“Helping people needing a deposit has for some time been cited as the missing piece of a coherent housing policy”.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): What does the Secretary of State think the mortgage guarantee scheme will do to house prices? Is there a danger of increased demand and no increase in supply, and prices going up?

Mr Pickles: The hon. Gentleman makes a reasonable point. However, housing prices are at a more reasonable level now, we will be increasing supply and of course there will be a check on the scheme, through the Bank of England, to see that it is renewed every three years. So the worries that he raises are not correct—

Mr Barry Sheerman (Huddersfield) (Lab/Co-op) rose—

Mr Pickles: The hon. Gentleman is jumping up and down. I have not said that I will give way, but I will.

Mr Sheerman: It is very kind of the right hon. Gentleman, who knows that I love intervening on him because I always get such a good response! It is supply that is wrong in this country; there is a national emergency in the supply of affordable housing. There are 1.5 million people on the minimum wage in this country. The waiting list in Kirklees has zoomed to having 17,500 people on it. These people do not have much money, they have little hope of ever buying their own home and they need a good affordable home now.

Mr Pickles: Of course they do, and it is a matter of regret that the number of affordable houses fell by 420,000-odd during Labour’s period in office, and we see a way in which we can achieve a number of affordable houses. As I said, we are well on track to deliver 170,000 and I hope that the hon. Gentleman will be pleased about that. I wish to make this contrast for him, because we have the benefit of the Leader of the Opposition’s remarks on Labour’s housing plans. He says:

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“We didn’t do enough... I don’t have a solution for this, but in the end government has to invest in housing, and...it’s a massive challenge”.

I think we can all agree with that—we can all unite behind those principles—so where the last Administration wrung their hands, this Government are stepping in. In the past couple of years, we have made sure that first-time buyers and those looking to buy a brand-new property have been given a helping hand. We also reinvigorated the right to buy, building mixed communities, more affordable homes and giving social tenants a chance to move up the housing ladder. This Government believe in extending opportunity to everyone who works hard and wants to do so.

The Home Builders Federation has said:

“If people can’t buy, builders can’t build”.

It has also said that “people’s inability to buy” has been the biggest “constraint” on house building. That is why in the Budget we announced our help to buy scheme. It is here to help in two ways: it is offering an equitable loan and a mortgage guarantee.

Clive Efford (Eltham) (Lab): Given that 60% of homes built in central London are being sold to overseas buyers, how does the Secretary of State think that the help to buy scheme will affect the prices of those properties and people’s ability to enter the housing market if he does not deal with that problem?

Mr Pickles: This scheme will not be available for foreign buyers; this is a scheme to help people from this country. That situation did not happen overnight, and the hon. Gentleman’s own Government signally failed to do anything about it. It is perhaps apposite for me to raise the issues to do with social housing.

As well as rewarding those who want to get on, we are taking tough action to tackle those who want a free ride and who are abusing the housing system. We are announcing today new measures to stop rogue landlords cashing in from renting homes to illegal migrants and we are also ensuring fair play in the allocation of taxpayer-funded social housing. We are tackling the widespread perception that the way social housing is allocated is unfair and favours foreign migrants over local people and members of the armed services.

It is true that one in 10 of all the new social housing tenancies in England go to a foreign migrant whereas in London one in five social housing tenancies belong to a foreign migrant. That is not fair to people who have worked hard and paid their taxes in Britain, so new rules will ensure that councils give priority to local people and to the armed forces when allocating social housing. That tough action will tackle the pull factors that led to unsustainable immigration under Labour and it will help community cohesion by ensuring fair play and removing the perception of unfairness that extremists exploit.

Dame Anne Begg (Aberdeen South) (Lab): I am sure the right hon. Gentleman is very keen that the work force should be mobile and able to move around the country to where there is work. However, would that

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not make the person moving into an area no longer a local, meaning that they would not qualify for social housing?

Mr Pickles: As the hon. Lady knows, under this Government and the previous Government a number of schemes have enabled tenants in social housing to swap between local authorities. Those schemes will continue to operate.

We are offering a simple and proportionate response to housing needs. As my second favourite member of the Labour party, Lord Mandelson, remarked last week:

“I can’t quite remember which member of the government it was who claimed to have abolished boom and bust. Well, we abolished boom”.

Last week, Labour was again playing the politics of envy and division, attacking the fact that we are helping hard-working families in middle England, in both the north and the south. Let me be clear for Labour’s benefit. We are not about to introduce 110% or even 100% mortgages for those who cannot afford to pay, but 95% mortgages for people who, but for the financial crisis, could have put enough money aside.

The checks are in place. Applicants will need to prove they can repay the loan before they pick up the front door key. As I said to the hon. Member for Coventry North West (Mr Robinson), this is not a scheme for second home owners, but the rules need to be carefully worded so we do not slam the door on parents who want to do a bit for their kids or prevent people from rebuilding their lives after family breakdown. Unlike Labour, this Government have not given up on growing families who are in properties too small for their needs, buyers looking to make that first step, or tenants who believe they can aim higher. We will continue to work closely with the industry to do everything in our power to make sure home hopefuls realise their dreams.

Bob Stewart (Beckenham) (Con): Will my right hon. Friend educate me, as I am probably mistaken, but will it be possible for a first-time buyer to buy a house that is not a new build?

Mr Pickles: Two schemes will be available. The first is the homebuy scheme, which will start from 1 April and is for new construction. From January next year, it will also be possible for buyers to purchase properties other than new builds.

The Government are giving the housing market a kick-start and are maintaining momentum on supply. On planning, we will be reducing planning burdens, making better use of empty buildings, bringing people back to live in town centres and supporting shops. There will be funding of more than £1 billion for thousands of new affordable and privately rented homes, for which we know there is demand. We are putting spades back into the ground and more workers back on site, and giving people more options over where they live.

We are also building on the success of our rejuvenated right to buy. Between July and September last year, numbers doubled, but we will go further. That is why we have put before Parliament regulations that will increase the discount for Londoners, where house prices are highest, to £100,000. The measure will come into effect from midnight tonight.

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We are reducing waiting lists for tenants who are ready to move on. Under our schemes, new homes will be built to replace those sold. What is Labour’s response? The Local Government Association Labour group says that the new right to buy is

“a cynical move by the government which is in effect forcing a fire-sale of community assets.”

I am sorry that the shadow communities Minister, the hon. Member for Derby North (Chris Williamson), is not in the Chamber. He too attacked the scheme and bemoaned the fact that in the 1980s,

“we saw council houses being sold off in their millions, and now the Government are at it again.”—[Official Report, 6 March 2012; Vol. 541, c. 241WH.]

As the late Alan Freeman would have said, “Not half we ain’t.”

Labour are the enemies of aspiration. Every council tenant on every council estate who wanted to work hard and move up had the ladder of opportunity kicked away from them under Labour. It will be restored by the coalition. The Government have accepted Michael Heseltine’s proposals for devolving power to local areas, a natural extension of the measures in the Localism Act 2011. The Government are taking decisive action in favour of families with ambition.

The head of the CBI said that

“our call for a focus on the short-term boost of housing has been heeded, alongside an increase in longer-term big ticket infrastructure spending…by shifting £6 billion to housing and infrastructure, the Government has sowed the seeds for growth and jobs.”

The Budget is tackling Labour’s toxic legacy. It is prising open the door of opportunity and heralding a day long overdue, when those who have put everything into this country finally get the chance to own a little piece of the place they call home.

I commend the Budget to the House.

4.47 pm

Hilary Benn (Leeds Central) (Lab): I draw the attention of the House to an indirect interest, declarable but not registerable, as my wife receives rental income from a property.

We welcome this opportunity to discuss the Budget and housing. The housing crisis has come upon us over many years—people living longer, a rising population, the breakdown of relationships and new families looking for a secure home. There is rising demand but not enough supply. The well housed—the majority—are affected only when they think about where their children can afford to live, whether they want to rent or to buy; while the younger generation, priced out of the market, see their dream of home ownership recede into the distance.

The Minister responsible for planning, the Under-Secretary of State for Communities and Local Government, the hon. Member for Grantham and Stamford (Nick Boles), expressed the consequences eloquently in his Policy Exchange speech earlier this year, when he talked about the misery of young families forced to grow up in tiny flats with no outside space, and working men and women in their 20s and 30s having to live with their parents or share bedrooms with friends. Doing something about that is a task for all of us. We have to harness

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land, money and consent to build the communities we need so that young people and families can build a better future.

