Roberta Blackman-Woods (City of Durham) (Lab):
Given the Minister’s comments on transparency, is he aware that my office has been trying to get details from the Department for Communities and Local Government about who Ministers have been meeting in the run-up to
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the national planning policy framework? We have been told consistently that that information is not available and has not been since June 2011. In the light of what has happened in the past few days, will the Minister undertake to ensure that all details of DCLG’s ministerial meetings are made available before the NPPF is published tomorrow?
Stephen Williams (Bristol West) (LD): Along with other members of the Select Committee on Political and Constitutional Reform, I met Christopher Kelly after he published his independent report on party funding. He made it quite clear to us that it was a package of measures from which no political party should cherry-pick. Should not the onus be on the Government and other party leaders to implement the Kelly report, which does have a £10,000 donation limit, which would be compensated for with modest state funding of 50p per elector?
Mr Maude: I refer my hon. Friend to what our mutual right hon. Friend the Deputy Prime Minister said in response to the Kelly report: at this time of great financial stringency, we do not think it would be acceptable for the Government to put forward an increase in state funding to make up for a deficiency caused by such a low cap. We think that a cap above that level could be sustainable without additional state funding and would give great comfort that the system was incapable of being abused.
Mark Durkan (Foyle) (SDLP): Can the Minister indicate whether the controlled foreign companies rules which are the subject of Budget resolution 36 tonight were discussed with any donors at any time?
Mr Maude: I have no reason to suppose that they were.
James Morris (Halesowen and Rowley Regis) (Con): I do not detect an appetite among the public for increased public funding of political parties. Does not that make it more imperative that we should have cross-party agreement on the future funding of political parties?
Mr Maude: I genuinely hope we can achieve that.
Dr Alan Whitehead (Southampton, Test) (Lab): When the Committee on Standards in Public Life was finalising its report on party funding last November, the Prime Minister leaned on the Conservative member of that Committee to withdraw his support for the report on the grounds that there should be no cap on donations, but now we hear that the Prime Minister proposes a £50,000 cap on donations. Can the Minister conjecture whether any recent events might have influenced the Prime Minister in deciding to change his mind?
Mr Maude: The hon. Gentleman should know that we have proposed a £50,000 limit on donations going back quite some way to before the Hayden Phillips talks began. We have consistently thought that was the right level because that could be implemented without the sort of increase in state funding that would be unlikely to be welcome to our constituents at this time.
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Dr Thérèse Coffey (Suffolk Coastal) (Con): I welcome the statement from my right hon. Friend and his commitment to progress on having transparency in greater detail on these matters. Does he agree that it would be in the spirit of transparency if the Leader of the Opposition stuck to the commitment he made last October to publish the list of attendees at a private dinner organised by Mr Rudd, a City lobbyist?
Mr Maude: The Leader of the Opposition will have heard my hon. Friend’s very reasonable request and it will be open to him to respond as and when he chooses.
Paul Flynn (Newport West) (Lab): Is the Minister aware of the failure of one of his Secretaries of State to register a meal he had with the lobbyist Bell Pottinger this year on the basis that on the day in question he was digesting with his private stomach and not his ministerial stomach? Is not the distinction a false one? Nobody would give £250,000 for a social, private chat with the Prime Minister, but they would pay it if they were seeking access and influence.
Mr Speaker: Order. Questions about registration are not matters for the Minister as responsibility for those lies elsewhere, but I wanted to hear the hon. Gentleman out. I do not think it is a matter for the Minister.
Mr Maude: I do not think it is, but I am prepared to have a go if—
Mr Speaker: The Minister does not think it is either; we are in happy accord.
Jason McCartney (Colne Valley) (Con): I have to make a declaration of interest as a former trade union representative in Yorkshire. The Unite union has just announced that tanker drivers have voted to go on strike. Does my right hon. Friend agree that Members in this House should be able to condemn such actions without fear of losing a donation?
Mr Maude: My hon. Friend makes a telling point. The Leader of the Opposition, who was put into his post by Unite, will no doubt have an opportunity to condemn the strike.
Mr Ronnie Campbell (Blyth Valley) (Lab): Can the Minister give us details of any private health companies that were trying to influence the Health and Social Care Bill that met in Downing street for lunch, in particular Alpha Healthcare, which gave £500,000 to the Liberal party?
Mr Maude: I can guarantee that there will be a great deal more transparency about what dealings health companies have had with Government and Ministers than there will be about health service unions’ dealings with the Labour party.
Chris Ruane (Vale of Clwyd) (Lab): I know that I have used the phrase before, but does the Minister agree with me that the shenanigans over the weekend can be described only as a right old Eton mess?
Mr Maude: If that is the best the hon. Gentleman can do, I would not advise him to give it another outing.
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Ian Lavery (Wansbeck) (Lab): Can the Minister advise the pensioners in my constituency on how best to secure premier access to the Prime Minister to discuss the implications of last week’s Budget? Does somebody make an offer—his place or mine, depending on the price?
Mr Maude: I feel in fairness obliged to point out to the hon. Gentleman that one of his colleagues has already read out the same planted question.
Naomi Long (Belfast East) (Alliance): The Minister has repeatedly stated that this Government are more transparent than previous Governments. Is what he proposes—a Conservative investigating this Conservative party act—sufficiently transparent to satisfy public concern, and should not that be the test that is applied?
Mr Maude: It will certainly be a great deal more transparent than the former Labour general secretary’s investigation of Labour’s donations scandal. I believe it will be a very thorough investigation—it needs to be—and people will be able to judge whether it goes far enough.
Mr Speaker: Order. May I remind Members that they are expected to use their mobile devices discreetly and without impairing the decorum of the Chamber? I say gently to the hon. Member for Chesterfield (Toby Perkins) that he should not stand up, seeking to catch my eye, while fiddling with his device.
Mr David Anderson (Blaydon) (Lab): I promise not to fiddle with my device, Mr Speaker.
Peter Cruddas was reported yesterday giving, as an example of how to influence policy, discussion of the Tobin tax with the Prime Minister the day before he met Angela Merkel. Is that true? Did that conversation take place and, if it did, what role was Peter Cruddas playing—treasurer of the party or private business man?
Mr Maude: As anybody who has anything to do with any financial transactions and any interest in London continuing to be the most vigorous international financial centre in the world opposes the Tobin tax, if he did say that, it would not be particularly surprising.
Chris Williamson (Derby North) (Lab): Does not this whole sorry episode reveal something very rotten right at the core of the Conservative party? Does the Minister agree with me that it stretches credulity to breaking point to argue that Peter Cruddas, a senior—the most senior—fundraiser for the Conservative party, did not understand the law relating to donations to political parties?
Mr Maude: The hon. Gentleman refers to Peter Cruddas as the most senior: not any more he ain’t.
Geraint Davies (Swansea West) (Lab/Co-op): Pensioners in Swansea on £135 a week now face an £11 second bedroom tax, so that if they did want to be able to afford a £250,000 lobby lunch, they would have to invest all their money for 40 years. Is this not just the same old Tory story of feeding the rich and robbing the poor?
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Mr Maude: It is certainly the same tired old question. I have to make the point that we could avoid all this and move forward if the Labour party gritted its teeth and realised that the days of a serious grown-up party being totally dependent on donations from a trade union movement that elects its leader and dictates its policy should be gone.
Emma Reynolds (Wolverhampton North East) (Lab): Will the Minister recognise that attack is not the best form of defence, and that the House and the country deserve a full explanation of the serious allegations that were made this weekend? Now that we have made him aware that the allegations are about buying influence on policies, can he not see that we need an independent investigation into what happened?
Mr Maude: I have nothing to add to what I have said many times before. The hon. Lady talks about buying influence and buying policy. It was not the Conservative party that sat in Warwick and formed the Warwick agreement with the trade union movement; it was her party, year after year. It was not the Justice Secretary who said that he could not decide his policy until he had phoned up the trade union to receive instructions; it is the shadow Justice Secretary who was found out doing that. The hon. Lady should think about taking the beam out of her own party’s eye before she starts looking for motes in others’.
Ian Mearns (Gateshead) (Lab): Given this weekend’s revelations and the way in which they have been received in the country, does the Minister really think it is credible that the people out there will think it acceptable for the Conservative party to investigate itself?
Mr Maude: The investigation will be conducted by a very distinguished senior lawyer who will—[Interruption.] I have to say again in response to the synthetic indignation from the Opposition Front Bench, particularly from the hon. Member for Barnsley East (Michael Dugher), who was the spokesman for the previous Prime Minister who presided over some of the worst scandals this country has ever seen, that we are not taking any lessons from him. He was in the Labour party in No. 10 when the leader of the Labour party appointed a former general secretary of the Labour party to conduct a so-called independent investigation into its donor scandal.
Toby Perkins (Chesterfield) (Lab): I believe that the Minister will ultimately come to rue the tone in which he is conducting the statement. At no point will a member of the public listening to the Minister this afternoon have the remotest confidence that he is taking these allegations as seriously as he should. Can he point out one thing from the statement today that will give members of the public watching this the slightest shred of confidence in him to sort this out?
Mr Maude: The hon. Gentleman should stick to fiddling with his device.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op):
The Minister has talked a lot today about transparency and at one point, in answer to a previous question, he
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seemed to dismiss any suggestion of cash for access as fantasy. Does he agree that perhaps there is just a scintilla of doubt when the leaders group is invited to pay £50,000 for the privilege of having post-PMQ lunches with the Prime Minister? For the avoidance of any doubt, can he say today that none of those lunches involved the use of taxpayer-funded offices or other facilities by Government?
Paul Blomfield (Sheffield Central) (Lab): The Minister talked about unparalleled openness. Will he therefore commit to publish full details of all Conservative party donors who have made representations on the 50p tax rate—yes or no?
Mr Maude: All donors are published—
Mr Maude: All contacts with donors along the lines that were set out by my right hon. Friend the Prime Minister this morning are going to be published. I did talk about unparalleled transparency, and it is. We would love to hear the same degree or even a scintilla of the same transparency from the two Labour leaders who were Prime Minister for those 13 years, and indeed from the current Labour leader.
Helen Jones (Warrington North) (Lab): Despite what the Minister said earlier, it is clear from the discussions that went on that Mr Cruddas did link lobbying and the reduction of the 50p tax rate, so this goes beyond access to the Prime Minister and includes access to the Chancellor. Will the Minister therefore publish a list of all those Tory donors who met the Chancellor and discussed taxation rates? Does not this explain exactly why we need an independent investigation and not one set up by the Conservative party?
Mr Maude: I have nothing to add to what I have said in response to the same question, which has now been asked many, many times. We are being more transparent than ever before, and will continue to be. I would love to hear the same sort of tone from the Labour party.
Ian Lucas (Wrexham) (Lab): Did the Prime Minister, in relation to this year’s Budget, discuss with Conservative party donors in his No. 10 Downing street flat, policy?
Mr Maude: It is hard to know what the hon. Gentleman is on about. We have disclosed what conversations and meetings there were in Downing street. That has never been done before. People know who the donors are. We have disclosed for the first time what conversations there have been. Honestly, if we could have a flicker of this amount of openness and transparency from his party, we would be better off.
Mr Speaker: Order. I thank colleagues for their co-operation, which has enabled 77 Back Benchers to question the Minister in 61 minutes of exclusively Back-Bench time.
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Points of Order
4.55 pm
Sir Gerald Kaufman (Manchester, Gorton) (Lab): On a point of order, Mr Speaker. Reports in the press this weekend have given direct rise not only to the statement that we have just heard but to a series of statements by No. 10 and, today, a statement by the Prime Minister. I put it to you that it is utterly unacceptable for the Prime Minister to make such a statement outside the House of Commons instead of coming here to make the statement and to face questions from Members. This is not the first time that this has happened. In fact, there has been a long series of Ministers making statements outside Parliament instead of coming here to face the elected House of Commons. Will you put it to the Government that it is totally unacceptable that they should make statements on such issues outside the House instead of coming to Parliament to face us?
