We now come to the amendment in lieu passed by the other place in respect of clause 1, and what has been described as a purpose clause. It was suggested variously
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in the other place yesterday that this amendment would have no effect; that it would have some effect, although that effect was not entirely clear; and that it would have a future effect in guiding successive Lord Chancellors when consideration was being given to what services might be added to the scope of legal aid under clause 8(2).
The difficulty the other place has so far had in establishing the precise effect of the amendment is instructive as this House decides whether it should stand. A duty with an uncertain effect is desirable neither in legislative terms nor for the person attempting to discharge that duty. However, it is the Government’s view that the effects of this duty can be described and are highly undesirable. The amendment would remove the uncontroversial, unambiguous duty the Bill places on the Lord Chancellor to ensure that legal aid is made available according to part 1 of the Bill. This made a clear link between the duty and legal aid. In terms of a clear duty, it does not get much clearer than this. However, the amendment would not only remove that but would replace it with a duty that would bring ambiguity and uncertainty. It refers to “legal services” rather than “legal aid”.
The argument was also made in the other place that the amendment had no effect other than to underline the Government’s commitment to the principle of access to justice. We contend that the imposition of any duty on the Lord Chancellor in legislation must create in law a potential course of action through challenges to the discharge of that duty. If it is accepted that the imposition of such a duty must give rise to a potential course of action, the amendment’s effect must be to bring into question the range of services provided under the Bill. The matter would then turn on the question of which legal services meet people’s needs. That contrasts with the clear and unambiguous duty in clause 1(1) requiring the Lord Chancellor to
“secure that legal aid is made available in accordance with”
The Government believe that the question of which legal services meet people’s needs is not relevant to the Bill. Schedule 1 lists the services that Parliament, following consideration of first principles and extensive consultation, believes it appropriate to make available under legal aid. To reopen that question via an ongoing duty would frustrate our intention to bring certainty and clarity to the scope of services funded by legal aid. The amendment would result in only one thing: numerous expensive judicial reviews—more than likely at taxpayers’ expense as the boundaries of the new duty are tested and because the question of which services should be provided would be reopened.
It was said yesterday in the other place that such JR applications would almost certainly fail, and that consequently there would be no cost implications to the amendment. However, even rejected applications have an inherent cost: lawyers are paid legal aid fees for their work up to that point and the Government pay their own lawyers to defend such cases.
I would also like to address the argument put forward in the other place about the amendment’s effect in guiding future Lord Chancellors. It seems novel to include in the Bill an overriding duty that activates when the Lord Chancellor considers adding a service or services to the scope of legal aid. I am not convinced
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this is possible, and I am certain it is unhelpful. Adding services to the Bill requires the affirmative approval of both Houses. Such a process will be more than adequate to ensure that the Lord Chancellor takes account of the relevant factors when considering what, if any, services should be added to the scope of legal aid.
I emphasise, however, as Lord McNally did in the House of Lords yesterday, that the Bill’s present form arises from extensive debate and consideration across both Houses and reflects decisions about the future nature of legal aid. In short, the amendment is incompatible with the Bill. It would muddy both the duty to which the Lord Chancellor is subject and the scope of services that might be funded.
Simon Hughes (Bermondsey and Old Southwark) (LD): I am not arguing that the House should agree to the Lords amendment, but the Minister will know, as the Lord Chancellor does, that I have asked that the Government consider bringing immigration matters—whether onward appeals by judicial review or when a judge gives permission for a case to go to a higher court—back within the scope of legal aid. Will he put on the record the response to that plea, which I have made to the Lord Chancellor and him several times?
Mr Djanogly: My right hon. Friend finds the right moment to ask about something not subject to the amendment. It is an important point, however. My right hon. and learned Friend has written to him about onward appeals in immigration cases. The Department will conduct a review of the impacts of withdrawing legal aid in such cases once we have sufficient data and after implementation of the reforms. I envisage allowing about a year for the reforms to take effect before starting such a review.
Lords amendment 2 was passed in the other place yesterday by the extremely narrow margin of three votes. Unusually for this topic, no one spoke other than the mover and my right hon. Friend Lord McNally. That indicates how far we have moved. I remind the House of the main points. First, and crucially, legal aid to obtain the full range of injunctions and orders to protect against domestic violence will remain exactly as at present. There is no evidential gateway for legal aid for these remedies, and those who need legal aid to protect themselves can get it, regardless of their means.
Secondly, although we have removed most of private family law from the scope of legal aid in favour of funding mediation and less adversarial proceedings, we have made an extremely important exception for victims of domestic violence. That is so that they can take or defend proceedings about child contact or maintenance, or about the division of property, without being intimidated by their abuser during the proceedings.
We have made significant changes to the detail of this exception in response to concerns expressed in both Houses. We have accepted in full the Association of Chief Police Officers’ definition of domestic violence. We have also significantly widened the list of evidence that we will accept as demonstrating domestic violence for the purposes of the exception. That list will now include undertakings, police cautions, evidence of admission to a refuge, evidence from social services and evidence
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from GPs and other medical professionals. That is in addition to the range of evidence that had already been confirmed, including the fact of an injunction or order to protect against domestic violence having been made, a criminal conviction or ongoing criminal proceedings for domestic violence, a referral to a multi-agency risk assessment conference and a finding of fact by the courts that there has been domestic violence. We have also doubled the previously announced time limit for evidence for this exception from 12 months to two years.
Kate Green (Stretford and Urmston) (Lab): We all noted the Lord Chancellor’s commitment in the Chamber last week to extending the time limit to two years. Will the Minister clarify whether that will also apply in cases of child abuse, which seem to be encompassed by the definition of domestic violence that now applies in the Bill? Clarification would be welcome on that, as there are clearly instances in which proceedings might be brought in relation to child abuse after more than 12 months, including in care proceedings, in which it would be entirely appropriate to grant legal aid.
Mr Djanogly: Yes, I am pleased to be able to confirm to the hon. Lady that that is the case.
We think that we have struck the right balance, although some will disagree. However, such disagreement misses the fact that there are two important safeguards to our system, which will provide genuine victims with a route into legal aid even if they do not have the headline forms of evidence. First, when a court has to consider whether domestic violence is a factor in a private family case, it may consider any relevant evidence, including police call-outs or evidence from domestic violence support services, or other types of evidence that have not even been suggested by the Opposition. This is also relevant in regard to the time limits. When a case involves older incidents of domestic violence and a court considers that the matter is still relevant and makes a finding of fact, legal aid funding could still be triggered. There is also the more generic safeguard of the exceptional funding regime.
We continue to believe that the evidential requirements should not be in the Bill. The level of detail required means that those requirements will be much better left to regulations, subject to the affirmative resolution procedure, rather than to primary legislation. Given how far we have moved on this topic, and the safeguards that I have outlined today, I invite the House to disagree with Lords amendments 2B and 196B.
Sadiq Khan (Tooting) (Lab): I shall try to keep my comments short, as I know that a number of colleagues wish to speak in the debate. The Bill sustained 11 defeats on Report in the Lords, which is a record for this Parliament, and a further three yesterday. The Government need to show some humility when they have suffered 14 defeats, and I am pleased that we have seen some evidence of that today.
It is still unclear why the Government are so resistant to Lords amendment 1B. They have given different reasons on different days for their opposition to Lord Pannick’s amendment. A statement of legislative purpose is frequently included in legislation of this nature. Lord Pannick’s drafting of the amendment would result in a statement of purpose within the financial limits set out
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in the Bill. The key question is whether there should be a duty on the Lord Chancellor to take into account citizens’ needs before making arrangements for legal aid provision. The amendment has been drafted with reference to the financial resources available, and would therefore not incur further expense for the Government. The Government cannot have it both ways. They say that the amendment replicates provisions that are already in place, and that it is therefore unnecessary. They also say that it would add to Government expenditure. We will be voting against the Government on Lords amendment 1B.
5 pm
Lords amendments 2B and 196B focus on domestic violence, so it is worth reminding this House what we are talking about, which is the availability of legal aid for victims of abuse to leave their abuser and protect their children. It is also worth reminding this House that on Second Reading, in Committee and on Report the Government believed that they had correct both the definition of domestic violence and the evidence that they would accept as proof of domestic violence. Only last week—thanks to the efforts of Baroness Scotland and others in the other place, but also thanks to victims’ groups, women’s groups and others who contacted us—did the Government finally accept our definition, or the Association of Chief Police Officers’ definition, of domestic violence. I accept that progress was made last week, too, in the acceptance of most of our evidential criteria for proof of domestic violence. We welcome that progress and the direction of travel.
The remaining issues of contention relate to two issues. The first is whether evidence from more than two years ago is acceptable, and the second is whether evidence from specialist domestic violence organisations will count as acceptable proof of abuse. The Government have said that they will accept evidence only of admission to a refuge, for example.
On the time limit issue, the Government have moved from one year to two years. The Minister will be aware that examples were given in the other place of real cases of real victims who would get legal aid currently, but would not get it in the future—even after the change to two years. To enable more victims to get access to legal aid and to ensure consistency, the Lords propose moving to the general limitation period for civil litigation, which is six years.
On the evidential criteria, even allowing accessing refuge services as evidence of eligibility for legal aid will exclude many women who are simply unable to access such services yet are experiencing violence. Baroness Scotland drew attention to research from women’s aid. On 16 June 2011, 224 women were turned away from refuge services—163 because there were no bed spaces, 13 because they had no recourse to public funds, and 48 because of complex needs. None of those would satisfy the evidential criteria necessary to secure legal aid. Of the 125,000 women and children who suffer domestic and sexual violence each year, only 17,615 are in refuges.
Even with last week’s concessions, this Bill still leaves too many vulnerable women and their children exposed. The Lords amendments are supported by the National Federation of Women’s Institutes, Mumsnet and many
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other community groups. We will vote against the Government in their attempt to overturn the Lords amendments.
Lords amendment 31 deals with mesothelioma. I was told this morning that the Government were not willing to give any ground on this issue either. The key question here is whether victims of industrial diseases such as mesothelioma should have to hand over part of their damages to their lawyers and insurer or whether the wrongdoers should fund the cost of the successful litigation. I pay tribute to the noble Lord Alton as well as to Lords Bach and Beecham for their work. My right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins), who I see is in his place, and the hon. Member for Chatham and Aylesford (Tracey Crouch) also deserve a mention for their efforts. Much progress has been made as a result of their work over the last few hours and days.
Members of all parties made powerful speeches last week about the impact of mesothelioma on their constituents. Someone suffering from this horrible disease is not making up their cancer to make a quick buck; they cannot possibly be part of the compensation culture. Mesothelioma is virtually incurable. This disease is inflicted on the hard working—those who have spent their lives contributing to Britain’s economy in heavy industry and in manufacturing. The Government have agreed to an amendment whereby changes affecting proceedings cannot happen until the Lord Chancellor has carried out a review of the likely effects of the provisions on those proceedings, and published a report on the conclusion of the review.
Alison Seabeck (Plymouth, Moor View) (Lab): My right hon. Friend has touched a raw nerve. Plymouth is a hot spot for mesothelioma, and it also has an extremely low-wage economy. These people are not millionaires, and losing a significant proportion of their damages simply is not fair on those who have this horrible disease and whose families have had to live with it. I congratulate my right hon. Friend on the work that he is doing in attempting to change the present position.
Sadiq Khan: What my hon. Friend has said echoes some of the powerful speeches that were made last week.
It is worth bearing in mind that the progress that has been achieved is due to work done by Members in all parts of both Houses. We welcome the concessions that have been made today, we welcome the pause, and we approach the amendment in good faith. For reasons that we appreciate, the details could not be fleshed out today, but we assume that there will be an independent assessment of the evidence gathered during the due diligence phase.
We hope that the review will consider the impact on victims’ damages. According to some, they will increase by up to 10% as a result of the Government’s proposals, but others disagree, and we expect the review to look into that.
Mr Djanogly: It would, in fact, be a matter for the judges who would apply the 10% increase, rather than for the Government.
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Sadiq Khan: Of course the Minister is right, but if there is to be a review of the impact on those who suffer from this disease, we will expect the impact of the Jackson changes on the level of damages to serve as a benchmark, rather than the changes affecting victims per se. We hope that the pause will lead to a rethink by the Government.
