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House of Commons

Wednesday 20 March 2013

The House met at half-past Eleven o’clock


[Mr Speaker in the Chair]

Oral Answers to Questions

Cabinet Office

The Minister for the Cabinet Office was asked—

Public Services (Digitisation)

1. Michael Fabricant (Lichfield) (Con): What estimate he has made of the potential savings to the public purse from the digitisation of public services; and if he will make a statement. [148849]

2. Rehman Chishti (Gillingham and Rainham) (Con): What estimate he has made of the potential savings to the public purse from the digitisation of public services; and if he will make a statement. [148850]

The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd): By introducing new digital services and redesigning old ones, we expect to save the taxpayer and service users around £1.2 billion by 2015, and at least £1.7 billion a year thereafter. Of course, that is not just about saving money; it is also about the opportunity to change totally the way the public engage with the Government and radically improve that experience.

Michael Fabricant: What services does the Minister see being digitised in the near future, when does he think that will happen, and how will we get people who do not have experience of computers using those new services?

Mr Hurd: We are reviewing more than 600 central Government transactions. My hon. Friend will be aware that seven Departments are responsible for around 90% of those. Those Departments have committed to redesigning three significant series each, all the details of which are in their departmental digital strategies. This is a live process, and the Student Loans Company went live in October. He is entirely right to remind us that no one should be excluded from the process, which is why the Government remain committed to an assisted digital service.

Rehman Chishti: The latest figures for Medway show that nearly 90% of people there have accessed the internet. What support are the Government providing to allow more people to access public services through the internet?

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Mr Hurd: We are making it easier to access broadband and have supported, and continue to work closely with, valuable networks such as Go ON UK and UK online centres, because my hon. Friend is right that there is still a big opportunity to help more people, small businesses and charities to access the benefits of the internet.

Helen Goodman (Bishop Auckland) (Lab): As I am sure the Minister knows, 11 million people in this country have never used the internet, and at the moment his Department is spending no money on digital inclusion. Is its real way of saving money on public services to make them completely inaccessible to those who need them?

Mr Hurd: No. As I said, we are clear that no one must be excluded from this process. That is why significant assisted digital provision is still in place, and we will shortly make available details of how that will work. There are digital inclusion projects across Government and we are actively reviewing, with partners such as Go ON UK, what more we can do.

Chi Onwurah (Newcastle upon Tyne Central) (Lab): I look forward to reading the real figures on fullfact.org, which had to correct the Minister’s overblown assertions last time. The Opposition know that ICT can make government more accessible and save money, but the Government have abandoned the universal broadband pledge and failed on digital inclusion, so 75% of over-75s and a third of people with disabilities are still not online. In those circumstances, is digital by default not simply digital exclusion by diktat?

Mr Hurd: I will take no lectures from the Labour party on wasting money on ICT, because the processes we inherited in that regard were absolutely scandalous. I repeat what I said: we see a big opportunity in digital by default. It is a chance to transform the way people engage with the Government. We can see significant savings, which I do not think have been overstated at all. As I said, we have an active commitment to assisted digital, the details of which will come shortly, and to continued activity to support digital inclusion.

Public Service Delivery (Innovative Design)

3. Mr Barry Sheerman (Huddersfield) (Lab/Co-op): What steps he is taking to utilise innovative design to increase the effectiveness and quality of public service delivery. [148851]

The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude): The Government are implementing an ambitious programme of public sector reform. From welfare to education, we are changing the way services are delivered to the public. We are opening up policy making, ensuring that policy is made with implementation in mind. To improve the quality of public services, we are backing new delivery models, such as public service mutuals, and redesigning services to be digital by default.

Mr Sheerman: Is the Minister aware that too many people still think that good design means a beautiful table or chair or a new piece of architecture, such as the Shard? There is a whole body of expert design capacity in this country that could help design services, particularly public services. Will he, his Department and the Government

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wake up to the fact that good design, as shown in a new publication from the Design Commission, could help recovery in this country?

Mr Maude: I agree with everything that the hon. Gentleman says except his assumption that we are not already doing this. I know he is a member of the Design Commission, which produced that excellent publication; it is in fact very complimentary about a number of initiatives that the Government have taken, including the creation of the Government Digital Service, which is committed to ensuring that as we reform the delivery of public services, they are designed around the needs of the user rather than, as has far too often been the case, designed to suit the convenience of the Government.

Mr Gary Streeter (South West Devon) (Con): Given that all public services are going to be under financial pressure for the next few years, is my right hon. Friend happy that enough sharing of best practice is taking place to find new, innovative ways to do more with less?

Mr Maude: No, I am not happy that we are yet doing enough, but we are doing more. We are establishing a series of What Works organisations that will exist to share best practice and experiences. We have also set up the commissioning academy, an unexpected by-product of which is that it brings together public service deliverers from all over the public sector who network and share experience, which is already proving extremely beneficial.

Jon Trickett (Hemsworth) (Lab): On the subject of innovative public service design, the Minister abolished the Central Office of Information and sacked hundreds of staff while simultaneously increasing the number of spin merchants in his Department and others. Meanwhile, he put the Government Information Service out to tender, with contracts valuing £520 million, millions of which then went to a company which he himself had chaired in the past, although I accept that he took no part in letting that contract. There are many ways of describing this chain of events. Does he agree that intelligent design is not one of them?

Mr Maude: We did dismantle the Central Office of Information, which was overloaded with 750 people who were not doing enough useful work. We cut down massively on the previous Government’s gross overspend on marketing and advertising, which was throwing money out of the back of a lorry wholly ineffectually. We therefore needed a lot fewer people in the Government communication service. Our own press and media operation in the Cabinet Office is smaller than what we inherited from the previous Government despite the fact that it has to service the Deputy Prime Minister as well as other Ministers and the Prime Minister.

Procurement Contracts

4. Anas Sarwar (Glasgow Central) (Lab): What recent steps he has taken to address barriers to small and medium-sized enterprises participating in Government procurement. [148852]

5. Simon Kirby (Brighton, Kemptown) (Con): How he plans to ensure that small and medium-sized enterprises secure a larger proportion of Government contracts. [148853]

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8. Julian Smith (Skipton and Ripon) (Con): What progress he has made on engaging small businesses in public procurement. [148856]

The Parliamentary Secretary, Cabinet Office (Miss Chloe Smith): It is this Government’s policy to dismantle the barriers facing small companies to ensure that they can compete for contracts on a level playing field and that they can better grow. Direct spend with small and medium-sized companies across Government has steadily increased since 2010 as a result of the steps we have taken, and we have required all Departments to put in place plans to ensure that their spend with SMEs continues to increase.

Anas Sarwar: Does the Minister think that it is acceptable for large multinational companies to receive millions of pounds in Government grants while avoiding paying a single penny in corporation tax? If not, what changes will she make to procurement legislation to ensure that we stop this bad practice and instead increase opportunities for small and medium-sized enterprises?

Miss Smith: I think that the hon. Gentleman will find that much of what he seeks is covered in debates later today. We have recently announced measures to ensure that the companies we deal with as a Government pay their fair share of tax, and rightly so.

Simon Kirby: I would like more businesses in Brighton to have contracts with the Government. Will the Minister make data available on a constituency level regarding which businesses do business with the Government?

Miss Smith: Since the general election Government have become much more transparent about the business they do, and all contracts over £10,000 are now published online at Contracts Finder. My hon. Friend will also find pipelines covering infrastructure and Government construction that will help him with a lot of data. Although we cannot yet release these data specifically at constituency level, I am very keen to make them available, and I look forward to working with him to make that a reality.

Julian Smith: The Minister has done a lot of excellent work on fair payment, but how do we make it easier for our smallest businesses, and our smallest service businesses, to win Government contracts?

Miss Smith: Central Government policy is to pay undisputed invoices within five days and to pass 30-day payment terms down the supply chain as a condition of contract. That has earned this Government the title of fair payment champion, which is very important. We encourage small and medium-sized enterprises to use the mystery shopper service to “shop” poor practice where they find it. My hon. Friend will also know that we have streamlined the procurement process, removed bureaucracy and increased transparency. We are challenging the traditional ways of buying and are ready to be held to account for that.

Keith Vaz (Leicester East) (Lab): Does the Minister agree that if a company fails to deliver on a contract, it should be put on a list and not allowed to bid for any future contracts?

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Miss Smith: As I noted in my previous answer, we believe in accountability and in being able to “shop” those examples where that occurs. We take action on every such example and I am confident that that will cover what the right hon. Gentleman seeks.

Mr Bernard Jenkin (Harwich and North Essex) (Con): Does my hon. Friend agree that the sheer cost inflicted on smaller businesses trying to bid for public contracts is prohibitive? What are the Government doing to reduce the cost of bidding for public contracts? Unless we reduce the cost, they simply will not bid.

Miss Smith: My hon. Friend is absolutely right. We have streamlined the procurement process by introducing faster and simpler procedures. We have removed bureaucracies such as pre-qualification questionnaires for contracts below the European Union threshold. We are also continually finding ways to help SMEs and others to navigate their way across Government. We look forward to continuing to work with my hon. Friend’s Committee to do more of that.

Mr Gregory Campbell (East Londonderry) (DUP): What progress is the Government making with the SME sector’s representative bodies in addressing barriers?

Miss Smith: I will answer that by quoting evidence submitted to the Public Administration Committee by the Market Research Society, which said that it

“applauds the activity of the Crown’s Representative for SMEs…and the ‘Mystery Shopper Scheme’ enabling SMEs to report examples of good and bad practice”.

Those are ways in which we are holding our own systems to account. We want to do more and it is vital to get SME representatives around the table to do so. I shall be doing more work on that this afternoon.

Teleworking/Home Working

6. John Pugh (Southport) (LD): What his policy is on the use of teleworking and working from home in Government Departments; and if he will make a statement. [148854]

The Parliamentary Secretary, Cabinet Office (Miss Chloe Smith): In order to deliver services that meet the needs of the public, the civil service—just like comparable private sector employers—needs a flexible and dynamic workforce. We recognise that remote and home working can bring significant benefits, such as increased productivity, business resilience, work-life balance and well-being. Business units in every Department will need to make such decisions according to business need.

John Pugh: Does the Minister recognise that young working mothers are the principal beneficiaries of teleworking, and will she do more to keep this pool of talent in the civil service?

Miss Smith: My hon. Friend makes an excellent point. This Government are doing plenty to help that group and we made child care announcements yesterday and today. The benefits of flexible working can also be seen on a much broader level: research recently suggested that British businesses could save £34 billion by taking on such an approach.

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Women's Voluntary Organisations

7. Kate Green (Stretford and Urmston) (Lab): What recent assessment he has made of the adequacy of Government funding for women’s voluntary organisations. [148855]

The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd): The Government recognise the tough conditions that all voluntary organisations face at present while we open up new opportunities for them. With limited resources we are helping the sector build its resilience and ability to take up those opportunities, including more than £107 million-worth of transition funding, some of which has been accessed by women’s organisations such as Birmingham and Solihull Women’s Aid.

Kate Green: What discussions has the Minister had with Ministry of Justice colleagues to ensure that the excellent work done by women’s organisations to meet the specialist needs of women offenders will be protected in a payment-by-results system?

Mr Hurd: I share the hon. Lady’s concern that, for example, the upcoming commissioning process for reform of probation and rehabilitation services is sensitive and sympathetic to, and makes full opportunity of, the voluntary sector, including the many organisations that do incredibly valuable work with women offenders. We are working very closely with the Ministry of Justice to make sure that happens.