Chris Bryant (Rhondda) (Lab): Further to that point of order, Mr Speaker. Is it not true that, notwithstanding the fact that the House has decided not to sit this Wednesday, the Government could, if they wanted to, table a motion tonight to allow us to sit on Wednesday, so that we could have Prime Minister’s questions? For that matter, notwithstanding this afternoon’s statement from the Minister, could we not have a statement on this matter from the Prime Minister later today, or a statement from him and a special round of Prime Minister’s questions tomorrow?
Mr Speaker: I will deal with the points of order in reverse order, if I may. First, I say to the hon. Member for Rhondda (Chris Bryant) that I know he is an expert in all matters of parliamentary procedure, as well as being blessed with a fertile imagination. I hope that he will accept that I do not want to get into hypotheticals. I am not disputing what has been said; nor am I making an argument for it. I simply note what the hon. Gentleman has said.
So far as the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) is concerned, I reiterate the importance that I attach to statements being made in the House on important matters of public policy. I hope that he will take it in the spirit in which it is intended when I say that it has been my privilege to listen to his points of order, his interventions, his questions and his speeches in this Chamber on a vast miscellany of topics for almost 15 years. Others have savoured that particular joy throughout the 41 years and nine months since the right hon. Gentleman entered the House of Commons.
Mr Speaker: There are other points of order, and the day would not be complete without a point of order from Mr Keith Vaz.
Keith Vaz (Leicester East) (Lab):
On a point of order, Mr Speaker. Actually, I very rarely raise a point of order, as you know, but this is almost a “further to that point of order”. Last Friday, I awoke to the dulcet tones of the Home Secretary talking on the “Today” programme about the Government’s new alcohol policy. An hour or
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so later, I was notified that a statement was going to be made to the House on that subject. This was on Friday morning, and very few Members—and no members of the Home Affairs Select Committee—were present. We fully support minimum pricing for alcohol—it has been a recommendation of the Committee—but it would have been helpful to know that such a statement was to be made before hearing the news on the “Today” programme.
Mr Speaker: I note what the right hon. Gentleman has said. I do attach importance to statements being made in the House. Statements on a Friday are relatively unusual, but they are certainly in no way disorderly. I acknowledge that the rarity of the circumstances was reflected not least in the fact that he was not present. Ordinarily, of course, in respect of virtually any conceivable aspect of Home Office business he is present. I detect a degree of frustration that he was unable to be and note it, but nothing disorderly occurred. The Home Secretary was perfectly in order to do what she did.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): On a point of order, Mr Speaker. On Friday the Supreme Court upheld the ruling that the Government’s cuts to the feed-in tariff for solar power are unlawful. Mr Speaker, have you or your good office had any indication from Ministers at the Department for Energy and Climate Change who presided over this debacle that they wish to come to the House to apologise for the chaos they have created in the British solar industry and the thousands of pounds of taxpayers’ money they have wasted on legal fees?
If there are no further points of order—
Fiona O'Donnell (East Lothian) (Lab) rose—
Mr Speaker: I beg the hon. Lady’s pardon.
Fiona O'Donnell (East Lothian) (Lab): On a point of order, Mr Speaker. This is my first point of order, so I understand why something so uncharacteristic might have slipped your eye. Will you urge the Cabinet Secretary to hurry back to the House, because in answer to one question he described the Prime Minister’s flat in No. 10 Downing street as private property? Have the Government sold off part of No. 10, or did he misinform the House?
Mr Speaker: I will not continue the exchanges that took place earlier and will not urge the Minister for the Cabinet Office to hurry back to the Chamber. I sense that the hon. Lady’s point of order is really a rhetorical question and hope that I can be forgiven for making the point in passing, which is simply a statement of fact, that the right hon. Member for Horsham (Mr Maude), although he occupies a high office in the Government, is not the Cabinet Secretary.
Chris Bryant: But your house has not been sold?
Mr Speaker: I am grateful to the hon. Member for Rhondda for what he says from a sedentary position. Speaker’s House remains standing, and I hope that it will continue to do so. I thank colleagues for their co-operation.
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Banking (Disclosure, Responsibility and Education)
Motion for leave to bring in a Bill (Standing Order No. 23)
5.2 pm
Chris Evans (Islwyn) (Lab/Co-op): I beg to move,
That leave be given to bring in a Bill to make provision for the collection from the UK banking sector of financial inclusion audits and data on financial transactions, including commodity trading; to make provision for further obligations on the appropriate financial regulator regarding financial consumer protection and education; and for connected purposes.
The Bill aims to improve the level of disclosure within our financial system. It would improve disclosure on how banks are addressing financial exclusion as well as improve disclosure within the UK’s commodities markets in the hope that we can rebuild trust in our banking system. A primary aim of the Co-operative party, for which I am a Member of Parliament, is its “The Feeling’s Mutual” campaign. Ever since the financial crisis of 2008 it has been fashionable in all sections of society to blame the bankers for everything. The Bill would seek to answer that question, first, by improving data collection within the banking system, and, secondly, by improving disclosure to regulators and the public.
First, the Bill would deal with the problems on the high street. I believe that everyone should have access to affordable financial services, but the sad reality is that that is not the case. The economic conditions following the financial crash have caused hardship for families and meant that more people have been driven into financial exclusion. At the same time, banks have become more reluctant to lend and give credit. As a result, doorstep lenders and illegal loan sharks, who charge extortionate rates of interest, have found their business picking up. That has made financial exclusion worse and at the same time has pushed more people into debt and poverty.
The impact of financial exclusion, which affects almost 2 million people in the UK, is that essential services become more expensive. This can take the form of the extra cost of paying utility bills without direct debit or the need for expensive, short-term loans to cover house repairs, for example, which can cause temporary financial difficulty and mean that people have to use the services of predatory and very expensive credit companies.
More broadly, households with no bank accounts face serious challenges in getting access to essential services such as energy, water, land lines and the internet. If people do not have access to basic bank accounts, things that the rest of us take for granted, such as receiving wages or benefit income, or paying the gas or water bills, become huge and costly obstacles to overcome. Not only do those challenges impact on the individuals concerned, but they have a serious impact on their families and members of their household. Faced with the scenario of their gas or electric meter running out before pay day, they might find it easier to borrow from a doorstep lender and to worry later about the interest charged.
People struggling to find work might also find insurmountable barriers put in their way when, without formal banking services, they seek employment. Currently, 9 million people in the UK do not have access to credit
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from banks, so the time is right to ensure that our financial institutions recognise their obligation to wider society. Two years ago, in response to those problems, my right hon. Friend the Member for Edinburgh South West (Mr Darling) announced in his Budget an obligation on banks to provide basic bank accounts. It is now time to disclose which banks are helping our communities.
This Bill would require banks to produce a report specifying whom they lend to, with the aim of revealing those who are still excluded from the financial products of mainstream banks, and of ensuring that everyone has access to affordable banking services. It would also make provision for the collection from the UK banking sector of financial exclusion audits.
The Bill would introduce a statutory duty on banks to comply with a financial audit, covering the number of current accounts and basic bank accounts and the amount of community development lending and investment. Each bank would be assigned a “social performance rating”, which would also take into account a range of factors such as branch presence in deprived communities, the take-up of basic bank accounts, environmental factors and community projects.
The sad reality is that some banks look with disinterest at things such as the basic bank account. The basic bank account does not credit score, so bank workers cannot sell products, and very few account holders are managed on to mainstream bank accounts. If banks had to disclose data that indicated how inclusive they were, however, they would be motivated to accord to basic bank account holders the same value as people who take out massive loans. Such inclusivity is crucial if we want to stop people being pushed into the hands of predatory loan sharks.
By scoring banks, we would also be in a far stronger position to judge the cost of bank closures in remote or rural areas. Rural closures can have a devastating impact on remote communities, and elderly people in particular—those more likely not to have access to internet or telephone banking services—can be left excluded completely from financial services. It is all very well closing a bank in a remote area and referring people to online services, but what use is that to a household with no internet access, or to people over 65 years old who might be unfamiliar with or unwilling to do simple things, such as checking a bank statement or transferring money, online?
When a bank closes a branch in a rural area, it often blames falling customer numbers, but no matter how few customers a bank has, they are still people who might be left without a local branch or point of contact. Data collection would reveal each bank’s presence in vulnerable or rural areas, ensuring that, before closing branches, they considered the impact on people and communities and the replacement measures they would have to put in place.
The second part of the Bill would ensure also that all information on financial transactions was recorded by banks and given to regulators in a standardised format. That would give an insight into the state of the market and make clear any warning signs, and it might even predict any future economic crash. It would also allow regulators to decide which were the good banks and which were the bad, thereby protecting the public purse. It would definitely allow regulators early on to identify the build-up of risk in our system, and then appropriate
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action could be taken, for, if the financial crash has taught us anything, it is the need to improve the systemic oversight and sustainability of financial services.
The Bank of England, in its new role, should be given statutory guidance to create a data centre to map the risks in our system. Parliament should tell the Bank to use the best technology available to obtain full disclosure from all market participants on the risks that they are taking. I am firm in my belief that this will rest on the information and analytical capabilities available to those charged with forecasting potential crises before they hit. Parliament should instruct the banks to use these data to disclose the full extent of financial speculation in the UK’s commodities markets.
The Bill would bring about important extensions to improve such disclosure in order to make public, for the first time, the true level of risk taking. With the prices of everything from petrol to bread squeezing hard-pressed families, it is absolutely crucial that we find out what is going on in the UK’s commodities markets. Lord Turner, the head of the Financial Services Authority, endeavoured to discover what was going on when he produced a report last year, and he found that despite the fact that traders have to report daily to the FSA their positions in the Brent oil market, none of the data is disclosed to the market in the UK. Lord Turner was in the position of having to look at the disclosure of speculation in the American market to infer what was going on in the UK. Apparently, data collected by the FSA are not even disclosed within the FSA.
With petrol prices in the UK hitting all-time highs, Parliament can no longer accept this poor level of data collection. We must demand that our regulators insist on proper disclosure within our financial markets. This Bill would give them that statutory guidance. Ultimately, the Bill is an opportunity to build trust in our banks. From the bank on the high street to the oil trading screens in the City, we need better disclosure as the first step. I commend the Bill to the House.
That Chris Evans, Tom Greatrex, Geraint Davies, Mr Gareth Thomas, Luciana Berger, Alun Michael, Gavin Shuker, Mrs Louise Ellman, Gemma Doyle, Cathy Jamieson and Jonathan Reynolds present the Bill.
Chris Evans accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 27 April 2012 and to be printed (Bill 324).
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Ways and Means
Budget Resolutions and Economic Situation
Amendment of the Law
Debate resumed (Order, 23 March).
(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.
Mr Deputy Speaker (Mr Nigel Evans): Before I call Mr Vaizey, may I implore both Front Benchers to show incredible time restraint due to the number of Back Benchers who wish to take part in today’s debate?
5.12 pm
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey): Your instructions have been noted, Mr Deputy Speaker.
May I begin by apologising to the House for the absence of my right hon. Friend the Secretary of State? As I am sure the House will know by now, his wife gave birth to a beautiful baby girl last week—appropriately enough, during Department for Culture, Media and Sport questions—and so he is enjoying his paternity leave. I am sure that the whole House will want to join me in passing on our good wishes to the whole family. I, for one, wish that the Secretary of State was here, because this is, I believe, the first time that DCMS, as a Department, has opened a Budget debate, and it is a testament to his skill and vision that he has put the Department at the heart of the Government’s strategy for growth. DCMS is now an important economic Department that is responsible for broadband and digital infrastructure, internet and media policy, and our world-beating creative industries. Policies pursued by this Department will contribute significantly to the growth of the UK economy.