We hope that the review will consider the impact on access to justice—some say that lawyers may be unwilling to take on such cases, and that as a result they may not be heard—and the interaction of the reforms with the new employers liability insurance bureau. We also believe that the data should take real-life experience into account.
Andrew George: The right hon. Gentleman will have heard my intervention on the Minister, when I sought to distinguish between a mere delay in the implementation of the policy and a genuine review. I hoped that the Minister would give me some indication that if the findings of a review required the Government’s policy to be amended in some way, there would be an opportunity for a rethink.
Sadiq Khan: Given the calibre of the Ministers involved and that of the Members of both Houses who have engaged in discussions over the last few hours and days, I believe that this will be a genuine review. I am sure that not only sufferers from the disease but colleagues who have been involved would be devastated if it were not.
We welcome the review, but the report needs to be based on proper evidence, and the genuine concerns that exist must be addressed. We support the proposal for a pause, and we are willing to work with the Government to ensure that we get this right.
Mr Deputy Speaker (Mr Nigel Evans): Order. Hon. Members can see how many of their number wish to take part in the debate. As it will end at 5.40 pm, I ask them to be mindful of others when making their contributions.
Tracey Crouch (Chatham and Aylesford) (Con): In the light of your comments, Mr Deputy Speaker, I will make a short speech, and will confine my remarks to the Government’s amendment to Lords amendment 31.
Let me first pay tribute to the work of Lord Alton, Lord Avebury, the late Lord Newton, and others in the House of Lords for tabling the original amendment. Without their dedication and commitment to ensuring a workable outcome for those with mesothelioma, we would not be where we are today.
I welcome the fact that the Government have listened carefully to the case presented in both Houses for exempting mesothelioma victims from the current proposals. It is not right to force victims of an extraordinary disease—when no fraud is possible and compensation is certain—to shop around for a lawyer during their last few months of life in an attempt to pay the lowest possible success fees as a proportion of a payment that they deserve. Discussion of this issue should never have been a fight about compassion for those with mesothelioma —it is a pretty heartless person who does not show compassion for those who suffer from the disease—but,
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rather, should have dealt with how best to protect the interests of the people who find themselves victims, and those of their families.
Without the amendment, the practical implications of the law as drafted for victims of mesothelioma would have been hugely damaging. Regardless of what colleagues on either side of the House may think of lawyers and insurance companies, it would ultimately be the victim, who would be going through intense suffering through no fault of their own, who lost out. The amendment rightly exempts mesothelioma from the overall package of reforms in the Bill, but it should be considered the beginning, not the end of the discussion. If ever there was an opportunity to kick-start progress on speeding up compensation payments to victims, it is now.
Like others, I seek assurances that there will be proper parliamentary debate on the commencement order and the report from the Lord Chancellor, and that future legislation will be synchronised with other initiatives that the Department for Work and Pensions is working on. However, more than anything, I urge the Government to conduct the review not with lawyers or insurers in mind, but with the sufferers at the centre, and to come forward with alternative proposals to ensure that they are protected, financially and otherwise, as soon as possible.
I started by thanking the noble Lords for tabling amendment 31 in the first place. It is only right that I finish by saying that I am sure that the late Lord Newton of Braintree, a co-sponsor of Lords amendment 31 who passed away recently from a respiratory disease, would have been pleased, as a former Leader of this House, that the Government have listened, that cross-party consensus has been achieved and that common sense has prevailed.
Paul Goggins (Wythenshawe and Sale East) (Lab): It is a pleasure to follow the hon. Member for Chatham and Aylesford (Tracey Crouch), who has played a brave and important role in discussions over recent days. I pay tribute to her for that. In relation to Lords amendment 31 and amendment (a) in lieu, the whole House is rightly paying tribute to Lord Alton and his supporters in another place for raising the issue in the first instance and for then persisting in their opposition to what the Government have until now been proposing in the Bill.
I also want to thank Lord McNally and Lord Freud for the constructive approach that they took in a meeting that I attended with Lord Alton last week, and in the days since. I welcome the concession that the Minister is offering this afternoon, and I appreciate that he cannot go into great detail about any proposals, which he said he hoped the Government would be able to bring forward before the summer recess. However, I can tell the House that his ministerial colleagues made it clear in the meeting I attended that they are striving to negotiate and implement a system of compensation and support for mesothelioma victims that is swifter and more sympathetic than the one currently in place. I am sure that the whole House would want to encourage them in their endeavours.
Whether amendment (a) in lieu is sufficient will depend entirely on the answers to a number of questions. In particular—this has already been raised—what will the extent and conduct of the review be? Crucially, how will
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the commencement of the relevant provisions of the Bill be aligned with the proposals that the Department for Work and Pensions hopes to publish before the summer recess? I would be happy to take an intervention from the Minister if he wishes to make a clear commitment this afternoon that he will not seek to implement the relevant provisions in the Bill unless and until an improved system of compensation is in place.
Mr Djanogly: I do not want to give any binding commitments about the process today, because things have not been finalised. However, I can tell the right hon. Gentleman that if the process is to be improved by the Department for Work and Pensions, which we hope it will be—he will have some insight into our proposals from the discussions he has had—that could well require DWP legislation, in which case we would look to roll the ending of the provisions into the commencement of the DWP provisions. That is how I foresee the process now, but again, I am not making that a commitment.
Paul Goggins: I am grateful to the Minister for that helpful intervention, because if there is to be legislation to introduce the new system, there will have to be full parliamentary scrutiny of those proposals in both Houses.
It has been a privilege and a pleasure to support Lord Alton in his efforts to protect mesothelioma victims. He has asked me to say that he is grateful for the cross-party support he has received from this House, and that, along with other Members of both Houses, he awaits with interest the outcome of the review and the details of the new compensation scheme. Above all, he is pleased that Parliament has acted to protect mesothelioma victims.
For my part, I am pleased that the Minister’s comments of last week—in particular that the families of dying mesothelioma victims should, and would, be watching the lawyers’ clock as fees mounted—have now been overtaken by an acceptance that mesothelioma victims are not part of a compensation culture and that they should not be expected to pay their lawyers a success fee out of their damages, and, finally, that through the amendment in lieu and other measures that will follow Parliament should continue to do all in its power to give mesothelioma sufferers the best possible help and support.
5.15 pm
Mr Robert Buckland (South Swindon) (Con): I welcome the Government’s concession and amendment on mesothelioma. This issue vexed many of us last week. The original amendment was somewhat wider, in that it related to respiratory diseases in general, and that caused a lot of us pause for thought. The new amendment is appropriate, however, as it deals specifically with this deadly condition. It reflects the will of both this House and the House of Lords. It promises a proper review and a report at the end of that. It has also been introduced in recognition of the fact that there is a genuine sense of urgency as many mesothelioma sufferers —including constituents of mine in Swindon, which, like many other industrial towns, has a proud heritage but also, sadly, a deadly legacy in the form of this awful disease—do not have time on their side. That is why this is an exceptional case. That is why in this instance, in which a House of Lords decision has put causation beyond any doubt, we are dealing with a particularly unusual set of circumstances.
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It has already been observed that lawyers charging success fees need to take care to ask themselves questions in cases where causation is not part of the equation, and where, frankly, the argument is first about making sure all the facts are marshalled so the evidence can be put in train to prove liability and, secondly, about questions of quantum. As those matters do not involve complex issues of law, lawyers should ask what sums it is appropriate for them to charge their clients.
As I have said, there is also, necessarily, a sense of urgency in these cases. We must create a system that will allow for a more speedy resolution of mesothelioma cases. In particular, we must address the issue of the traceability of insurers of former employers as that is often a challenge for mesothelioma sufferers and those representing them. Mention has been made of the Motor Insurers Bureau. Many accidents are caused by uninsured drivers who then go on their way. It can be difficult to trace them, but victims can claim from that bureau, which is funded by the insurers, in a civil court. I know all Members would like to see a similar scheme adopted in the months ahead, and the Government have made a welcome early concession that they will report back on that before the summer recess.
We have had debates in Committee, the House and another place about domestic violence, and the Government are to be commended on the progress made on that. I reiterate that it would be better to put the criteria for the assessment of evidence in regulations rather than in the Bill, as it is patently clear that regulations can be amended more swiftly. If there are genuine injustices as a result of the operation of the new rules, regulations can be amended by negative or affirmative procedure. They provide a far more flexible way of dealing with the challenges ahead than primary legislation. For those reasons, I am happy to support the Government on the vexed issue of the domestic violence criteria.
It has been a long journey; this Bill has taken a considerable amount of my time and that of everybody else who has taken a keen interest in legal aid. Some extraordinarily important debates have taken place, and I pay tribute to all Members in this House and in the House of Lords for engaging in a very constructive, important and challenging set of debates as the Bill has proceeded. It is now coming to the last stage, and I am glad that the Government have, in many respects, listened, adapted their position and made appropriate concessions.
Simon Danczuk (Rochdale) (Lab): I wish to say a few words about the Government amendment. I hope that it means that the Government will come up with a satisfactory system by which mesothelioma sufferers can be fully compensated, without them or their families being robbed of the compensation they receive and so richly deserve.
Hon. Members may well be aware that, in years gone by, Rochdale was home to the world’s largest asbestos factory, so this is a massive issue for my constituents. It is fair to say that they suffer from the connections that they have had with asbestos over many years. Just last Saturday, I was knocking on doors in my constituency, as I do every weekend, and I called upon a lady in Littleborough, Mrs Beryl Greenwood, who told me about her experience with this disease. She had been married to her husband, Kenneth, for many years, and he had contracted the disease from having worked as a
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welder on the railways. He had worn asbestos gloves at that time and, no surprise, he passed away a couple of years ago. I suppose the good news is that she was served well by solicitors; she and her family received a fair amount of compensation and were treated reasonably. She told me that the issue was that none of that compensation will ever bring back her husband, whom she loved dearly. The point I am getting to is that the Government now need to amend this Bill—we are asking them to be genuine in this—so that the people and the families who suffer from this terrible disease are treated fairly, responsibly and respectfully.
Andrew Bingham (High Peak) (Con): I do not intend to detain the House for long, because I am aware that plenty of other hon. Members wish to speak. I just wish to add my voice to those thanking the Government and the Ministers for their concession on this matter. My constituency is very rural but, like the constituency of the hon. Member for Rochdale (Simon Danczuk), it contains a large asbestos-related industry. That industry was born and based in High Peak, so my constituency has a higher level of mesothelioma than the national average. The Government’s movement on this issue is to be commended. Last week, I, along with one or two of my hon. Friends, voted in the Opposition Lobby on this matter. I subsequently received an e-mail from a constituent telling me that he was actually proud of his MP—he said that this does not happen very often.
I pay tribute to my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch), because she has driven this through, along with the right hon. Member for Wythenshawe and Sale East (Paul Goggins) and those in the other place. I welcome the amendment in lieu and am particularly pleased to see that a report will be published on the conclusions of the review. That gives me great confidence that the review will be meaningful and searching, and will come forward with something that all of us across the House can support when the day comes. I look forward to that report.
Fiona Mactaggart (Slough) (Lab): When the Lord Chancellor introduced the statement to the House which preceded this Bill, I asked him about the provisions in relation to domestic violence. He thought that I would be pleased with the answer, because the Government had recognised that domestic violence was, to some degree, a special case. I was not pleased with the answer, because at that point the definition of “domestic violence” was unique to this Bill, it did not cover all cases and it was, in my view, fundamentally flawed. So the first thing I wish to say is how glad I am that the Government have now decided to use the Association of Chief Police Officers definition of “domestic violence”.
I need to push one point further, however. The failure of the Government to understand the reality of the lives of victims of domestic violence is reflected in how they have constructed this Bill. I will never forget the moment when I talked to two local police officers in my constituency who dealt regularly with victims of domestic violence and who told me about a case that they had just dealt with of a woman who had been beaten up by her husband 12 years earlier but did not report it until he started biting pieces out of her body. That case, although
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it made me tremble with horror, is shockingly not that exceptional. We should not forget that, in this country, two women are murdered every week following a history of domestic violence. We should not forget how few women ever report it. Why do they not report it? Overwhelmingly, the victims of domestic violence think, “It was my fault.” That is how they feel, so they do not go to the police or to social workers. They conceal it, as they think it is caused by something that they did.