Ministers have made big claims for what was announced in the Budget. Of course we welcome steps that will enable people to get a foot on the housing ladder, and where they work, we will support them; after all, helping people to get a home is exactly what we have been calling on the Government to do. But the proof will lie in the detail of the schemes and on progress in actually managing to build more homes. As always with the Secretary of State, the issue is not so much his stated intention as his delivery. Perhaps that explains why we have had four major housing launches over the past three years and more than 300 announcements on housing; and why, in his recent speech to the Conservative spring conference on what he had actually achieved, the Secretary of State devoted three words to building more houses, and 194 words to talking about closing down a bar in the basement of his Department.

In the past few days, headline after headline has queried the Government’s grasp of the detail of its latest scheme. The Chancellor did not seem to know, and neither did the Secretary of State for Business, Innovation and Skills, whether the scheme could indeed act as a spare-home subsidy, as my right hon. Friend the shadow Chancellor memorably christened it; whereas they certainly know that they are forcing social tenants out of their own homes because they have a spare room.

Let us begin by examining the facts about the Government’s record. Housing starts fell by 11% last year to 98,000. The number of private homes started was down; the number of local authority homes started was down; and the number of housing association homes started was down—indeed, the figure of 19,460 was the lowest for eight years.

Sir Bob Russell (Colchester) (LD): Will the right hon. Gentleman confirm that in 13 years of Labour government fewer council houses were built than in the entire period of the Thatcher Government?

Hilary Benn: I will happily confirm that we did not build enough council houses, although that began to change in 2007. Indeed, 70,000 affordable homes for which this Government have tried to take credit in their target of 170,000 were started by the Labour Government.

Andrew Gwynne (Denton and Reddish) (Lab): I urge my right hon. Friend to resist the temptation raised by the Secretary of State to be too political, and commend to him the partnership work of Labour Tameside council and New Charter housing trust, which together have set the ambition and the reality of producing one affordable home a day for the next three years. That is Labour in action.

Hilary Benn: I welcome the efforts that my hon. Friend has described. I said a moment ago that this is a responsibility for all of us, but I cannot promise to resist the temptations presented by the Secretary of State, given what he had to say.

Ministers do not want to talk about housing starts, because the figures are bad, so instead they want to focus on completions. Let us have a look at them. The facts are pretty stark. The number of completions in

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England in each of the first two years of the coalition Government was lower than in any one of the 13 years of the Labour Government. In other words, we completed more homes in every one of those years than the Government have managed in either year since they were elected. Indeed, the Secretary of State has the dubious distinction of presiding over the lowest level of completions by any peacetime Government since the mid-1920s. That is some achievement. No wonder the construction industry has been so hard hit. Eighty thousand construction workers are out of work, and output has fallen by 8.2%, contributing a great deal to the absence of growth in the British economy. The rate of home ownership has fallen, and there are 136,000 fewer home owners than when the Government came to power. That is hitting the youngest hardest, because the average age of a first-time buyer is now 37.

Official statistics from the Secretary of State’s Homes and Communities Agency show that affordable housing starts collapsed in the last financial year by 68%; homelessness and rough sleeping are up by a third since the election; the number of families with children and/or a pregnant woman housed in bed-and-breakfast accommodation for six weeks or more has risen by over 800% since the coalition came together; and 125 councils have had families in bed-and-breakfast accommodation for six weeks or more. As private rents have continued their relentless rise and incomes are squeezed, more people in work have to claim housing benefit to help them pay the rent.

Alun Cairns (Vale of Glamorgan) (Con): I am struggling with an inconsistency on the Labour Benches. The former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), said that housing was essentially a private sector operation and that the public sector need not be involved in it.

Hilary Benn: I simply say to the hon. Gentleman that if he cares to look at the record of the Labour Government, he will see that 2 million more homes were built during those 13 years, 500,000 of which were affordable homes that we provided, and 1 million more families were able to buy their own home. That stands in comparison to the Government’s miserable record over the past two years.

Clive Efford: In response to the previous intervention, I remind Members that this Government inherited the biggest council house building programme for 20 years, but one of their first decisions was to scrap it, which is why we have so few social housing starts.

Hilary Benn: My hon. Friend is correct. That is a consequence of the 60% cut.

The number of people on housing benefit has gone up by 300,000, almost entirely accounted for by people in work. When the Prime Minister launched NewBuy, the previous scheme, in March last year, we were told that it would help 100,000 people to get a mortgage. A year on, how many people has it actually helped? The answer is 1,500. Firstbuy, which was slightly more successful, has helped 6,000 people against a target of 16,500.

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Then there is the strange case of the remarkably reclusive infrastructure guarantee. It was launched by the Chancellor in the autumn statement. He said that he would set aside £10 billion for investment in housing. It sounded good and we supported it, but we now know that not a single penny of it has yet been used to support house building. The facts are clear: lots of promises, precious little delivered, and not a lot for the Secretary of State to crow about.

Mr Sheerman: Many of my constituents are fed up with listening to Punch and Judy debates like this. They are getting tired of hearing, “They did this, but we didn’t do that.” Could we not offer the Government a proper agreement to discuss the way forward to deliver affordable housing now, because it is a national emergency? Is there not a possibility that the parties in this House could get together for a change?

Hilary Benn: Well, I have already told the Secretary of State that when he has proposals that will work and succeed, I will support them. If he wants the benefit of further advice from the Opposition, I would be happy to see him in his office, especially if he is buying the tea and biscuits himself.

Richard Graham (Gloucester) (Con): Will the right hon. Gentleman give way?

Hilary Benn: If the hon. Gentleman will bear with me, I wish to make a little more progress.

I will now turn to the Budget. I have some questions to put to the Secretary of State. We know that the Government have a soft spot for people who earn a lot of money, but why is he proposing that his new deposit and mortgage scheme should be made available to anyone earning any amount, including millionaires, so that they can buy a house worth up to £600,000? Why is he changing the rules in that way, given that Firstbuy is currently only for those with family incomes below £60,000, and given that the Treasury document published last Wednesday states that the scheme is meant to help

“households struggling to save for the high mortgage deposits required by lenders”?

How many struggling top rate taxpayers does he expect to take advantage of the new scheme? No doubt they will be very grateful to him for his generosity.

In respect of the mortgage guarantee element of the help-to-buy scheme, can the Secretary of State clarify once and for all whether people who already own a property will be able to use it to buy a second home? He did not quite answer that earlier—[Interruption.] No, he did not. On Thursday, the Secretary of State for Business, Innovation and Skills could not answer the question. When asked, he simply said:

“The scheme has not yet been designed in detail.”—[Official Report, 21 March 2013; Vol. 560, c. 1102.]

At the same time, the Minister for Housing told “World at One” that second-home purchases would not be allowed. The BBC then reported that No. 10 had had to clarify the position. It seemed that the Housing Minister had been referring to another part of the help-to-buy scheme relating to equity loans. So yesterday we all turned on “The Andrew Marr Show” to watch the

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Chief Secretary to the Treasury, and far from ruling it out categorically, he said, in a formulation that the Secretary of State has repeated today:

“Our intention is not to help people to buy second homes”.

If the Government do not want it to happen, why do Ministers not simply make it clear that it is not going to happen? Otherwise, reminiscent of last year’s Budget, we will have fanfare followed by farce.

In the event that these schemes are over-subscribed, what criteria will be used to determine which applicants are going to get assistance? I listened very carefully to the Secretary of State when he said that foreign nationals would not be eligible for assistance from the scheme, but where in the Government’s scheme description does it say that foreign nationals will not be eligible? I have looked at the mortgage eligibility criteria, and they do not say that. Has he taken any advice on whether EU nationals who are resident in the UK will be barred by law from taking part in the scheme?

What estimate has the Secretary of State made of the impact that “help to buy” will have on the housing market, given that we know that it is the lack of supply that has led to high house prices? The Royal Institution of Chartered Surveyors has warned that the Government must be careful not to create “another housing bubble”. It seems that the scheme is not even a done deal with the lenders, because the Council of Mortgage Lenders has set out certain conditions that it wants to be met, or else, it warns, the scheme could be made “uneconomical”. How many additional homes, in total, does the Secretary of State think will be built as a result of the scheme?

Fiona O’Donnell (East Lothian) (Lab): Will my right hon. Friend also seek clarity on whether, in the event of a family break-up and a parent wishing to buy a home, that parent will be restricted in the number of bedrooms they can have in that home, or is aspiration only for some and not for others?

Hilary Benn: That is a very good question that has already been asked. I am very happy to give way to the Secretary of State if he wishes to answer it. Does he wish to answer? No, he does not.