I want to use today’s debate to remind the House of how well placed this country is to take advantage of the technology revolution. The Chancellor has set out our ambition to turn Britain into Europe’s leading technology hub, and we are well on course to achieving that. According to a Boston Consulting Group report published this month, the UK is the top internet economy in the G20; we purchase more online than Germany, the United States and South Korea. We have a huge range of successful technology companies in this country. It is worth reminding the House that BT, for example, is a global technology company with a presence in 170 countries. ARM supplies the chips for smartphones and tablets. Imagination Technology provides the graphics for Apple
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products. Ubiquisys in Swindon sells femtocells to the French and the Japanese. Neul, based in Cambridge, is developing new wireless network technology. In Tech City, we have a rapidly growing technology hub in the heart of London’s east end, which in just three years has grown from about 15 companies to more than 300.
My personal favourite is the motor sport industry, which is worth £5 billion a year and exports 70% of its products. I was particularly tickled by an anecdote—[ Interruption. ] I cannot believe that Opposition Members are groaning at an anecdote. I feel rather deflated. When a German Formula 1 company launched its German engine, branded by Mercedes-Benz, with Michael Schumacher, a German driver, I was told that it was designed and manufactured in the UK. [Hon. Members: “Hear, hear!”] I thank Government Members for approving of my anecdote.
Andrea Leadsom (South Northamptonshire) (Con): I am delighted about that, because it was made in my constituency.
Mr Vaizey: Is it not a wonderful coincidence that I also get to suck up to one of the most important Back Benchers in the House?
Next week, a BDO report will say that telecoms, media and technology industries will be the success stories of 2012 in the UK, with software investment growing and investment last year at an all-time high. Innovations such as cloud computing are set to create more than 200,000 jobs in the UK in the next three years.
Tristram Hunt (Stoke-on-Trent Central) (Lab): Is it because the Department for Culture, Media and Sport is no longer interested in art and culture that it has purged Dame Liz Forgan from the Arts Council?
Mr Vaizey: That gives me a chance to respond to one of the Labour party’s most important Back Benchers. If he thinks that we are not interested in art and culture, why is he never out of my office talking about art and culture and, in particular, our joint campaign to save the Wedgwood collection?
To support technology and innovation businesses we have protected the science budget and are funding new science capital projects, including £158 million for e-infrastructure. The total increase in capital funding since December 2010 is £495 million. I feel that point keenly because tomorrow is the 10th anniversary of the agreement between the previous Labour Government and the Wellcome Trust to build and site the Diamond synchrotron in my constituency. I must say, in a moment of cross-party unanimity, that the last Labour Government had two of the finest science Ministers we have seen in Lord Sainsbury of Turville and Lord Drayson. We have, of course, gone one better by appointing our own Minister for Universities and Science, who has two brains.
We will have increased the level of the small company research and development tax credit from 175% to 225% by April 2012. That is the largest programme of support for business innovation in the UK and will provide support of more than £1 billion a year. We have
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made it more attractive to invest in smaller high-risk companies by raising the tax relief available under the enterprise investment scheme. We have established 24 enterprise zones throughout England. We have introduced catapult centres, which will form a new elite national network to act as a bridge between academia and business. They will cover sectors such as high-value manufacturing, cell therapy and offshore renewable energy. The Technology Strategy Board is investing at least £200 million in the current spending review period to make that happen.
We need to build on that success and I am pleased to say that the Budget maintains the momentum. We are cutting taxes on patents through a 10% patent box corporation tax worth some £900 million, which will be introduced next year and phased in. We are extending enterprise zones to Scotland, Northern Ireland and Wales. We are investing £100 million, which will leverage a further £200 million, in new university research facilities. We are introducing transport systems and future cities catapult centres. In a country with the world’s second largest aerospace industry, we have announced an investment of £60 million in a new aerodynamics centre to encourage innovation in aerospace design and the commercialisation of new ideas. Those measures will ensure that our world-leading universities and innovative small businesses can come together with global companies to commercialise new technologies, ideas and inventions in a wide variety of sectors.
Ian Lucas (Wrexham) (Lab): Will the hon. Gentleman tell the House where the aerodynamics centre is to be based?
Mr Vaizey: May I congratulate the hon. Gentleman on his iPad cover, which is the same colour as a ministerial red box? It looked like he was using his ministerial red box. That is a rather nice conceit for an ex-Minister.
Mr Vaizey: Oh, it was the Budget book. It looked like an iPad cover. Forgive me; I keep mistaking the hon. Gentleman for somebody who is on top of new technology. We have not yet decided where the aviation centre will be sited, and it may not even be in one place. It may be sited in two or three different areas.
To become Europe’s technology hub, we need world-leading digital infrastructure. The average broadband speed in the UK is already 7.5 megabits a second. In Northern Ireland, almost all the population have superfast broadband, and in England almost two thirds of the population do. In England, Northern Ireland and Wales, roughly three quarters of the population now have broadband. UK broadband coverage is in fact almost universal, with 91% of the country having access to speeds above 2 megabits a second, putting us in the top 20 countries worldwide. We are far ahead of many countries, including Morocco, where only one in 10 of the population have access to fixed-line broadband.
We have come a long way, but we need to go further. We are already investing £530 million in rural broadband, which will deliver superfast broadband to 90% of the country by 2015, two years earlier than Labour planned. More than half of our local broadband projects have
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been approved, and all will be approved by the end of this year. Procurement for some projects will proceed in the next few months.
Mrs Anne McGuire (Stirling) (Lab): Would the Minister like to come to the village of Balquhidder in my constituency and tell people that they might be better off living in Morocco? I see that the Chief Secretary is trying to tell him where Balquhidder is. In that village people still have dial-up, not even slow broadband, never mind fast or superfast broadband.
Mr Vaizey: First, that is why we are spending the money that we are, and secondly, we are working in partnership with the Scottish Government, so the right hon. Lady should have a word with them if she wants to put her constituency at the forefront of broadband roll-out in Scotland.
We will have provided universal coverage by 2015 without Labour’s telephone tax, which in any event would not have raised sufficient money to do the job. Not only do we have the most ambitious rural broadband programme, but the Chancellor announced in the Budget new measures to upgrade the coverage in our cities. The UK’s four capitals, Manchester, Birmingham, Bristol, Newcastle, Leeds and Bradford will share a £100 million pot to ensure that they are among the best-connected cities in the world.
Jim Dowd (Lewisham West and Penge) (Lab): On that subject, will the Minister have a word with the London borough of Bromley—it is allegedly in London, although it is not—which is obstructing the implementation of superfast broadband simply because it is an out-of-London, Tory-controlled borough that does not know any better? Will he exhort it to wake up to the idea of tomorrow rather than living in yesterday as it always does?
Mr Vaizey: Without adopting the hon. Gentleman’s language—I would certainly never describe Bromley or its council as out of touch or living in the past—I accept that he makes an important point that is worth labouring. It is vital that local authorities work with broadband providers to ensure the roll-out of broadband, and we are providing the money and working with local councils. We understand why planning regulations are in place, but if they are used in a way that restricts broadband roll-out, councils will be denying their residents the opportunity to access a very important service. It is vital that local councils take a proactive approach and ask not how to apply the planning rules but how to make it as easy as possible to get broadband to as many of their residents as possible.
Bob Blackman (Harrow East) (Con): Will the Minister elucidate further on the benefits to the whole of London of the roll-out of ultrafast broadband, which will happen much faster as a result of the new initiatives in the Budget?
Mr Vaizey:
Ultrafast broadband will of course benefit London, and across the 10 cities that I mentioned, the Chancellor’s Budget means that 40,000 businesses and 200,000 households will get ultrafast broadband. London is also getting it through private sector providers, to which I will turn in a moment. It is also worth noting
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that Virgin Media will provide free wi-fi on the London underground during the Olympic games. Some 3 million people will be able to get access to high-speed wi-fi in the 10 best-connected cities. The Chancellor also announced in the Budget an additional £50 million, which will be available to ensure that ultrafast speeds are available to the UK’s smaller cities.
I said in reply to my hon. Friend that the private sector is doing a huge amount to speed broadband roll-out. I can announce that this week, Virgin Media, after £110 million of additional investment—investment over and above the £600 million it invests every year—will complete the upgrade of its network, so all 13 million premises covered by it, which is about half the premises in the UK, will be able to access speeds of up to 100 megabits a second. Average speeds are set to be around 40 megabits a second, which makes Virgin Media’s broadband network the fastest in the world. [ Interruption. ] From a sedentary position, an hon. Lady accuses Virgin Media of bribing me to say that. I am not sure she will say that outside the Chamber.
Ian Lucas: Virgin broadband is not available in north Wales. The problem, as the Minister will hear from Government Back Benchers, is access to universal broadband, which the Government delayed from 2012 to 2015. What will he do about increasing services to ensure that we have universal broadband, the absence of which is preventing businesses from making progress in large parts of the country?
Mr Vaizey: I first need to get the hon. Gentleman an iPad—[ Interruption. ] He has one. At last he has an iPad! We have given £10 million to north Wales to put in place superfast broadband. As he well knows, we will get superfast broadband to 90% of the country two years before the Labour Government promised. We are not going to impose Labour’s telephone tax, which would have hit consumers and businesses. We will have the best superfast broadband in Europe by 2015—[ Interruption. ] My colleagues are saying from sedentary positions that that sounds excellent; it is excellent.
Having praised Virgin Media, let me also say that BT is investing £2.5 billion in rolling out broadband. Indeed, it has accelerated its plans so that it will deliver fibre to two thirds of the UK by 2014, a year ahead of schedule. It has already delivered to 7 million premises, and is currently adding an additional 1 million premises—the equivalent of the number in Singapore—every three months.
Alun Cairns (Vale of Glamorgan) (Con): Following the point made by the hon. Member for Wrexham (Ian Lucas), does my hon. Friend the Minister recognise the added complication because of the delays that the Welsh Government have introduced in the roll-out of superfast broadband, despite the money being made available swiftly by the UK Government?
Mr Vaizey: My hon. Friend makes a very good point. Because we believe in devolution and localism, the implementation of the plans is down to the Welsh and Scottish Governments. It is therefore up to them to roll them out as quickly as possible. I am sure the hon. Member for Wrexham (Ian Lucas) will send an e-mail from his iPad to the leader of the Welsh Assembly Government to tell him to pull his finger out.
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Ten million premises will be covered by BT by the end of the year in one of the largest engineering projects the country has ever seen. Those areas will get speeds of up to 80 megabits a second.
Mobile broadband is becoming increasingly important, with more people purchasing smartphones. Last year, the Chancellor announced an additional £150 million to help with mobile broadband coverage. By 2015, that will extend mobile coverage to 60,000 rural homes that have no mobile connection whatever, including, perhaps, villages in the constituency of the right hon. Member for Stirling (Mrs McGuire), as well as along at least 10 key roads. We will also continue to look at how we can improve coverage on our railways.
At the end of this year, we will auction spectrum that will allow mobile companies significantly to increase their capacity, as well as offer faster speeds to their customers, and we continue to make progress on our plans to release some 500 MHz of the public sector spectrum.
World-leading digital infrastructure is the cornerstone of economic growth in the 21st century. Some estimates show that a 10% increase in broadband penetration can deliver a boost of up to 1.4% of gross domestic product. By the end of this Parliament, at least 90% of the country will have superfast broadband; our great cities will have ultrafast broadband; and 60,000 rural homes and businesses will have mobile coverage for the first time.
As the House knows, the UK has some of the most successful creative industries in the world. I know the whole House will wish to congratulate One Direction on topping the US charts with their debut album—a feat not matched by either the Rolling Stones or the Beatles. Adele’s “21” is the best-selling digital album of all time, and for the first time in 25 years, UK acts were at Nos. 1, 2 and 3 in the US charts. We have the second- biggest music exporting industry in the world, and our UK animation industry has a huge impact worldwide. In 2010, Peppa Pig’s UK licensing and merchandising sales were £200 million alone.