Bob Blackman (Harrow East) (Con): Local authorities across the country have been determining what they will do with Government grants. Does my hon. Friend agree that it is disgraceful that local authorities have been cutting grants to voluntary organisations that provide services to the weak and vulnerable?

Mr Hurd: I should inform my hon. Friend and fellow Harrow MP that I had a meeting with Harrow charities recently to discuss the response to cuts in their grants from Harrow council. I pointed out the contrast with neighbouring Conservative-led Hillingdon council, which, having managed its public finances excellently over many years, is continuing to invest in front-line charities, rather than cut the grants to them.

Social Market

9. John Glen (Salisbury) (Con): What steps his Department is taking to encourage growth in the social market in the UK. [148857]

The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd): We are cutting red tape for charities and investing to encourage social action. We are recognised as a world leader in developing the social investment market. We are opening up opportunities for the social sector to help us deliver better public services.

John Glen: Does the Minister agree that the Cinnamon Network community franchising model is proving an excellent stimulus that is enabling the big society to flourish? Will he commend the work of Simon Redmill and Salisbury city church, who are using a grant from the Cinnamon Network to launch a job club in Salisbury next Monday?

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Mr Hurd: It will not surprise my hon. Friend that I totally agree with him. I am delighted that through the social action fund we have invested more than £1 million to help the Cinnamon Network and Tearfund support church-led community projects around the country. Through him, I congratulate Salisbury city church and wish it every success.

Michael Connarty (Linlithgow and East Falkirk) (Lab): Does the Minister agree with the Federation of Small Businesses and the Forum of Private Business that the three problems for small businesses are the set-up costs for tendering, the difficulty of getting on to lists, and the fact that they do not get their payments in time, which means that they have great problems with cash flow?

Mr Hurd: I recognise that there are all kinds of challenges for small organisations and, in particular, for small voluntary groups and charities in competing for public service contracts. We are opening up many more opportunities for them than there were under the previous Administration. We are working actively through things like the commissioning academy and new master classes around the country to tool up small organisations so that they can compete more effectively for such contracts.

Late Payments

11. Debbie Abrahams (Oldham East and Saddleworth) (Lab): What steps his Department is taking to reduce the level of late payment by public sector contractors to small and medium-sized enterprises. [148859]

The Parliamentary Secretary, Cabinet Office (Miss Chloe Smith): As I have noted, Government policy is to pay undisputed invoices within five days and to pass 30-day payment terms down supply chains. The Crown representative team in the Cabinet Office is encouraging prime contractors to do that more quickly on a voluntary basis. We have tasked Departments to manage their contracts to ensure that prime contractors pay sub-contractors within 30 days.

Debbie Abrahams: I am glad that the Government are now taking seriously late payments to small and medium-sized enterprises, after I received such a dismal response on the issue in 2011. When are the Government going to ensure that public sector contractors have the need to pay SMEs in their supply chain promptly in their contracts?

Miss Smith: I congratulate the hon. Lady on the award that she has won in connection with her work on this matter. My previous answer covered what the Government are doing. We are extremely keen to see good practice pushed throughout the supply chain. We are ensuring that more business goes to SMEs, which is good for growth. All told, that is a good thing and something of which the Government can be proud.

Topical Questions

T1. [148864] Jonathan Ashworth (Leicester South) (Lab): If he will make a statement on his departmental responsibilities.

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The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude): My responsibilities are the public sector Efficiency and Reform Group, civil service issues, the industrial relations strategy in the public sector, Government transparency, civil contingencies, civil society and cyber-security.

Jonathan Ashworth: I thank the Paymaster General for his answer. When I talk to voluntary organisations across Leicester, many of those that took part in the future jobs fund tell me that it had a positive impact. Today, we have seen unemployment across Leicester rise again. The chief executive of the National Council for Voluntary Organisations recently called the Work programme

“a slow motion car crash”.

When are we going to have a scheme to get our young people back to work that truly harnesses the expertise of the voluntary sector?

Mr Maude: It would have been nice to hear the hon. Gentleman celebrating the rise in employment and the fact that since the election 1.25 million new jobs have been created in the private sector. It would be very good if he and his colleagues would occasionally support that.

T2. [148865] Karen Lumley (Redditch) (Con): Will my right hon. Friend assure me that the residents of Redditch will not suffer too much today from the strike action by the Public and Commercial Services Union?

Mr Maude: I am happy to be able to tell my hon. Friend that the latest numbers suggest that fewer than 95,000 civil servants went on strike today. The leadership of the PCS, who are not serving their hard-working members at all well, claimed this morning that 250,000 civil servants were on strike. That was simply untrue—it is fewer than 95,000.

Mr Gareth Thomas (Harrow West) (Lab/Co-op): On 5 March, Sir George Cox published his independent review into “Overcoming Short-termism within British Business”. The report concluded, among other things, that Cabinet Office-led procurement in the public sector is failing, with long-term strategic issues for the UK Government not a part of Government procurement thinking. When does the Minister plan to put that right?

Mr Maude: We inherited a position that was exactly as the hon. Gentleman describes from the Government of whom he was a member. We have already improved matters significantly by publishing forward pipelines in a number of sectors so that British suppliers can tool up to bid effectively. We have cut procurement times and costs dramatically so that it is easier and cheaper for businesses to bid and win that business. It is a very great pity that his Government did not get on and do some of that themselves.

T3. [148866] David Rutley (Macclesfield) (Con): Can my right hon. Friend confirm that the big society awards help highlight the important work of community groups, just as the 2012 award did for the Street Angels initiative, which helps make night life safer in Macclesfield and in hundreds of towns and cities across the country?

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The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd): I can certainly confirm that the big society awards are there to throw a spotlight on and celebrate outstanding community-led initiatives, such as the Street Angels initiative that has done such good work in Macclesfield and has now spread to more than 70 towns across the UK. I encourage colleagues on both sides of the House to think about nominating community initiatives to the big society awards through the No. 10 website.

Graeme Morrice (Livingston) (Lab): Can the Minister explain why his Government have failed to bring forward robust proposals for a statutory register of lobbyists given that the public want one, the lobbying industry wants one and the Government promised one?

Mr Maude: An announcement will be made shortly, but it is worth pointing out that the hon. Gentleman’s party was in power for 13 years and did the square root of nothing on this.

T5. [148868] Stephen Phillips (Sleaford and North Hykeham) (Con): What services have been affected by the PCS strike today? Does my right hon. Friend agree that responsibility for the strike lies exclusively with the PCS leadership?

Mr Maude: That is exactly right. I can confirm that there has been minimal impact on public services and that the public will have been inconvenienced to a very small extent by today’s strike. The borders at the airports and ports have been properly manned, queues have been minimal and I am delighted to say that at Birmingham airport alone, there have been significant seizures of illegal drugs to the benefit of protecting the public.

T4. [148867] Tristram Hunt (Stoke-on-Trent Central) (Lab): Today’s shambolic, reactionary Budget will put the Labour party another step closer to government. Now that we have a fixed-term Parliament, will the Minister lay out a proper timetable for Opposition access to the civil service so that we can clear the mess up?

Mr Maude: I am afraid that I did not hear a single word that the hon. Gentleman said—[Interruption.]

Mr Speaker: Order. In the remaining couple of minutes, let us have a courteous audience for Mr Halfon.

T6. [148869] Robert Halfon (Harlow) (Con): Does my right hon. Friend agree that local trade unions are very much part of the big society? Does he support the vital work of USDAW, which is fighting for fair pay and conditions for Tesco workers whose jobs are under threat following the announcement of the closure of the Tesco depot in Harlow?

Mr Maude: Of course, responsible trade unionism has a proper role to play in Britain’s big society. What we object to is the irresponsible leadership of unions such as Unite, Labour’s biggest donor, which is taking strike action today in support of the wholly unrepresentative PCS leadership, whose sway with its members has fallen to the extent that the turnout in the strike today has been the lowest at any time since the election.

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T7. [148870] Ann McKechin (Glasgow North) (Lab): It has been reported that half of charities are planning to cut their work force or expenditure in the next 12 months. What real steps will the Minister take to help those charities to carry out the valuable work that they do throughout our country?

Mr Maude: The hon. Lady will know that, to give one example, my right hon. Friend the Justice Secretary is proposing to open up the whole of rehabilitation services so that particularly charitable and voluntary organisations and social enterprises will be able to bid on a payment-by-results basis to win that business. We have created a growing social investment market, supported by big society capital, which will enable those groups to get for the first time access to capital to fund those projects.

Prime Minister

The Prime Minister was asked—


Q1. [148833] Philip Davies (Shipley) (Con): If he will list his official engagements for Wednesday 20 March.

The Prime Minister (Mr David Cameron): This morning I had meetings with ministerial colleagues, and others. In addition to my duties in this House, I shall have further such meetings later today.

Philip Davies: Does the Prime Minister agree that today we need a blue collar Conservative Budget which cuts taxes for people who work hard, do the right thing and want to get on; which stops spending billions of pounds that we do not have on overseas aid; and in which we source the cheapest energy for people, helping them with their costs of living, rather than sourcing the greenest energy?

The Prime Minister: First, I thank my hon. Friend for giving me the opportunity to remind people that even before this Budget, in two weeks’ time there will be a tax cut for 24 million people in our country as we raise the amount of money someone can earn before they pay tax. We will have taken more than 2 million people out of tax altogether; we have frozen council tax; we have cancelled fuel duty increase after fuel duty increase; and we are legislating to put customers on the lowest electricity tariff. I can also tell my hon. Friend that we are not going to carry on with the proposal made by the previous Energy Secretary, which was to put £179 on everybody’s bill. We have decided to scrap that.

Edward Miliband (Doncaster North) (Lab): I want to ask the Prime Minister about the situation in Cyprus. Will he update the House on what is being done to protect British nationals, including our armed forces, who have deposits in Cypriot banks?

The Prime Minister: The Leader of the Opposition raises an extremely important issue at a very sensitive and difficult time for the Republic of Cyprus. First, we have absolutely guaranteed that anyone who is in Cyprus because they have been sent there by the British Government, and the armed forces, Ministry of Defence or the Foreign Office, will not lose out in any way in terms of their earnings or their savings. That is the first

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thing to say. We have also made sure that money will be available, which is why a plane with money was sent to Cyprus last night.

In terms of British citizens in Cyprus, of whom there are many thousands, of course we cannot insure them against any losses in Cypriot bank accounts, but we can make sure that they get safely the pensions and benefits to which they are entitled. We have frozen those payments for the time being until the situation becomes clear, but everyone should know that they will get those payments.

Edward Miliband: On Monday, the City Minister said that the UK Government have

“intelligence about what went on”—[Official Report, 18 March 2013; Vol. 560, c. 620.]

in discussions among eurozone members who negotiated the plan. Will the Prime Minister tell us what the Government knew in advance, and what eurozone members said about that plan?

The Prime Minister: First, as we are not in the euro, we do not join the discussions about eurozone bail-outs. That is important, and it is worth noting that because of the deal I did in Brussels, getting us out of the bail-out fund, we will not be contributing to what would otherwise, under the previous Government’s plans be perhaps up to £1 billion. Obviously what we are doing is waiting to see the action that the Cypriot Government and the Eurogroup agree, and ensuring that we do everything to help British citizens in the weeks ahead.