Such women often report because of someone else. When women are pregnant, they will report their victimisation by their partner because they want to protect the child in their womb. The problem with the distance travelled by the Government is that they have not yet gone far enough. I hope to be able to persuade the Minister to take that last step and to accept wider forms of evidence. We know that women do not necessarily go to a refuge; they go to a place of refuge. They might go to their sister, to their school friend or to their mum, and they are the people who women will tell first about their experience of victimisation.
Some very perturbing evidence from Welsh Women’s Aid suggests that the average time—the average, not the extreme—that a victim might take before reporting a domestic violence incident and getting to the stage of resolving the private family law issues is five and a half years. That average time would be excluded by the route that the Minister is pursuing. I beg him to recognise that the House of Lords got this one right and to say that he will take the last step and ensure that the other victims are properly protected. That is important because by allowing these women to use private family law to protect themselves and their families, we will prevent future domestic violence homicides. The Minister could do that by changing his position on the amendments.
Anna Soubry (Broxtowe) (Con): It is always a pleasure to follow the hon. Member for Slough (Fiona Mactaggart) and I pay tribute to the work done by her and other Opposition Members when they were in Government. They undoubtedly made huge advances in the prosecution of people who had committed offences of domestic violence and put protection in place to enable victims of domestic violence to come forward in both the criminal jurisdiction and the family and civil jurisdiction. That protected not only those women but their children. We part company, however, on this matter as I believe that the Government have gone as far as they should in their acceptance of the definition of domestic violence and what should support any allegation of domestic violence.
I do not think that it is fair simply to criticise those on the Front Bench for not understanding domestic violence, especially if it were suggested that they did not do so by virtue of the sex of the ministerial team or the Secretary of State. I am not suggesting that the hon. Member for Slough said that herself, but others have. It was interesting that in her speech she told us that the peculiarity and horror of domestic violence, which is demonstrated in the fact that women will often suffer for year after year without making any formal complaint or any complaint at all and that they suffer in silence, came as a surprise and a shock to her when she first learned of it in a conversation with two police officers.
Many Members on both sides of the House have experience by virtue of their work in the health service, the criminal justice system or—I am thinking in particular
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of my hon. Friend the Member for Maidstone and The Weald (Mrs Grant)—as a solicitor in the family division. Unless one has had that first-hand experience, some of the appalling stories one hears beggar belief. It is difficult to accept the fact that appalling abuse can go on, year after year, unreported.
It has been generally accepted across the House that we still have a long way to go. Members of this House conducted an admirable investigation into the inadequacy of our stalking laws, notwithstanding the efforts made by the previous Administration. We know that more legislation is needed to protect from stalking which is, in my opinion, not only an offence of abuse but, in effect, an offence of violence because of the psychological damage it causes. Recent events in Nottingham, which my Broxtowe constituency touches on, show that we still have police officers who, when it comes to domestic violence, simply do not get it. A woman was murdered who had repeatedly complained to the police.
5.30 pm
The real subject of this debate is whether the Government have finally got it right. I welcome the changes they have made and I am pleased and proud that they listened to what others have said. I agree with my hon. Friend the Member for South Swindon (Mr Buckland) about regulations. We do not need to put all the provisions in the Bill. I am more than content for the matter to be dealt with in regulations, which give us flexibility, so that if a point arises that we have not yet thought about or even discovered, it can be added to the regulations.
On the question of evidence, I caution against saying that all that is needed is a simple complaint to someone, somewhere along the line. There has to be something more substantial than that. After all, that one has been abused in some way by a partner or ex-partner is a serious allegation to make. Although I do not for one moment suggest that the overwhelming majority of complaints are not properly made, it has to be said that still, in a very small number of cases, people make false allegations to advance some other dispute in which they are involved. That is why I err on the side of caution.
I am pleased that the Government have accepted the point about a report to a GP, which is more than someone just saying to a GP, “He hit me.” There will be some reason and some visible sign of why a woman has gone to her GP. I have no difficulty with that, nor with reporting abuse to a refuge. As I think I asked the Secretary of State, why on earth would a woman go to a refuge if she had not been a victim of domestic violence? She is hardly likely to go to a refuge for a pleasant break away from home. She goes because she is undoubtedly the victim and is taking concrete measures that support her complaint. I support the Government on those measures and congratulate them.
On mesothelioma, last week I made an off-the-cuff speech, even though, to be truthful, I knew little about the subject. I urged the Government to find an alternative way to sort the matter out. They have done so and I am delighted to support them on that.
Ian Lucas: I thank the Minister for his letter today setting out the concession that has been made, and I am grateful to him and the Lord Chancellor for that concession.
I thank my constituent, Mrs Marie Hughes, whom I quoted extensively last week. I also thank the peers who
24 Apr 2012 : Column 844
listened to last week’s debate in the Commons and, as a result, sent this matter back to this House. Had they not done so, we would not have had the concession.
I pay tribute to those Conservative and Liberal Democrat MPs—I think there were five Conservatives and two Liberal Democrats—who voted against their Whip last week. They listened to the debate, participated in it and contributed to the expression of the overwhelming view, both in this House and in the other place, that the measure could not proceed in the form in which it appeared last week. It was clearly wrong, and I am pleased that we have reached a different position.
Debbie Abrahams (Oldham East and Saddleworth) (Lab): I shall be brief. I pay tribute to the Government for the moves that they have made on the Bill and I welcome the progress on the definition of domestic violence. Although they have extended the range of evidence that will be required, there is still some way to go. I recall that last week the hon. Member for Maidstone and The Weald (Mrs Grant) suggested that the time limits might be up to three years.
I am speaking on behalf of a constituent who came to see me a few weeks ago. She had been habitually abused—emotionally abused—over a number of years. The last straw for her was when her husband tried to set fire to her. She went to hospital. She has medical evidence but she did not want to press any charges. She is, understandably, so traumatised by the experience that she has been through that several months after the incident she can barely speak. She is years away from being able to take to a court or tribunal the levels of evidence that have been suggested. I support amendments 2B and 196B, particularly on her behalf.
Like my hon. Friend the Member for Rochdale (Simon Danczuk), I welcome the amendment on mesothelioma and the moves towards a review, if there is to be one. Oldham is not far from Rochdale and many of my constituents worked in the industry. Once people are diagnosed with the disease, they are, unfortunately, likely to be dead within 18 months. It would be outrageous if 25% of the damages were taken from them. I support amendment 31, but I acknowledge the moves that the Government have made.
Yasmin Qureshi (Bolton South East) (Lab): I wish to place on record my gratitude to the Lords for their amendments and for their hard work. I also place on record my gratitude to the Opposition Front-Bench team for all the hard work that they have done on all aspects of the Bill, and to my hon. Friends and some on the Government Benches who have fought against certain provisions of the Bill.
I welcome the Minister’s concession on industrial diseases, including mesothelioma, and the fact that the Government will review the issue. I hope they will abandon the proposal to make victims contribute to the lawyers’ costs if they are successful. I ask the Government to consider other industrial diseases that should be placed in the same category, such as industrial deafness, industrial blindness, severe spinal degradation, leukaemia, cirrhosis of the liver and other organ damage.
It cannot be said that people suffering from those conditions are out to make a quick buck. Although we support the idea of a limit on insurance claims or the suggestion that the victim should pay a contribution
24 Apr 2012 : Column 845
towards the damages, it is disgraceful that the provisions should apply to people affected by serious illnesses. To say to people who suffering from such illnesses, “By the way, once you have gone through the process of proving your case, your lawyers will have to take their costs from your damages” cannot be right. It is plainly unfair and unjust. I can see that the Lord Chancellor disagrees with me. If I am wrong and he wishes to intervene, I am more than happy to give way.
The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke): I just want to say that the lawyers do not have to take 25% of the compensation. All the costs are recovered from the defendants in a case that has been won. It is only those costs that are irrecoverable from the defendants that can sometimes be recovered. In a straightforward case there is no reason for anything to be recovered over and above that, and lawyers should not automatically take 25% of the claim and say that it is for their costs.
Yasmin Qureshi: But there is nothing to stop them doing so. The legislation should be simple and straightforward: a person’s compensation, whatever it might be, should be theirs and the legal costs should be a separate item that they can claim for. If I am awarded damages worth £100,000, I should get £100,000 and not have to pay £25,000 to someone else. Any legal costs should be paid separately by defendants’ insurance companies, which are incredibly rich and have loads of money that they can—
5.40 pm
One hour having elapsed since the commencement of proceedings on the Lords message, the debate was interrupted (Programme Order, 17 April).
The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83G),
That this House disagrees with Lords amendment 1B.
The House divided:
Ayes 300, Noes 222.
[5.40 pm
AYES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Alexander, rh Danny
Amess, Mr David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Tony
Baldwin, Harriett
Barclay, Stephen
Barker, Gregory
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Benyon, Richard
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, Mr Crispin
Boles, Nick
Bone, Mr Peter
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Browne, Mr Jeremy
Bruce, Fiona
Bruce, rh Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burns, rh Mr Simon
Burt, Lorely
Byles, Dan
Cable, rh Vince
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, rh Mr Alistair
Chishti, Rehman
Clark, rh Greg
Clarke, rh Mr Kenneth
Clegg, rh Mr Nick
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crockart, Mike
Crouch, Tracey
Davey, rh Mr Edward
Davies, Glyn
Davies, Philip
Davis, rh Mr David
de Bois, Nick
Dinenage, Caroline
Djanogly, Mr Jonathan
Doyle-Price, Jackie
Drax, Richard
Duncan, rh Mr Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Elphicke, Charlie
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Fallon, Michael
Farron, Tim
Field, Mark
Foster, rh Mr Don
Fox, rh Dr Liam
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fullbrook, Lorraine
Fuller, Richard
Garnier, Mr Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Gillan, rh Mrs Cheryl
Glen, John
Goldsmith, Zac
Goodwill, Mr Robert
Gove, rh Michael
Graham, Richard
Grant, Mrs Helen
Greening, rh Justine
Griffiths, Andrew
Gyimah, Mr Sam
Halfon, Robert
Hames, Duncan
Hammond, rh Mr Philip
Hammond, Stephen
Hancock, Matthew
Hands, Greg
Harper, Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Nick
Haselhurst, rh Sir Alan
Heath, Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, Charles
Hinds, Damian
Hoban, Mr Mark
Hollingbery, George
Holloway, Mr Adam
Hopkins, Kris
Horwood, Martin
Howarth, Mr Gerald
Howell, John
Hughes, rh Simon
Huhne, rh Chris
Hunter, Mark
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Javid, Sajid
Jenkin, Mr Bernard
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kirby, Simon
Knight, rh Mr Greg
Kwarteng, Kwasi
Laing, Mrs Eleanor
Lancaster, Mark
Lansley, rh Mr Andrew
Latham, Pauline
Laws, rh Mr David
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Lefroy, Jeremy
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lilley, rh Mr Peter
Lloyd, Stephen
Lord, Jonathan
Loughton, Tim
Luff, Peter
Lumley, Karen
Macleod, Mary
Main, Mrs Anne
Maude, rh Mr Francis
Maynard, Paul
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McLoughlin, rh Mr Patrick
McPartland, Stephen
McVey, Esther
Menzies, Mark
Metcalfe, Stephen
Miller, Maria
Mills, Nigel
Mitchell, rh Mr Andrew
Moore, rh Michael
Mordaunt, Penny
Morgan, Nicky
Morris, Anne Marie
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Mundell, rh David
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Neill, Robert
Newmark, Mr Brooks
Newton, Sarah
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
Offord, Mr Matthew
Ollerenshaw, Eric
Opperman, Guy
Ottaway, Richard
Paice, rh Mr James
Parish, Neil
Patel, Priti
Paterson, rh Mr Owen
Pawsey, Mark
Penning, Mike
Penrose, John
Perry, Claire
Phillips, Stephen
Pincher, Christopher
Poulter, Dr Daniel
Prisk, Mr Mark
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Mr John
Reckless, Mark
Redwood, rh Mr John
Rees-Mogg, Jacob
Reevell, Simon
Reid, Mr Alan
Rifkind, rh Sir Malcolm
Robathan, rh Mr Andrew
Robertson, Hugh
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Shepherd, Mr Richard
Simmonds, Mark
Simpson, Mr Keith
Skidmore, Chris
Smith, Miss Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Soubry, Anna
Spencer, Mr Mark
Stanley, rh Sir John
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Streeter, Mr Gary
Stride, Mel
Stuart, Mr Graham
Stunell, Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swinson, Jo
Swire, rh Mr Hugo
Syms, Mr Robert
Tapsell, rh Sir Peter
Teather, Sarah
Timpson, Mr Edward
Tomlinson, Justin
Tredinnick, David
Truss, Elizabeth
Turner, Mr Andrew
Tyrie, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Villiers, rh Mrs Theresa
Walker, Mr Charles
Walker, Mr Robin
Wallace, Mr Ben
Ward, Mr David
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Williamson, Gavin
Willott, Jenny
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, Jeremy
Wright, Simon
Young, rh Sir George
Zahawi, Nadhim
Tellers for the Ayes:
James Duddridge and
Stephen Crabb
NOES
Abbott, Ms Diane
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Anderson, Mr David
Ashworth, Jonathan
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Barron, rh Mr Kevin
Bell, Sir Stuart
Benn, rh Hilary
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blears, rh Hazel
Blenkinsop, Tom
Blomfield, Paul
Blunkett, rh Mr David
Brennan, Kevin
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnham, rh Andy
Byrne, rh Mr Liam
Campbell, Mr Alan
Campbell, Mr Gregory
Campbell, Mr Ronnie
Caton, Martin
Chapman, Mrs Jenny
Clark, Katy
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Cooper, rh Yvette
Crausby, Mr David
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Tony
Curran, Margaret
Danczuk, Simon
Darling, rh Mr Alistair
David, Mr Wayne
Davies, Geraint
De Piero, Gloria
Denham, rh Mr John
Dobson, rh Frank
Docherty, Thomas
Dodds, rh Mr Nigel
Donohoe, Mr Brian H.