Last year saw the most UK film production activity ever—it grew by 7% to £1.16 billion. UK television formats dominate television schedules all across the globe, accounting for two in every five global programmes, and of course “Downton Abbey” has continued UK success at the Globes. Exports of UK television content are the second highest in the world, worth more than £1.3 billion per year, having grown by more than 20% a year for about the last decade. [Interruption.] The right hon. Member for South Shields (David Miliband) looks astounded by this success. I urge him to get out more and see what some of our successful creative industries are doing.
David Miliband (South Shields) (Lab): I was actually wondering how many more pages of this drivel we had to sit through. The hon. Gentleman said that infrastructure is the seedcorn and the basis of future prosperity. How, then, does he explain the fact that 45% of the infrastructure investment that the Chancellor announced in the autumn statement will not happen until 2014-15?
Mr Vaizey:
I have just spent two or three minutes talking about the success of the UK music, animation, film and television industries, and the right hon. Gentleman,
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who was meant to be the Labour leader, describes that as utter drivel. Let the message go out to the UK creative industries that one of the most senior members of the Labour party regards their success as drivel. And I make no apology for continuing to list some of those successes.
BBC Worldwide increased international sales by almost 10% last year. We are the European hub for the video games industry, with 35% of video games software sold in Europe being developed by UK studios, and almost half of the world’s top 100 development studios based in the UK, generating sales of almost £2 billion a year. The visual effects hub in Soho is home to four of the largest visual effects companies in the world. We have one of the most innovative and successful advertising industries in the world, and it is growing despite the recession. We have one of the most successful and creative fashion capitals anywhere in the world, with Burberry, a UK company, increasing its sales by a quarter. And, of course, our largest creative industry, the UK publishing sector, has a turnover of almost £20 billion.
We want to build on this success. We do not regard it as drivel. We regard it as vital to our economic success. That is why we will introduce a tax credit for our video games and animation industries and our high-end television production sector. We are confident that this will bring increased investment and growth in these sectors too.
John Mann (Bassetlaw) (Lab) rose—
Mr Vaizey: I give way to an hon. Gentleman who normally does not spout drivel. I hope that will remain the case.
John Mann: I thank the Minister for generously giving way. I would not regard his speech as drivel at all. It is a superb enunciation of the successes of the last Labour Government. Given the lead time required for investment and innovation, I look forward to hearing what he predicts his legacy will be in two, three and four years. Will it be as good as that of my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell) and her colleagues who worked in the Minister’s Department so assiduously over the past decade?
Mr Vaizey: They cannot make their minds up. On the one hand, the success of the UK’s creative industries is drivel; on the other, the success of Adele and her biggest-selling digital album in history is down to the Labour party. I would not claim that, but I would claim instead that we are putting in place the infrastructure for broadband investment to support high-tech innovation in this country. Through a series of initiatives, such as catapult centres, investment from the Technology Strategy Board, research and development tax credits and the patent box tax credit, we continue to support investment in our technology industries. Specifically through our tax break for video games, animation and high-end television production, we will support our creative industries and spur them on to greater success. I have already heard from some of the UK’s most successful animation companies. They are now planning to increase investment in their businesses, recruit more staff and make more programmes here in the UK. [ Interruption. ] Mr Deputy Speaker, there is a Labour Member standing next to you shouting at me. Could you encourage him to make a formal intervention at some point?
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American studios are lining up to work with our talented production staff and amazing studios. British developers will be able to take advantage of the 8% growth in the worldwide video games industry.
Jim Dowd: I am not sure whether my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop)—to whom the Minister refers—wants to intervene, but if so, I am taking his slot. I do not want to make a partisan point, because although our understanding of the importance of the creative industries to this country and this economy, starting under the last Government, is well established, I congratulate the current Government on continuing that process, with the patent box and all the benefits that it will create. However, will the Minister prevail upon the Secretary of State for Business, Innovation and Skills and his colleagues to understand just how important creativeness and ingenuity are to this economy? In the light of the Hargreaves review and the role played by the Intellectual Property Office, it is not just product being made available free to consumers that is important, but ensuring that those who create and innovate get the best deal possible. That is a supreme role for this Government to perform.
Mr Vaizey: I thank the hon. Gentleman for that intervention—I hesitate to say that it is good to hear from somebody who knows what they are talking about, in case he makes a hostile intervention in a minute. I absolutely hear the point he makes. The protection of intellectual property is paramount. We need to bring the intellectual property regime up to date, but I for one do not want to rob Peter to pay Paul. It is absolutely right that content creators are paid for what they create.
Let me say something at which the whole House will rejoice: I am coming to the end of my remarks. However, if all those who said that they wanted to make an intervention still want to, they have a small window, as I perorate towards my conclusions.
Sarah Newton (Truro and Falmouth) (Con): I am grateful for my hon. Friend’s cue. Creative industries are vital to Cornwall, but so is creating high-quality food products. There is growing concern throughout Cornwall about the possible unintended consequences of the Budget and about the undoubtedly real threat to the Cornish pasty of the pasty tax. May I seek my hon. Friend’s reassurance that the concerns of pasty makers in my constituency are being listened to and that a solution can be found?
Mr Vaizey: I thank my hon. Friend for that intervention, which I know the Chief Secretary to the Treasury will respond to fully when he winds up. I congratulate her county on receiving the award for being Britain’s best tourist destination for the third year, and I congratulate her on the extraordinary energy with which she represents her constituency. She and I have had many meetings to discuss various issues in her constituency. [ Interruption. ] You are looking at the clock, Mr Deputy Speaker, so I shall wrap up; however, let me tell my hon. Friend that I hear what she says about the Cornish pasty issue, and I am assured that the Treasury is looking at it seriously.
With a Budget that introduced the largest ever increase in personal allowances, so as to reward work, the lowest corporation tax rate in the G7, so that Britain is open for business, tax reliefs for our creative industries, increased
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investment in science and technology, and plans to create the best broadband network in Europe, we are well placed to realise the Chancellor’s ambition of making Britain the technology hub of the UK. I do not think that our success to date is “drivel”; I think that Britain is known around the world for its creativity and the success of its creative industries. We on this side of the House intend to ensure that we maintain and increase that success.
5.39 pm
Ms Harriet Harman (Camberwell and Peckham) (Lab): Let me begin with a double congratulation: to the Secretary of State and Lucia on the birth of their daughter, and to the shadow arts Minister and Rachel on the birth of their daughter. I congratulate both Members on their new babies, and also on taking paternity leave, which is a thoroughly good thing—mind you, I imagine that the Secretary of State feels well out of the debate today. Clearing up after a baby is much easier than clearing up after the mess of this Budget.
This is a Tory Budget, backed by the colluding Lib Dems—two parties that told us they were coming together in the national interest. How can it be in the national interest to fail on jobs, to fail on growth and to fail on fairness? Let us tell it how it really is: two parties coming together to give a tax bonanza to millionaires and a kick in the teeth to pensioners.
This is a Budget built on economic failure, with more than 1 million young people looking for work, economic growth at just half what can be seen in the US and the Government set to borrow £150 billion more than planned. What was needed was for the Government to come up with a Budget for jobs and growth, and they have failed.
It is good that today’s debate is focused on the creative industries, because they must be at the heart of economic growth in the future. We are good at them; they put Britain on the map; we are renowned for our arts and our culture, our film, TV and video games and our music, design and fashion. There is huge potential for growth there—growth in jobs, in exports and in contributions to gross domestic product. We needed the Government to come up with a plan for jobs and growth in the creative economy, but they have not.
The Government announced a tax break for high-end television, animation and video games, but these measures are strangely familiar. As my hon. Friend the Member for Bassetlaw (John Mann) said, it is something of an “homage” to the policies of the last Labour Government. It was, of course, the Labour Government who introduced the first tax breaks for the creative industries with our film tax relief, which has been hugely important for getting films made in Britain, helping our pioneering special effects industry and backing our studios such as Pinewood and Shepperton. The only original film policy this Government have come up with is axing the Film Council.
As for the tax break for video games, who first proposed this for the games industry? It was Labour.
Mr Vaizey: To continue the “homage” theme, it was the policy of the last Labour Government to merge the Film Council with the British Film Institute.
Ms Harman: But certainly not to do what this Government have done—without any consultation or any discussion at all. We certainly promoted the film industry.
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To return to the tax break for video games, we first proposed a tax break for the games industry, and we put it in our Budget in 2010, but what did the Tory Chancellor say in his very first Budget? He said that
“we will not go ahead with the poorly targeted tax relief for the video games industry.”—[Official Report, 22 June 2010; Vol. 512, c. 175.]
And what did he do? He axed it. For the UK games industry, it could have been game over. He is introducing the tax relief now, but this misjudgment and delay have come at a price. Our video games industry was the third biggest in the world and has now fallen to the sixth. Many jobs have been lost, with nearly half going abroad to countries such as Canada, lured by its tax relief.
This policy, then, is not an original; it is a cover version—and like most cover versions, just not as good as the original. Although tax credits are worth while on their own, they are not enough to ensure that Britain fulfils its potential as a global hub for the creative industries. Just as this Government do not have a plan for jobs and growth in the economy, they do not have a plan for jobs and growth in the creative industries.
Where is the long-awaited communications Green Paper? The Minister did not say a word about it—not one word. Perhaps it is still waiting for some high-level policy input from a premier league Tory donor.
Where, too, is the action on protecting intellectual property? This is a fundamental issue for the creative industries—the bedrock of the knowledge economy. A tax break helps to boost investment, but more investors would be more confident if they knew that the product to which they were committing was not vulnerable to theft on an industrial scale. If an industry has been given a tax break, it makes it even less sensible to stand by and watch any of the value drain away through IP theft. The last Labour Government recognised that, which is why in 2010, we passed the Digital Economy Act with cross-party support. It needs to be implemented now. We already have the Digital Economy Act; it would be good to go with it. Professor Hargreaves has conducted another review of the same issue, but what the industry and economy are crying out for is action.
Mr Don Foster (Bath) (LD): I have listened to a lot of drivel in my time, but is the right hon. and learned Lady seriously telling me that she recommends going ahead with all aspects of the Digital Economy Act when Ofcom has shown that part of it was simply unworkable, as Liberal Democrats pointed out during the passage of the Bill?
Ms Harman: But it needs to be implemented now, with a clear timetable and a code of conduct so that notification letters can be issued. We want the Government to show leadership by ensuring that search engines such as Google play their part, and, if there is no agreement, to carry on and legislate in the forthcoming communications Bill.
Where is the action on young people and skills in the creative industries? The future of our creative economy is built on our young people—young people who are consumers, and many of whom want to work in those industries. We must ensure that there are opportunities for creative development from primary school to the
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workplace, but the signs are not good. Creativity is being stifled in schools, and since last year the number of applications for degree courses in creative arts and design has fallen by 27%. We all know why that is: it is because of the Liberal Democrats’ shameful betrayal on tuition fees. The Liberal Democrats were meant to be a brake on the Government—remember that?—but it is obvious that they have zero influence on policy. Perhaps they just did not have enough money to buy dinner with the Prime Minister.
Where is the action on access to finance for the creative industries? London is a global financial capital and Britain’s creative industries are world leaders, yet they struggle to obtain the finance they need to grow. Most creative businesses are small or medium-sized, and they need the banks to lend to them to help them get started and grow. However, as has been pointed out by the British Chambers of Commerce, credit easing
“will not help the smaller, younger, and high-growth firms that have trouble getting credit in the first place.”
Operation Merlin figures show that banks are still failing to meet their lending targets. Net lending to small businesses fell by £10 billion last year. Banks must start lending to creative businesses rather than throwing money away in bankers’ bonuses, and the Government must start making that happen rather than throwing money away on tax cuts for rich bankers.
Alun Cairns (Vale of Glamorgan) (Con): The right hon. and learned Lady says that creative industries are struggling to gain access to capital. Will she give us a specific example?