We need a lot of new affordable homes because of the decision taken by the Government nearly three years ago to slash the affordable housing budget, when £4 billion was taken away. We are then asked to be grateful to the Secretary of State when we hear in the Budget announcements that an additional £225 million will be made available, although it seems that only £125 million of it will be spent before 2015. That figure is dwarfed by the original £4 billion cut. We are told that this is a time for tough choices. A quarter of a billion pounds was identified by the Secretary of State to try to persuade councils to collect the bins in the way that he thinks is correct. It was such a failure that only one council took him up on his offer. A quarter of a billion pounds and one council: think how many affordable homes that money could have been used to build! If the Government want to be taken seriously on affordable housing, they have to will the means. That is why we called for the 4G auction proceeds and the bankers’ bonus tax repetition to be used to build 125,000 new affordable homes to get the economy moving.

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The Secretary of State referred to councils. We know that he is presiding over cuts to the local authority sector that are bigger than in any other part of the public sector and that the cuts are being unfairly applied. Councils need as much money as they can find to help, in part, to build homes. When the Secretary of State was asked about these cuts earlier this year in front of the departmental Select Committee, he said that in his view the cuts were “modest”. In private, however, it seems that his views are rather different. When it was reported last month that the Chancellor was looking for further cuts from certain Departments, including CLG, The Times said that

“sources close to Mr Pickles”—

[Interruption.] It certainly was not me. The Times said that

“sources close to Mr Pickles made clear that he was not accepting the latest reductions, arguing that council services had already been cut to the bone.”

It seems, therefore, that the Secretary of State’s private views are rather different from his public views. We are used to hearing Liberal Democrats say one thing to one audience and another thing to another, but I am surprised that the Secretary of State is also doing so.

This is a familiar record. The Secretary of State, as the statistics show, is not very good at getting things done. It is not just me who thinks that; the Chancellor does, too. Apparently the Chancellor was in a fiery mood at the Cabinet meeting following the loss of the triple A credit rating and challenged Ministers about the poor rate of growth. The Daily Telegraph reported:

“Eric Pickles, the Communities and Local Government Secretary, was given a ‘dressing down’ for failings in the Government’s flagship enterprise zone programme, according to sources.

With less than a month until he unveils his Budget, the Chancellor criticised Mr Pickles over figures that show that one in three enterprise zones is failing to attract enough businesses. Mr Pickles is then said to have attempted to deflect the blame on to Vince Cable, the Business Secretary, by accusing him of failing to convince foreign businesses to invest in the schemes.”

It is a very familiar story: Cabinet members are so busy fighting and blaming each other that it is no wonder that they cannot sort out the problems facing the country.

The reforms to the national planning policy framework were supposed to streamline the planning system, but it seems that they have left councils less able to decide applications quickly. The national rate of decisions taken on major applications within 13 weeks has fallen from 62% in 2011 to 57% in 2012, and the same is true of minor applications determined within eight weeks, which are down from 72% to 69%, and the transition period is about to finish.

The planning Minister, the Under-Secretary of State for Communities and Local Government, the hon. Member for Grantham and Stamford, said recently that he wants further relaxation of the planning laws. We would be very interested to hear what he has in mind.

Richard Graham: I am grateful to the right hon. Gentleman for giving way. May I confirm for him that the relaxation of planning laws introduced by the new planning Minister has been incredibly helpful to my constituents? It has ensured that work on three brownfield sites is now going ahead, which will be a great boon to the people of Gloucester.

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The right hon. Gentleman also made a point earlier about the Secretary of State’s problems with delivery. Given that the right hon. Gentleman agreed earlier with one of my Liberal Democrat friends that delivery was a problem for his party when it was in power, is it not better to focus on the Budget announcements and—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Mr Graham, please keep interventions short. Sixty-one Members wish to get in and speak. If we are going to get on, we must have short interventions.

Hilary Benn: I am grateful to the hon. Member for Gloucester (Richard Graham) for agreeing that the Secretary of State is having problems with the delivery of housing. I have already indicated that we will support any measures that will help.

Councils will have to make proper assessments of their housing need. On the Prime Minister’s announcement today on council and social housing and migration, the Secretary of State knows that people cannot just get off a plane and get a council house. He will be familiar, of course, with section 160A of the Housing Act 1996, and he will know that councils already have the power to put in place allocation schemes, because the previous Labour Government issued guidance in 2009 and an increasing number of them are doing so. It would be helpful if we could get clarity about precisely what is being proposed, given that the housing lead of the Local Government Association, Councillor Mike Jones, who is a Conservative, has queried the need for the guidance, and given that this morning’s papers reported that the Government plan to impose an expectation on councils. How exactly is it possible to impose an expectation on councils? [Interruption.] I say to the planning Minister that I have a little bit more experience of Government than him—and it shows.

Ministers are looking to councils to identify housing need, but I say to them that the Growth and Infrastructure Bill will not assist councils in doing so, because clause 1 threatens to take away the power of local communities to decide whether housing is provided. The planning Minister, who is being very vocal, said that “vanishingly few” councils would be caught by that provision. However, to judge by the latest figures, as many as 21 local authorities could be stripped of their democratic accountability in taking decisions on housing planning applications if developers choose to go straight to the Planning Inspectorate.

How does the planning Minister think that will assist communities to take responsibility for housing provision? All of us have to face up to the need to provide more homes. That is the point that he has been making. However, is it better to let developers decide where houses should be built or to allow communities to take that responsibility for themselves?

I turn, finally, to one of the effects of what the Government are doing, which was not mentioned by the Chancellor in his speech on Wednesday. That is the effect that the decisions taken by the Chancellor, the Secretary of State for Communities and Local Government and the Secretary of State for Work and Pensions will have on people on low incomes and their homes. So far in this debate, we have talked about the need to build

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homes so that people can move into them. I want to turn to the problem of people being forced out of their homes because of the Government’s bedroom tax and the Secretary of State’s poll tax.

One consequence of what the Government are doing is likely to be rising rent arrears. That is exactly what councils and housing associations up and down the country are anticipating. Last week, the evidence from the universal credit pilot showed rising rent arrears. That is creating a lot of uncertainty, not least for housing associations. A number of them have had credit rating downgrades recently. If lenders think that housing associations will have difficulty collecting rent, it could put up their borrowing costs, which could impact on their balance sheets and their ability to borrow. Ultimately, it will affect their ability to build the homes that the Secretary of State says he wants to see. All of that will create huge challenges for families, councils and housing associations, not least because of the debt that people will get into.

At the very time when the Chancellor has decided that the most important thing to do is to cut the top rate of tax, the Secretary of State for Communities and Local Government has brought in his new poll tax and the Secretary of State for Work and Pensions has brought in the bedroom tax. What is so astonishing is that they are both singling out one group of people in our society. Whether they are working, seeking work or unable to work, the people who will be affected are those on the very lowest incomes, because that is why they get council tax benefit and housing benefit.

Given that the fundamental problem in the country is a lack of growth in the economy—the Chancellor’s crowning failure—have Ministers paused for a second to consider what impact those two taxes will have on the economy? All the evidence shows that when people who are on low incomes have money, they tend to spend it. In Leeds, £9.4 million—[Interruption.] I know that the planning Minister, who is chuntering from a sedentary position, does not want to hear this, but the people on the lowest incomes in Leeds are going to lose £9.4 million that they do not have because of rent increases and council tax rises.

Incredibly, last week the Secretary of State tried to blame local authorities for his policy, when he said that they

“seek to persecute and to tax the poor.”—[Official Report, 18 March 2013; Vol. 560, c. 611.]

That is extraordinary. The only person who is to blame is the Secretary of State. It is his legislation. He is the reason why bills are landing on people’s doorsteps that many of them will find hard to pay. Ministers know that people will do their best to stay in their own home—indeed, the Government’s assessment expects that to happen—because they want to stay with their friends, family and community.

Kate Green: Is my right hon. Friend interested in research just released by the Centre for Local Economic Strategies which shows that the Government’s welfare reforms, and the loss to family incomes, mean that on average 80% of money lost will be lost to the local economy as a result of reduced local shopping, reduced use of local transport, and reduced socialising?

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Hilary Benn: My hon. Friend is absolutely right: the reforms will have a damaging economic impact and be bad for families who cannot afford it, although they will try to stay if they can because they value community, friends, neighbours and a sense of place. Ministers know that even if people downsize, there are not enough smaller properties for them to move into. That is why this is a tax: people cannot avoid it because they cannot move.

Yasmin Qureshi (Bolton South East) (Lab): On the bedroom tax, does my right hon. Friend agree that Nos. 10 and 11 Downing street are social housing? Will the occupants of those homes be moving out in light of the fact that—[Laughter.]

Hilary Benn: My hon. Friend is right on the first point, although I am not entirely sure that the occupants are claiming housing benefit. We wait to be informed.