Doran, Mr Frank
Dowd, Jim
Doyle, Gemma
Dromey, Jack
Dugher, Michael
Eagle, Ms Angela
Eagle, Maria
Edwards, Jonathan
Efford, Clive
Elliott, Julie
Ellman, Mrs Louise
Engel, Natascha
Evans, Chris
Field, rh Mr Frank
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Flynn, Paul
Fovargue, Yvonne
Francis, Dr Hywel
Galloway, George
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glindon, Mrs Mary
Godsiff, Mr Roger
Goggins, rh Paul
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Hanson, rh Mr David
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hendrick, Mark
Hepburn, Mr Stephen
Heyes, David
Hilling, Julie
Hodge, rh Margaret
Hodgson, Mrs Sharon
Hoey, Kate
Hopkins, Kelvin
Howarth, rh Mr George
Hunt, Tristram
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs Siân C.
Jamieson, Cathy
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Susan Elan
Jowell, rh Tessa
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Khan, rh Sadiq
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewis, Mr Ivan
Lloyd, Tony
Long, Naomi
Lucas, Caroline
Lucas, Ian
Mactaggart, Fiona
Mahmood, Shabana
Malhotra, Seema
Mann, John
Marsden, Mr Gordon
McCabe, Steve
McCann, Mr Michael
McCarthy, Kerry
McCrea, Dr William
McDonagh, Siobhain
McDonnell, John
McFadden, rh Mr Pat
McGuire, rh Mrs Anne
McKechin, Ann
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Mearns, Ian
Michael, rh Alun
Miliband, rh Edward
Miller, Andrew
Mitchell, Austin
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murphy, rh Mr Jim
Murphy, rh Paul
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Owen, Albert
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Qureshi, Yasmin
Reed, Mr Jamie
Reeves, Rachel
Reynolds, Emma
Reynolds, Jonathan
Riordan, Mrs Linda
Ritchie, Ms Margaret
Robinson, Mr Geoffrey
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruddock, rh Dame Joan
Sarwar, Anas
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Shuker, Gavin
Simpson, David
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
Smith, Angela
Smith, Nick
Smith, Owen
Spellar, rh Mr John
Straw, rh Mr Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Umunna, Mr Chuka
Vaz, rh Keith
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Watts, Mr Dave
Whitehead, Dr Alan
Wicks, rh Malcolm
Williams, Hywel
Wilson, Phil
Winnick, Mr David
Winterton, rh Ms Rosie
Wood, Mike
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Noes:
Lyn Brown and
Nic Dakin
Question accordingly agreed to.
24 Apr 2012 : Column 846
24 Apr 2012 : Column 847
24 Apr 2012 : Column 848
24 Apr 2012 : Column 849
The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83G).
Motion made, and Question put, That this House disagrees with Lords amendments 2B and 196B.—( Mr Djanogly .)
The House divided:
Ayes 298, Noes 227.
[5.54 pm
AYES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Alexander, rh Danny
Amess, Mr David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Tony
Baldwin, Harriett
Barclay, Stephen
Barker, Gregory
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Benyon, Richard
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, Mr Crispin
Boles, Nick
Bone, Mr Peter
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Browne, Mr Jeremy
Bruce, Fiona
Bruce, rh Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burns, rh Mr Simon
Burt, Lorely
Byles, Dan
Cable, rh Vince
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, rh Mr Alistair
Chishti, Rehman
Clark, rh Greg
Clarke, rh Mr Kenneth
Clegg, rh Mr Nick
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crabb, Stephen
Crockart, Mike
Crouch, Tracey
Davey, rh Mr Edward
Davies, Glyn
Davies, Philip
Davis, rh Mr David
de Bois, Nick
Djanogly, Mr Jonathan
Dorrell, rh Mr Stephen
Doyle-Price, Jackie
Drax, Richard
Duncan, rh Mr Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Fallon, Michael
Farron, Tim
Field, Mark
Foster, rh Mr Don
Fox, rh Dr Liam
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fullbrook, Lorraine
Fuller, Richard
Garnier, Mr Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Gillan, rh Mrs Cheryl
Glen, John
Goodwill, Mr Robert
Gove, rh Michael
Graham, Richard
Grant, Mrs Helen
Gray, Mr James
Greening, rh Justine
Griffiths, Andrew
Gyimah, Mr Sam
Halfon, Robert
Hames, Duncan
Hammond, Stephen
Hancock, Matthew
Hands, Greg
Harper, Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Nick
Haselhurst, rh Sir Alan
Heath, Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, Charles
Hinds, Damian
Hoban, Mr Mark
Hollingbery, George
Holloway, Mr Adam
Hopkins, Kris
Horwood, Martin
Howarth, Mr Gerald
Howell, John
Hughes, rh Simon
Huhne, rh Chris
Hunter, Mark
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Javid, Sajid
Jenkin, Mr Bernard
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kirby, Simon
Knight, rh Mr Greg
Kwarteng, Kwasi
Laing, Mrs Eleanor
Lancaster, Mark
Lansley, rh Mr Andrew
Latham, Pauline
Laws, rh Mr David
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Leech, Mr John
Lefroy, Jeremy
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lloyd, Stephen
Lord, Jonathan
Loughton, Tim
Luff, Peter
Lumley, Karen
Macleod, Mary
Main, Mrs Anne
Maude, rh Mr Francis
Maynard, Paul
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McLoughlin, rh Mr Patrick
McPartland, Stephen
McVey, Esther
Menzies, Mark
Metcalfe, Stephen
Miller, Maria
Mills, Nigel
Mitchell, rh Mr Andrew
Moore, rh Michael
Mordaunt, Penny
Morgan, Nicky
Morris, Anne Marie
Morris, James
Mosley, Stephen
Mowat, David
Mundell, rh David
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Neill, Robert
Newmark, Mr Brooks
Newton, Sarah
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
Offord, Mr Matthew
Ollerenshaw, Eric
Opperman, Guy
Ottaway, Richard
Paice, rh Mr James
Parish, Neil
Patel, Priti
Paterson, rh Mr Owen
Pawsey, Mark
Penning, Mike
Penrose, John
Perry, Claire
Phillips, Stephen
Pincher, Christopher
Poulter, Dr Daniel
Prisk, Mr Mark
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Mr John
Reckless, Mark
Redwood, rh Mr John
Rees-Mogg, Jacob
Reevell, Simon
Reid, Mr Alan
Robathan, rh Mr Andrew
Robertson, Hugh
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Simmonds, Mark
Simpson, Mr Keith
Skidmore, Chris
Smith, Miss Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Soubry, Anna
Spencer, Mr Mark
Stanley, rh Sir John
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Streeter, Mr Gary
Stride, Mel
Stuart, Mr Graham
Stunell, Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swinson, Jo
Swire, rh Mr Hugo
Syms, Mr Robert
Tapsell, rh Sir Peter
Teather, Sarah
Thurso, John
Timpson, Mr Edward
Tomlinson, Justin
Tredinnick, David
Truss, Elizabeth
Tyrie, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Villiers, rh Mrs Theresa
Walker, Mr Charles
Walker, Mr Robin
Wallace, Mr Ben
Ward, Mr David
Webb, Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Williamson, Gavin
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, Jeremy
Wright, Simon
Young, rh Sir George
Zahawi, Nadhim
Tellers for the Ayes:
James Duddridge and
Jenny Willott
NOES
Abbott, Ms Diane
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Anderson, Mr David
Ashworth, Jonathan
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Barron, rh Mr Kevin
Bell, Sir Stuart
Benn, rh Hilary
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blears, rh Hazel
Blenkinsop, Tom
Blomfield, Paul
Blunkett, rh Mr David
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnham, rh Andy
Byrne, rh Mr Liam
Campbell, Mr Alan
Campbell, Mr Gregory
Campbell, Mr Ronnie
Caton, Martin
Chapman, Mrs Jenny
Clark, Katy
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Cooper, rh Yvette
Crausby, Mr David
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Tony
Curran, Margaret
Danczuk, Simon
Darling, rh Mr Alistair
David, Mr Wayne
Davies, Geraint
De Piero, Gloria
Denham, rh Mr John
Dobson, rh Frank
Docherty, Thomas
Dodds, rh Mr Nigel
Donohoe, Mr Brian H.
Doran, Mr Frank
Dowd, Jim
Doyle, Gemma
Dromey, Jack
Dugher, Michael
Eagle, Ms Angela
Eagle, Maria
Edwards, Jonathan
Efford, Clive
Elliott, Julie
Ellman, Mrs Louise
Engel, Natascha
Esterson, Bill
Evans, Chris
Field, rh Mr Frank
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Flynn, Paul
Fovargue, Yvonne
Francis, Dr Hywel
Galloway, George
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glindon, Mrs Mary
Godsiff, Mr Roger
Goggins, rh Paul
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Hanson, rh Mr David
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hendrick, Mark
Hepburn, Mr Stephen
Heyes, David
Hilling, Julie
Hodge, rh Margaret
Hodgson, Mrs Sharon
Hoey, Kate
Hopkins, Kelvin
Howarth, rh Mr George
Hunt, Tristram
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs Siân C.
Jamieson, Cathy
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Susan Elan
Jowell, rh Tessa
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Khan, rh Sadiq
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewis, Mr Ivan
Lloyd, Tony
Long, Naomi
Lucas, Caroline
Lucas, Ian
Mactaggart, Fiona
Mahmood, Shabana
Malhotra, Seema
Mann, John
Marsden, Mr Gordon
McCabe, Steve
McCann, Mr Michael
McCarthy, Kerry
McCrea, Dr William
McDonagh, Siobhain
McDonnell, John
McFadden, rh Mr Pat
McGuire, rh Mrs Anne
McKechin, Ann
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Mearns, Ian
Michael, rh Alun
Miliband, rh Edward
Miller, Andrew
Mitchell, Austin
Moon, Mrs Madeleine
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Mulholland, Greg
Munn, Meg
Murphy, rh Mr Jim
Murphy, rh Paul
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Owen, Albert
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reeves, Rachel
Reynolds, Emma
Reynolds, Jonathan
Riordan, Mrs Linda
Ritchie, Ms Margaret
Robinson, Mr Geoffrey
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruddock, rh Dame Joan
Sarwar, Anas
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Shuker, Gavin
Simpson, David
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
Smith, Angela
Smith, Nick
Smith, Owen
Spellar, rh Mr John
Straw, rh Mr Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Umunna, Mr Chuka
Vaz, rh Keith
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Watts, Mr Dave
Whitehead, Dr Alan
Wicks, rh Malcolm
Williams, Hywel
Wilson, Phil
Winnick, Mr David
Winterton, rh Ms Rosie
Wood, Mike
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Noes:
Lyn Brown and
Nic Dakin
Question accordingly agreed to.