Edward Miliband: The point I make to the Prime Minister is that this is a matter not just for the eurozone but for other European economies, because it goes to trust in the banking system. I think it should have been obvious to everyone that a sudden levy imposed on ordinary savers would undermine basic trust and confidence in banks. Will the Prime Minister send a clear message from the Dispatch Box that any negotiated bail-out that is subsequently agreed with the Government of Cyprus needs to rebuild trust in the banking system and not undermine it further?

The Prime Minister: We have made our views very clear to the Cypriot Government. In our view, when there are deposit protection schemes—as we have in this country; as all of Europe put in place after the crash of Lehman Brothers—those deposit protection schemes should be respected. That is the whole point; that is why they are there for small savers.

Harriett Baldwin (West Worcestershire) (Con): The civil service union has chosen today to go on strike, but the country does not seem to have ground to a halt. Does the Prime Minister agree that that probably indicates that there is a bit more room to save in terms of public sector spending, so that we can clear up Labour’s debts and get this country back on track?

The Prime Minister: My hon. Friend raises an important point. It is important to recognise that we should do everything we can to save and find efficiencies in public spending in order to help hard-working families and keep their tax bills down. That is exactly what this Government will continue to do.

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Q2. [148834] Dame Joan Ruddock (Lewisham, Deptford) (Lab): On 9 January, the Prime Minister told me there would be no hospital reorganisations unless they had the support of the local GP commissioners, proper public engagement and an evidence base. Will he now admit that not one of those tests is met in the case of Lewisham hospital, where he proposes to close down half the services and sell off two thirds of the land to bail out a neighbouring failing trust? Can anyone trust this Prime Minister on the NHS ever again?

The Prime Minister: It is worth remembering who set up the PFI deal that has meant that this action has had to be taken. The apology over what is happening at the South London Healthcare trust should come from the Labour party, because it was responsible for creating this situation. As the right hon. Lady knows, £1 million a week is being lost from front-line care. No change is not an option, but the Health Secretary’s plans have ensured that Lewisham will retain an A and E with senior medical emergency cover.

Gordon Birtwistle (Burnley) (LD): Today, the FTSE index is just under 6,500; in 2008, it was just under 3,500. Does my right hon. Friend agree that the real investors in this economy agree with the coalition Government’s economic policy, contrary to the policies delivered by the Labour party?

The Prime Minister: My hon. Friend makes a good point. It is a difficult and hard road that we are travelling to turn this economy round after the huge mess made by Labour, but when we look at the facts—just this morning, we have seen that an extra 131,000 are in work—we see the changes necessary to start the rebuilding of our economy.

Edward Miliband: Last weekend, the Foreign Secretary said that there was a strong case for lifting or amending the arms embargo on Syria in the months ahead. Given that no decision was taken at the EU Council, does it remain the Prime Minister’s intention to seek a relaxation of the EU arms embargo?

The Prime Minister: First of all, let us look at what we have already achieved in terms of amending the arms embargo. We asked specifically for it to be changed so that we could give technical support to the opposition. We have achieved that, but the French President and I discussed at the European Council looking for further changes to the arms embargo, which will be discussed by Foreign Affairs Ministers this weekend. The reason for that is twofold. First, that the arms embargo still applies pretty much equally to this hateful regime and to the opposition, who we now recognise as legitimate representatives of the Syrian people, sends a peculiar message. Secondly, the French President and I are concerned that we should not be restricted for months and months ahead when we do not know exactly what could happen in Syria—there are very worrying reports of the use of chemical weapons.

Edward Miliband: I thank the Prime Minister for that answer. Obviously, everybody is appalled by the actions of the Assad regime, but the Prime Minister will know that there is not only a lack of unity among Syrian opposition groups, but the known presence on the

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ground in Syria of al-Nusra, the al-Qaeda backed terrorist organisation. Does he therefore understand the widespread concern that remains about the idea of seeking to supply weapons to the rebels?

The Prime Minister: The Leader of the Opposition puts the point absolutely rightly. There is widespread concern about the nature of the opposition. The argument we must engage in is this: are we more likely to help the good elements of the opposition by standing back, or are we more likely to help by getting in there and shaping and giving that technical assistance, so that we can play a part in building up the Syrian opposition, so that they are a legitimate and credible alternative to this hateful regime?

It is worth recalling—we should all recall it—the fact that current policies are not working for the people of Syria. Seventy thousand people are dead and this hateful regime is still in place.

Edward Miliband: The Prime Minister is absolutely right that the current situation is terrible; we just must not make it worse with the actions that we take. The spokesman for the UN Secretary-General has said that the introduction of more weapons into Syria is “counterproductive” and will not lead to a solution. Special Representative Brahimi recently called for a renewed diplomatic initiative to bring the warring parties to the negotiating table. Will the Prime Minister set out what steps the UK Government, specifically, are taking to support the UN in advancing that initiative?

The Prime Minister: We are taking specific steps to help the UN with this vital initiative. Trying to achieve a diplomatic solution, with transition at the top of the regime, is worth while. That is why we have had detailed talks with the Russian Foreign and Defence Ministers in the past week. I would just make one other point about the arms embargo. Sitting in the European Council chamber, I felt that there was a slight similarity between some of the arguments being made about not putting more weapons into Syria and the discussions we had on Bosnia, with the appalling events that followed. In my view, it is better to be engaged and working with the Syrian opposition and trying to bring this conflict to an end.

Q15. [148847] Anne Marie Morris (Newton Abbot) (Con): Traveller numbers on the coastal railway line running through my constituency are growing fast. Given its importance to local tourism in Dawlish and Teignmouth, can the Prime Minister assure me that urgent investment plans are in hand to repair recent flood damage and to create a long-term sustainable future for this railway line?

The Prime Minister: I can give my hon. Friend that assurance. I know that the Transport Secretary will shortly be visiting her constituency. Investment is going into the whole of the line that serves her constituency, including major investment that will shortly be completed at Reading station, which will help capacity all down the line.

Q3. [148835] Ms Margaret Ritchie (South Down) (SDLP): The Prime Minister will be aware of the growing disquiet across the UK regarding his Government’s

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welfare reform proposals—great disquiet, because the proposals are deeply unfair and will, I predict, lead to administrative chaos. Does the Prime Minister agree with me that, in terms of his legacy, welfare reform will be his poll tax?

The Prime Minister: I do not agree with the hon. Lady at all. I find that there is strong support for the housing benefit cap, so that we no longer fund homes in the capital of our country by up to £100,000 a year. There is strong support for the welfare cap, and, indeed, there is strong support for universal credit, which will make sure that in every case people are better off in work and better off when they choose to work extra hours. That is what we want: a welfare system that supports enterprise, work and aspiration.

Q14. [148846] Mr Henry Bellingham (North West Norfolk) (Con): Is the Prime Minister aware that seven people have died on Norfolk’s roads in the past week? Furthermore, eight have died on the A47 in the past 10 weeks. Does he share my concern about this tragic loss of life? Is he aware of the campaign being run by me and other hon. Members, such as my hon. Friend the Member for Broadland (Mr Simpson), to improve the A47? Norfolk people understand the current budgetary constraints; they simply want a fairer share of resources.

The Prime Minister: I am grateful to my hon. Friend for bringing me up to date with this important campaign that he and others are leading in Norfolk. We have a much better record on road safety than we have had in recent years, but we should never be complacent and should continue to work on it. Money has been made available for road schemes in Norfolk, the A11 chief among them. I can see from the Minister of State, Department for Transport, the right hon. Member for Chelmsford (Mr Burns) nodding vigorously behind my hon. Friend that there may be more to come.

Q4. [148836] Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): Does the Prime Minister agree with Lord Heseltine that people are suffering under the recession, and that it would be the wrong politics at this time to remove the 50p top rate of tax? Will he now cancel next month’s tax cut for millionaires?

The Prime Minister: The point I make to the hon. Lady is that after the start of the financial year the top rate of tax will be higher than in any year when Labour was in office, and I am sure that that is something with which Michael Heseltine would fully agree.

David Mowat (Warrington South) (Con): Today is the 20th anniversary of the Warrington bombing. The Prime Minister will recall that more than 20 people were killed and injured, among them a 12-year-old boy, Tim Parry. Will he join me in congratulating Tim’s parents, Wendy and Colin, on how they have worked tirelessly for peace over the past two decades, and particularly on the establishment of the Foundation for Peace, which brings help to victims of conflict around the world?

The Prime Minister: I certainly join my hon. Friend in praising that family for the incredible bravery they have shown. When someone suffers such a tragedy, it

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must be so much easier to try and put it behind them and forget about it, but to go on and campaign for peace and to bring together the people of Warrington as they have done shows enormous character and fortitude. They have the backing of the whole country.

Q5. [148837] Jonathan Ashworth (Leicester South) (Lab): Has the Prime Minister had time to consider the remarks of the leader of his MEPs in the European Parliament, who said of the decision to cut the 50p rate that it was

“one of the biggest mistakes that we’ve made so far in this parliament”


“disastrous to do so in a recession”.

Is Mr Callanan right or wrong?

The Prime Minister: When the hon. Gentleman’s party put the top rate of tax up, millionaires paid £7 billion less in taxation. We are having a lower tax rate that will raise more revenue. That makes pretty good sense.

Paul Uppal (Wolverhampton South West) (Con): Just a few weeks back, my right hon. Friend became the first serving British Prime Minister to visit Amritsar in Punjab. As a British Sikh, may I say how warmly his visit was received? More importantly, will he congratulate Her Majesty’s Government on the pioneering work they have done in searching the Sikh turban at European airports? It shows that we can have a proactive relationship with Europe, rather than a reactive one.

The Prime Minister: I thank my hon. Friend for all the work he does in this area and for how he consistently raises issues about the British Sikh community, the immense contribution it makes to our country and the respect that we should show it. I also thank him for accompanying me on that trip to the Golden Temple—something that I will never forget. It gives me the opportunity to say, on behalf of the House, how much British Sikhs give to Britain and how much we thank them for it.

Q6. [148838] Chi Onwurah (Newcastle upon Tyne Central) (Lab): My constituent Jordan Kingston found himself homeless aged just 17. He was offered social housing and is now studying for his A-levels, determined to improve his situation through education. From his £56 weekly benefit, he will lose £14 in the bedroom tax and £3 in council tax, leaving just £11 per week to live on after utilities. Based on the Prime Minister’s experience of hardship, what advice does he have for Jordan?

The Prime Minister: First, the Government are investing in social housing, and the hon. Lady will hear more about that in a moment. Secondly, when housing benefit costs £23 billion a year, we simply have to reform it. There is a basic issue of fairness: why should someone living in private rented accommodation not receive a spare room subsidy and someone in social housing should? There is a basic issue of fairness, and that is why it should be put right.

Lorely Burt (Solihull) (LD): Unlike the hon. Member for Shipley (Philip Davies), I am proud of our coalition for sticking to the 0.7% aid target—[Interruption.]

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Mr Speaker: Order. The hon. Lady’s question must be heard. People should not jeer before they have heard it.

Lorely Burt: Thank you, Mr Speaker.

We set an example to the world, and later on this month, the Prime Minister goes to Bali to co-chair the high-level panel to discuss the next set of millennium development goals. Will he use his leadership to press for a stand-alone goal on gender equality and women’s empowerment?

The Prime Minister: I will look very carefully at what the hon. Lady says about the importance of gender equality in terms of the new millennium development goals. The point I would make to anyone who raises the issue about our aid commitment is that I do not think we should break our promises to the poorest people in the world. Our key aim ought to be to eradicate the extreme poverty that people sometimes still face, living on less than $1.25 a day. That is what we are talking about, and I think that we should be proud of the fact that we are keeping our promises.