People with disabilities will be forced to move and the new home will have to be adapted all over again. Divorced dads who are trying to keep in contact with their children will be told that they have to pay the bedroom tax on the spare bedroom where they stay at the weekend, but as we know, some people will have no choice but to move. The final absurdity—the Chief Secretary should be interested in this—is that if people do move to the right sized property in the private rented sector, because of higher rents the housing benefit bill is likely to be bigger than that paid on the social home from which the family was forced out.

Andrew Stunell (Hazel Grove) (LD): Will the right hon. Gentleman give way?

Hilary Benn: I will conclude now, because many other Members want to speak. I have been generous in giving way but I want to finish on this point.

Last Friday a constituent came to see me in my surgery. He is a man in his late 50s who has worked for the past 42 years, until last December when he became unwell. He currently has to live on £71 a week and has just received a council tax bill for £108.25. He is not sure how he is going to pay it and he asked me—it is quite something when someone says this to a Member of Parliament, because we had not met before—“Can I tell you that I can no longer keep the heating on in my flat because it costs me £25 a week and I do not have the money to pay it?”

The Chancellor, the Secretary of State and other Ministers are fond of telling us that we have to make really tough decisions, but I wonder how difficult it was to decide to give those on highest incomes a tax reduction at the beginning of next month, while imposing a reduction in council tax benefit and the bedroom tax on people. They are taking money from those who are poor—that is what we are talking about—and giving it to those who are rich. That is why they should scrap the cut to council tax benefit and get rid of the bedroom tax.

The Secretary of State was full of his usual bravado and occasional bluster in what he had to say, but the cold hard reality of the collision of his policies with people’s lives shows that those policies are not well thought out and are incapable of being delivered. Because of that record, we have a promise of growth that has not

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materialised, a promise of localism that is not what it seems, and a promise of homes that have not been built. This Chancellor, this Secretary of State, and this Budget have nothing to offer the people of Britain.

Several hon. Members rose

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I remind hon. Members that there is a limit of five minutes on speeches. If we could have short interventions, that would help to get everybody in.

5.18 pm

Mr David Ruffley (Bury St Edmunds) (Con): The Chancellor is a fiscal Conservative and monetary activist, and as such he eschewed shock and awe measures in this Budget, opting instead for sensible targeted relief that is welcome on this side of the House. Cuts to income tax mean that by 2015 a large number of income tax payers will receive a £700 cut compared with their tax bill of 2010. On child care, average two-child families with working mothers and fathers will get £2,400. Fuel duty has been frozen, and it is the longest freeze for two decades. The national insurance contribution cut of £2,000 is equivalent to someone just under average median earnings being taken on at no national insurance cost to an employer.

I support the house building programme that we have heard about. As someone on the dry end of the Conservative party economically, I have heard the criticism that it is Fannie Mae all over again. People wonder whether there will be lots of defaults when the interest-free period runs out, and whether the policy could lead to higher house prices because of supply constraints. I am sure I will hear those concerns again, but the reality is that we need an injection of confidence into British households. There is no question but that the ability to get on the housing ladder, including the encouragement to spend money, because consumer spending frequently attends the purchase of a new house, is the kind of confidence that the British consumer wants at this stage of the economic cycle.

Oliver Colvile (Plymouth, Sutton and Devonport) (Con): Does my hon. Friend recognise that the key issue is the blockage in getting money to people and giving them the ability to borrow it in the first place? We expect our banks to ensure that they not only rebuild their balance sheets, but lend money and make it available.

Mr Ruffley: My hon. Friend makes an interesting point.

There were no shock-and-awe measures in the Budget, because the Chancellor is probably right to believe that we are not approaching a lost Japanese decade. Nevertheless, I am concerned about the Office for Budget Responsibility growth projections; it forecasts growth of 2.3% in 2015, 2.7% in 2016 and 2.8% in 2017. The forecast turns on one central OBR assumption that might be wrong. The OBR assumes that there is quite a large negative output gap—that, in simple terms, there is a lot of slack in the economy. Forecasting or estimating the output gap is very difficult. If its assumption is wrong, and if the output gap is smaller than it says, a huge amount of the £120 billion a year last year and the coming year is structural rather than cyclical. If that is the case, we will

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need shock-and-awe measures—deeper cuts than those implied in the spending envelope and, yes, a fiscal stimulus in deeper tax cuts.

Mr MacNeil: On the one hand the hon. Gentleman calls for deeper cuts, but on the other hand, he spoke a few moments ago of the importance of consumer spending. In an earlier intervention, the hon. Member for Stretford and Urmston (Kate Green) said that 90% of the money for which those who are being penalised by the bedroom tax are responsible circulates locally. Surely if the Government take money out of the economy, we will see not consumer-led spending, but further contraction in the economy and further gaps.

Mr Ruffley: Perhaps the hon. Gentleman did not hear the second part of my statement, when I mentioned deeper cuts in public spending and a fiscal stimulus with deeper tax cuts.

If we do not have the growth we want in the economy in the next 12 or 18 months, I would like capital gains tax holidays of the kind suggested by my right hon. Friend the Member for Wokingham (Mr Redwood), to get investment moneys circulating. I also believe there could be a case for deeper cuts in corporation tax to approximate more closely the Irish model; Ireland has 12.5% corporation tax, which makes it more of a magnet for foreign direct investment.

That said, the Conservative party has indicated that it has the technology should we need to go further and faster in fiscal consolidation. The Conservative economic affairs committee, which is chaired by my right hon. Friend the Member for Wokingham, has discussed proposals from colleagues for a suspension of the carbon price. A key cost that is undoubtedly hampering business confidence is that, in 2011, about one fifth of the energy bill paid by small and medium-sized enterprises was attributable to green, renewable policies. Considering whether we want a holiday from that, and certainly not going further than European countries, would seem sensible.

On Budget day, the Chancellor said two important things about monetary policy. First, he explicitly said that the Financial Policy Committee must co-ordinate better in future, under Mark Carney, with the Monetary Policy Committee. At the moment, the regulators are pulling in different directions. The MPC has pumped in £375 billion by printing electronic money in exchange for purchasing gilts from the commercial banks, but that credit is not flowing into the real economy. On the other hand, the Financial Services Authority, and its successor body the FPC, are telling the banks not to lend any of that money and to rebuild their capital position to de-leverage. Those two impulses fight against each other and it is entirely sensible for the Chancellor to say that the FPC and the MPC must co-ordinate better.

Secondly, the Chancellor talked about forward policy guidance via thresholds to commit to looser monetary policy for a set period. That has had a good effect in Canada and the United States, and it will give British business the confidence that interest rates will not be jacked up just as the recovery begins and that economic activity will not be choked off.

I support the Budget with qualifications.

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5.26 pm

Mr Alistair Darling (Edinburgh South West) (Lab): I shall follow up shortly the points made by the hon. Member for Bury St Edmunds (Mr Ruffley) on the Bank of England, but first I draw the attention of the House to my entry in the Register of Members’ Financial Interests.

The big problem we face at the moment is lack of growth. Here we are, five years since the crisis hit most western developed economies, yet contrary to what has happened in the past, there is absolutely no sign that growth will return to this country.

Richard Drax (South Dorset) (Con): One of the many reasons we do not have growth is that the Opposition made the country such a client state that we are indebted up to our eyeballs and there is no room for growth.

Mr Darling: With due respect to the hon. Gentleman, I anticipated that predictable nonsense. I am grateful to him for intervening, however, not least because he has given me another minute in which to make my case.

As the Office for Budget Responsibility points out, the recession is taking far longer to come out of than any we have seen previously. The principal factor is that in 2007-08 we had a complete collapse of our GDP and that situation has not been recovered in the past five years. Frankly, on the evidence presented by the Chancellor last week, I see little evidence that it is going to happen. As a result, we are borrowing very large sums of money: £120 billion last year, this year and next year.

As I was saying before the hon. Gentleman interrupted, in the Chancellor’s forecasts, yet again in the back three years of the forecast period we see an expectation that growth will go from 2.7% to 2.8% in 2017. That is exactly the same profile that we have seen in each of the Chancellor’s Budgets and autumn statements. The problem is that these sunny uplands are moving to the right each time he stands up. I cannot for the life of me see why anything will be any different in 2017 from the bleak outlook we see today. The problem is that as long as we have low growth we will have high levels of borrowing, and debt is now expected to peak at 85% of our GDP. When we advocate a different approach, the Conservatives and the Liberals say that we are talking about borrowing more, but this Government are borrowing more than they ever imagined they would in 2010, and they are doing so not to invest in things such as infrastructure, but because of the price of their economic failure. That is what many of us have a problem with.