24 Apr 2012 : Column 850
24 Apr 2012 : Column 851
24 Apr 2012 : Column 852
24 Apr 2012 : Column 853
24 Apr 2012 : Column 854
Lords amendments 2B and 196B disagreed to.
Glenda Jackson (Hampstead and Kilburn) (Lab): On a point of order, Mr Deputy Speaker. The Secretary of State for Culture, Media and Sport has announced on Radio 4 within the last hour that he will make a statement to the House this afternoon, presumably arising from the contributions made to the Leveson inquiry. Has he made that request to you, has it been granted, and if so when will the House hear the statement?
Mr Deputy Speaker (Mr Lindsay Hoyle): No message has been conveyed to me, and I know nothing of it.
That this House insists on its disagreement with Lords amendment 31 and proposes its amendment (a) in lieu.—(Mr Djanogly .)
Motion made, and Question put forthwith (Standing Order No. 83H), That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments 1B, 2B and 196B;
That Mr Jonathan Djanogly, Mr Shailesh Vara, Mr Andy Slaughter, Yvonne Fovargue and Tom Brake be members of the Committee;
That Mr Jonathan Djanogly be the Chair of the Committee;
That three be the quorum of the Committee.
That the Committee do withdraw immediately.—(Jeremy Wright .)
Committee to withdraw immediately; reasons to be reported and communicated to the Lords.
24 Apr 2012 : Column 855
Section 5 of the European Communities (Amendment) Act 1993
6.8 pm
The Financial Secretary to the Treasury (Mr Mark Hoban): I beg to move,
That this House approves, for the purposes of section 5 of the European Communities (Amendment) Act 1993, the Government’s assessment as set out in the Budget Report, combined with the Office for Budget Responsibility’s Economic and Fiscal Outlook, which forms the basis of the UK’s Convergence Programme.
I welcome this opportunity to debate the information that will be provided to the European Commission this year under section 5 of the European Communities (Amendment) Act 1993. As in previous years, the Government will send to the Commission data on the UK’s economic and budgetary position, in line with our commitments under the EU stability and growth pact.
The Government will submit their convergence programme by 30 April, after debates in both Houses. It explains our medium-term fiscal policies, as set out in the autumn statement, the Budget and the Office for Budget Responsibility’s forecasts, and it is drawn entirely from previously published documents that have been presented to Parliament. It makes it clear that this year’s Budget reinforces the Government’s determination to return the UK to prosperity, and it reiterates our No. 1 priority of tackling the huge deficit that we inherited from the previous Government.
It is because of the decisive action this Government have taken to tackle that deficit since the June 2010 Budget that we have secured and maintained the stability of the UK economy. Last month’s Budget builds on those strong foundations, safeguarding our economic stability; creating a fairer, more efficient and simpler tax system; and driving through reforms to unleash the private sector enterprise and ambition that are critical to our recovery.
As the Chancellor said in his Budget speech, Britain will earn its way in the world, but we can succeed in that goal only if we continue to safeguard our economic stability, tackling the record deficit and debt we inherited from the previous Government. That is why this year’s Budget has a neutral impact on the public finances, implementing fiscal consolidation as planned, and keeping us on course to achieve a balanced structural current budget by 2016-17 and debt falling as a percentage of national income by the end of this Parliament in 2015-16.
Fiscal sustainability is the vital precondition for economic success, but we are doing much more to catalyse growth. First and foremost, we are undertaking far-reaching reform to ensure that our tax system is simple, predictable and fair, and that it supports work.
Kate Hoey (Vauxhall) (Lab): Given that the requirement for the Government’s assessment was passed under the Maastricht treaty, for which no one in the country voted, and that it must go to a Commission that no one in this country has elected, why does an independent British Parliament have to go through this procedure—this charade—every year?
Mr Hoban:
We have signed up to certain aspects of the stability and growth pact. One precondition is that we present this information, as we have done every year
24 Apr 2012 : Column 856
since the Maastricht treaty. I will set out later why the UK is treated differently in this process from other European Union member states, but there is nothing new in the information that we will supply and it has been presented to the House. When the EU sought to revise its economic governance package, we were very clear that, whereas other member states provide information to the Commission in advance of their budget-setting process, the UK will provide it after our process.
Mr John Redwood (Wokingham) (Con): Does the Minister believe the UK is bound by the Maastricht rules that its deficit should be 3% per annum and no more, and that it should have a stock of debt of only 60% of national income?
Mr Hoban: We are required to endeavour to achieve the Maastricht criteria. A very different regime is in place for the UK because of the opt-out that John Major negotiated under the Maastricht treaty. We have been clear, as the economic governance package has developed in recent years, on preserving that opt-out and the different treatment for the UK as compared with other European member states. One achievement is that we are not subject, for example, to the sanctions regime to which other member states are subject.
We jealously protect our particular position in the process, as I am sure hon. Members on both sides of the House would want us to do. Clearly, were we to follow the Leader of the Opposition’s policy—he wants us to join the eurozone at some point—we would have to give up those safeguards and protections. That is not a policy that this Government or the Conservative party would support.
Kelvin Hopkins (Luton North) (Lab): Setting aside my views on the Budget, which are probably not printable, is not talking about the stability and growth pact at this time simply building castles in the air? We have neither stability nor growth in any part of Europe at the moment. It might be that we are waiting for things to turn, but even in Britain we face savage deflation if we do not change our policies.
Mr Hoban: Europe needs to tackle its fiscal deficit and put in place the policies that will lead to economic growth. One reason for such uncertainty in the eurozone is that a series of imbalances have built up in different European economies. It is important that we tackle them and set out a very clear course for growth. I shall come later in my remarks to some of the actions that the UK Government have led to ensure that the EU spends more time talking about growth and finding ways in which we can accelerate economic progress in the European economies.
Let me mention some of the measures we are taking at home that were set out in the Budget. We are committed to creating the most competitive tax system in the G20. We are cutting the rate of corporation tax to 22% by 2014, which will be the lowest rate in the G7 and the fourth lowest in the G20. [ Interruption. ] The hon. Member for Nottingham East (Chris Leslie) pre-empts my remarks, because I was about to say that we will remove the ineffective and uncompetitive top rate of tax.
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I should say to the hon. Gentleman that I talk to businesses that wish to grow and businesses that want to locate here in the UK. They commend the Government for the corporate tax reforms in which we have engaged. In Treasury questions earlier, my right hon. Friend the Chancellor referred to remarks made by the chief executive of GlaxoSmithKline, who responded positively to the tax changes that we introduced. He is not alone—other businesses are moving to the UK as a consequence of our corporate tax arrangements.
Clearly, when we are trying to attract international business men to work here in the UK, and if we want to retain high-paid, talented business leaders here, the 50p tax rate is an issue. It is an outlying issue in G7 countries and affects location decisions for businesses. Cutting the top rate of tax is therefore the right thing to do. We set out the cost—£100 million—in the Red Book and highlighted measures that would raise five times that amount from the very wealthiest in society.
That was a difficult decision, but I believe it was the right one if we want the economy in this country to grow. As was mentioned earlier, one consequence of the higher rate that the previous Government introduced—they did not bother to introduce it in the first 12 years they were in office—was that 20,000 people moved from the UK to Switzerland. That demonstrates the negative impact of a 50p rate. If we want to be competitive, we need a competitive tax regime for both personal and corporate taxes.
Kelvin Hopkins: I do not believe that nonsense about people moving because of the top rate of tax. In France, the socialist opposition have suggested a top tax rate of 75% and said that if people move away because of it, plenty of other people who are just as talented will be prepared to take their jobs because they will still earn a lot of money.
Mr Hoban: To be fair to the hon. Gentleman, I suspect he is one of the few Opposition Members who supported the 50p rate throughout the period of the Labour Government, and is not one of the late converts that many of his hon. Friends have become.
As I have said, it is important that we create the right competitive conditions for business to flourish, and this Government will continue to invest in our nation’s future. We have announced that we will take forward many of Alan Cook’s recommendations on roads and develop a national roads strategy; we have confirmed investment to provide ultrafast broadband to 10 cities across the UK, with a second wave of cities to be identified in future; and we will continue to support the establishment of a new pension infrastructure platform to unlock an initial £2 billion of investment by as early as 2013.
However, a return to prosperity in the UK depends not only on what is happening here, but on what happens beyond our shores.
Mr Stewart Jackson (Peterborough) (Con):
My hon. Friend makes a coherent argument, but we have been told on many occasions that what happens in the eurozone is important for exports. Without any monetary stimulus, and without major fiscal changes or major structural
24 Apr 2012 : Column 858
reforms, how can a cumulative 3% year-on-year reduction of budgets in southern Europe in countries such as Portugal, Greece and Italy possibly assist us in growing our economy out of the recession of the past few years?
Mr Hoban: My hon. Friend needs to recognise that, in several countries that have a programme in place, there is a requirement to make structural reforms. A number of member states are already embracing structural reforms, tackling issues such as restrictions on the labour market and looking at ways to tackle the burden of regulation. We are seeing the structural reform that goes hand in hand with fiscal consolidation to create a stable and sustainable platform for economic growth. Here in the UK, we are undergoing fiscal consolidation, but at the same time we are engaging in supply-side reforms to help stimulate growth in the economy. I do not see the two as mutually exclusive. Indeed, they need to go hand in hand if we are to deliver growth.
Kelvin Hopkins: I shall reserve most of my remarks for later when I hope to have the chance to speak. However, I must say that supply-side reforms are all very well, but if there is no demand in the economy, it will not grow but contract.
Mr Hoban: It has been demonstrated time and again in a host of different economies that supply-side reforms are vital, because they reduce some of the costs on businesses and enable them to invest and improve productivity, and in that way they stimulate demand and growth.
Hon. Members are right to focus on events beyond our shores. As the Office for Budget Responsibility said in its March report,
“the situation in the Euro area remains a major risk”
to the UK’s economic forecast. More than 40% of our exports are to the euro area, and recent events in the markets remind us that euro area countries need to make painful adjustments to their public finances and external deficits. It is a difficult path that they have to walk, although new Governments in the likes of Ireland, Portugal, Spain and Italy are walking it. That is the logic of the single currency to which they are all committed, and progress is being made.
The European Central Bank’s monetary loosening has helped to stabilise the banking system, and the trillion dollars pumped in through the long-term refinancing operation has been helpful. There has been progress in stabilising Greece, and—as I have said—a number of countries have announced important economic reforms.
As well as these measures, important longer-term reforms have been made since we last debated the convergence programme. Those reforms include a stronger, more effective stability and growth pact following agreement of the “six pack” in December 2011. A new macroeconomic imbalances procedure will provide an assessment of potential economic risks across Europe, with sanctions for euro area countries that fail to take action. Importantly, the Commission has put forward proposals to improve co-ordination of budgetary processes between euro area countries.
The treaty on stability, co-ordination and governance—the fiscal compact—was signed in March by 25 member states and it also has the potential to embed stronger rules on fiscal discipline. Together, these reforms represent
24 Apr 2012 : Column 859
a stronger, reinforced system of economic governance for the EU and the euro area in particular. While many of these stronger measures may not be right for the UK, they can support stability in the single currency area.
Graham Stringer (Blackley and Broughton) (Lab): Will the Minister give way?
Mr Hoban: If I may, I will finish my paragraph as it may clear up any misapprehensions that the hon. Gentleman has.
I would like to reassure the House that following these reforms the UK is still not subject to sanctions under the strengthened stability and growth pact—the EU treaty is clear that they apply only to EU area countries. Unlike other countries, the UK will only present its convergence programme to the Commission after the Budget is presented to Parliament—the procedure that we are following today.
Graham Stringer: Does the Minister read the newspapers? Has he not noticed that Europe is getting less and less politically stable and that many of the European economies are shrinking? Whatever titles are put on the policies, that is what is really happening. Would it not make sense for the Government and this country to support an as stable as possible break-up of the euro, which would provide growth in Europe and in the United Kingdom?