Q7. [148839] Diana Johnson (Kingston upon Hull North) (Lab): As a money-saving tip on Budget day, and in line with what the Education Secretary wants for teachers, could the Prime Minister put his Chancellor and the Cabinet on performance-related pay? How much does he think it would save?

The Prime Minister: It is this Chancellor who has seen the deficit come down by a third since he became Chancellor and has seen the creation of over a million private sector jobs. He is getting the country out of the hole that we were left in by Labour.

Richard Fuller (Bedford) (Con): Will the Prime Minister welcome the successful launch in Bedford last week of the country’s first local enterprise fund? People who care about Bedford have raised £400,000 to invest in businesses in Bedford, encouraging enterprise and securing employment? Does he agree that in this respect, as in so many others, where Bedford leads, the rest of the country should follow?

The Prime Minister: I am sure my hon. Friend is right about Bedford’s leadership in all things. He makes an important point, which is that we need to see more small businesses start and more enterprise. We have seen in Britain over the last three years the fastest rate of new business creation in our history, but we need to see more of it to keep the private sector going.

Q8. [148840] Alex Cunningham (Stockton North) (Lab): Rising unemployment remains an issue in my Stockton North constituency. Is unemployment and recession, which grind hard-working families and the most vulnerable into the ground, a price worth paying for next month’s obscene tax cut for millionaires?

The Prime Minister: If the hon. Gentleman looks at the figures today, he will see that there are 131,000 more people in work over the last quarter. We have seen 600,000 more people employed compared with a year ago. That is what is actually happening in terms of employment. I have to say, when we look at the mess we

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were left by Labour, being given advice on economics on Budget day from Labour is like asking Enron for accountancy advice.

Mr Marcus Jones (Nuneaton) (Con): In less than a fortnight’s time, this Government will have taken 3,168 of my constituents out of paying income tax altogether. Does that not show that this Conservative-led Government are on the side of hard-working, low-paid people?

The Prime Minister: My hon. Friend makes an important point, which is that we have consistently lifted the personal tax allowance—the amount of money that people earn before they start paying tax—starting at around £6,000 and now rising all the time, so that over 2 million people have already been taken out of tax altogether. If he is sitting comfortably for the next half an hour, he may hear some further news.

Q9. [148841] Bridget Phillipson (Houghton and Sunderland South) (Lab): Does the Prime Minister agree with his hon. Friend the Member for Hexham (Guy Opperman) that his Government’s focus should be on looking after people who are struggling to pay their mortgages, rather than protecting those in £2 million houses?

The Prime Minister: We should be helping people who are paying their mortgages, and that is why it is so vital that we stick to our plans. We have low interest rates in this country because we have a plan to get the deficit down. That is absolutely key. The other point I would make to the hon. Lady is that if we look at the funding for lending scheme from the Bank of England, it has now successfully reduced mortgage rates and also made sure that people who do not have access to a large deposit are able to look at buying a house. We are making progress, but there is a lot more to do.

Q10. [148842] Gavin Williamson (South Staffordshire) (Con): This month we have had the wonderful news that Jaguar Land Rover is going to create a further 700 jobs in South Staffordshire, bringing its total investment to over £500 million. Last year we saw the creation of 70,000 manufacturing jobs in the UK. Does my right hon. Friend not think that this is a stark contrast to the 1.7 million manufacturing jobs destroyed under the last Labour Government?

The Prime Minister: My hon. Friend makes an important point. Jaguar Land Rover has been a massive success story for our country, and I would praise all of those who have invested money in that business, all those who work in it and all the apprentices who are being trained in it. It is part of a recovery of our automotive sector, which has, for the first time in 30 years, seen a surplus in the number of cars that we export overseas, and it is part of a picture where Nissan, Toyota, Honda and other automotive businesses in the sector are doing well, and we support them.

Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): The Prime Minister will be aware that this week marks the bicentenary of the birth of Dr David Livingstone—born in Blantyre in my constituency, buried in Westminster abbey—which was marked by a service attended by President Joyce Banda last night in the abbey. He will know that one of Livingstone’s proudest

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achievements was the drive to abolish slavery in east Africa. Given the bicentenary, does the Prime Minister agree that it is now time for his Government to take the lead to end the scandal of the 2.5 million people in modern-day slavery or prostitution as a result of people trafficking?

The Prime Minister: The hon. Gentleman makes an important point, and he gives me the opportunity to praise President Banda for what she is doing to lift people out of poverty in Malawi, and to thank her for visiting Britain and Scotland this week. The hon. Gentleman makes an important point about slavery, because there is still modern-day slavery and we still need to take action to combat it at European level, at national level and at local level with the police. This Government will continue to take that action.

Q11. [148843] Duncan Hames (Chippenham) (LD): Whatever further changes the Chancellor announces today, the payslips of ordinary working people will show a tax cut next month as a result of the personal allowance rise that the Liberal Democrats called for. It represents the largest single income tax change in this Parliament. What does this say about the priorities of my right hon. Friend the Prime Minister’s coalition Government?

The Prime Minister: This is an important priority that we have taken action on in Budget after Budget, even in difficult times, saying to people, “We are on your side. We want to cut your tax bills.” In just two weeks’ time there will be a tax cut of over £200 for 24 million people in our country—each and every taxpayer. At the same time, we are lifting over 2 million people out of tax—they will not pay any income tax at all. This is real progress and it is on the side of the people who work hard and want to get on.

Q12. [148844] Gloria De Piero (Ashfield) (Lab): What is the Prime Minister planning to spend his millionaire’s tax cut on?

The Prime Minister: When the top rate of tax was put up, millionaires paid £7 billion less. That is the sort of incompetence and inefficiency that the hon. Lady left the sofa of GMTV to support. [Interruption.]

Mr Speaker: Order. When a question is asked, Members should not shout their heads off when the Prime Minister is giving an answer.

Dr Julian Lewis (New Forest East) (Con): Given that SAS Sergeant Danny Nightingale has had his conviction quashed following the quashing of his military prison sentence last year, does the Prime Minister agree that it would be totally against the public interest, and against the interests of the SAS Regiment, for Sergeant Nightingale to have to face a fresh trial when others are benefiting from the weapons amnesty that was rightly introduced by the Secretary of State for Defence as a result of the Nightingale case?

The Prime Minister: My hon. Friend raises an important point. Let me say how strongly I support all those who serve in our special forces. As Prime Minister, I have the privilege of meeting many of those brave people and seeing that they are some of the finest and most courageous

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people in our country. I do not, however, want to get into any trouble with my right hon. and learned Friend the Attorney-General, so I will leave the issues of the courts to the courts.

Q13. [148845] Hugh Bayley (York Central) (Lab): The money that the Government have set aside to help people who are hit by the bedroom tax will not cover a fraction of the really hard cases, such as that of my paralysed constituent who receives round-the-clock care from his wife. There is an acute housing shortage in York, and they have nowhere to move to. So will the Prime Minister do one more U-turn on the bedroom tax, and scrap it altogether?

The Prime Minister: First, let me remind the hon. Gentleman that only the Labour party could call a welfare reform a tax. It shows how little they understand how tax and benefits work. We are making available a discretionary fund that is there for the hard cases, but we are also recognising that there is a basic issue of cost—about £23 billion is spent on housing benefit every year—and a basic issue of fairness, not just between the private sector and the social sector but in recognising that there are 1.8 million people on housing waiting lists who would love to have a bedroom.

Iain Stewart (Milton Keynes South) (Con): Is my right hon. Friend aware that the Business Location Index has just cited Milton Keynes as the best place in the country to do business and that, with more than 2,000 business start-ups in the past year, it is Milton Keynes that is rebuilding our economy?

The Prime Minister: I was aware of that statistic, because my hon. Friend helpfully reminded me of it when we were in Milton Keynes together recently, talking about what a fantastic location for business it is, about how it is encouraging business start-ups and about how it is leading to a growth in employment in the region.

Andy McDonald (Middlesbrough) (Lab): Given that the Chancellor has joined Twitter this morning, will the Prime Minister remind him and the House what too many tweets make?

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The Prime Minister: I have made a number of remarks about Twitter over the years, most of which I have had to withdraw because I am now tweeting, too. I look forward to the first tweet after the Budget this afternoon. What is clear is that the hon. Gentleman could tweet even now that we are cutting taxes in two weeks’ time for 24 million working people, taking 2 million people out of tax. Tweeting that would certainly not cause any dangers for the hon. Gentleman.

Mr Shailesh Vara (North West Cambridgeshire) (Con): Recently, the shadow Home Secretary admitted that when the Labour party was in government it got its immigration policy wrong. Does the Prime Minister agree with me that across the breakfast table, she should persuade her husband to make a similar admission on Labour’s economic policy.

The Prime Minister: I think my hon. Friend makes a very good point. We inherited a complete shambles in immigration—a system completely out of control. We have sort of had apologies for that; what we have not had is any sort of apology for the borrowing, the spending and the debt—the mess that the Labour party left us.

Caroline Lucas (Brighton, Pavilion) (Green): It has been estimated that for the cost of just one nuclear reactor, 7 million households could be lifted out of fuel poverty through energy efficiency and conservation. Hinkley is expected to come with an eye-watering £14 billion price tag and a strike price of getting on for double the current price of electricity. If that does not make nuclear unaffordable, can the Prime Minister tell us what would?

The Prime Minister: I am afraid that I just do not agree with the hon. Lady. Our fleet of nuclear power stations is coming to the end of its life, and I think it is important that we work hard to replace some of that capacity. That is what Hinkley is about; that is why I think my right hon. Friend the Secretary of State for Energy and Climate Change was absolutely right to give it the go-ahead. It will be an important provider of carbon-free electricity in the years ahead.

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Ways and Means

Financial Statement

Mr Deputy Speaker (Mr Lindsay Hoyle): Before I call the Chancellor of the Exchequer, it is convenient to remind hon. Members that copies of the Budget resolutions will be available in the Vote Office at the end of the Chancellor’s speech. It may also be appropriate to remind hon. Members that it is the norm not to intervene on the Chancellor of the Exchequer or the Leader of the Opposition.

12.32 pm

The Chancellor of the Exchequer (Mr George Osborne): This is a Budget for people who aspire to work hard and get on. It is a Budget for people who realise there are no easy answers to problems built up over many years—just the painstaking work of putting right what went so badly wrong. And together with the British people, we are, slowly but surely, fixing our country’s economic problems. We have now cut the deficit not by a quarter, but by a third. We have helped business create not a million new jobs, but one and a quarter million new jobs. We have kept interest rates at record lows.

Despite the progress we have made, there is much more to do. Today, I am going to level with people about the difficult economic circumstances we still face and the hard decisions required to deal with them. It is taking longer than anyone hoped, but we must hold to the right track. By setting free the aspirations of this nation, we will get there.

Our economic plan combines monetary activism with fiscal responsibility and supply-side reform, and today we go further on all three components of that plan: monetary, fiscal and supply-side reform. We also understand something else more fundamental. Our nation is in a global race, competing alongside new centres of enterprise around the world for investment and jobs that can move anywhere. What was the response of those who came before us? It was to expand the state in a way that we could not afford; to drive businesses overseas with taxes that became more and more uncompetitive; to let schools fail; to deplete our skills base; to let a bloated welfare system pick up the human casualties and assume that an uncontrolled banking boom would pick up the bill. To win in the global race, we are doing the exact opposite. We are building a modern, reformed state that we can afford. We are bringing businesses to our shores with competitive taxes. We are fixing the banks. We are improving our schools, our skills—[Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Obviously the country is waiting to hear the Chancellor. I certainly want to hear the Chancellor, and I am sure that most people in the Chamber also want to hear the Chancellor. Please let us hear the Chancellor.