Ms Harman: There are many. We need only listen to all the arguments throughout the industry, whether they concern films, video games or music. If the hon. Gentleman does not realise that small and medium-sized businesses are having trouble obtaining loans so that they can start up and grow, he does not realise what is going on in the real world.
Where is the regional strategy that supports the creative industries all over the country, not just in London? The Government have abolished the regional development agencies, they have cut local government, and they have squeezed the BBC, which is bound to hit the independent sector that it supports. The Culture Secretary says that philanthropy will make up for his cuts. If that is his policy, how does it accord with the announcement in the Budget of a cap on tax relief for charitable donations? Was the Secretary of State consulted? Did he even know about it?
There is even more bad news for the arts. Not only have the Government cut the Arts Council’s budget by 29%, but they have now sacked its chair, Liz Forgan. That was a petty political act, and I am disappointed that the Minister did not take the opportunity to pay tribute to Liz Forgan. Those in the arts sector feel that she was doing a tremendous job for them, particularly in managing incredibly difficult cuts, and I want to pay tribute to her today.
Key to a regional strategy is a truly national broadband infrastructure. A digital economy needs digital infrastructure—
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John Mann: Before my right hon. and learned Friend moves on to the subject of digital infrastructure, may I ask whether she is as disgusted and shocked as I am by the news that in 12 minutes’ time the Bassetlaw Youth Theatre will give its last performance because it has been cut by the Tories on Nottinghamshire county council, who have failed to invest in young people and their future? People who could have had a vocational future in the creative industries have had it taken away tonight by the Tories.
Ms Harman: I am very sad indeed to hear that. Although the Government have squeezed councils, Labour councils up and down the country are determined to do what they can to protect the arts in the community against a Government who are cutting while telling them that philanthropy can step in and take the place of funding, which it will not.
Mary Macleod (Brentford and Isleworth) (Con): Will the right hon. and learned Lady give way?
Ms Harman: I am going to get on with my speech now, because I know that many other Members wish to speak.
Key to a regional strategy is a truly national broadband strategy. There is a growing digital divide between the haves and have-nots—between urban areas with superfast broadband and rural areas with none. That is from the party that said it cared about rural areas. In Labour’s digital Britain strategy, we guaranteed 2 megabit broadband speeds to the whole country by 2012. The Tory Government scrapped that, and now it will not happen until at least 2015. The Government boast of the £100 million for its super-connected cities, re-announced from the autumn statement, and the £50 million for a second wave of smaller towns and cities, but that will not happen until 2015, if then. The Government can talk about ultrafast and superfast and hyperfast and megafast all they like, as the Ministerdid, but what is happening is the creation of a digital underclass—those in rural areas, the unemployed, and older people, who are already so squeezed by this Budget and by this Government.
For many, broadband access will be made all the more difficult by cuts to libraries. According to the Chartered Institute of Library and Information Professionals, almost 600 libraries are threatened by this Government. Where does that leave the Government’s “race online” campaign, which is supposed to be about libraries playing a key role in getting people online? The Government should tread carefully here: it is a well-known fact that libraries are very popular with many older people—unlike the Chancellor of the Exchequer.
This was a Budget that failed on jobs, failed on growth and failed on fairness, especially for older people. How can it be fair to give a £40,000 tax cut to millionaires and pay for it by taking £3 billion from pensioners? There is no justification. There can be no excuse. The Government’s claim that this is not a cut but a “simplification” is an absolute joke. They have invented a wholly new meaning for the word, but perhaps we should all go along with it: when I went to the hairdresser on Saturday, I asked for a simplification and blow dry, and yesterday I failed to persuade my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) to simplify the lawn. But when it comes to simplification,
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the Culture Secretary had better watch out—I have heard that there are many on his side who would love to simplify his Department entirely.
Despite the fanfare ahead of this Budget, it has turned into a disaster. They wanted the centrepiece of the Budget to be “Downton Abbey”, but it turns out to be more like “Titanic”: the rich get the lifeboat, the rest sink or swim. This was a Budget that rearranged the deckchairs but did nothing for jobs and growth; a Budget that was based on economic failure and grossly unfair. Goodbye to detoxification: this Budget tells us everything we need to know. The clocks may have gone forward yesterday, but this Government have turned the clock back: wrong choices, wrong priorities, wrong values—same old Tories. The only people to benefit from this Budget were those rich enough to buy access to the Prime Minister.
Mr Deputy Speaker (Mr Nigel Evans): Order. I thank both Front-Bench speakers for demonstrating time restraint. There is a five-minute limit on Back-Bench contributions, but if Members can speak for less than five minutes, we will be grateful.
5.53 pm
Mr David Ruffley (Bury St Edmunds) (Con): I believe in low tax. Low tax fosters personal responsibility and generates the incentives that create greater wealth and greater national prosperity, in which all can share.
I therefore welcome the tax-reducing measures in the Budget, such as reducing corporation tax to 22p by 2014, so that we will have one of the lowest corporate tax regimes in the G20. I also welcome the fact that we have reduced the 50p income tax rate to 45p, as all the evidence demonstrates that lowering high marginal rates results in the rich paying more tax. In the early 1980s, when the marginal rate of income tax was 83p, the richest 1% contributed only 10% of the income tax yield, but a 40p rate generates just under a third, so the top 1% pay more tax. This is a truth that the Labour party does not understand. The third welcome measure in the Budget is the increase in the basic personal allowance. That will protect living standards at a time when the cost of living is increasing.
Colbert said that the art of taxation is to pluck the goose in such a way as to obtain the largest number of feathers for the lowest number of hisses. The Chancellor almost achieved that trick, with the exception of the pensioner tax. I believe that he will come to think that the granny tax was a mistake. Pensioners were already angry about lower annuity rates, and about lower rates of interest on their savings, which was not the fault of this Government. They also feel that their savings income should not be taxed twice. Overall, however, this was a good Budget. It was not a Lawsonian Budget, grand in its ambition and its tax-cutting sweep, but many of us believe that the Chancellor will be able to deliver that in future Budgets.
I know that some Members, including those on the Government Benches, argue that the economic circumstances are not propitious for talking about further tax reductions. They will observe that the Office for Budget Responsibility figures suggest that from 2013
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onwards the prime drivers of higher GDP will be net investment and trade. We know that they are both sensitive: trade is sensitive to EU zone growth, which is inherently uncertain; and higher business investment is highly sensitive to the easing of credit conditions, yet credit has remained at stubbornly low levels in the early stages of this nascent recovery. Given all that, how can we talk about further tax cuts? We do so for the simple reason that tax reductions will get the economy going, and we can fund them by reducing public expenditure over and above the totals in the last comprehensive spending review.
Real-terms spending in this country increased by more than 50% during the Labour years. The plans in the Budget imply a real-terms reduction of 3.4% over the five years of this Parliament. There is plenty of fat in those spending numbers, therefore, and I urge the Chancellor to reopen the spending round this year, rather than wait until next year. He will find a surprising amount of support for funded tax cuts to get the economy going, financed and fully funded by further and deeper cuts in bloated public expenditure.
5.57 pm
Mr Alistair Darling (Edinburgh South West) (Lab): I want to return to the “nascent recovery” in just a moment, but first I should say that I was particularly pleased to hear the Minister refer to a number of successful growth industries including publishing, and in that connection I should draw the House’s attention to the Register of Members’ Financial Interests.
Before turning to the question of growth—or, more accurately, my concern about the lack of it—I want to say a word about the 50p rate of tax, since I introduced it. At the time, I said it was a temporary measure. I did not particularly want to introduce it, but I took the view that, at a time when we were asking many people in this country to share the burden of meeting the increased cost of the downturn, it was right that those who had done well over the previous 10 years or so should bear their fair share of it. I do not have a philosophic attachment to that rate at all, therefore, but this is not a Budget in which I would have returned to the topic, simply because the incomes of many other people in this country are currently being squeezed and they are going to lose out this year. I would have tried to do something about their position first.
The documentation that the Treasury has produced on the measure reminds me of the stuff that was produced for the five tests in respect of the euro, in that so much evidence has been adduced in support of the Government position. Why did they not just say that they philosophically did not want the 50p rate so they were going to cut it? As the OBR says that its calculations are highly uncertain and it is very difficult to estimate behavioural effects, especially after only a year, and given that there are so many uncertainties and there will be so much forestalling, it is difficult for the Government to say, “Look, this wasn’t actually raising anything.” At a time like this, I think the fact that the rate brought in £1 billion and that we are talking about smaller sums in relation to some of the welfare reforms means that the Government cannot simply write it off. If they want to bring the rate down to 45p, that is fine, although I am bound to say that
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I have never understood the argument that someone will still work harder if the rate comes down to 45%, yet they will also work harder if they are told at the same time that they will be paying five times as much tax in the future. That seems a very odd argument to run.
Harriett Baldwin (West Worcestershire) (Con): I thank the right hon. Gentleman for making these interesting points. Was he as shocked as I was to see that, as a result of the measures that he introduced as Chancellor, there was £16 billion to £18 billion-worth of forestalling in 2009-10?
Mr Darling: Inevitably, there is some forestalling and there will be an awful lot more of it this year when people realise that they will pay a lesser tax rate next year. The hon. Lady makes a point, but perhaps not the one she intended.
The real problem we face as a country is the lack of future growth. I am concerned about that, because our borrowing levels are still high. The Chancellor is still having to borrow £150 billion more than he set out to borrow in his first Budget, in 2010, and his room for manoeuvre is very slight. He has given away about £2 billion this year. He says that he is going to get that back in two years’ time, but £1.5 billion of it is coming out of the reserve. That is not normally what we would expect a Chancellor to be doing if he is saying that he is conducting his finances in a prudent manner.
Of course, a lot of what the Chancellor is saying is dependent on cuts still to be specified—he used to criticise us when we did not specify these things. An awful lot more cuts are yet to be implemented and yet to be specified. When the Budget figures show that borrowing will be only £1 billion less than the Government thought, it is easy to see that we are right on the margins at the moment and that, unless we get growth going, the chances are that that borrowing will increase, not decrease. The need to get growth going is paramount.
We are already on plan B, in that what the Chancellor announced in his autumn statement last year was rather different from the course he set out on 12 months earlier. We are also relying heavily now on monetary policy—on quantitative easing and the Bank of England continuing low interest rates—to try to bring about a recovery. I welcome some of the things that the Government have done, but it is sobering to read the OBR analysis that the Budget will have a limited effect on growth. The best it can say is that the cutting of corporation tax will get us 0.1% of growth, which shows how much more the Government have to do.
I do welcome some of the measures the Government announced. Of course we are in favour of the patent box, which we introduced. It is very impressive that GlaxoSmithKline was, within hours, suddenly able to decide that it would open new factories and new production. It is just a pity that some of the new investment will take three or four years, if not longer, to be put in place. I also certainly welcome what was done for the creative industries. The deputy leader of the Labour party, who spoke for us earlier, made the point that I introduced a number of these proposals in 2010. They were rubbished by the coalition in 2011, but they are back again in 2012, and I wholeheartedly support them. I am also glad that the Green investment bank is coming to Edinburgh, and I hope that it will be up and running fairly quickly.
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Turning to the other end of the country, the Government’s recognition that they have to look again at airport capacity in the south-east of England is welcome. It is a difficult issue, it is 10 years since we looked at it and we need to get a move on with it. However, a lot of the measures that have been announced are small or will not be implemented for a long time. Public investment is set to drop. I hope that the private sector comes in on infrastructure and so on, but unless we do more we are simply not going to get the investment we need.