Mr Hoban: It would be inappropriate for the UK Government to dictate the economic policies to be followed by those in the eurozone. Members of the eurozone have made it very clear that they wish to remain part of it, and there are even member states queuing up to join it. Indeed, if we have an independent Scotland, it might consider joining the eurozone. There are challenges, but there is a strong political commitment in the eurozone for the euro to remain in place.
Mrs Anne Main (St Albans) (Con): The Minister is making a genuine argument in favour of stability, but the rise of the far right—and Marine Le Pen receiving one in five votes in France—shows that whatever was said before, when all these treaties were signed, may not be current now. There is great unrest on the part of the public about what is being done in their name, both abroad and here.
Mr Hoban: It is not appropriate for any of us to provide a running commentary on the French presidential elections, but it is important that Governments, whether inside or outside the euro, make their argument as to why they believe that the measures required to bring about fiscal stability and economic growth are necessary. Those arguments need to continue to be made, because that is vital to Europe’s long-term interests. We will wait and see what the outcome of the French presidential election is and what the view of the new President is on the fiscal compact.
Richard Drax (South Dorset) (Con): What will the Minister tell the millions of people in the eurozone when it goes horribly wrong—as it will—and their lives are ruined, given that we have had the chance, as has been suggested, to rebalance the euro from a position of control? It will collapse.
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Mr Hoban: My hon. Friend should recognise the strong political consensus in the eurozone for the continuation of the euro. The actions of member states have sought to stabilise the situation in the eurozone, and that is why they have set up the European stability mechanism and boosted it with funds to strengthen the firewall. They are also looking at recapitalisation of banks and trying to stabilise the situation. The actions of eurozone countries are attempts to reinforce the stability of the eurozone, and they have also embarked on reforms to try to bring about closer fiscal integration, and the fiscal compact is part of that.
Mark Hendrick (Preston) (Lab/Co-op): Will the Minister accept that even though we are not members of the eurozone, this country is still teetering on the brink of another recession? Does he also accept that the euro will continue for many decades to come—probably ad infinitum—albeit without some current members?
Mr Hoban: I remind the hon. Gentleman that as a consequence of the actions taken in the Budget one of the rating agencies, Standard & Poor’s, reaffirmed the UK’s triple A rating—[ Interruption. ] If the hon. Member for Nottingham East paid attention and read the newspapers—he accused me of not doing so—he would have seen that post-Budget one of the big rating agencies reaffirmed our credit rating with a stable outlook. Actions have been taken to stabilise the UK economy, and that is important.
This is not a debate about the future of the eurozone and whether individual members should be in or out, because that is a matter for the national Governments of those member states, not for us. What we cannot ignore is that the stability of the European economy is a vital factor in determining the level of economic growth in the UK. As I said, 40% of our trade is with Europe. We still export significant amounts to places such as Ireland and, historically, we have exported more to Ireland than we have to Brazil, Russia, India or China combined. It is important to recognise that jobs in all our constituencies are dependent on trade with the European Union and the strength of European economies.
Stewart Hosie (Dundee East) (SNP): I agree entirely with what the Minister has said about the need for stability, not least for UK recovery. I also welcome what he said about the fiscal compact and the other measures being taken. Does he agree that if there is a legitimate debate in any country about growth versus austerity, it is not—as some more excitable colleagues suggest—any indication of political instability in the eurozone, but merely a debate about the direction of travel that a country’s economy might take?
Mr Hoban: The hon. Gentleman makes an important point. In any economy where there is economic change, there will be a political debate, and that political debate is helpful.
Mr Stewart Jackson:
I thank the Minister for giving way; he is being his normal generous self. Do we not have a responsibility to the millions of young people in southern Europe who are on the edge of penury and economic misery, essentially because of this institutionalised, obdurate approach, principally from the Germans, and the failure to accept that the European Central Bank
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should be the lender of last resort? This political project, which the euro is, is plunging millions of working people in southern Europe into poverty for the next 10, 15 or 20 years. Surely we have a moral duty not to be complicit.
Mr Hoban: My hon. Friend would, I think, be the first to criticise other member states seeking to lecture us on our economic policy, so we need to be careful not to lecture them either. As I said, there is the political will in the eurozone to keep the euro, and its actions are consistent with that. Whether through closer fiscal integration or increased firepower for the European stability mechanism, those signs are there. The fiscal compact is a significant step towards closer fiscal integration.
Mr Nigel Dodds (Belfast North) (DUP): The Minister talks about the political will in Europe to continue with the euro, but one wonders about the popular will among the peoples of Europe. He knows that the Irish Republic will shortly hold a referendum on these measures. Does he welcome that and would he encourage other countries to go to their people and seek their views, as opposed to the consensus among the political elites?
Mr Hoban: Different member states have different constitutional requirements and different histories on the use of referendums, so it is not necessarily appropriate for a politician here in Westminster to lecture others on how to ratify treaty changes.
Before I took the intervention from the hon. Member for Blackley and Broughton (Graham Stringer), who has now disappeared, I was talking about how the UK fits into the economic governance measures. We will present the convergence programme to the Commission after the Budget has been presented to Parliament—the process we are going through at the moment. The EU, alongside other international institutions such as the OECD and the International Monetary Fund, can comment on the Budget, but, crucially, we are under no obligation to take action. It is up to the Government, not Brussels, to decide what action to take in the UK.
Of course, as the euro area moves towards closer fiscal integration, we must remain vigilant to protect the UK’s interests. Where matters are rightly for discussion or agreement by all 27 member states—for example, on the single market or financial services—they must be agreed by all 27 member states. In case there is any doubt, I can reassure Members that the UK remains at the heart of the EU’s economic debate. It is because of the Prime Minister’s recent letter with 11 other Heads of State or Government ahead of the March European Council that the Council conclusions were agreed with a commitment to ambitious structural reforms at the EU level. That included concrete Council conclusions on strengthening the single market and its governance; completing the digital single market by 2015; making further progress in reducing administrative burdens; and boosting trade by removing trade barriers and ensuring better market access and investment conditions.
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The Government will push for even more ambition, however, because a return to sustainable growth is the only way for EU member states to pay down their debts and exit the current crisis. It is essential that the Commission uses EU-level policy levers fully to support growth, but member states must continue to take tough decisions to prioritise the most growth-enhancing reforms, matching the kind of ambition that the Government have demonstrated since coming to office, including in our most recent Budget. The Budget information we are providing to the Commission in the convergence programme is part of the European semester process, now in its second year, and will be something that the Commission will look at.
Mr Redwood: Does the Minister think that, when the Commission reviews the British Government’s homework, it will say that we need to go further and faster with the cuts or endorse the Government’s programme?
Mr Hoban: I do not wish to pre-empt the Commission’s conclusion—it would be wrong to do so—but when other international organisations have looked at the Budget and the Government’s path to fiscal reform, they have clearly endorsed keeping to the path and sticking to the course. That is important. It has meant that we have retained the confidence of international markets, and interest rates are low as a consequence, which is to the benefit of households and businesses. That is vital to the programme of continued economic reform in the UK.
It is important that we discuss these matters with international partners and have a debate about economic policy in Europe, but at home we have to stick to the path required to deliver the necessary reforms. The Budget builds on the Government’s ambition to create a stable and prosperous economy, it shows our commitment to fiscal consolidation and economic growth, and, along with the OBR’s forecast, forms the basis of the UK’s convergence programme. We are taking the right path, and I hope that—
Kate Hoey: I want to be clear in my own mind, because obviously this is important. If the House was to say no to this tonight and say, “Actually, we don’t think it’s got anything to do with the Commission what we are doing in our independent country. We’re not part of the eurozone,” what would be the repercussions? What would it matter?
Mr Hoban: As I said, all the information in the convergence programme is already in the public domain. It was published at the time of the Budget by both the Treasury and the OBR, in accordance with our commitments.
Chris Leslie (Nottingham East) (Lab/Co-op) rose —
Mr Hoban: No, I will allow the hon. Gentleman to make his own contribution in his distinctive style, and doubtless I will have a chance to wind up and respond to the points made. However, I have gone on for nearly 30 minutes, and other hon. Members want to take part. I will now allow him to do so.
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6.37 pm
Chris Leslie (Nottingham East): My hon. Friend the Member for Vauxhall (Kate Hoey) asked an extremely pertinent question, and I want to come back to it later. First, however, I commend hon. Members from both sides and all parties for spotting that this debate was so relevant. The motion, as framed, does not leap out from the Order Paper, and when hon. Members go to the Vote Office to find these convergence documents, they are met with a little mystification. Let us turn to page minus-2, so to speak, of the Budget Red Book.
Mr David Nuttall (Bury North) (Con): This is last year’s speech.
Chris Leslie: Indeed, I was here this time last year making a very similar, uncannily parallel speech, but I will point it out again. Underneath where it talks about Crown copyright, the ISBN number and where it says:
“Printed on paper containing 75% recycled fibre”,
“The Budget report, combined with the Office for Budget Responsibility’s…fiscal outlook, constitutes the Government’s assessment under section 5 of the European Communities (Amendment) Act 1993”.
That is relevant to today’s debate. It is written in very small font for those who might have difficulty reading it. It mentions the European Communities (Amendment) Act, which sounds like a very British piece of legislation, but, being eagle-eyed, hon. Members will have spotted that all that Act does is refer to the Maastricht treaty, article 2 of which states:
“The Community shall have as its task…a harmonious and balanced development of economic activities, sustainable and non-inflationary growth”.
Of course, it also relates to article 103, which talks about economic policies being a “matter of common concern” that should be co-ordinated within the Council. These are the sorts of words that some find difficult to stomach, but the article continues:
“For the purpose of this multilateral surveillance, Member States shall forward information to the Commission about important measures taken by them in the field of their economic policy”.
In a sense, the right hon. Member for Wokingham (Mr Redwood) was right to say that this is the homework that has been set by the European Commission, and we are completing our homework today.
Mark Hendrick: We will oppose the Government tonight, but we will do so not because we disagree with the European Union having a look at our Budget—these multilateral surveillance procedures have been going on for the best part of 20 years—but because we disagree with the measures in the Budget.
Chris Leslie: People will have their different reasons for opposing the motion, and my hon. Friend is right to state his reason for opposing it. My reason for opposing it is that, essentially, it asks the House to approve the Government’s assessment of the economy. That is the nub of the question. We are being asked to approve the Budget Red Book as their assessment of the economy. Sadly, we know that the Government are out of touch not only with the public but with economic reality. Their grip on what one might call the actuality of the real economy leaves a great deal to be desired.
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This is an opportunity not only to take stock of the Government’s approach to the economy as a whole but to look at their analysis of what is happening. We know that they are pursuing failing policies on jobs, economic growth and deficit reduction. The Minister proudly defended the cut in the 50p top rate of income tax for the wealthiest 1% in society. The Government are giving a tax cut of about £40,000 to millionaires at the expense of pensioners and working people. Is it any wonder that their popularity is falling precipitously as a result? I am glad to have an opportunity, every time the Minister speaks at the Dispatch Box, to remind those watching these proceedings of the Government’s priorities. Living standards are being squeezed, and the VAT rise is hitting people hard, as are the cuts to tax credits and the cost of living generally. Independent experts say that a typical family will be worse off by £511 this year, but that is the Government’s choice; they want to give millionaires that advantage.
The motion relates to the Government’s assessment of the economy. Such a poor analysis as that presented in their Budget Red Book betrays either extreme wishful thinking on the part of the Treasury or, more likely, a dangerous detachment from the key decisions that Ministers need to confront. Their understanding of what is happening to business, employment and the cost of living is far removed from the experience of the vast majority of the public.
I urge all hon. Members to look at the facts and to examine the way in which the Budget Red Book is so detached from reality. On page 11, the Government claim that growth is
“strengthening over the forecast horizon”.
Growth was minus 0.2% in the last quarter for which we have figures, and the economy has been flatlining for a long time. It has performed very poorly since the spending review, while that of the United States has grown by more than 2%. The Office for Budget Responsibility is predicting growth of just 0.8% in 2012. Last year, in this very debate, we heard that the OBR was forecasting growth of 1.7% in 2012, and that was after several downgrades. There is clear evidence that the Government’s assessment of the economy is entirely out of touch with reality. The OECD is predicting good things for the United States, Germany and Japan, which are all predicted to grow faster than the United Kingdom this year.