Mr Osborne: For years people have felt that the whole system is tilted against those who did the right thing: who worked, who saved, who aspired. Those are the very people whom we must support if Britain is to have a prosperous future. This is a Budget for those who aspire to own their own home, who aspire to get their first job or to start their own business. It is a Budget for

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those who want to save for their retirement and provide for their children. It is a Budget for our aspiration nation.

The forecast from the independent Office for Budget Responsibility today reminds us of the economic challenge at home and abroad, but it also—[Interruption.]

Mr Deputy Speaker: Order. Let us start as we mean to go on. The shadow Chancellor may not have been the Chancellor, but he should observe the courtesies, and should know better. [Interruption.] We want no advice from the Government, and they should know better than to display it. I do not wish to see it. That is not a good position to put us in. Let us continue, and let this not become the circus of the day.

Mr Osborne: Since the autumn statement, the OBR has again revised down its forecast for global economic growth, and has sharply revised down its forecast for world trade. Growth in the United States and Japan was flat in the last quarter, while the eurozone shrank by 0.6%. That was the largest fall since the height of the financial crisis. The problems in Cyprus this week are further evidence that the crisis is not over, and the situation remains very worrying. I can confirm that, as the Prime Minister said, people sent to Cyprus to serve our country, in our military or Government, will be protected in full from any tax on their deposits.

The OBR today sharply revised down its future growth forecast for the eurozone, and expects it to remain in recession throughout this year. In its words, “the underlying situation” in the eurozone “remains very fragile”. I will be straight with the country: another bout of economic storms in the eurozone would hit Britain’s economic fortunes hard. Forty per cent. of all we export, we export to the eurozone. There is a huge effort across the Government to grow Britain’s trade with the fast-growing parts of the world, and exports to Brazil, India and China are up by almost two thirds. United Kingdom firms now export more goods to non-European Union countries than to EU countries. This is the first time that that has happened in over two decades. However, we are still very exposed to what happens on the continent. Indeed, last year domestic demand was actually stronger than forecast, but it is the weakness of net trade that helps to account for much of the weakness in GDP. As the OBR makes clear,

“the unexpectedly poor performance of exports is more than sufficient on its own to explain the shortfall”.

GDP for last year has turned out to be a little higher than the OBR forecast in December, but this year its output forecast is reduced to 0.6% growth. Despite the recession in the eurozone, the OBR’s central forecast today is that we will avoid a second quarter of negative growth here in the UK. While it is less than we would like, our growth this year and next year is forecast by the International Monetary Fund to be higher than that of France and Germany. That is a reminder of the fact that all western nations live in very challenging economic times.

The OBR expects the recovery to pick up to 1.8% in 2014, 2.3% in 2015, 2.7% in 2016, and 2.8% in 2017. Crucially, jobs are being created. Indeed, in the words of the OBR, the picture on employment

“continues to surprise on the upside”

in this forecast.

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When we started the unavoidable task of reducing the size of the public sector work force, some in the House expressed doubts that the private sector would be able to make up the difference. I am glad to report to the House that their lack of confidence in British businesses has been misplaced. It is a tribute to the energy and enterprise of British companies that for every one job lost in the public sector in the last year, six jobs have been created in the private sector; the employment rate has been growing faster than in the US and three times as fast as in Germany. So, despite the weaker GDP, at this Budget the OBR has now revised up further its forecasts for employment. Compared with this time last year, the OBR now expects 600,000 more jobs in 2013, and there will be 60,000 fewer people claiming unemployment benefit. We have seen more people in work than ever before, including a record number of women; there are a quarter of a million fewer workless households than two years ago; and the unemployment rate is lower than it was when we came to office.

The deficit continues to come down. Three years ago, the Government were borrowing £1 for every £4 they spent—that was completely reckless and unsustainable. We have taken many tough decisions to bring that deficit down, and we will continue to do so. The deficit has fallen from 11.2% of GDP in 2009-10 to a forecast of 7.4% this year—that is a fall of a third. It will then fall further to 6.8% next year, 5.9% in 2014-15, 5% in 2015-16 and 3.4% the following year, reaching 2.2% by 2017-18. Those numbers all exclude the transfer of the Royal Mail pension fund to the Government, which reduces the deficit still further for this year alone. It is sometimes asserted in this House that borrowing has gone up under this Government—[Interruption.] As we have just seen again. The facts show the opposite to be true. The previous Government borrowed—[Interruption.]

Mr Deputy Speaker: Order. We cannot have one side being told without the other. It is not a competition of who can shout the loudest. Let us hear the Chancellor. If you don’t want to hear your own Chancellor, I am sure your constituents would understand if you were to leave the Chamber. I suggest that nobody wants to leave the Chamber, so let us continue to hear the Chancellor of the Exchequer.

Mr Osborne: As I was saying, the facts show the opposite to be true. The previous Government borrowed £159 billion in their last year in office and this year this Government are forecast to borrow £114 billion. So that is not more borrowing—it is £45 billion a year less borrowing. Borrowing then falls from £108 billion next year, and falls again to £97 billion in 2014-15 and to £87 billion in the last year of this Parliament, before falling again to £61 billion and £42 billion in the following two years. To ensure complete transparency, the OBR publishes the numbers without the asset purchase facility cash transfers. They show that on that measure, too, borrowing is just forecast to fall.

We committed at the start of this Parliament to a fiscal mandate that said we would aim to balance the cyclically adjusted current budget over the following rolling five years. I can confirm that the OBR says we are on course to meet our fiscal mandate—and meet it

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one year early. However, the likelihood of meeting the supplementary debt target has deteriorated. Public sector net debt is forecast to be 75.9% of GDP this year, 79.2% next year, 82.6% the year after, 85.1% in 2015-16 and 85.6% in the year after, before falling to 84.8% in 2017-18.

In response, there are those who would want to cut much more than we are planning to and chase the debt target. I said in December that I thought that with the current weak economic conditions across Europe that would be a mistake. We have got a plan to cut our structural deficit. Our country’s credibility comes from delivering that plan, not altering it with every forecast—and that is why interest rates remain so low. Our judgment has since been supported by the International Monetary Fund, the OECD and the Governor of the Bank of England, and I do not propose to change that judgment three months later.

I have also had representations at this Budget for measures that would add £33 billion a year extra to borrowing on top of the figures I have announced. That is from people who seem to think that the way to borrow less is to borrow more. They would return us to the double-digit deficits of the last Government and give us far and away one of the highest deficits in the western world. That would pose a huge risk to the stability of the British economy, threaten a sharp rise in interest rates and leave the burden of debts to our children and our grandchildren. I will not take that gamble with the future of this country, especially when those representations came from the very same people whose previous gamble with our economy led to the mess that we are clearing up in the first place.

The spending reductions that we promised have been more than delivered. Welfare reforms have been legislated for and are taking place, and here is a clear sign of progress: the proportion of national income spent by the state has fallen from 47.4% three years ago to 43.6% today; and it is on course to reach 40.5% at the end of the period. We have set out the deficit plan, and we are delivering that plan. Taken together, the measures that I will announce today are fiscally neutral overall. Ask the British people and they will tell you: our problem as a country is not that we are taxed too little, but that the Government spend too much. I agree with them. So the tax cuts in this Budget are not borrowed; they are paid for. That is our way, and it is the only responsible way to lower taxes.

It is the central plank of our economic plan that a tough and credible fiscal policy creates the space for an active monetary policy. Recovering from the financial crisis has exposed the shortcomings of conventional monetary tools. We in Britain have had to innovate and develop new tools; so have other countries. I confirm today that the asset purchase facility will remain in place for the coming year. We are now actively considering with the Bank of England whether there are potential extensions to the successful funding for lending scheme that will boost lending still further. We are also setting out our plans for lending from our new business bank, but I want to make sure that an active monetary policy plays a full role in supporting the economy, so I am today setting out an updated remit for the Monetary Policy Committee. Alongside it, we are publishing a review of the monetary policy framework.

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This Budget confirms the primacy of price stability and the inflation target in Britain’s monetary policy framework. The updated remit reaffirms the inflation target as 2% as measured by the 12-month increase in the consumer prices index. The target will apply at all times, but as we have seen over the last five years, low and stable inflation is a necessary but not sufficient condition for prosperity. The new remit explicitly tasks the MPC with setting out clearly the trade-offs that it has made in deciding how long it will be before inflation returns to target. To ensure a fuller communication between the Bank and the Treasury, I am changing the timing of the open letter system, so that when inflation is above target the Governor will write to me on the day the minutes of the next MPC meeting are published to allow for a more substantive exchange of views.

The new remit also recognises that the Monetary Policy Committee may need to use unconventional monetary instruments to support the economy while keeping inflation stable, and it makes it clear that the committee may wish to issue explicit forward guidance, including using intermediate thresholds in order to influence expectations on the future path of interest rates. For example, that is what the US Federal Reserve has now done, making a commitment to keep interest rates low while unemployment is high, provided that inflation is not expected to rise too much. This can help the economy because it gives families planning their futures, and businesses wondering whether to invest, more confidence that interest rates will stay lower for longer. So I am asking the Monetary Policy Committee to provide an assessment of how intermediate thresholds might work in Britain, and to give that assessment in its August 2013 inflation report. That report will be the first issued under the governorship of Mark Carney. Whether intermediate thresholds are used will be an operational matter for the independent MPC. I can confirm that Mervyn King and Mark Carney have both seen the new remit and they have both agreed to it.

Active monetary policy can only operate freely when securely anchored by credible fiscal policy. That is the next component of our economic plan. We have instituted new public spending controls in government. When money is short, we make no excuses for the rigorous financial management we have run across Whitehall. Let me be clear with the House: that is one of the reasons why we have got forecast borrowing falling in this year and next. The traditional splurge of cash by Departments at the end of the financial year, just to get the money spent, has to be curtailed. And thanks to the tough financial control of my right hon. Friend the Chief Secretary, Government Departments are forecast to underspend their budgets by more than £11 billion this year. If you want to bring borrowing down, you have to control spending, and that is what we have done.

Now we want to ensure Departments have budgets that are more closely aligned to what they actually spend. So both next year and the year after, we will reduce resource departmental expenditure limits by the equivalent to a 1% reduction for most Departments. The schools and health budgets will remain protected, because our promise to our NHS is a promise we will keep. Local government and police allocations for 2013-14 have already been set out and will not be affected. We will also deliver in this coming year on

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this nation’s long-standing commitment to the world’s poorest to spend 0.7% of our national income on international development. We should all take pride, as I do, in this historic achievement for our country. As previously, the Department for International Development budget will be adjusted to ensure we do not spend more than 0.7%.

Departmental budgets have yet to be set for the year 2015-16, which starts before the end of this Parliament. This will be done in the spending round that will be set out on 26 June. I said last autumn that we would require around £10 billion of savings from that spending round. I confirm today that we will instead be seeking £11.5 billion of current savings. We have got to go on making difficult decisions so that Britain can live within its means. And because we make those decisions, we can get our deficit down and focus on our nation’s economic priorities.

Total managed expenditure for 2015-16 will be set at £745 billion. How the savings will be achieved will be a matter for the spending round, but existing protections apply. We are also taking steps to help all Departments to achieve the savings required. Together, my right hon. Friends the Chief Secretary and the Minister for the Cabinet Office have indentified that a further £5 billion of savings in efficiency and cutting the cost of administration can be made. This will go a huge way towards delivering the spending round in a way that saves money but protects services.

