others sounded a bit like a Whip’s handout. His birthday is to be welcomed.

I suggest to colleagues that it would be worth their while going through chapter 2 of the Red Book, because its 250 paragraphs contain all kinds of things, some of which are important and others of which are even more important.

As we all recognise, everything that we are discussing must be put in the context of the Government’s receipts and expenditure, which are shown on page 18. The attempt to close the gap between the two underlies everything that we are considering. Some of the matters in chapter 2 of the Red Book will not matter to many people, such as VAT being put on the rental of hairdressers’ chairs. Others have not been spotted by many, such as VAT relief being taken off alterations to listed buildings.

Anyone who has had dealings with English Heritage, as I have, will know that sometimes it is very helpful and that at other times it adds to the cost of what one is trying to do. If we have to take the VAT relief off alterations, perhaps we should consider giving VAT relief to the maintenance and repair of such buildings, or to a portion of those costs, because meeting the requirements of the listed buildings authorities can be expensive.