What is worse is that on page 15, the Red Book states that we will experience
“positive growth, consistent with experience from past financial crises”.
Last year’s Treasury Red Book said that we were expecting a recovery that was
“in line with previous recoveries”.
I know that my hon. Friends who are students of these matters will be familiar with the charts and analysis produced by the National Institute of Economic and Social Research and others that compare the progress of recessions and recoveries across the decades, from the great depression to the recessions in the 1970s, 1980s and 1990s. When we consider our present position, we see that we are still 4% off the pre-recession peak. We have not yet clambered out of the hole. This is proving to be one of the longest and deepest financial crises, and the Government have failed to make any headway
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in ensuring our recovery. Their claims that we are in a parallel situation to previous recessions and financial crises prove that they are not in touch with reality.
Mrs Main: I note that the shadow Minister is making a principled argument and that he disagrees with the figures. If he did agree with the Budget figures, would he still feel that we had to submit them for scrutiny? We are a sovereign country. Do we really need our homework to be checked by Europe?
Chris Leslie: That is an interesting question. Obviously, I believe in the rule of law, and there is a legal obligation on Her Majesty’s Government to abide by the treaties. This is where we come back to the question that my hon. Friend the Member for Vauxhall asked earlier. She asked the Minister what the consequences would be if the motion were not passed by the House today. That is the key question that all hon. Members should be pressing the Minister on when he winds up the debate. I will give way to him now if he can answer it. What would be the consequences for us if we did not vote in favour of the motion today? I am happy to give way to him. For the reasons that I have suggested, the Government’s poor assessment of the economy does not inspire me to vote for the motion. I do not see why we would want to support their woeful assessment. The Minister is not giving us a reason for voting for it.
Chris Leslie: Perhaps my hon. Friend can help.
Kelvin Hopkins: I entirely agree with not submitting the report to the European Union, but is not the growth situation even worse than my hon. Friend suggests? Even as we speak, the eurozone is plunging into a deeper crisis. Because of the weakness of the euro, the pound is unfortunately strengthening against the euro, which is going to make it harder for our manufacturers to export. The Chief Secretary to the Treasury said yesterday that we needed to make even more cuts than those already planned. So far, we have experienced only about a quarter of the planned public expenditure cuts. Is not the situation far worse than my hon. Friend suggests?
Chris Leslie: We have a blinkered and, in many ways, deluded approach to austerity—or über-austerity, as some might characterise it—which is hurting not only in the eurozone but here as well. What angers many people is that the Government’s approach to helping the eurozone out of its difficulties is to throw money at it. Technically, that money is going to the International Monetary Fund, but everyone knows that it is all about eurozone bail-out funds. We are giving a further £10 billion loan, even though the Americans and the Canadians are all saying that we should stand firm and negotiate with the wealthy eurozone countries, including Germany, and make them dip deeper into their own pockets. If they do not do that, and if Britain, China, America and others provide the money, those eurozone countries will not do the deep, serious thinking that they need to do, and they will not take the consequences of their situation within the single currency. They will not put up a proper firewall, as they ought to do; they will not build what has been characterised as the “big bazooka”.
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That is why we have consistently expressed our scepticism about the Chancellor’s decision to cave in and give extra resources—British taxpayers’ money—to the IMF, which we all know is going to be used for that particular purpose. We like the IMF for its work with other countries in the developing world, and of course we want a strong IMF, but we should not be letting those wealthy eurozone countries off the hook. They need to confront those issues.
Mr William Cash (Stone) (Con): I apologise for coming in late, but I have just got off the plane from Denmark where I was meeting the chairmen of the scrutiny committees of all the other national Parliaments of the European Union. We have recently witnessed the resignation of the Dutch Government and the consequences of the French elections. Would the House be interested to know that there is deep disquiet behind the scenes throughout the whole of Europe, as I discovered through speaking to those chairmen in the last couple of days?
Chris Leslie: I am afraid that I am not surprised to hear that that is the case. The hon. Gentleman spends a great deal of time and effort monitoring how these issues progress. Personally, I feel we need to find ways of supporting and stabilising the situation in the eurozone, but I do not think that the Government’s strategy is the right way to do that. However, I digress.
Mr Stewart Jackson I feel it appropriate to give the shadow Minister some friendly advice. One reason why my party was not credible on the economy until quite a few years after we lost the election was that in many respects we did not face up to the fact of the legacy we left. I remind him that he really should be looking at the wider picture of Europe rather than focusing on the national situation here. The fact is that real-terms public expenditure rose by 53% from £450 billion to £700 billion between 2000 and 2010. His party ran a structural deficit in times of economic growth. That is the situation in which we find ourselves now.
Chris Leslie: I obviously disagree with the hon. Gentleman’s assessment, but he made an important point earlier about the plight of those who are suffering as a result of the austerity approach being applied in southern European countries in particular. I worry greatly about that; it is a matter of concern. It is also a concern, however, for our constituents here in the UK. We take a different approach on principle about the right ways to repair our economy. We believe that a stronger emphasis on growth is necessary to generate revenues; it is not just about public expenditure cuts, which do not provide the way out of the situation. I also disagree that the motion is a general debate about the state of the European economies. We are debating whether the Red Book provides a right, accurate, fair and good assessment of the state of the British economy such that we can submit it, as we are required to do by the treaties, to the European Commission. I am simply following the strictures placed on us by the Maastricht treaty.
Stewart Hosie:
That is the key point. The hon. Gentleman quoted from the 1993 Act—a Tory Act, of course—about the need to submit information to the European Commission, including information on industrial
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investment. We have seen forecasts of 6.7% business investment growth ending up being a negative 0.8% out-turn. He is thus absolutely right that the Red Book is not credible in terms of the objective set out in the 1993 Act.
Chris Leslie: It is that lack of credibility that makes me want to oppose the motion. The hon. Gentleman picked up on the point about business investment. I encourage hon. Members to turn to page 16 of the Red Book, which says:
“business investment will pick up and make an increasingly strong contribution to growth in each year of the forecast as confidence builds and credit conditions ease”.
Just yesterday, the trends in lending data came out from the Bank of England. Year on year, net lending to all businesses—small and medium-sized enterprises in particular—has fallen in every single month since the Government took office. That is despite Project Merlin and all the attempts at credit easing, which have still not come into effect and will do nothing to help credit availability. Last year, they said in their document that
“Credit conditions have shown signs of stabilisation.”
That has not come to pass, so I have no confidence that their current propositions will come to pass either.
On borrowing, page 12 of the Red Book claims that we are heading for
“£11 billion lower over the forecast period than was projected at Autumn Statement 2011”,
which is sophistry because we know that in the spending review figures from October 2010, the Government projected a set of borrowing statistics that have had to be ripped up, because we are on a trend that takes us into £150 billion of further borrowing over the lifetime of this Parliament. The new borrowing figures out this morning confirm that particular trend. That is where things are going.
The Chancellor keeps restating that the UK is “a safe haven”, although he slipped a little bit today in saying that it was “a safer haven”. There he was in Washington this weekend, saying that the UK has “solved our problems”. That is our Chancellor’s assessment of our economy. Such dangerous complacency beggars belief, and I think that it is a sign of arrogance.
Stewart Hosie: The hon. Gentleman picks up on our Chancellor’s reference to “a safer haven”. Does he think that could be because the debt figures on the treaty calculation are no longer expected to peak at 87% of gross domestic product as was forecast a year ago, but at 93% of GDP—a catastrophically high figure?
Chris Leslie:
Of course, that is because of the Government’s record of high unemployment, with statistics showing not much improvement, an increase in welfare costs and so forth. All those things are a drag on public expenditure; they are making things no better. That is the result of the Government’s misguided strategy. On the wider issue of employment and unemployment, I challenge hon. Members to find much in the Red Book that provides an assessment of what is going to happen to them. We know that we have the highest unemployment in 17 years, with 2.67 million people on the dole. We know the story that long-term unemployment doubled
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in the last year and that youth unemployment is at a record high. My hon. Friends do not need me to repeat these figures.
On inflation, the Red Book says that
“inflationary pressures, which the OBR considers to have been the main drag on UK growth over the past 18 months, have started to abate, easing the pressures on household incomes and improving the outlook for consumers.”
Well, consumer prices index inflation rose, I think, in the last month. We are at around 3.25%. We should not forget that the Chancellor’s target for the Governor of the Bank of England is 2% inflation. Indeed, Paul Tucker, the deputy governor of the Bank of England, warned this week that inflation is likely to stay above 3% for much of 2012. Again, even on inflation, the Government’s assessment of the economy is just not correct. There is no mention of consumer confidence in the analysis. Although there is a section on “Investment and confidence” on page 14, it does not mention consumer confidence at all. The consumer confidence indices have been down and are worsening at minus 31%.
Gavin Shuker (Luton South) (Lab/Co-op): My hon. Friend talks about confidence. Did he see the comments of Barney Frank, a leading US congressman, when he talked yesterday about this Government’s obsession with austerity measures, which went right to the heart of the credibility of whether or not they could reduce the deficit? Coming from Washington as he did, he was clear that this Government’s key measure for reducing the deficit in their period of office was counter-productive.
Chris Leslie: Indeed. All across the globe, developed countries are realising that a strategy focused singularly on austerity alone will not be the solution. We must have a greater focus on growth and job creation as a way of generating revenues.
I have spoken for too long. Labour Members believe that this motion is flawed because the Government’s assessment of the economy is poor. Others will have their own reasons for voting against it. I want to hear the Minister’s justification for the motion and to find out why it would be cataclysmic if it did not go through. The consequences of that are a key point. As I see it, the Government misunderstand the economy, they are misreading the growth prospects of the UK and they are misconstruing what is happening in the employment markets and business investment. I therefore urge the House to reject this mistaken assessment of the prospects for our economy.
6.58 pm
Mr John Redwood (Wokingham) (Con):
I have some sympathy with the Minister in this debate, which is about colossal issues, such as the future of economic prosperity throughout the European Union and its impact on our own economy, yet it is also a rather absurd debate. Successive Governments have felt that they have to table documentation and figures to the European Union, but they are embarrassed by that fact because they know that many of us feel that it is this Parliament, which answers to the British people, that should debate and settle these issues, and that what we are doing is none of the EU’s business. If we do a good job, we will stay in office; if we do a bad job, we will be thrown out of office, and the British people will rightly
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choose another group of people as they decided to do in 2010 as this crisis developed. We think that that is the right approach.
I must tell my hon. Friend the Minister that if the Opposition had tabled a motion suggesting that the House should tell Brussels that we would no longer send it these documents, I would probably vote with the Opposition, because I would consider that a sensible way of trying to send an obvious message to Brussels. However, we are being invited to spend more time debating the crucial topic of what kind of economic policy would best promote growth and stability in our own country, and what contribution wider economic policies can make to stability and growth in the European Union as a whole.
The description of the pact that we are debating as a stability and growth pact is a grotesque bad-taste joke at the expense of the European peoples. It is clear from the way in which it now operates in the euroland countries that it is actually an instability and recession pact. It is a pact for mutually assured deflation. It is intended to do more damage at the very point in an economic cycle when an economy is performing very badly, to withdraw spending power from both the private and the public sector in an economy with too little demand, and to take jobs away in an economy with a problem of mass youth unemployment.
Mark Hendrick: I accept that the policies of many euro area member states are deflationary, but it is ridiculous to deride them simply because those countries are members of the eurozone when our own Government’s policies are equally deflationary.
Mr Redwood: As I shall make clear shortly, our policies are rather different. For one thing, the coalition Government decided to increase current public spending, which is running at £64 billion a year more this year than in the last year of Labour government. The Red Book shows that real current public spending has risen in each of the two years of the coalition Government, although not by very much. The Government are clearly not trying to deflate the economy by introducing massive current spending cuts, given that overall current spending has been rising.
Stewart Hosie: The right hon. Gentleman, who knows the Red Book inside out, will recall that it makes it clear that the Government’s projected discretionary consolidation by 2016-17 amounts to £155 billion a year, of which 81% will be delivered by cuts in services and the remainder by tax increases. The hon. Member for Preston (Mark Hendrick) was right: the Government are embarking on precisely the policies for which the right hon. Gentleman is criticising others.