Lastly, I wish to discuss the cloud hanging over us all—Europe. At the moment, we have something of a lull, as it has gone out of the headlines, but the problems have not gone away. We should all be grateful for what the European Central Bank has done, as it almost certainly prevented at least one, if not two, banks in continental Europe from getting into trouble earlier this year. However, the deep-seated problems that Spain has, that Italy has and that Greece has have not gone away. I hope that we will use whatever influence we have to try to engage with the eurozone, so that, for once, they get ahead of the game, because until that happens, that situation will hold back our prospects of growth even more.
6.4 pm
Andrea Leadsom (South Northamptonshire) (Con): This has been a great Budget for business growth, for work incentives and, as the Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend the Member for Wantage (Mr Vaizey) rightly says, for technology, too. However, I shall focus my comments on a huge potential opportunity for growth by using technology, which would transform the banking system, put people and small businesses first, and shatter the comfortable oligopoly of the big banks in our banking sector.
Bank balance sheets in Britain amount to 500% of our GDP, which compares with about 300% in Germany and France, and only 100% in the US. Britain is uniquely at risk from this highly profitable sector. Financial services employ 1 million people in the UK, including 250,000 in Birmingham alone, and generate 11% of our total tax take. However, banks in the UK are so highly concentrated that four or five players have 80% of the small and medium-sized enterprises lending market and 80% of the personal current account market, and only about 2% of that on their vast balance sheets is lent into the real economy—the bit that gives us our jobs and helps businesses to grow. We saw in 2008 how the crisis in banking could bring our economy to its knees. Our unique British dilemma is in deciding what to do about this critical industry which has the ability to make or break us. The Chancellor was right to set up the Independent Commission on Banking to look at how to improve the industry, but it missed a big opportunity, as it did not address the massive barriers to entry into the UK economy for new challenger banks.
When I was director of Barclays Financial Institutions Group in the 1990s, an incredible consolidation took place in the financial sector. Banks merged with fund managers, broker dealers, private banks and building societies, creating today’s oligopoly of banks that are simply too big to fail.
Ian Lucas:
The hon. Lady is making an interesting speech, and she is talking about the 1990s, when she was at Barclays. Does she agree that one of the major errors
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of the late 1980s was the incredible centralisation that took place through the privatisations and the ending of local building societies, and that that is a major reason why it is impossible to get local access to finance now? That issue needs to be addressed.
Andrea Leadsom: I completely agree with the hon. Gentleman.
Before Virgin took over Northern Rock, Metro Bank was the only company to have been granted a full banking licence in 100 years. I have met entrepreneurs who would love to finance and set up new banks, and we have seen the launch of some new financial services products through the likes of Tesco and Marks and Spencer, but competition remains woeful. At the latest meeting of my business breakfast club, members made it clear to me that switching their business between banks is nearly impossible. Banks that lend money to SMEs require that their customers also do their everyday banking and personal current account banking with them. Some banks even require businesses to switch from a floating-rate loan to a fixed-rate one—that is profitable for the banks, but it forces the business into a loan that it cannot pay back early without enormous expense.
One specific policy would be a game changer for Britain, radically transforming our banking sector in terms of choice and competition, for business and personal accounts alike. We should introduce full bank account portability; we should be able to change banking provider at the flick of a switch. As with mobile telephones, when we change our bank we should be able, if we so wish, to take our account details with us. The ICB has proposed a costly seven-day switching service, where banks undertake to assist customers to move their banking within seven days but customers will still have to change all their direct debits, cheque books and debit cards, and all their documentation. Instead, we could insist on the creation of a shared payments clearing system, where all banks participate and customers have a unique bank account number with a code that simply identifies which bank holds the account. Switching would then be simple because nothing, other than the identifier code, would need to change when someone changes banks. This would vastly transform competition in the sector. Of course the big banks will resist it, arguing that the costs outweigh the benefits, but I want to highlight five very real advantages of full account portability.
First, it would cut barriers to entry for new challenger banks. Increased competition would force banks to differentiate themselves to retain customers. This would lead to enormous improvements in customer service and differentiation of bank offerings. Secondly, new challengers would mean more banks and, over time, a reduction in the risk of banks being too big to fail. The US has more than 3,000 banks and when a retail bank fails there is hardly a ripple. We need diversity of financial services providers, and this would enable it.
Thirdly, industry experts claim that the impact of creating a new shared clearing infrastructure would mean the banks sorting out the problem of their multiple legacy systems that date back to the consolidation of the 1990s. New systems could lead to a reduction of up to 40% in the bank fraud that costs the sector billions each year and is passed on to customers.
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Fourthly, multiple legacy systems within banks make it hard properly to evaluate business ideas. Banking is essentially a technology business and improving the single customer view would have a positive impact on banks’ ability to evaluate credit risks and lend more successfully.
Finally, account portability offers the potential for orderly resolution of a failed bank. The potential to close down a bank and move accounts overnight to a solvent bank could be a valuable tool in a future financial crisis. The Chancellor has been kind enough to tell the Treasury Committee that he would consider full account portability if the ICB’s preferred option of a seven-day switching service fails to improve the current low switching levels. I urge him to grasp the nettle now. Technology has the potential to drive a fundamental change in our banking system.
6.10 pm
David Miliband (South Shields) (Lab): The Minister did not manage to mention in his speech the export potential of football, but I am happy to refer the House to my declared interest as the vice-chairman of Sunderland football club.
Since last Wednesday, the consensus has formed that the Budget spin was cack-handed. I want to make the case that the substance was dangerously complacent about growth and youth unemployment. Growth in our economy has tanked since the Chancellor’s Budget at this time last year. The hon. Member for Bury St Edmunds (Mr Ruffley) said that we had had a nascent recovery, but the truth is that we have had a non-existent recovery. We have had stagnation. British business is sitting on £750 billion-worth of cash, but it is not investing. It is not refusing to invest because of the planning laws or tax rates or because of public sector pay rates; it is not investing because there is no demand in the economy for the goods and services it wants to produce. No wonder the OBR has slashed its forecast not just for growth but for business investment from nearly 8% to less than 1%.
I have never believed the argument that without the austerity programme Britain was about to become Greece; neither do I believe the Chancellor’s argument from last Wednesday that it is essential to keep austerity to keep international investors buying British gilts. Why? Some 89% of conventional gilts issued by the Debt Management Office in the past year have been bought by the Bank of England, not by international investors. Even within the fiscal straitjacket that the Chancellor has set, he could have done more. He found £1 billion to support business. We all want to support business. His corporation tax cut will add to the corporate cash pile, but it will not change the arithmetic of demand. Meanwhile, far from increasing investment in capital allowances that would do so, he is cutting them by £1.7 billion. Instead of focusing on regional policy, the Treasury has abolished its regional policy unit. Instead of the strength of higher education being exploited, higher education visas are being cut. Instead of tackling the finance gap for small and medium-sized enterprises, a British investment bank was nowhere to be seen in this Budget. No wonder the OBR concluded, after studying each and every one of the Chancellor’s plans that had been announced
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since the autumn statement, that the plans will do nothing for growth this year and that it will have to reduce its forecast for growth next year.
We have learned, since the Chancellor’s new definition of simplification last Wednesday, that the price is to be paid by the old. There has been a lot of commentary on that, but there has been far less commentary on the price to be paid by the young. By the Government’s own admission there is a crisis of youth unemployment, with more than a million under-25s out of work, with 1.4 million not in education, employment or training, with 250,000 young people having been unemployed for at least a year and with 200,000 more having been unemployed for more than six months. The net present value cost of all that has been independently calculated at £28 billion. In my constituency, there has been a 250% rise in long-term youth unemployment, with 590 young people having been looking for work for more than six months.
This Government did not invent the problem, but they have made it worse. The Budget was their chance to make a difference, but while the Chancellor insulted the elderly he ignored the young—he spent longer talking about taxing hot snacks. Ministers say, “Look at what we have already announced,” but the flagship Work programme covers only one in 10 of the young unemployed. By the Government’s own admission, the Work programme itself, according to the voluntary sector group that comes together to discuss these things, will help only one in five of those on the programme. So, in total, the Government’s programme will help only one in 50 of the young unemployed get into work.
The Government’s wage subsidy programme, which starts in April, is designed to help 50,000 young people but that number could be doubled by bringing forward the spending for 2014 when the Government say that unemployment will be falling. What about the apprenticeship programme? We all support apprenticeships. Some 75% of the increase in apprenticeships is going to the over-25s. The administration of the £120 million plan for 16 and 17-year-olds is putting at risk precisely the voluntary organisations that the big society was meant to help.
The Deputy Prime Minister has said that he cannot think of a better use of money than creating jobs, hope and optimism for young people. The Prime Minister and the Chancellor say we are all in it together, but the truth is that they got lost in the endless tactical dance about how to dress up the cut in the top rate of tax and in the endless leaking about who would claim credit for raising the personal allowance. They have completely flunked the issue of how to get our economy back on its feet. The loveless coalition will say anything but will do nothing. That is the true story of the Budget and that is the tragedy for the country.
6.15 pm
Mr Don Foster (Bath) (LD):
I am delighted to follow the right hon. Member for South Shields (David Miliband) who said quite clearly that the coalition Government were not responsible for and had not invented the problem. I might ask him to consider who did. Our country has had to face the biggest boom and bust, with the biggest deficit in the G20, and has had to cope with the biggest banking failure and the biggest crisis among our European neighbours. As a result, we have seen, under Labour, manufacturing falling and personal and
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national debt rising to a situation in which for every £4 we spend, we have to borrow £1. Every single day, we are spending £120 million just to pay off the interest on the country’s debt. Of course this coalition Government did not create the problem: we are trying to put it right and we are now in the early stages of recovery.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC): The hon. Gentleman is making some pressing points, but in the light of everything he has said is he seriously saying that the priority at this time should be a tax cut for those earning more than £3,000 a week?
Mr Foster: Let me come to that in a moment. First, let me tell the hon. Gentleman what I thought this Budget needed to do. First, it needed to continue the process of reducing the deficit. It needed to continue to maintain confidence in the international markets not least to keep interest rates low and it needed to develop a fair taxation system. I believe that the tax policy that was introduced through this Budget is a fair one. It has moved us more rapidly than many of us could have hoped to a Liberal Democrat aspiration to achieve a tax threshold of £10,000. As a result of what this Government have done by lifting that tax threshold to more than £9,000 by April next year, we will have taken 2 million of the lowest paid out of paying tax altogether and 24 million people will have been given a tax cut of more than £500. That is in marked contrast to the 5 million low-paid people who had to pay more under the Labour Government who cut the 10p income tax band.
The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) seems to suggest that the rich are getting off lightly, but if he looks at all the figures, he will see that that simply is not the case. Under the measures that have been included in the Budget with the 7% increase in capital gains tax, the 15% on stuff that is owned offshore by foreign companies and the measures on tax loopholes, the figures demonstrate that those who are best placed to pay will be paying even more as a result of this Government.
Mr Foster: I will not give way because I want to make progress.
I was pleased with the comments of my hon. Friend the Minister because he was able to put at the heart of what the Government are doing some of the really important work of the Department for Culture, Media and Sport. He showed how the work being done there can help to deliver the growth in the economy that is really necessary, particularly in relation to the creative industries. As he said—and I am grateful to the deputy leader of the Labour party for agreeing—we have in this country some of the brightest and best people working in our creative industries. We need to give them as much support as we can. Even before the Budget, work had been done to try to achieve that, such as the establishment of the creative industries council, which is already making valuable recommendations on the skills and training needs of the sector.
Tristram Hunt: Is the right hon. Gentleman happy that as a result of the tuition fees introduced by his Government, we are seeing a massive collapse in the numbers studying modern languages, humanities and the creative industries?