Mr MacNeil: Surely by boasting that he would cut harder and deeper than Thatcher, the right hon. Gentleman set the tone for the cult of austerity that we are now living through.

Mr Darling: I am grateful to the hon. Gentleman for his intervention, but not in the way he intended, because that is nonsense too. Incidentally, in the leaked document from John Swinney, the Cabinet Secretary for Finance, Employment and Sustainable Growth, the Scottish Government too faced up to some difficult decisions. The difference is that I and—to give them credit—the coalition Government were open about the difficulties we faced, whereas the Scottish National party wanted to keep them secret from the Scottish people.

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It seems that the Chancellor has given up on doing anything. As I said last week, we are in the middle of a lost decade—it happened to Japan and it is happening to us now—and there is no sign that the Government have any idea how to get out of it. The Government’s Budget response on infrastructure is fine, but it does not come along for two or three years. On housing, I agreed with everything that my right hon. Friend the Member for Leeds Central (Hilary Benn), the shadow Secretary of State, said. The problem is that last week’s announcement is more likely to create yet another housing bubble by driving up asset prices. Indeed, some of it might even sow the seeds that gave rise to the sub-prime mortgage problem we saw in the United States, because we are suffering from an acute lack of housing in just about every town and city in the country.

I was encouraged by what the planning Minister, the Under-Secretary of State for Communities and Local Government, the hon. Member for Grantham and Stamford (Nick Boles), said over the summer. Unless we break through this logjam and get more housing built, prices will go up and up and people will face the same difficulties they did in the past. The irony is that we are not prepared to build houses, but we are prepared, it seems, to finance the inflation of a bubble in housing prices. That is absolutely the wrong thing to do. The bedroom tax illustrates the problem; there simply are not the houses for people whose income is being cut to move to. That illustrates the need to improve our housing infrastructure, although the problem applies to transport and energy as well. I do not object to some measures in the Budget, but nothing in it is likely to get our economy going.

The hon. Member for Bury St Edmunds referred to the Bank of England and said that the Chancellor of the Exchequer had effectively said, “I can’t do anything further in fiscal terms. It’s all up to the Bank of England now.” Most Members have warmly welcomed the appointment of Mark Carney. I think he will be a very good Governor, but with the best will in the world we cannot expect him to do everything the Government are supposed to be doing. It is useful that we can tell the markets what we think will happen to interest rates. I suspect that most people do not expect them to rise for the next two or three years, although they might rise in the United States, given that the US Government are following a different policy from that being followed here and in Europe.

I do not think, however, that the sort of measures the Chancellor has in mind and which the new Governor might announce in relation to forward guidance will do the trick and get our economy going. I have said before that quantitative easing has played its role and stabilised the banking system—I have supported what has been done so far—but there is little evidence of what additional QE would do for our economy. The risk is that the money simply goes into the bank vaults, not into the wider economy. The Bank will play its part, but monetary policy and fiscal policy have to be complementary, otherwise they simply will not work.

Time does not allow me to mention the eurozone, other than to say that the last week has confirmed my suspicion that the eurozone is almost psychologically incapable of sorting out its problems. Unless it does so, it will hold back growth not only in this country, but elsewhere. At the same time, I am committed to this country remaining part of the European Union—that

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is very important—although we need to use our influence. Governments can make a difference. In 2008-09, through the G20, Governments from across the world, from communist China to the Republican-led United States, came together and we did what was necessary to support our economies. And guess what? Our economy was growing in 2010. Look at it now.

5.34 pm

Andrew Stunell (Hazel Grove) (LD): I am delighted to take part in this debate. It is a pleasure to follow the right hon. Member for Edinburgh South West (Mr Darling). Some of his remarks would have had more bite if he had not left us borrowing £428 million every day of 2010. It is a credit to this coalition Government that that figure has been substantially reduced.

As the first Liberal Democrat speaking in this debate, I would not be doing my duty if I did not praise the Chancellor for the decision to raise the income tax threshold to £10,000. This is a long sought-after victory, which I very much welcome, which will see 2.5 million taxpayers—many of them low-paid women—taken out of tax and 20 million taxpayers getting a £700 smaller tax bill than they did under Labour.

I want to use my time primarily to talk about two measures that appear on page 40 of the Red Book. The first is the major step forward announced on zero-carbon homes and the achievement of the target in 2016, which appears in paragraph 1.109. I am delighted to see that. I am delighted, too, to see that the intention is now to increase the standard of energy efficiency of new buildings from October this year. I very much look forward to the announcement by the Department for Communities and Local Government, which is prefigured in the Red Book. I also very much welcome the statement that a decision on allowable solutions will be taken by the summer; the construction industry is certainly ready for this measure. The Zero Carbon Hub has done the preparatory work and the Green Building Council has been pressing for it. I would like to think that the decision reported in the Red Book is at least in part a response to what they have said and to early-day motion 1004, which covers the same ground.

I asked the Prime Minister at Prime Minister’s Question Time last November whether the Government still intended to be the greenest Government ever. I was pleased that he replied emphatically, “Yes”. I was even more pleased when, in a speech to the Royal Society on 4 February, he reiterated the Government’s commitment. I want to say to the Chancellor, the Chief Secretary and the Secretary of State for Communities and Local Government that, given the Prime Minister’s support, there can be no excuse for delay. We need an urgent decision on the carbon price for offsite generation for zero-carbon homes. The Red Book says that the decision will be taken by the Department for Communities and Local Government. I am sure that the DCLG and Her Majesty’s Treasury can sort out their respective responsibilities, but can we ensure that there is no delay in taking that decision?

The second point I want to bring to the House’s attention is the excellent news of more investment in homes for rent, with £225 million and 15,000 starts planned before 2015. That comes on top of 170,000 new homes planned for rent and 150,000 decent homes brought up to standard. There are many positive features to our housing programme. Like everybody else in the

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Chamber, I wish it was going further and faster, but I do not believe we should listen for a moment to the shadow Secretary of State for Communities and Local Government and his complaints, when his Administration reduced the stock of affordable homes by 420,000 and sold so many homes without having a replacement policy—a policy that Labour itself now admits was a failure. I welcome these housing measures in the Budget, but there is still much more to do to improve the quality of our 20 million existing homes and to build the many more we need to the highest environmental standards. I look forward to the coalition making yet more progress in the remaining two and a half years before the general election.

5.38 pm

Mr Jim Cunningham (Coventry South) (Lab): Listening to Government Members this evening, one would think that there was no economic situation in 2008, but in fact it started in America because of the irresponsibility of the bankers—not only in this country, but in America. It is also worth reminding the House, when the Government try to blame those on the Labour Benches, that in his last four or five weeks as President, George Bush pumped billions into the American economy, because he realised right away that the fault lay with the American banks.

I remind Members, too, of the catastrophe associated with Lehman Brothers, with Fannie Mae and Freddie Mac, for example. We need to remind the Government of those aspects because the Government were very light, to say the least, when it came to dealing with the bankers who caused the problem in the first place. What they have tried to do is to blame the previous Government for things that they never understood at the time. I remember that when we were in government, their solution to the problem was “Oh, well, we have too much red tape and we must cut it”. I do not remember any Members now on the Government Benches providing any solutions whatever at the time, yet they are pretty good at coming here and trying to blame us for a situation that their friends, the bankers, caused in the first place.

Mike Thornton (Eastleigh) (LD): Under whose regulatory system did those failures take place?

Mr Cunningham: It was the previous Conservative Government, and that has never been acknowledged, so the hon. Gentleman should not rewrite history.

Another interesting aspect of the present economic situation is that local government has taken the brunt—33.3%—of the cuts. People talk about growth, without realising that it is only through local government that growth will happen. It is worth noting that in the west midlands, for example, unemployment is probably the highest in the country with about 8.5% unemployed, while for young people up and down the country it is as high as 21%. Given those levels of youth unemployment over which this Chancellor is presiding, I think it is offensive when he talks about aspiration and the aspiration nation. The UK has the third worst level of youth unemployment in the developed world; of the OECD countries, only Spain and Greece have higher levels. Since the recession started, the UK has experienced the fastest rise in youth unemployment of the G8 countries.

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Speaking about aspiration, the Chancellor is dividing people into “aspirants” who aspire to prosperity and others. It is as though he does not know or does not care that there is a national lack of job opportunities available to young people. It is simply disgraceful for the Chancellor to talk about aspiration when one in five young people leaving school might not find work. The Government need an extensive programme to create jobs for young people and should support them in finding those jobs and training them.