So too will action on pay. The Government will extend the restraint on public sector pay for a further year by limiting increases to an average of up to 1% in 2015-16. This will apply to the civil service and work forces with pay review bodies. Local government and devolved Administration budgets will be adjusted accordingly in the spending round. We will also seek substantial savings from what is called progression pay. These are the annual increases in the pay of some parts of the public sector. I think they are difficult to justify when others in the public sector, and millions more in the private sector, have seen pay frozen or even cut. I know that is tough, but it is fair. In difficult times with the inevitable trade-off between paying people more and saving jobs, we should put jobs first.

Today is also the 10th anniversary of the start of the Iraq war. The awarding of a posthumous Victoria Cross to Lance Corporal James Ashworth this week reminds us of the courage and sacrifice that all who serve in our armed forces are still making to defend our country. We will exempt our military from changes to progression pay. We are also accepting in full from 1 May this year the armed forces pay review body's recommended increase in the so-called X factor payment made to military personnel to recognise the particular sacrifices they make. And I can also announce that further awards from the LIBOR banking fines have gone to good military causes, with money for Combat Stress to help veterans with mental health issues and funds for Christmas boxes for all our troops on operations this year and next. Those who have paid fines in our financial sector because they demonstrated the very worst of values are paying to support those in our armed forces who demonstrate the very best of British values.

Ultimately as a country we will not be able to spend more on the services we all value, from our NHS to our armed forces, or invest in our infrastructure, unless we

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go on tackling the growth of spending on welfare budgets. The public spending framework introduced by the previous Government divided Government spending into two halves: fixed departmental budgets and what is called annually managed expenditure—except in practice it was annually unmanaged expenditure—and it includes almost the entire welfare budget as well as items like debt interest and payments to the EU. I can tell the House that according to the OBR forecast today, the European budget deal secured by my right hon. Friend the Prime Minister has saved Britain a total of £3.5 billion. We will now introduce a new limit on a significant proportion of annually managed expenditure. It will be set out in a way that allows the automatic stabilisers to operate, but it will bring real control to areas of public spending that had been out of control. We will set out more detail on how this new spending limit will work at the spending round in June. All decisions, on welfare, pay and Departments are tough, and they affect many people. But if we did not take them, what is a difficult situation for them and for the whole country would be very much worse.

Active monetary policy and a responsible fiscal policy are two components of our economic plan. We also need supply-side reform, to throw the full weight of our efforts behind the entrepreneurial forces in our society. Our fundamental overhaul of the planning laws are now helping homes to be built and businesses to expand. Our reform of schools, universities and apprenticeships is probably the single most important long-term economic policy we are pursuing. Our support for European free trade agreements with India, Japan and the US is a priority of our foreign policy. And we are building the most competitive tax system in the world. But now we need to do more.

First, we can provide the economy with the infrastructure it needs. We are already supporting the largest programme of investment in our railways since Victorian times, and spending more on new roads than in a generation. We are giving Britain the fastest broadband and mobile telephony in Europe. And the Treasury is now writing guarantees to major projects from supporting the regeneration of the old Battersea power station site to building the new power stations of tomorrow. We have switched billions of pounds from current to capital spending since the spending review to mitigate the sharp decline set in train by the last Government. But on existing plans, capital spending is still due to fall back in 2015-16, and I do not think that is sensible. So by using our extra savings from Government Departments, we will boost our infrastructure plans by £3 billion a year from 2015-16. That is £15 billion of extra capital spending over the next decade, because by investing in the economic arteries of this country, we will get growth flowing to every part of it. And public investment will now be higher on average as a percentage of our national income under our plans than it was in the whole period of the last Government.

In June, we will set out long-term spending plans for that long-term capital budget. And we will use the expertise of Paul Deighton, the man who delivered the Olympics and who now serves in the Treasury, to improve the capacity of Whitehall to deliver big projects and make greater use of independent advice.

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The second thing we can do to support enterprise is to give our great regional cities and other local areas much greater control over their economic destiny and to back sectors that are a global success. Businesses have created more jobs in areas such as the west midlands in the first three years of this Government than they did in the first 10 years of the Labour Government. Private sector employment has been growing more quickly in the north-east, the north-west and Yorkshire than across the whole country.

But we can do much more, so I accept Michael Heseltine’s excellent idea of a single competitive pot of funding for local enterprise. I also fully endorse the report of Doug Richard to make the most of our apprenticeships. We have the second largest aerospace industry in the world. For the first time in 40 years, we manufacture for export more cars than we import, and our agritech business is at the global cutting edge. We are backing international successes like those with £1.6 billion of long-term funding for the industrial strategy that my right hon. Friend the Business Secretary launched this week.

Today we build on our new tax reliefs coming in this year for the creative industries such as high-end television and animation with new support for our world-class visual effects sector. To help small firms, we will increase fivefold the value of Government procurement budgets spent through the small business research initiative. We will fund the proposal to make growth vouchers available to small firms seeking advice on how to expand. We are putting new controls on what regulators can charge and giving the Pensions Regulator a new requirement to have regard to the growth prospects of employers.

A vital sector for our economy, and a cost of doing business for everyone, is energy. Creating a low-carbon economy should be done in a way that creates jobs, rather than costing them. The granting of planning permission yesterday at Hinkley Point was a major step forward for new nuclear. Today, with the help of my hon. Friend the Energy Minister, we are also announcing our intention to take two major carbon capture and storage projects to the next stage of development. We will support the manufacture of ultra-low emissions vehicles in Britain with new tax incentives. The hon. Member for Stoke-on-Trent Central (Tristram Hunt) has argued passionately, and on this occasion in a non-partisan way, about the damage that energy costs are doing to his city’s famous ceramics industry. He has persuaded me, so from next year we will exempt the industrial processes for that industry and some others from the climate change levy.

In the spending round, we will provide support for energy-intensive industries beyond 2015. For the North sea, we will this year sign contracts for future decommissioning relief, the expectation of which is already increasing investment there. But I also want Britain to tap into new sources of low-cost energy such as shale gas, so I am introducing a generous new tax regime, including a shale gas field allowance, to promote early investment. By the summer, new planning guidance will be available alongside specific proposals to allow local communities to benefit. Shale gas is part of the future, and we will make it happen.

We can help companies grow and succeed by building infrastructure, backing local enterprise and supporting successful sectors, but nothing beats having the most

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competitive business tax system of any major economy in the world. That is what this Government set out to achieve. That is what we are delivering. The accountants KPMG does a survey of investors that ranks the most competitive tax regimes in the world. Three years ago we were near the bottom of that table; now we are at the top. But in this global race we cannot stand still, so today we step up the pace. Our seed enterprise investment scheme offers generous incentives to investors in start-ups. My hon. Friend the Member for Braintree (Mr Newmark) and David Young have done a great job helping to promote it across the country. They have asked me to extend the capital gains tax holiday, and I will.

Employee ownership helps create an enterprise culture, so we are making our new employee shareholder status more generous, with national insurance contributions and income tax relief, and we are introducing capital gains tax relief for sales of businesses to their employees. Companies that look after their employees and help them return to work after periods of sickness will also get new help through the tax system, and we will double to £10,000 the size of the loans that employers can offer tax free to pay for items such as season tickets for commuters. That is a great idea from my hon. Friend the Member for Witham (Priti Patel) and I am happy to put it into practice. My hon. Friend the Member for Enfield North (Nick de Bois) and others have put forward proposals to help investment in social enterprises, and I have listened. We will introduce a new tax relief to encourage private investment in these social enterprises.

Research and development is absolutely central to Britain’s economic future, so today I am increasing the rate of the above-the-line R and D credit to 10%. Along with our new 10% corporation tax rate on profits from patents coming in next month, that will help make us one of the most internationally attractive places to innovate.

I also want Britain to be the place where people raise money and invest. Financial services are about much more than banking. In places such as Edinburgh and London we have a world-beating asset management industry, but they are losing business to other places in Europe. We act now with a package of measures to reverse that decline, and we will abolish the schedule 19 tax, which is payable only by UK-domiciled funds.

Many medium-sized firms and start-ups use the alternative investment market to raise funds to help them grow. Many observers of the British tax system complain that it has long been biased towards debt financing over equity investment, so today I am abolishing altogether stamp duty on shares traded on growth markets such as AIM. In parts of Europe they are introducing a financial transaction tax; here in Britain we are getting rid of one. From April next year, that will directly benefit hundreds of medium-sized UK firms, lowering their cost of capital and supporting jobs and growth across the UK.

We also set out to compete with the world in our headline rate of corporation tax. In Germany, the corporate tax rate is 29%; in France it is 33%; in the United States it is 40%. Here in Britain we have cut corporation tax from the 28% we inherited to 21% next year. But I want to go further. Today I want us to send a message to anyone who wants to invest and create jobs here that Britain is open for business, so in April 2015 we will reduce the main rate of corporation tax by another 1%. Britain

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will have a 20% rate of corporation tax, the lowest business tax of any major economy in the world. That is a tax cut for jobs and growth. We will have achieved in one Parliament, and in these difficult times, the largest reduction in the burden of corporation tax in our nation’s history, and with it we will achieve major simplification of our business tax system. By merging the small company and main rates at 20p, we will abolish the complex marginal relief calculations between them and give Britain a single rate of corporation tax for the first time since 1973. As with previous reductions in the corporate tax rate, I do not intend to pass the benefit on to the banking sector, so I will offset the reduction by increasing the bank levy rate next year to 0.142%.

Britain is moving to low and competitive taxes, but we should insist that people and business pay those taxes, rather than aggressively avoiding or evading them. That is the right way to succeed in the global race. Under Labour, we had the worst of both worlds: uncompetitive tax rates that were not paid. When the 50p rate was introduced, tax revenues fell by billions of pounds as the wealthy paid less. That is the wrong way round. Under this Government, the tax rates are more competitive and the wealthy pay more tax. That is the right way round. Here is an inconvenient truth for the Opposition: in every year of this Parliament the rich will pay a greater proportion of income tax revenues than in any one of the 13 years of the previous Labour Government. During those 13 years, too many people were allowed to get away with aggressive tax avoidance and abuse. They boasted that they were paying less tax then their cleaners, and Labour Members lauded them for it. We have stopped that, and that is what I call fair.

Today I am unveiling one of the largest ever packages of tax avoidance and evasion measures presented at a Budget. The details are set out in the Red Book. They include agreements with the Isle of Man, Guernsey and Jersey to bring in over £1 billion in unpaid taxes and new rules to stop the abuse of partnership rules, corporate tax losses and offshore employment intermediaries. That is another £2 billion. This year we are giving Britain its first ever general anti-abuse rule, and we will name and shame the promoters of tax avoidance schemes. My message to those who make a living advising other people how to aggressively avoid their taxes is this: this Government will not let you get away with it. This year we are leading international action on tax avoidance through our presidency of the G8 and with the OECD and the G20. We want the global rules governing the taxation of multinational firms to be updated from the 1920s, when they were first written, and made relevant to the global internet economy of the 21st century. This is the right and fair thing to do.

A tax system where people and businesses pay what is expected of them is part of the glue that holds our society together. So too is the expectation that those who work hard, who play by the rules, who save for their future and try to be independent of the state are not undermined but supported. So to the working parents struggling with the costs of child care, and the mother wondering whether it makes financial sense to get a job, we offer this: tax-free child care. The plans were set out yesterday: new tax-free child care vouchers for working families, with 20% off the first £6,000 of

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your child care costs for each child, and increased child care support for those low-income working families on universal credit.