Mr Redwood:
I am afraid that the hon. Gentleman has not read the Red Book intelligently. The 80:20 statistic on which Members seem to rely relates to changes compared with much bigger growth in public spending that was in inherited programmes. It is not the reality. The reality of the Government’s strategy is a massive increase in taxes over the planned five years of the present Parliament to pay for rather modest increases in current public spending over the life of the Parliament, and to get the deficit down. The 2010 strategy suggested
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that tax revenues would be £171 billion a year more in year 5 than they had been in the last Labour year. The Government have now had to reduce that figure a bit because—as other Members have pointed out—the expected growth has not been forthcoming, for a variety of reasons.
We need to promote growth vigorously and actively, which is common ground between the Government, coalition Back Benchers and many Opposition Members. The argument, surely, concerns what measures are most likely to bring that about. It appears that over the last four years both Governments have operated policies involving actively increasing public spending, with the exception of capital spend—certainly overall spending has risen—and actively promoting massive borrowing, while at the same time the economy has bombed very badly. I am not suggesting that that is causal, but it should lead Opposition Members to ask why that fiscal injection—massive borrowing and an increase in current public spending—has not done the job. There seems to be some disconnection between the remedy that they recommend and the reality of what is happening.
When we look at the way in which other countries have pulled out of crises of this kind, and, indeed, the way in which Britain has pulled out of similar but, perhaps, less aggressively damaging crises than the one that we inherited, we see that there is nearly always a period during which public spending must be reduced or controlled quite strongly to make room for a private sector recovery, and that a series of measures to promote that recovery will then be necessary. As I have explained at length in the past, banking reform and competitive banking are crucial. The Government’s theory favours a tight fiscal policy and a loose monetary policy. They want to allow more money to circulate through the private sector through credit and through the banking system, and they want to lower the deficit gradually in the public sector so that the fiscal policy becomes a bit tighter.
Mark Hendrick: The right hon. Gentleman makes great play of tax revenues. We all know where they come from—they come from those who can least afford to provide them—but given that only one private sector job is coming along to replace every 10 jobs that are being lost in the economy, where will they come from in future?
Mr Redwood: So far the strategy has generated quite a lot of new private sector jobs, which is very welcome, but it is obvious that it needs to generate many, many more over the next three years if it is to secure the savings on welfare benefits that I am sure all Members wish to see.
It is nonsensical for Opposition Members to say that the poor will be paying the taxes. We have just seen a big increase in thresholds which takes many people out of income tax altogether at the lower end of the income scale. Moreover, if the hon. Gentleman looks at the Red Book, he will see that there will be a sharp acceleration in self-assessment income tax—the income tax that is paid mainly by the rich—once we get the rate down. I know that Opposition Members do not like reading the figures in the Red Book, but it provides a much better case than Ministers ever provide for why we need to get back closer to Labour’s rates of income tax.
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One of the things that I most admired about the former Prime Minister and last Chancellor of the Exchequer but one was his insistence that 40% was the highest rate of income tax that could be charged to optimise the amount of money obtained from the rich. He stuck to that view throughout his time as Chancellor and most of his time as Prime Minister. We all know that he only put it in as a political trap at the end of his period in office when he could see the writing on the wall, but it is obvious from the Red Book figures that he was right: 40% is about as high as we can go to optimise the revenue.
According to the forecast in the Red Book, the revenue will stream in after the rate falls to 45p. If Opposition Members look at the Red Book, they will see that last year, under the 50p regime, self-assessment income tax fell by an amazing 9%. That was because rich people who have a lot of freedom and ability to decide how much to pay themselves—I know that Opposition Members do not like that, but it happens to be the state of play—decided to pay themselves a great deal less. Both the outgoing and the incoming Governments had said that the tax was temporary, so they decided that they would hold back their income. It was obvious that they would do that.
Gavin Shuker: The right hon. Gentleman is talking like a cheerleader about the Laffer curve. Why does he think that the UK economy is not growing?
Mr Redwood: I think that the UK economy may be growing. We will know the facts tomorrow, when we see the first quarter figures, but I suspect that the economy will grow this year. I accept the Government’s forecast of a slow and modest rate of growth. Why, though, is the economy not growing more quickly? There are two main reasons.
The first reason is banking. All the cash that the Bank of England is printing is not going into circulation in the private sector. It is very helpful to keep the Government’s rate of interest down, and it is very helpful to make the increase in public spending more affordable because it controls the interest rate cost for the Government; but the money cannot enter the private sector in any real quantity because the banks are under a huge regulatory cosh to hold more cash and capital at what is, in my view, the wrong stage in the cycle, which means that we cannot secure the growth in banking credit that would finance a better recovery.
The second reason is that taxation is now very high overall in the United Kingdom, which—combined with the inflation tax that has resulted from the high inflation rate that we inherited, which has remained persistently high—means that real incomes are being badly squeezed. It is plain to us all that real incomes started the squeeze under Labour, when the recession really hit, and that that squeeze has continued. A progressive squeeze on the scale that we have experienced since 2008 hits demand and makes recovery that much more difficult.
Graham Stringer:
Is there not a third reason: that we are in the wrong part of the world, next to the eurozone, which has no mechanism for the poorer countries to get rid of their trade imbalances or for Germany to get rid
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of its trade surplus? Normally that would be done by revaluing or devaluing those currencies, but having one currency makes it impossible.
Mr Redwood: I know that you would like me to wind up quickly, Mr Deputy Speaker, because others wish to contribute, but it is such a pity, as this is a crucial issue. I entirely agree with the hon. Gentleman that there is great difficulty in financing the big balance of payments deficits in the eurozone. Now that a mechanism has been found—German surplus deposits in the ECB being routed to weak member states’ banks through the ECB—the Germans are kicking up a fuss, because they suddenly realise that they have €600 billion at risk and they are not very happy. However, as the main surplus country, Germany has to finance the transfers in the union, and until she does so actively and in an encouraging way, there will be all these kinds of problems.
We have problems in Greece, Portugal and Ireland, which we know about. We now have deep problems developing in Spain, and we even have a problem in the Netherlands—which was meant to be one of the good guys—because of a falling out over the rather modest cuts needed to hit the Maastricht criteria. I agree that we need to get to 3% and 60% in due course—I have no problems with the European targets—but I feel strongly that we should do so for our own reasons, in our own time. It is nothing to do with Europe how we run this economy, and the sooner Ministers have the courage to tell Europe that, the better.
7.10 pm
Kelvin Hopkins (Luton North) (Lab): Let me say first that the Minister is heroic to take this brief, which is—to understate the matter—a difficult one. I do not envy him his job of having to try to sell it.
There are two good reasons for not sending the Budget report to the European Union. One reason, on which the Opposition agree, is that it is not a good Budget. The other reason, on which many of us on both sides of the House agree, is this: why should we send our Budget report to the European Union? If the EU wanted a copy, it could buy a copy. It is not a problem.
Mr Nuttall: The EU could just look it up for free on the internet.
Kelvin Hopkins: I am not as skilled as the hon. Gentleman in using the internet. Old-fashioned though it may be, I go to shops and buy books, I am afraid.
As for the Budget, the reality is that it will not solve our economic problems. Our problems are not really about the deficit; they are to do with unemployment. Looking back, another time when we had an enormous public debt and enormous deficits was the second world war, after which the then Labour Government ran a full-employment economy, which was the way they overcame our problems. If our Budget was directed towards creating employment, we too would solve many of our problems. The important thing is to generate directly in labour-intensive areas, which are not expensive. We are talking about relatively low-paid workers in the public services or the construction sector—labour-intensive sectors with low import content, which are just the sort of sectors where we want to be generating. However, public services and construction are the very sectors we are cutting.
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If we had a massive Government-driven house building programme, along with the creation of more public service jobs, we would bring down unemployment and people would be paying taxes rather than living on benefits, and over time the deficit would solve itself. That is what the Labour Government did after 1945. We were living in Keynesian times then, and I think that Keynes was absolutely right. I like to think that if he were here now, he would be saying what I am saying, albeit possibly in a more sophisticated way.
Richard Drax: Perhaps the hon. Gentleman could say where all those homes would be built. I believe the last Government had a target of some 1.8 million, but I recall that something like half were on a floodplain. Where are we going to build all those homes?
Kelvin Hopkins: That is a problem for Ministers and local authorities, but it has been estimated that we need another 4.5 million homes over the next few years if we are going to house our people. However, I will not go into that now, because I want to talk about the European Union.
I do not agree with the Budget—I think we ought to have a different one—but even if it were a good Budget, I nevertheless do not think that we should necessarily be required formally to send it to the European Union. I say that because the motion before us refers to the European Communities (Amendment) Act 1993—the Maastricht Act—which, I am pleased to say, my party voted against. Indeed, some Government Members voted against it as well. It is the Act that requires us to send the report to the European Union. Personally, I do not feel bound by that, because my party voted against it, and I do not think it is sensible anyway.
However, let us return to the stability and growth pact, which, as I have suggested, is like building castles in the air. What stability? What growth? We have grotesque instability at the moment—terrifying instability, in fact—and absolutely no growth. Indeed, even the powerhouse economy of Germany has serious problems. There is talk of convergence, but who do we want to converge with? Greece? Portugal? Some of the countries that are actually contracting, with mass unemployment? In Spain there is even talk of unemployment rising to 6 million, which, as a proportion of the population, is the equivalent of 9 million in Britain. This is absolutely insane. I do not want to be “disable-ist” about this, but anybody running that economy must want their head examined, quite frankly.
Mr Cash: Given the hon. Gentleman’s important comment about the convergence criteria, does he accept that it is absolutely clear that what was thought would happen in 1993, when the Maastricht treaty went through, has gone completely off the wall, as we predicted at the time and as everybody now knows? The Prime Minister said recently that he thought there ought to have been a referendum on that treaty. Does the hon. Gentleman not agree, therefore, that there is a powerful case for having a referendum on the current situation with the euro and the eurozone?
Kelvin Hopkins:
Indeed, and I think many of the peoples of the European countries that are now suffering would like a referendum as well. What I find difficult to
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understand is why so many people in the countries facing difficulties still support the euro. I do not know why, because supporting membership of the euro is almost like having a death wish. If only there were some courageous politicians who could say, “The way out of our problems is to recreate our own currency, depreciate it against the countries we’re competing with and reflate behind that barrier,” those countries would start to solve their problems. However, they cannot do it because they are tied into the euro.
We have collective deflation, right across the entire European Union, and although this country is perhaps tinkering round the edges compared with some other countries, that is entirely the wrong way to go. One thing that is causing us problems at the moment is that the eurozone is in such trouble that the euro is now weakening, which, by contrast, is strengthening sterling and making life more difficult for our manufacturers. That is causing problems in many ways. However, if there were a sensible, managed deconstruction of the euro, with the re-creation of national currencies in many, or possibly all, of those countries, thereby allowing them to reflate their economies, they would benefit, as would we, and the whole European Union would then start to work properly—as a group of democratic, independent nations co-operating voluntarily for mutual benefit, rather than something driven by people in central banks or people in Brussels in the Commission.
Kate Hoey: I wonder whether my hon. Friend could give me an answer to the question I asked the Minister, to which he did not give me an answer. What are the repercussions for our country if we vote this motion down this evening, as I hope we will?
Kelvin Hopkins: I hope we do too. As for the repercussions, will we be taken to the European Court of Justice? I suppose that is what happens; however, I think the European Union has other things on its mind rather than punishing us for not sending the Red Book across to Brussels. It has more problems than it can deal with at the moment, and it will not be taking us to court simply for refusing to send across our Budget book, which it can buy in the shops anyway.
Jacob Rees-Mogg (North East Somerset) (Con): I apologise for not being here for the whole of the debate, but I was in the Finance Public Bill Committee. Does my honourable friend in European matters not agree that the Government have behaved much, much better this year, by allowing the debate in Parliament to take place before the book is sent to Brussels, and that we should encourage the Government in this reformed behaviour?
Kelvin Hopkins: Indeed. I think we ought to debate many more of these things on the Floor of the House. I would like to think that many more colleagues, from all parties, would take part in these debates and appreciate some of the things that some of us, on both sides, have been saying about the nonsense of the European Union at the moment.
I have been speaking for rather too long, so I ought to stop. There are two extremely good reasons for not sending the Budget report to Brussels. I hope that many Members will agree with that and vote against the motion this evening.