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Mr Foster: If the hon. Gentleman looks at the figures on applications to our universities, he will see that the predicted fall-off has simply not happened. As we heard earlier in the debate and in the Budget statement, investment in science is being increased. The creative industries want a better base than what is taught in our schools. Because of this coalition Government, the way computing is taught in schools is to be changed, and because of the work of the Henley review, we are going to put culture and creativity back in schools. That will be crucial to the sector. The former Chancellor talked about young people; I hope that he has looked at the real benefit that will be produced by the enterprise loan scheme for young people introduced in this Budget. Work is now being done to roll out high-speed broadband and ultra-high-speed broadband in many of our cities. Everyone in the creative industries will benefit from measures such as the cut in corporation tax, the simplification of tax collection, the loan guarantee system, the enhanced business finance partnership and so on.
I welcome many of the measures that have already been introduced and those that are in this Budget, but of particular importance are the tax breaks for producers of computer games, high-end television productions and animation. They will bring real benefits to those elements of the creative industries, helping the UK economy and increasing employment and opportunities for innovation and investment. As many have said, their effect is already being felt. Only a couple of days ago, I received an e-mail from an animation company, Blue-Zoo, saying that it
“has scrapped all planned moves abroad and intends to make shows 100% in this country”
“not only that, we are now planning to invest further in our infrastructure, creating jobs, and growing our industry”.
There are many other examples.
Having been very positive, in the few seconds remaining let me raise three concerns about the Budget. First, the Budget introduces a change in gaming machine taxation, the broad thrust of which is welcome, but the failure to take account of irrecoverable VAT in the calculation will, I believe, be to the disadvantage of some aspects of the gaming industry, particularly bingo. I am also concerned about the impact of tax relief changes on philanthropy, and of VAT changes on work done on listed buildings. With those three—
Mr Deputy Speaker (Mr Nigel Evans): Order.
6.23 pm
Mr Ronnie Campbell (Blyth Valley) (Lab): I received a letter this morning from my local county council, Northumberland, saying how pleased it was to have got £7 million for the roll-out of broadband. I take from that letter that the council is quite satisfied. I know the council ran a campaign and met the Minister, and I wrote to him as well. We will have to wait and see how it all pans out. I am not sure that £7 million is enough to cover rural Northumberland—it is a big county and sparsely populated, so we will need some money to get it right—but I hope it works out.
I am disappointed that we did not get our enterprise zone on the River Blyth. The Chancellor mentioned in the autumn statement that he would look at the
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programme—we submitted a programme for 100 hectares on the river and port of Blyth—but it was not mentioned in the Budget statement. There are to be two enterprise zones in Scotland, up the road from us. I hope that he has not forgotten us and that we are still in with a chance. We have high unemployment in Blyth Valley, south-east Northumberland and Wansbeck.
Mr David Anderson (Blaydon) (Lab): Perhaps my hon. Friend should get some wealthy Northumberland business men to pay a quarter of a million pounds to have lunch with the Chancellor. Then he might get an LEZ in Blyth.
Mr Campbell: The only place I could take them is the canteen. I might get something there, but I am sure I would not get anything in Downing street.
The 50p tax rate has been widely discussed since the Budget statement. We were told it does not do anything and that no one is paying it, which makes me wonder why we have it. We have just heard the previous Chancellor explain why he put it on, but I have to ask: if people can fiddle a 50p rate, surely they can fiddle a 45p rate? And if they are fiddling the 50p rate, what else are they fiddling?
In the Budget statement, we heard the Chancellor say he opposes people fiddling their taxes. I have been here 25 years—I suppose I am an old man compared with some—and I have heard that time and again. Every Chancellor in history—certainly while I have been here—has said, “I’m going to come down heavy on tax evaders”, but what do we see? People making profits in this country and swanning off with their swag to some tax haven—an island somewhere. They cannot go to Switzerland now, because the Swiss will give the show away, but the Government should remember the old saying, “There’s honour among thieves.” There is honour among bankers as well, so I doubt they will be getting much information from the Swiss.
The Liberals have been telling us how wonderful the Budget is, but 14,000 people in this country are going to get a £40,000 tax rebate at the expense of £3 billion from old people—pensioners. I always thought the Liberals had a little heart in them. I do not know what deal they did to get what they wanted, but I am getting a weary feeling in my bones that they sold out the health service to what they think is a good deal. I am sure, when it comes down to it, that is what they did. They sat round the table and told the Tories, “We’ll get your health Bill through Parliament, but we want this and we want that.” Well, they have come unstuck, because in fact they are getting nothing.
Mr Foster: I do not know whether the hon. Gentleman has looked at the detail of the OBR’s calculations, but if he does he will see that the additional money going to pensioners totals £1.75 billion and the cost of the removal of the age-related allowance is £360 million. That means a net increase to pensioners—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The hon. Gentleman has made his speech and there are many Members who will not get in. It is fine to intervene, but I certainly do not want a second speech.
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Mr Campbell: We will just have to wait and see what happens when the country goes to the ballot box and the pensioners know what the Liberals have done.
There is another thing, which is that right at the end of his speech, the Chancellor said he had to find another £10 billion from welfare. There we are: people out there are already being hit, with their benefits cut from one end to another, and now another £10 billion has to be found from welfare next year. Where are the Government going to cut? They are cutting deeply now—the poor, the sick, the old and the disabled have certainly been hit.
Finally, let me say something about pay. We Members of Parliament are public sector workers and, like everybody else in the public sector, we have the three-year pay freeze, but since this Government came to power, there has been a 3.4% drop in wages in this country. That is the wages of people who are working—and who probably voted Liberal, too. When they find out who has been pushing those policies, the Liberals might not get so many votes. Then again, what has happened to executive pay? Let us look at the figures. In 2009 executives were reported to be getting, on average, £888,000. Under the Tories, two years on, they are getting £3 million, and that is without the bonus. We have not yet seen what the bonus is. It is reported in the paper that the bonus has been kept back because of the 50p. They are all going to get a bonus that is linked to the 45p. That is the most obscene orgy of greed that I have ever seen in my life, and I hope the Liberals get what they deserve—nothing at the polls.
6.30 pm
Mary Macleod (Brentford and Isleworth) (Con): It is a pleasure to follow the hon. Member for Blyth Valley (Mr Campbell), who is passionate about his enterprise zone, unlike the right hon. and learned Member for Camberwell and Peckham (Ms Harman), who went on a tirade of negativity about growth and business in this country. In the House hon. Members should be talking up British business to encourage people to invest in this country because it is a great country to invest in.
Even in these difficult economic times there are some great news stories in the national economy. London has retained its status in the global financial centres index as the best place to do business, ahead of New York, Hong Kong, Singapore and Tokyo. Business confidence has jumped to a nine-month high, according to a confidence index by BDO accountants group. This confidence index leapt 3.9 points to a score of 98 in February. Over half of members polled by the Federation of Small Businesses expect to grow in the coming 12 months.
West London is the place where I want people to invest. In my local area, Brentford and Isleworth, there are great local success stories of growth. Aker Solutions, which provides engineering and construction services to the energy, mining and power generation industries, has come back to the UK to Chiswick, and the reason is the highly skilled work force. International SOS has started up in Chiswick, helping organisations manage health and security risks. Otis, QVC and Swarovski are all moving to Chiswick. Starbucks headquarters in Chiswick has announced a major apprenticeship scheme to help young people get into work and develop skills for the future.
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BSkyB, based in Osterley, has major expansion plans, with an increase in the number of jobs based there and an extensive programme of increased work in schools, developing skills and aspiration for the future. Fullers Brewery, London’s last remaining traditional family brewer, announced revenue figures up by 6% in its half-year results in November 2011 and like-for-like sales growth of 3.9%.
My hon. Friend the Member for South Northamptonshire (Andrea Leadsom) spoke about banking, and I agree with what she said, but Handelsbanken has already moved into my constituency and Metro Bank is about to open in my constituency. In the jobs fair that we are having on Friday in Isleworth there are hundreds of jobs available to people who are out there looking for work.
I applaud the Government for the fact that the Budget was one for business growth and exports. Corporation tax is dramatically down and is now lower than in the US, Japan, France or Germany. That is what will make us more competitive than ever before. We are backing potential winners—for example, through tax relief to the video games industry, which will help Sega in my constituency and other similar organisations. Helping companies export is key to growth in the future. Lord Green has been doing a lot of work at a local level as well to encourage businesses to expand abroad. If we exported more, more than £36 billion could be added to our UK economy.
This is also a Budget for small and medium-sized enterprises, encouraging investment and creating an enterprise-led recovery. The national loan guarantee scheme, the enterprise management initiative scheme, the enterprise investment scheme and the seed enterprise investment scheme will help small businesses, and we have helped to simplify tax for so many small businesses. I encourage the Government to do more for SMEs by simplifying employment legislation, as we are doing, helping small companies bid for Government contracts and keeping that process as simple as possible.
This is a Budget to encourage young entrepreneurs. Enterprise loans, which we heard about in the Budget, will help young people believe that they can aspire and set up a new business. It does not matter what age they are; they can do it and achieve great things in business. Linked to the work that we have been doing to try to get more women on boards in the City, we need to encourage more female entrepreneurs. If women were setting up businesses at the same rate as men, we would have 150,000 more businesses.
In conclusion, Britain is a great place to do business. The signs of change are being seen locally and nationally. Each Member can do their bit for growth by helping to build aspiration in schools and/or in businesses. This Budget will deliver real results for this country and allow British business to grow and succeed in the future.
Mr Deputy Speaker (Mr Lindsay Hoyle): Before I call Mr Jim Cunningham, let me say that I do not want to drop the time limit any more, but if each Member could be generous to others and shave a little bit off their speeches, we will try to make sure that we get everybody in.
6.35 pm
Mr Jim Cunningham (Coventry South) (Lab):
I will try to be as quick as I can, but I want to highlight some of our concerns. In response to the right hon. Member
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for Bath (Mr Foster), who flung out a challenge about where the economic crisis started, I am sure he knows that it started in the United States. People will remember Fannie Mae and Lehman Brothers, for a start. How he thought the then Labour Government could tell the American Government what to do beats me. He should also remember that George W. Bush, the outgoing American President, who would be a Conservative in our terms, pumped $260 billion into the American economy.
I remind the right hon. Gentleman of that, but more important to me is the effect of this Budget and previous Budgets on the west midlands, where one in 10 people are unemployed. There has not been any coherent effort or real strategy from the Government to do anything about the restoration of manufacturing. If the Government point to what is happening at Jaguar, let me make it clear that that was well and truly under way under the Labour Government. At that time, we had a stimulus and we also had a scrappage scheme. That set Jaguar on the road and enabled it to recover. Incidentally, Jaguar is not doing very well in this country, but its exports are doing very well, as are those of other motor car companies. That is not a result of anything that the Government are doing here.
The Government’s new idea of driving down regional pay is a concern to many west midlands colleagues. I always thought it was a good thing to lift people up, not to take people down. The measure reflects the Government’s thinking on economic policy and the regions. At the same time, they are cutting public sector salaries and they are cutting pensions. Salaries have already been cut by inflation and workers will be hit very hard. The Government are also reducing the money going to local businesses, which rely on pay increases to revamp the local economy. From the perspective of Coventry and the west midlands, there is no change in the policies of this Government. The policies pursued by their predecessors in the 1980s have been dressed up with a different veneer, but it is the same old approach.
Police and fire services in the west midlands have been cut. It is difficult to get information about what the police and the Government mean by outsourcing. As I have always understood it, outsourcing means buying in goods and services. Leaving the police aside, does that mean that other services are to be privatised? We cannot get a clear answer on that. Over the next four or five years we are going to have a 25% cut in the fire brigade. That raises questions about the quality of services that will be delivered.
A large number of families in my constituency will be hit hard. More than 12,000 families claiming child benefit will either lose it or be affected by the freeze. There are 360 families who will lose their tax credits. Tax credits cut, child benefit taken away, and fuel duty rising—before the general election, this was the Government who were going to do something about fuel duty. Instead, they have started to increase it, which may affect the purchasing power of pensioners and families up and down the land. That means, in effect, that their standard of living will be drastically cut as the increase feeds through to food prices. The latest gimmick is VAT on hot food. Will that be extended in next year’s Budget to VAT on clothes and other goods that people buy? I am worried and chary when the Government start to go down that road.