For those who aspire to put aside money for their retirement, we offer this: a simple, flat-rate pension accessible to everyone and worth £144 a week. Any one pound you save will be a pound you can keep. We are bringing forward the introduction of the new single-tier pension to 2016. It will help the low-paid, the self-employed, and millions of women most of all. Of course, if there is no longer the old state second pension, there is no longer anything to contract out of. For employers, that means paying the same employer national insurance as those without defined-benefit schemes. Private sector employers can adjust their pension benefits to accommodate the extra cost; public sector employers will have to absorb the burden, as is always the case with tax changes. Any spending review in the next Parliament will of course take the £3.3 billion cost into account.

As we have already made clear, public sector employees, and the relatively small number of private sector employees in defined benefit schemes, will from 2016 pay more national insurance then they do today. They will pay the same rate of national insurance as the rest of the working population, and in return they will get a larger state pension than before. For example, someone who is 40 years old when the single-tier pension is introduced, and who has always been contracted out, will pay an extra £6,000 in national insurance over the rest of their working life—and in return get an extra £24,000 in state pension over the course of their retirement. That is a fair deal, and it is a progressive pension reform. We have also made it clear before that the extra £1.6 billion raised in employee national insurance will not be kept by the Treasury.

There is another group of savers I want to talk about today. I am proud to have been part of a Government who have helped to compensate the policyholders of Equitable Life, who have suffered a great injustice. But we have not extended help to those who bought their with-profits annuity before 1992. Now we can. I would like to acknowledge the work of my hon. Friend the Member for Harrow East (Bob Blackman) on behalf of these people. We will make ex gratia payments of £5,000 to those elderly policyholders, and we will make an extra £5,000 available to those on the lowest incomes who are on pension credit. We are not doing this because we are legally obliged to; we are doing it because, quite simply, it is the right thing to do.

Helping with aspiration also means helping those who want to keep their home instead of having to sell it to pay for the costs of social care. That is what our new cap will deliver, as Andrew Dilnot recommended. It will also come in in 2016. It will be set to protect savings above £72,000, and we will raise the threshold for the means test on residential care from just over £23,000 to £118,000 that year too. For decades, politicians have talked of doing something for savers and those who have to sell their homes to pay for care, and yet nothing has been done—until this week.

I want to do much more, for unless we fire up the aspirations of the British people—light the fires of ambition within our nation—we are going to be out-smarted, out-competed and out-performed by others in

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the world who are prepared to work harder for success than we are. So this Budget makes a new offer to our aspiration nation—and what symbolises that more than the desire to own your own home? Today I can announce Help to Buy. The deposits demanded for a mortgage these days have put home ownership beyond the great majority who cannot turn to their parents for a contribution. That is not just a blow to the most human of aspirations: it is a setback for social mobility, and it has been hard on the construction industry too. This Budget proposes to put that right—and put it right in a dramatic way.

Help to Buy has two components. First, we are going to commit £3.5 billion of capital spending over the next three years to shared equity loans. From the beginning of next month, we will offer an equity loan worth up to 20% of the value of a new build home to anyone looking to move up the housing ladder. You put down a 5% deposit from your savings, and the Government will loan you a further 20%. The loan is interest free for the first five years. It is repaid when the home is sold. Previous help was available only to those who were first-time buyers and who had family incomes below £60,000. Now help is available to all buyers of newly built homes on all incomes: available to anyone looking to get on or move up the housing ladder. The only constraint will be that the home cannot be worth more than £600,000—but this covers well over 90% of all homes. It is a great deal for homebuyers; it is a great support to home builders; and because it is a financial transaction, with the taxpayer making an investment and getting a return, it will not hit our deficit.

The second part of Help to Buy is even bolder and has not been seen before in this country. We are going to help families who want a mortgage for any home they are buying, old or new, but who cannot begin to afford the kind of deposits being demanded today. We will offer a new mortgage guarantee. This will be available to lenders to help them to provide more mortgages to people who cannot afford a big deposit. These guaranteed mortgages will be available to all homeowners, subject to the usual checks on responsible lending. Using the Government’s balance sheet to back these higher loan-to-value mortgages will dramatically increase their availability. We have worked with some of the biggest mortgage lenders to get this right; and we are offering guarantees sufficient to support £130 billion of mortgages. It will be available from the start of 2014 and run for three years. A future Government would need the agreement of the Bank of England’s Financial Policy Committee if they wanted to extend it.

Help to Buy is a dramatic intervention to get our housing market moving. For newly built housing, Government will put up a fifth of the cost; and for anyone who can afford a mortgage but cannot afford a big deposit, our mortgage guarantee will help them to buy their own home. That is a good use of this Government’s fiscal credibility.

In the Budget Book we also set out more plans for housing—plans to build 15,000 more affordable homes; plans to increase fivefold the funds available for building for rent; and plans to extend the right to buy so that more tenants can buy their own home.

People also have the aspiration to keep more of what they earn. That is a difficult aspiration for any Chancellor to help with when economic times are tough and money is short, but we are doing the hard work to reduce

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current spending. We have set out a tough package to raise money from tax avoiders. That means that with this Budget we can stick to the path of deficit reduction, increase capital spending, and still find ways to help families.

Let me turn to duties. We inherited a fuel duty escalator from the previous Government that would have seen above-inflation increases in every year of this Parliament. We abolished the escalator and we have now frozen fuel duty for two years. This has not been easy. The Government have forgone £6 billion in revenues to date, but oil prices have risen again, family budgets are squeezed, and I hear those who want me to do more to help them get by. My hon. Friend the Member for Harlow (Robert Halfon) has again spoken up for his hard-working constituents. He has been joined by many other hon. Friends, like the hon. Member for Argyll and Bute (Mr Reid). We have all listened to the people we represent. Today I am cancelling this September’s fuel duty increase altogether. Petrol will now be 13p per litre cheaper than if we had not acted over these last two years to freeze fuel duty. For a Vauxhall Astra or a Ford Focus, that is £7 less every time you fill up.

There is another duty escalator that we also inherited from the previous Government—the annual 2% above inflation increase in alcohol. We are looking at plans to stop the biggest discounts of cheap alcohol at retailers, but responsible drinkers in our pubs should not pay the price for the problems caused by others. The sad fact is that we have lost 10,000 pubs in the UK over the past decade. Many hon. Members, such as my hon. Friend the Member for Bristol North West (Charlotte Leslie), have raised their concerns with me, and my hon. Friend the Member for Burton (Andrew Griffiths) in particular has been a committed champion of the famous brewing industry that employs many of his constituents.

I intend to maintain the planned rise for all alcohol duties, with the exception of beer. We will now scrap the beer duty escalator altogether, and instead of the 3p rise in beer duty tax planned for this year by the previous Government I am cancelling it altogether.

That is the freeze people have been campaigning for, but I am going to go one step further and cut beer duty by 1p. We are taking a penny off the pint. The cut will take effect this Sunday night and I expect it to be passed on in full to customers. All other duties will remain as previously announced.

Of course, freezing petrol duty and cutting beer duty will not transform the finances of any family, but it helps a little to have some bills that are not going up. [Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. May I say to Back Benchers and to a couple of Members in particular that the panto season is not for another nine months, and if there are auditions could they take place outside the Chamber?

Mr Osborne: It helps a lot to be able to keep more of the money you earn before you pay tax on it. The Government support people who work hard and want to get on.

When we came to office the personal income tax allowance stood at under £6,500. In two weeks’ time, the allowance will reach £9,440, with the largest cash

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increase in its history. Twenty-four million taxpayers will see their income tax bill cut by an extra £200. More than 2 million of the lowest paid will be taken out of tax altogether.

In this Budget, the Government reconfirm their commitment to raising the personal allowance to £10,000, In fact, we go one better. We said we would raise the personal allowance to £10,000 by the end of the Parliament. Today I can confirm that we will get there next year. From 2014, there will be no income tax at all on the first £10,000 of your salary—£10,000 of tax-free earning. That is £700 less in tax for working families than when this Government came to office. Almost 3 million of the lowest paid will pay no income tax at all. It is a historic achievement for this Government and for hard-working families across the country.

I am aware that the concept of a 10p tax rate has caused problems for Labour Members. First, they introduced it before deciding that introducing it was a mistake and that it ought to be abolished. Then they decided that abolishing it was a mistake and that they ought to introduce it again. To put them out of their misery, we are going to turn their 10p band into a 0p band, so they do not have to worry about it any more. Every person who is paying at the 10p rate that Labour doubled will now pay no income tax at all.

There is one final tax change that I want to tell the House about. It is about jobs. In the end, aspiration is about living in a country where people can get jobs and fulfil their dreams. The ending of contracting out that I talked about generates extra employee national insurance revenues for the Exchequer. I want to put those revenues to good use. I want to support jobs and the small businesses that create them, and I want to do it with a reforming tax cut. In fact, it is the largest tax cut in this Budget.

The cost of employing people is a burden on small firms. It is a real barrier to taking an extra person on. To help create jobs and back small businesses in this country, I am today creating the employment allowance. The employment allowance will work by taking the first £2,000 off the employer national insurance bill of every company. It is a tax off jobs. It is worth up to £2,000 to every business in the country. It will mean that 450,000 small businesses—one third of all employers in the country—will pay no jobs tax at all.

For the person who has set up their own business and is thinking about taking on their first employee, a huge barrier will be removed. They can hire someone on £22,000, or four people on the minimum wage, and pay no jobs tax. Ninety-eight per cent. of the benefit of this employment allowance will go to small and medium-sized enterprises. It will become available in April next year, once the legislation has passed. We will also make it available to charities and community sports clubs. The previous Government’s answer to Britain’s economic problems was to propose a tax on jobs. We stopped that and today this Government are taking tax off jobs.

A new employment allowance that helps small firms, a 20% rate of corporation tax and a £10,000 personal allowance are major achievements delivered by this Government in difficult times.

We understand that the way to restore our economic prosperity is to energise the aspirations of the British people. If you want to own your own home, if you want

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help with your child care bills, if you want to start your own business or give someone a job, if you want to save for your retirement and leave your home to your children, and if you want to work hard and get on, we are on your side. This is a Budget that does not duck our nation’s problems; it confronts them head on. It is a Budget for an aspiration nation. It is a Budget that wants to be prosperous, solvent and free, and I commend it to the House.




Mr Deputy Speaker: Order. If Members want to debate the Budget, we had better make some progress.

Provisional Collection of Taxes

Motion made, and Question put forthwith (Standing Order No. 51(2)),

That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—

(a) Alcoholic liquor duties (rates) (Motion No. 50.)

(b) Tobacco products duty (rates) (Motion No. 51.)—(Mr George Osborne.)

Question agreed to.

Sir Bob Russell (Colchester) (LD): Let’s all have a drink.

Mr Deputy Speaker: Only if you’re buying.

I now call upon the Chancellor of the Exchequer to move the motion entitled “Amendment of the Law”. It is on this motion that the debate will take place today and on the succeeding days. The remaining motions will be put at the end of the Budget debate next week.

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Budget Resolutions and Economic Situation

Amendment of the Law

Motion made, and Question proposed,


(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.