Let me deal with manufacturing. I have often spoken about the west midlands and its success in manufacturing, and I strongly believe that the manufacturing sector can drive local economies and boost growth. I was therefore alarmed at the Budget’s lack of discussion of manufacturing industry. The Chancellor’s only mention of it was his claim that for the first time in 40 years we are manufacturing for export more cars than we import. Well, that started under the Labour Government and certainly not under the present Government. The Government try to take the credit for the success of Jaguar Land Rover, but Labour Members know that the previous Labour Government supported that industry.

Mr MacNeil: Will the hon. Gentleman take this opportunity to congratulate his old friend on these green Benches—Alex Salmond—on presiding over youth unemployment in Scotland that is at a 20-year low, recently going down from 25% to 17%?

Mr Cunningham: Obviously, I—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I am not sure that we need to be dragged around the Scottish Parliament and Scottish leaders. This is supposed to be a Budget debate, and I do not see a true connection.

Mr Cunningham: I will accept your ruling, Mr Deputy Speaker.

Why was there nothing in the Budget about manufacturing green technology? If that was the Budget’s intention, it could hardly be any less green than it is. This Government launch initiatives, but then seem to forget them. In 2001, the Chancellor of the Exchequer pledged that 100,000 people would be able to buy their own home; 18 months later, only 1,500 had done so. I hope that this will not be the fate of the schemes announced in last week’s Budget, too.

Public sector workers have had yet another 1% pay cut levied on them. As I understand the Chancellor’s Budget statement, this will probably last until 2015. I believe that 1.4 million public sector workers, including nurses, paramedics, midwives and prison staff, are affected by that policy. Those jobs are spread out across the country rather than being just London-based. Rather than cutting those people’s pay by 1%, putting more money in the pockets of these workers would be an excellent way to stimulate demand across the country. Instead, the Government are stifling those workers’ spending ability. Furthermore, a high proportion of women in the public sector will be affected. I fear that the Government’s approach will hurt working women disproportionately. It certainly does not encourage aspiration.

Cuts in funding for Coventry city council will hit the most vulnerable people in the city. The council’s community services director must make a third of its £63 million

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budget cuts by 2016. Last week cuts of £6 million were announced, which will mean the closure of day care centres used by hundreds of elderly and disabled people, the axing of subsidies for transport to day centres, the ending of housing-with-care bedsit schemes for the vulnerable, and the cutting of housing-related support that is currently provided for the elderly and disabled. Roughly 160 carers are expected to lose their jobs. It is predicted that thousands of elderly people will be affected, as well as people with learning disabilities, Alzheimer’s and mental health problems.

We should judge our society according to how we treat the most vulnerable, the old, the sick and the young, not according to how we treat our millionaires. We are failing fast, and this Budget will do nothing to help those people.

5.45 pm

Alun Cairns (Vale of Glamorgan) (Con): In the limited time available to me, I intend to explain why I welcome the measures in the Budget, and also why I consider the views of Opposition Members to be highly inconsistent.

Given the lack of growth in our largest trading nations, it is easy to understand why the Chancellor was left with so little room for manoeuvre. After all, growth projections in Germany and the United States—just two examples—have been downgraded. We need to recognise the context of the present position: the scale of debt inherited in 2010, the major issues that confront the eurozone, the local impact of the high prices of commodities such as oil, gas and food and the inflationary pressures that that involves, and the lack of growth in other nations.

Oliver Colvile: Did not the last Labour Government create a structural budget deficit as long ago as 2001?

Alun Cairns: My hon. Friend is absolutely right. I shall say more about Labour’s inconsistency later.

All the issues I have mentioned have had impacts on the living standards of families throughout the United Kingdom. Decisions such as these are difficult to take, but they must be seen in context.

What I welcome most is the Chancellor’s drive to create the most competitive of economic environments. That will attract investment, and will also continue to encourage the private sector in the UK to invest. The further reduction in corporation tax goes to the heart of a sustained economic recovery, and underlines the economic imbalance that we inherited. The 20% corporation tax rate means that we now compare exceptionally well with our major competitors. In Germany the rate is 29%, in France it is 33%, and in Italy it is 31%. Those are material considerations for anyone who is thinking about where to invest, and for any United Kingdom investor who is thinking of expanding. We should also bear in mind the uncompetitive position that we inherited. The increase in employers’ national insurance rates led to the term “jobs tax”, with which we are now familiar.

The ultimate judgment will come in the grades that the World Economic Forum confers on the competitiveness of the various nations. Having ranked fourth in 1997, we were dragged down to 13th by the Labour party. At last, however, we have recovered enough to rank eighth—and that happened before the announcement

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of the welcome changes in the Budget. Neither the 20% corporation tax rate nor the employers’ national insurance relief were taken into account.

Other Budget measures that I welcome include the “help to buy” mortgage guarantee schemes. That is an area of policy in which no Government would ideally become involved. However, bearing in mind the context I referred to earlier, the Chancellor had little choice other than to get involved. The scheme will provide a welcome boost to the construction and retail industries and various elements of the service sector, and it will make a significant difference to many families who want to buy their own home.

Wayne David (Caerphilly) (Lab): On “help to buy”, does the hon. Gentleman think it morally correct that millionaires can get support to buy second homes?

Alun Cairns: The hon. Gentleman recognises, I hope, that the economy needs to be kick-started. He always refers to the changes to the highest income tax rates and the 5% reduction that will take place next week. However, I remind him that the rate Labour introduced was temporary. If so, when was Labour planning to abandon it? The ultimate question that Labour Members have to answer is, will they reintroduce for the next general election the 50% rate that was in their manifesto? I will happily give way to the hon. Gentleman if he wants to intervene again. Obviously, he does not, because they are not prepared to say whether they will commit to doing that.

I am pleased that the homebuy scheme will be limited to three years because as I said, it is not a policy area that any Government would want to be involved with in perpetuity, because of some of the risks that have been highlighted. It simply is not a public sector initiative that any Government would want to undertake all the time.

If those who want to criticise such initiatives are to have any credibility, they need to offer some form of alternative. It is hard to believe the audacity shown by some Labour Members. Less than three years ago, they were responsible for, or were the loudest cheerleaders for, the policies that led us into this position, giving this country the most debt-ridden, overspent, unbalanced economy in modern history. Manufacturing had declined by more than 20%, public sector job numbers had ballooned and we had the highest debt level of any G20 nation. I notice that the Labour Members who were seeking to intervene and criticise earlier are now staring at their boots.

These initiatives are aimed at promoting growth and freezing or cutting spending. [Interruption.] The Labour critics really need to come up with some alternatives. Until they have accepted their responsibility, they will lack credibility and no one will listen. Even Lord Mandelson recognised that just last week. They came up with some sort of plans in the past. Spending the 4G auction money on 100,000 new affordable homes was one option; a two-year freeze on stamp duty was another. However, that money has already been used—on the national debt—so I look forward to hearing their alternatives.

This Budget will make a difference to families, and help to kick-start the housing sector and to make Britain’s economy much more competitive. I look forward to hearing the solutions that Labour Members will try—

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Mr Deputy Speaker (Mr Nigel Evans): Order. I call Brian Donohoe.

5.53 pm

Mr Brian H. Donohoe (Central Ayrshire) (Lab): I became a Member of this House in 1992, and I have to say that this is the worst Budget I can remember—that is, since last year’s omnishambles of the pasty tax and the caravan tax. It will do nothing to reverse the decline of the economy, nothing for jobs, nothing for taxpayers and nothing for those forced on to benefits by this Government’s policies. The February unemployment figures show that any decline in unemployment during the previous three-month period is now faltering.

In my constituency, the picture is bleak. There has been an increase in unemployment, including among those aged over 50, and the number of people on jobseeker’s allowance for more than 12 months has also increased. Those in their 50s, in particular, will suffer when they retire because they will be unable to build up an occupational pension and will have to rely on the state pension.

I recently visited one of my constituency’s Work programme providers. Advisers there told me that most of the jobs they were helping people into were part time and paid the minimum wage, involving basic skills and offering limited prospects. However, the bigger problem is that the number of people who have been unable to find work after 12 months has grown by more than a third during the past year.

The Chief Secretary to the Treasury, who is in his place, might be interested to hear about the effects of the Government’s policy on excise duty. The Chancellor has knocked a penny off a pint of beer, and he made a big deal of it. When I heard about that, I thought back to the days of Denis Healey, when a penny off a pint meant something. Today, it is the equivalent of 0.2% or 0.3% off the cost of a pint. In other words, someone would have to buy 200 to 300 pints to get an extra pint for their money, so it is hardly going to have a huge impact on the pub trade.