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In Coventry, we saw an 87% increase in long-term youth unemployment last year, and slapping VAT on regular purchases sends out a very sinister signal indeed. I have tried to cut my speech down as much as I can, so there are some issues that I shall not raise. The granny tax has been well documented, and I shall not go into it again tonight. In the west midlands, there are 390,000 income tax payers over the age of 65. Whatever did the pensioners do to the Tory party—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order.
6.40 pm
Chris Kelly (Dudley South) (Con): Thank you, Mr Deputy Speaker, for calling me to speak in this important Budget debate. It is a pleasure to follow the hon. Member for Coventry South (Mr Cunningham), a fellow west midlands Member. Before I begin my remarks, I wish to draw the House’s attention to my declaration in the Register of Members’ Financial Interests, as I am a company director.
I broadly welcome this radical, reforming Budget. We are fortunate to have a Chancellor of the Exchequer and a Treasury team who have been able, over the past two years, to steady the markets and instil a sense of confidence once again in Britain’s ability to earn its way in this globalised world and to repay its debts. My right hon. Friend the Chancellor’s emergency Budget in June 2010 was crucial in signalling to the international markets that the British Government were serious about addressing our structural deficit and debt situation. His Budgets in June 2010 and March 2011 have played a significant part in the crucial task of ensuring that Britain will not be weighed down by crippling rates of interest and spiralling costs for servicing our debts; we have shown that Britain is able to reform its economy, earn its way out of recession and pay off its debts.
Last week, my right hon. Friend reaffirmed his unwavering commitment to dealing with the debts Labour left behind and that mean that we spend over £120 million every day on debt interest. He is rightly sticking to the plan. Our country’s credibility is helping to keep interest rates low for households and businesses in my constituency and around the country. If we listened to Labour’s calls for more spending, more borrowing and more debt, we would risk a sudden loss of confidence and a sharp rise in interest rates.
One of the most important things that this Budget has done is to provide even greater support for working families on middle and lower incomes. I welcome the largest ever increase in the personal allowance, which will provide a tax cut of up to £220 for 24 million income taxpayers, from next year. Taken with previous increases, this means that the coalition Government will have taken 2 million of the lowest paid out of tax altogether, and basic rate taxpayers will be up to £526 better off. Thousands of families in Dudley South will keep more of their income in their own pockets to spend on their own priorities for their own families. I am pleased that the Chancellor has listened and decisively dealt with the cliff-edge issue in relation to the payment of child benefit while ensuring that 90% of families will still be eligible for the benefit, again helping working families in my constituency.
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On more than one occasion, I have taken my right hon. Friend to visit manufacturing and engineering businesses in Dudley South. I know that he has taken a great deal of time to visit businesses the length and breadth of this country to listen to their concerns and to see at first hand some of the innovation and creativity that is happening every day in the UK economy. So I am pleased that this Budget has unashamedly backed business, large and small.
The Government are right to be simplifying small business taxes and to have cut corporation tax again. This means that we are on our way to a 22% corporation tax rate, which will be one of the lowest in the world. There is a great big “Open for business” sign now hanging over the UK. As founder chairman of the all-party parliamentary group on family business, I know that that support will be widely welcomed in the family business sector, which is responsible for employing four in every 10 people working in the private sector, representing 9.5 million jobs throughout the UK and almost a quarter of our gross domestic product.
We cannot spend what we have not earned, and this Budget will help Britain to earn its way out of the disastrous financial situation that we inherited from the last Labour Government. The Chancellor has had to make many difficult choices, including on personal allowances for pensioners, but this is a radical, reforming Budget that will help Britain to earn its way in the world. It is a Budget that rewards work, backs businesses and puts Government Members firmly on the side of those who aspire to do better for themselves and their families.
6.44 pm
Simon Danczuk (Rochdale) (Lab): Much has been said over the past few days about how the Budget will adversely affect pensioners, those on middle incomes and the less well off. There is no doubt that the vast majority of people living in Rochdale will be worse off, rather than better off, as a result of the Budget. But it is not just individuals who will be worse off; there is no doubt that businesses, especially small businesses, could have received much more assistance from the Chancellor. I want to concentrate on that subject this evening.
We are all aware that small and medium-sized enterprises create the most jobs in our economy. Given the present record levels of unemployment, I would have hoped that the Chancellor would do more to help small businesses, rather than just the larger corporations. The Government’s actions to stimulate the economy so far have failed, and if the Office for Budget Responsibility is to be believed, little in this Budget will improve growth. It is predicting growth of 0.8% this year, as opposed to its initial prediction of 2.5%. The cut in corporation tax might well encourage additional investment by larger corporations, but it will do little, if anything, to help SMEs to grow their businesses and create jobs.
I accept that there is some potentially good news in the Budget. Tax simplification for small businesses could work, enterprise loans for young people sound promising, and the expansion of UK export finance is a good thing in principle.
Jim Dowd: My hon. Friend mentions tax simplification. What does he make of the tax simplification for pensioners?
26 Mar 2012 : Column 1213
Simon Danczuk: My hon. Friend is absolutely right to mention pensioners and the disadvantages to them of the Chancellor’s proposals.
The Government could get things right for small business by simplifying the processes, but none of those proposals will be enough to stimulate the economy. It is also fair to say that a number of this Government’s initiatives to help business have not worked. It has been pointed out that Project Merlin has failed to hit the mark, for example. It failed to provide £10 billion of investment for SMEs. The regional growth fund continues to fail to pay the money that it should be awarding. There is nothing to suggest that the Government initiatives—of which there are certainly many—will actually work. The Budget has also done nothing to allay the fears expressed by small businesses about fuel duty and fuel costs, which continue to go up. Related to that are the Government’s proposals to privatise the road network, which could place further costs on businesses.
Probably one of the biggest disappointments in the Budget relates to business rates. This April, they will increase by 5.6%, the biggest increase in 20 years. Business rates are the elephant in the room—one of what I would call the big three: costs to businesses are wages, accommodation and business rates. Greater Manchester chamber of commerce recently carried out research which showed that the 5.6% increase will add £54.4 million to the business rates that businesses across the region will have to pay, which equates to 2,407 jobs. In Rochdale, businesses will have to pay an extra £3.3 million, over and above what they are already paying, which will equate to 141 jobs. This is a real concern for local economic growth.
It is therefore not surprising that the British Retail Consortium, the British Independent Retailers Association and the British Chambers of Commerce are all calling for the hike in business rates to be revised downwards. It is no coincidence that retailers in particular are calling for reform of business rates, because they are the ones that carry the greatest burden. It is also worth pointing out that it is retailers that provide much of the employment for young people and women, so the Government could have done much more to help to stimulate employment for those two groups by reforming business rates. They could have used the Budget to really support and encourage small businesses, but they failed to do so. Instead of taking an active approach, they used the Budget to take a laissez-faire approach.
6.50 pm
Esther McVey (Wirral West) (Con): I would like to use my time in this debate to talk about how Wirral and the wider Liverpool city region can benefit from the Budget and how the rest of the UK in turn can benefit from Wirral’s advances and successes.
The Budget is a Budget of growth. It is concerned with repositioning the UK as a place to do business, to set up in business and to relocate big business. It sets out policies offering help to new start-ups, with the simplification of regulations and taxes, a Government loan guarantee scheme and the promotion of self-employment opportunities for all. It offers guidance and support to those businesses going through the new enterprise allowance.
The Budget also set about reducing corporation tax, going further and faster to make it the lowest in the G7. Members do not need to listen to me on this; they can
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just look at the actions of industry. GlaxoSmithKline has announced 1,000 new jobs for Cumbria, Nissan is creating 2,000 new jobs in Sunderland, and Jaguar, with 1,000 new jobs in Halewood on Merseyside, has increased its number of jobs to 4,500, trebling the number of employees in the past three years. That is because it is a good place for business. We have the “Open for business” sign up, as my hon. Friend the Member for Dudley South (Chris Kelly) said.
Ian Mearns (Gateshead) (Lab): Will the hon. Lady give way?
Esther McVey: I am sorry, but I will not.
The Budget also offers clear support and incentives for firms taking on apprentices and young employees as well as support for key infrastructure projects, including roads, rail, ports and broadband. It is also supporting the construction industry, with housing development getting Britain building. As the debate was opened by the Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend the Member for Wantage (Mr Vaizey), I would like to quote from the Liverpool Daily Post, whichthis week carried the following headline: “Merseyside video game companies welcome Budget tax credits”. That was Sony, Evolution Studios, Rebel Play and Lucid Games referring to not only the tax credits, but the research and development tax credits and changes to enterprise investment schemes. The Budget is the beginning of a shift from the downward slide in enterprise, manufacturing and exports to an expansive vision and the aspirational upward mobility of UK plc, from which everybody in the UK should benefit. It is a seismic shift saying that we are open for business, and now we have the tools, infrastructure and tax system to enable it.
On Wirral specifically, Wirral Waters is one of the biggest and most visionary regeneration projects in the UK, and it has been enabled only because it became an enterprise zone at the last Budget. The scheme will create over 20,000 permanent new jobs in Wirral, help to create skills and apprenticeships for young people, giving them a future on their doorstep, and help to encourage new housing projects and international trade and investment. Last week I was with some of the Chinese developers hoping to come to the UK, including Stella Shiu, chair of the Sam Wa group, which will produce a 50% investment on the site, starting with the £175 million investment. None of that would have been possible had we not had an enterprise zone, the reduction in corporation tax or the new enhanced UK Trade and Investment—my hon. Friend the Member for Stourbridge (Margot James) is helping with its rejuvenation—and the localism agenda and planning, because had this been called in to the Secretary of State, the private company, Peel Holdings, would not have been able to pursue it. All in all, this was a catalyst for regeneration and jobs on the Wirral.
There is much to applaud in what has gone on, because we know that we have to strive, to move forward and to reposition the UK as a place to do business. We are starting here, we are starting now, and with further support from Ministers we hope we will be starting in Wirral, too.
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6.54 pm
Jim Dowd (Lewisham West and Penge) (Lab): I congratulate the hon. Member for Wirral West (Esther McVey) on reading out her speech. I am not sure whether she got it from the Whips or those on the Government Front Bench, but it is patently obvious that it was completely—
Esther McVey: Will the hon. Gentleman give way?
Esther McVey: Will he give way?
Jim Dowd: No, I will not—[ Interruption. ] No.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The hon. Gentleman cannot be made to give way, so the hon. Lady must resume her seat. It is up to him.
Jim Dowd: I have reflected upon the error of my ways and will give way. I will not respond to whatever point is made, but I will gratefully receive the extra minute.
Esther McVey: I appreciate the hon. Gentleman giving way. As the Wirral is somewhere I have lived all my life, and as this is something I have given great thought to and know inside out, and it comes from the heart, I know that it is a part of the country where we need to succeed, and these are the sorts of tax incentives and the sort of Budget that we need in order to be able to do that.
Jim Dowd: Yes, indeed, and as for the next bit, I do not know. None the less, I will go on to make a few points.
All Budget statements are a spectacle. When I first came to the House, people used to dress up for the Budget and it used to be more of a spectacle. Some used to put on national dress and dress in top hat and tails and all the rest of it. They do not do that any more, and perhaps it is just as well, but what has replaced it is an altogether more depressing sight, because the Budget statement has become something of a pantomime—this does not just apply to this Government and this Budget, because it has become like this over time—with the Chancellor and his acolytes sitting on the Front Bench and making a few statements and the simpletons behind them simply responding, cheering and making completely idiotic noises, whether or not they know what the Front Benchers are saying. As I said, I do not limit my criticisms to this Government because it has happened over a number of years, although I think they are the worst example of it. I do not exempt Members on the Opposition side of the Chamber, because when our Front Benchers get up there are Pavlovian responses from this side as well.