(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

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

(b) for refunding an amount of tax;

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

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

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

1.29 pm

Edward Miliband (Doncaster North) (Lab): This is the Chancellor’s fourth Budget, but one thing unites them all: every Budget, when he comes to this House, things are worse, not better, for this country. Compared to last year’s Budget, growth last year is down, growth this year is down, growth next year is down and growth in 2015 is down. And all he offers is more of the same: higher borrowing, lower growth and more—[Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I expected the Chancellor to be heard and I expect the Leader of the Opposition to be given the same courtesy.

Edward Miliband: Government Members do not think that growth matters, but people in this country do.

All the Chancellor offers is more of the same. It is a more-of-the-same Budget from a downgraded Chancellor. Britain deserves better than this.

The Chancellor almost need not have bothered coming to the House, because the whole Budget, including the market-sensitive fiscal forecasts, was in the Standard before he rose to his feet.

Hon. Members: Resign!

Mr Deputy Speaker: Order. I cannot understand an Opposition who do not want to hear their own leader. [Interruption.] Order. Just as when the Opposition did not want to hear the Chancellor, the one thing that I can guarantee is that people in this country want to hear what the right hon. Gentleman has to say.

Edward Miliband: To be fair to the Chancellor of the Exchequer, I am sure that he did not intend the whole of the Budget to be in the Standard before he rose to his feet. I hope that he will investigate and report back to the House.

What did the Prime Minister declare late last year? He said

“the good news will keep coming.”—[Official Report, 24 October 2012; Vol. 551, c. 917.]

What did the Chancellor tell us today? Under this Government, the bad news just does not stop. Back in June 2010, he promised in his Budget a “steady and sustained” recovery. He was wrong. We have had the

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slowest recovery for 100 years. Last year, he said in the Budget that there would be no double-dip recession. He was wrong; there was. He told us a year ago that growth would be 2%. He was wrong; now he says that it will be just 0.6%. He told us that next year, growth will be 2.7%. Wrong again; it will be just 1.8%.

“Wait for tomorrow,” the Chancellor says, “and I will be vindicated.” But with this Chancellor, tomorrow never comes. He is the wrong man in the wrong place at the worst possible time for the country. It is a downgraded Budget from a downgraded Chancellor. He has secured one upgrade this year: travelling first class on a second-class ticket from Crewe to London. [Interruption.]

Mr Deputy Speaker: Order. I do not want to keep repeating myself. I expect, and the public expect, to hear the Leader of the Opposition. Government Members must also listen to the Leader of the Opposition.

Edward Miliband: The only time when the country has felt all in it together is when the Chancellor was booed by 80,000 people at the Paralympic games. I have some advice for the Chancellor: stay away from the cup final, even if Chelsea get there.

Who is paying the price for the Chancellor’s failure? Britain’s families. In his first Budget, he predicted that living standards would rise over the Parliament, but wages are flat, prices are rising and Britain’s families are squeezed. What the Chancellor did not tell us is that the Office for Budget Responsibility has already confirmed that the British people will be worse off in 2015 than they were in 2010. It’s official: you’re worse off under the Tories. Worse off, year after year after year.

Was there not an extraordinary omission from the Chancellor’s speech? There was no mention of the triple A rating. The Prime Minister called it the “mark of trust” and told us that it had been “secured”. The Chancellor said that it would be a humiliation for Britain to be downgraded. So he is not just a downgraded Chancellor, but a humiliated Chancellor too.

What about borrowing? The Chancellor made the extraordinary claim in his Budget speech that he was “on course”. Even he cannot believe this nonsense. Debt will be higher in every year of this Parliament than he forecast at the last Budget. He is going to borrow £200 billion more than he planned.

What did the Chancellor say in his June 2010 Budget? He set two very clear benchmarks:

“we are on track to have debt falling and a balanced structural current budget by”

2014-15.—[Official Report, 22 June 2010; Vol. 512, c. 168.] He called that “our four-year plan”. This was the deal that he offered the British people. These were the terms: four years of pain, tax rises—[Interruption.] The Prime Minister says from a sedentary position, “Borrow more.” He is borrowing more. He just needs to look down the Bench, because his own Business Secretary said that they are borrowing more. I would keep quiet if I was him.

These were the terms: four years of pain, tax rises and spending cuts, and the public finances would be sorted. So today, the Chancellor should have been telling us, “Just one more year of sacrifice. In 12 months the good times will roll. Job done. Mission accomplished. Election plan under way.” But three years on, what does

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he say? Exactly what he said three years ago. We still need four more years of pain, tax rises and spending cuts. In other words, after all the misery, all the harsh medicine and all the suffering by the British people—three years, no progress, deal broken, same old Tories. And all the Chancellor offers is more of the same.

It is as if the Government really do believe their own propaganda that the failure is nothing to do with them. We have heard all the excuses: the snow, the royal wedding, the jubilee, the eurozone. Now, they are turning on each other. The Prime Minister said last weekend:

“Let the message go out from this hall and this party: we are here to fight.”

They are certainly doing that. The Business Secretary has turned on the Chancellor, the Home Secretary has turned on the Prime Minister and the Education Secretary has turned on her. The whole country can see what is going on: the blame game has begun in the Cabinet.

The truth is that the Chancellor is lashed to the mast. Not because of his judgment, but because of pride; not because of the facts, but because of ideology. Why does he stay in his job? Not because the country wants him, not because his party wants him, but because he is the Prime Minister’s last line of defence. The Bullingdon boys really are both in it together. They do not understand that we need a recovery made by the many, not just a few at the top.

It is a year now since the omnishambles Budget. We have had U-turns on charities, churches, caravans and, yes, on pasties. But what is the one policy that the Government are absolutely committed to? The top rate tax cut. John the banker—remember him?—has had a tough year earning £1 million. What does he get? He gets a tax cut of £42,500 next year—double the average wage. His colleague—let us call him George—has done a little better and brings home £5 million a year. What does he get as a tax cut? I know that the Prime Minister does not like to hear what he agreed to. He gets a tax cut of nearly £250,000.

At the same time, everyone else is paying the price. The Chancellor is giving with one hand and taking far more away with the other. Hard-working families are hit by the strivers tax. Pensioners are hit by the granny tax. Disabled people are hit by the bedroom tax. Millions pay more so that millionaires can pay less.

The Chancellor mentioned child care in his speech. He wants a round of applause for cutting £7 billion in help for families in this Parliament and offering £700 million of help in the next. What are the families who are waiting for that child care help told? They have to wait more than two years for the help to arrive, but the richest in society need to wait only two weeks for the millionaires’ tax cut to kick in. That is David Cameron’s Britain.

Of course, the Prime Minister still refuses to tell us, despite repeated questions, whether he is getting the 50p tax cut. He is getting embarrassed now, we can see. He has had a year to think about it and he must have done the maths. Even he should have worked it out by now, so come on. Nod your head if you are getting the 50p tax rate—[Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The House must come to order. Let us hear the Leader of the Opposition.

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Edward Miliband: I am not getting the 50p tax rate; I am asking whether the Prime Minister is. He should answer—after all, he is the person who said that sunlight is the best disinfectant. Let transparency win the day.

Let us try something else. What about the rest of the Cabinet? Are they getting the 50p rate? Okay, hands up if you’re not getting the 50p tax cut. Come on—[Interruption.]

Mr Deputy Speaker: Order. We are all right; as some hon. Members want to take a cup of tea, we might be a little more silent.

Edward Miliband: I was just asking those in the Cabinet to put their hands up if they are not getting the 50p tax cut. They do not like it, do they? At last, the Cabinet are united with a simple message: “Thanks, George.” He is cutting taxes for them while raising them for everyone else.

The Chancellor announced some measures today that he said would boost growth, just like he does every year—and every year, they fail. I could mention the national loan guarantee scheme that he trumpeted last year—

Stephen Mosley (City of Chester) (Con): Rubbish!

Mr Deputy Speaker: Order. Mr Mosley, I think your voice might be better saved for Chester FC this weekend. As they are top of the league, I think you would be better off cheering them on.

Edward Miliband: The Chancellor trumpeted the loan guarantee scheme, then he abolished it just four months later. There was the funding for lending scheme, which he said would transform the prospects for small businesses, and the Work programme, which is worse than doing nothing.

Today, the Chancellor talked a lot about housing. When the Prime Minister launched his so-called housing strategy in 2011, in his own understated way he labelled it

“a radical and unashamedly ambitious strategy”.

He said it would give the housing industry a “shot in the arm” and help 100,000 people to buy their own homes. Eighteen months later, how many families have been helped? Not 100,000. Not even 10,000. Just 1,500 out of the promised 100,000. That is 98,500 broken promises. For all the launches, strategies and plans, housing completions are now at their lowest level since the 1920s and 130,000 jobs have been lost in construction. It is a failing economic plan from a failing Chancellor.

The Chancellor has failed the tests of the British people—growth, living standards and hope—but he has not just failed their tests. He has failed his own as well. All he has to offer is this more-of-the-same Budget. Today, the Chancellor joined Twitter. He could have got it all into 140 characters: “Growth down. Borrowing up. Families hit. And millionaires laughing all the way to the bank. #downgradedChancellor.”

More of the same is not the answer to the problems of the last three years. More of the same is the answer of a downgraded Chancellor in a downgraded Government. Britain deserves better than this.

Several hon. Members rose

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Mr Deputy Speaker: Order. I remind hon. Members that there is a 10-minute limit on speeches.

1.44 pm

Mr Andrew Tyrie (Chichester) (Con): Before I start my speech I shall give colleagues an opportunity to get to their lunches. The slot while they are shuffling out seems always to fall to me.

There is a lot more to digest in this Budget than many—not least those people sitting in the Chamber this afternoon and around the country—thought there would be. The Treasury Committee will have a great deal to consider, particularly the changes to the inflation remit, the employment allowance and the policies on housing and corporation tax.

For many years, and certainly since 2008, Britain has been living beyond its means and the Chancellor’s most immediate priority has been and should have been to sort that out. An equally important task has been to find ways to improve the long-run performance of the economy and supply-side reform.

Ultimately, politicians can do little more than create the conditions that release the energy of others. The future of the economy will depend on the millions of people in small businesses in our constituencies and on our releasing their energies.

Robert Halfon (Harlow) (Con): Does my hon. Friend agree that this is a cost of living Budget, freezing fuel duty, cutting beer taxes, helping people with child care costs and raising the threshold for lower earners?

Mr Tyrie: Yes. My hon. Friend did not mention fuel duty, which rather surprised me—[Interruption.] Oh, he did? I am terribly sorry, I thought he missed it out. I shall discuss energy in a moment, if I get a chance.

Let me say a few more words about the macro decisions before I move on to the supply side.

Dr Julian Huppert (Cambridge) (LD): When I was leader of the opposition on Cambridgeshire county council we had an approach of presenting an alternative budget so that it could be scrutinised by the scrutiny committees and select committees. That approach is carried on by Councillor Kilian Bourke, the current leader. Does the hon. Gentleman agree that it would be helpful if there were an alternative Budget for him and his Committee to consider in order to check whether it all added up?

Mr Tyrie: If anybody wants to produce one, we will certainly take a look at it.

The Chancellor has not fundamentally altered the macro-economic stance in this Budget. The big shift in direction of Britain’s fiscal policy in response to the crisis came not from this Chancellor but from his predecessor. More than two thirds of the fiscal adjustment announced by the Chancellor in the 2010 Budget had already been signalled by the right hon. Member for Edinburgh South West (Mr Darling). In 2010, the OBR estimated that the economy would grow about 4% more than it has and the key question for the Chancellor has been how much policy should be altered to take account of that—what he should announce this afternoon and what adjustments he should make in response.