As far as I am aware, there are no wine producers in my constituency—although there are some who brew at home—but Scotch whisky is a major industry, as it is for the UK as a whole. It is worth £4 billion a year and employs more than 35,000 people across Scotland, yet the Chief Secretary and his Treasury cohorts have done nothing whatsoever to support it. When I entered Parliament in 1992, the average price of a bottle of Scotch was £10.42, of which VAT and excise duty accounted for 68%. The average price after this Budget will be £12.89, of which VAT and excise duty will account for 78%. In other words, since 1992 the price of a bottle of Scotch has increased by £2.47, but the amount of VAT and excise duty has increased by £2.95. The industry is therefore producing whisky more cheaply, yet the customer has to pay more. The beer industry complains about this issue, but imagine the uproar if it had to bear the same tax burden as the Scotch whisky industry has to bear.

The Chancellor has responded to public pressure on fuel duty, but has totally ignored air passenger duty. The aviation and tourist industries have complained—as have the travelling public, in mass numbers—about this unfair penalty on those who want to travel.

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Mr MacNeil: It is reputed to be the world’s most onerous tax on air travel, and I am sure the hon. Gentleman will agree that it is damaging Scottish airports terribly.

Mr Donohoe: I do agree with the hon. Gentleman on this occasion; it is not very often I can say that. The Government are doing absolutely nothing for air passengers, the aviation industry and those who work in it. They continue with this tax, while our competitors throughout the world are laughing at us. The Government are prepared to examine other measures, but not the tax that affects not only my constituency but others throughout the United Kingdom.

The Chancellor says that he wants to boost house building, but how is the bedroom tax going to help to do that? Surely it will add to the confusion about the sort of housing stock we require. I predict that it will be worse than the poll tax for people in my constituency; indeed, I am already seeing signs of that. It will prove to be the Government’s Achilles heel, just as the poll tax was for Margaret Thatcher.

Future growth forecasts have had to be revised, and the Office for Budget Responsibility says that in 2015 most people will be worse off. All in all, the Budget offers the British people nothing other than more of the same failed policies of the last three years. The approach simply is not working, and the Government should own up to that and change tack today, for the sake of the UK economy as a whole.

Reflecting on it, this is the worst Budget I have witnessed since being elected in 1992.

5.59 pm

Alok Sharma (Reading West) (Con): I welcome this responsible Budget, which targets help to individuals and businesses intelligently. Our time is short, so I wish to focus on three points: personal allowances, the employment allowance and exports.

Like my right hon. Friend the Member for Hazel Grove (Andrew Stunell), I welcome the raising of personal allowances to £10,000. That is being delivered by a Conservative Chancellor and, as a result, more than 42,000 people in my constituency will be paying less tax and more than 4,000 will be taken out of paying tax altogether. Before the Budget, I suggested to the Treasury that we set an aspiration for future years that nobody on the minimum wage should pay income tax. I know that the Chief Secretary to the Treasury, who is not in his place, shares that aspiration. It will take some years to deliver and it will be an expensive measure, but it is fair and it is the right thing to do. I hope that aspiration will be set and I hope it will be in the 2015 Conservative manifesto.

Small and medium-sized businesses in my constituency welcome the employment allowance, which is a big boost to job creation. The private sector is the engine of growth, and Reading, the town I represent, is an economic powerhouse in the south-east. No matter what the Opposition may say, the private sector is creating jobs. This morning, I met the chief executive of Huawei, a Chinese IT and telecoms group, which is opening its head office in my constituency in the next few months. It is bringing hundreds of new jobs to Reading and creating several hundred more over the next few years.

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In the past few weeks, Tesco has confirmed that it is starting recruitment at a new distribution centre in my constituency, and I am pleased that this brownfield redevelopment is taking place. I have been discussing it with Tesco and its advisers since 2011, and it means more than 1,000 new jobs in my constituency.

A couple of months ago, I met Ross Snape, the chief executive officer of United Asphalt, a successful independent business located in Theale in my constituency. He said:

“All too often we hear politicians and the press talking down the economy, which can have really negative effects on business and the decisions we make on investment and employing people…it is time to move on and face the challenges we have with confidence.”

I could not agree more. Many billions of pounds have been sitting on UK corporate balance sheets as deleveraging has been going on, but businesses based in my constituency have decided that it is now time to invest. They realise there are no easy fixes to the economy because of the problems that had built up.

James Morris (Halesowen and Rowley Regis) (Con): My hon. Friend is giving good local examples of job creation. Does he agree that as the Budget contains one of the proposals relating to the single pot of funding, a recommendation of the Heseltine review, his local area will be helped to develop even further?

Alok Sharma: My hon. Friend is absolutely right about that proposal, which will help not only my local area, but other areas. It also advances the whole aspect of localism, on which this Government are very keen, as I am. As I was saying, companies in my constituency have decided that it is time to start investing, and I hope that many others up and down the country will follow suit.

Mr MacNeil: The hon. Gentleman says that some companies are starting to invest, but is that not related to what Keynes and, latterly, Paul Krugman have said: in the absence of government doing anything substantial, recessions will sort themselves out in the end, but years of unnecessary pain will have been experienced by many people because of government inaction or wrong policies?

Alok Sharma: Thanks to the measures taken by this Government, the deficit is coming down, we have record employment and interest rates are at record lows. I would have thought the hon. Gentleman would welcome all those things, just as businesses in my constituency do.

The Chancellor made the point in his Budget statement that for the first time in more than two decades we are exporting more goods to non-EU countries than to EU ones, and I welcome that. The right hon. Member for Edinburgh South West (Mr Darling), for whom I have huge respect, said that there is no growth, but, as he well knows, there is growth; we are expanding our exports to some of the world’s key economies, which is a result of the policies that this Government have put in place and of the good work being done by UK Trade & Investment and the Foreign and Commonwealth Office.

Small and medium-sized businesses still tell us that there is a fear factor when they are looking to enter new markets. UKTI and the FCO have been great at targeting high-growth nations and opening new offices, but we

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need to turbo-charge that expansion. We need not only to target three, four or five cities in these huge economies such as India and Indonesia, but to go into the 15 or 20 top tier 1 and tier 2 cities. In those economies it is not only the national Governments who make decisions; the state governments make many of the big decisions on investment, which is why we need to turbo-charge our approach and get these offices across these countries quickly. The Government, together with UKTI, should provide practical help by taking on office space in these key cities, basing sector experts from the UK Government and UKTI there, and working with local enterprise partnerships to get out there and allow SMEs low-cost desk and office space for three, six or 12 months. The synergies that will be created as a result of all these companies coming together in one location, with sector focus and where we can also get local advisers involved, will do a huge amount to boost our exports. We want to go from having one in five SMEs exporting to having one in four, which is the European average. That will add billions of GDP to our economy. UKTI is doing a great job with the headstart scheme, but we need to build on such initiatives.

The final point I wish to make is about the local Labour party in Reading—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I am not sure that this is totally relevant to the Budget, and I am sure that the hon. Gentleman would not want to stray from what the good people of Reading want to hear about the Budget.

Alok Sharma: Of course not, Mr Deputy Speaker. What I wanted to say was about jobs. We have really good news coming out of Reading, but I never hear people from the local Labour party welcoming new jobs or celebrating business success. They do not do good news. They are anti-aspiration and anti-business, very much like many of the Opposition Members who have spoken in these Budget debates. Let me tell hon. Members what Geoff Foley in my constituency says about Labour Reading council:

“Reading Borough Council do not really give a thought to local businesses”—

Mr Deputy Speaker: Order. I am sure that Reading borough council knows exactly what it is talking about, but I am not sure that this is relevant to today’s Budget debate. I am being very generous and I think we are going to run out of time, so one quick mention of Reading without the Labour party would be helpful.

Alok Sharma: Let me conclude, Mr Deputy Speaker, by commending this Budget and urging everyone to support it.

6.7 pm

Mr Geoffrey Robinson (Coventry North West) (Lab): May I draw the House’s attention to my entry in the Register of Members’ Financial Interests?

I listened attentively to the Budget statement and tried to hear something that was positive, not just for exports, but for manufacturing, for business and for productive industries. There were just two things that we, of course, welcome: the £2,000 off national insurance contributions and the increase to 10% of the research

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and development credits for those investing, which I am pleased to say several companies in my constituency have already welcomed. The trouble is that those two things pale into insignificance when we look at the scale of the problem we face; they just are not going to tackle it.

The problem can best be measured by looking at the plan from 2010 and the Office for Budget Responsibility forecasts attached to it. Two crucial elements were going to support that plan and those forecasts. I recall saying in the debates that followed that they seemed to be the two most solid pillars on which the Government were building, but that, as far I could see, there was nothing underneath to support them or the OBR’s very optimistic forecasts. Those two elements were: manufacturing exports—exports on the visible account; and the increase in output from manufacturing. We were told to expect a 10%—I believe the figure given was 9.8%—increase in output from the business sector, but what have we had in the two years to the end of 2012? An increase of less than 5%—barely half what was projected. The hon. Member for Reading West (Alok Sharma) said that we are doing well on exports—I am not sure whether we were more interested in exports or Reading—but compared with what was projected and with what we need, the outcome in those two years has been terrible. I believe that the projected figure was 6% and we achieved minus 0.3% to December last year in the value and volume of exports.

I am not saying it is easy, but one thing I am sure about is that either the OBR has no idea about forecasts or we need to reconsider the OBR model, as it continually gets everything so wrong. My right hon. Friend the Member for Edinburgh South West (Mr Darling), the former Chancellor, was kind enough to say that he thought the estimates were optimistic—that the sunny uplands kept moving to the right and that the further out the OBR went, the more optimistic it became, but that was the case from the very beginning and nothing has changed. We should now be in those sunlit uplands. I do not understand why the OBR, with its much-vaunted independence, continues to get things so hopelessly wrong. Somebody needs to rethink that model. It is not enough to take responsibility out of the Treasury and pop it somewhere down Victoria street—one should not think that that will put everything right. There we are; that is one problem.

One part of the Budget that I thought might lead to some positive movement concerned the construction industry and the house building sector in particular. In an intervention on the Secretary of State, I welcomed the Firstbuy initiative, and a development on the old Jaguar site in Coventry has made quite a contribution, but the extension of the mortgage scheme, which is much bigger, is—yet again—a measure that has not been thought through. The problem with this Government is that they are totally incapable of thinking anything through. They should not be consulting on whether millionaires can have subsidised mortgages for second homes. That should have been ruled out in principle right from the beginning, before the consultation began. Many things require consultation, but not that. I cannot imagine why it was left in as an option—well, I can; things were not thought through.

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We are in real need with housing starts down 11%, 70,000 construction workers unemployed and the lowest house building programme since the ’20s. That is the scale of the problem and such tiny measures show that the Government are fiddling around the edges—fiddling while Rome burns, as it were. Central to it all is the attitude of the Treasury and the Chancellor. If the Chancellor has lost self-confidence to such an extent that it impacts on confidence in the business community and consumers in the UK, he must consider whether he any longer has the vision, courage and self-confidence—whether he ever had those things is, of course, another question—to do what is necessary and change course.

6.12 pm

Eric Ollerenshaw (Lancaster and Fleetwood) (Con): I am grateful to follow the hon. Member for Coventry North West (Mr Robinson). I think it was the late Harold Macmillan who talked about economists telling people this and that, and about statistics. However, there are some realities in this Budget, which other Members have referred to, and I will also do so in terms of the impact on my constituency.

Let me begin with the general point about the £10,000 income tax threshold for next year. That is reality; that is not statistical. It means that next year, 4,000 individuals in my constituency will not be paying tax. More important for hon. Members to understand is the fact that the average total family income across Lancashire is approximately £26,600, and next year those people will pay no tax on their first £10,000 of income. To me, that is a huge selling point in increasing confidence. People will be able to go out to work and the Government will promise that we will not touch the first £10,000. It seems remarkable that we are in such a state that we can say that that is marvellous, but compared with what has gone on before it is extremely good news for constituents across Lancaster and Fleetwood.

Fuel duty has been frozen. In a huge rural area such as my constituency, where people have no choice, whatever their income, but to be dependent on their car to travel to work and to the shops, the ending of Labour’s plans to increase fuel duty provides massive support for the local economy.

There is the new employment allowance. Most businesses in my area are small, made up of two or three—if not six—people. The national insurance promises in the Budget will be a massive fillip to new employment and to encouraging people to get out there, set up their own business and start moving with the support of this Government.

Hon. Members will bear with me while I discuss a local theme that they would expect me to mention: shale gas. Many hon. Members have looked at shale gas as the great nirvana and something that will fill the energy gap, but that will affect Lancashire. Let me underline yet again that we in Lancashire are still not satisfied that the regulatory regime is right. We welcome the Chancellor’s commitment to an office for unconventional gas and the tightening up of those regulations, but people in Lancashire need to see that the regulations are thorough and tight. Given that farmers still take water directly from the water table through boreholes, Members will be able to imagine the worries in parts of my constituency.

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More important than that is the question of who will earn money from shale gas. Lancashire people are quite generous, like me, in their commitment—[Interruption.] Well, we are far more generous than the people from the other side of the Pennines. We are generous in our commitment to the United Kingdom and in our willingness to support it, but as the law stands, the people who own the land, including the farmers on whose land this fracking might—I still say might—take place will earn precious little from it.

Mr MacNeil: Is the hon. Gentleman advocating an equivalent to a sovereign wealth fund for Lancashire? That was the source of the reason why all Norwegians feel they own the oil; is there a similar feeling in Lancashire towards this gas?

Eric Ollerenshaw: The hon. Gentleman anticipates me and for once—in fact, not for the first time—we agree. If Lancashire is to be used to fill the energy gap and if Lancashire will see fracking across the county, we need to understand that it is not Texas and landowners in Lancashire do not own the mineral rights. The Chancellor will gain through the tax system, companies will gain through their profits and, presumably, the Duchy of Lancaster or the Crown Estate will gain through the tax on mineral rights, but the local councils will gain precious little. I was pleased that the Chancellor said in his Budget that there would be specific proposals to allow local communities to benefit, but I tell the Ministers on the Front Bench that Lancashire expects more than one or two parish hall roofs to be fixed. We want to see something that will return money to Lancashire when the gas has been fracked, if that fracking is to go ahead. I need to make that clear.

Finally, on infrastructure, hon. Members talked about growth. For me, the key point was the Chancellor’s phrase about “clearing the economic arteries”. In the north-west, that means something substantial and we have had that from this Government. We have had the biggest investment in rail for the last 30, 40 or 50 years. It was all right Opposition Members saying that that would happen in future—it is happening now. I point to my own station in Lancaster, where £8.5 million is already being spent to vary the signalling so that trains can turn around in Lancaster and more platforms can be used. That is the small-scale work. Only last week, the Department for Transport finally agreed the M6 link road, which will be a bypass for Lancaster to the port of Heysham. It will bring thousands of jobs through a scheme for which the first plans were produced in 1948—that is perhaps a lesson to us all. It has taken this coalition Government to agree the money to get things moving and get the growth.

As the Secretary of State mentioned, there is still a great deal more for local councils to do. I am pleased that the Conservative councils in my area, Wyre borough council and Lancashire county council, have kept the council tax frozen. Not only that, but Lancashire has cut it by 2%—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order.

6.18 pm

Anas Sarwar (Glasgow Central) (Lab): The Budget the Chancellor delivered was not the Budget that my constituents or the city of Glasgow needed. The Budget

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Glasgow needs is one that gets the economy moving, helps people back into work and looks after the most vulnerable in our society. Instead, the Government are willing to give millionaires a £40,000 tax cut at the same time as 17,000 Glaswegians will have to cope with the impact of the bedroom tax. Thousands more will have to mitigate the damage to their family budget of the cuts to child tax credits, cuts to working tax credits and drastic cuts to the local services that many people rely upon. Wages are falling, jobs are being lost, household budgets are being squeezed and there is still no sign of a rethink. Just when will the Chancellor wake up and smell the Starbucks coffee?

Mr MacNeil rose—

Anas Sarwar: I will give way to the hon. Gentleman. He has made many interventions, so let us hope that this one is sensible.

Mr MacNeil: Is the hon. Gentleman not disappointed, and should he not be ashamed, that he supports a Westminster Government over independence, so we have the bedroom tax imposed on Scotland? If he supported independence, we would not have the bedroom tax in Scotland at the moment.

Anas Sarwar: That shows us the myth of the Scottish National party. The hon. Gentleman says that the only way to stop the bedroom tax is independence; the bedroom tax will be introduced on 1 April 2013, but according to the SNP timetable, independence day will be 31 March 2016. Members can work it out for themselves.

Plan A clearly is not working. For some time, the Opposition have been calling for additional infrastructure investment to boost the construction sector and we have been urging the Government to act. The Chancellor could have used the funds from the 4G auction to build 100,000 affordable homes, stimulate the economy and help tackle the housing crisis, but instead he decided that public services and public sector workers should bear the burden. Not content with imposing a 1% pay freeze until 2015, he has extended it to 2016. Given the rate of inflation, that is an effective pay cut for hundreds of thousands of people across the country.

With 80,000 construction workers out of work, construction output has fallen by 8.2%. The Government announced an extra £225 million for affordable housing, but only £125 million of that will be spent before 2015 according to the OBR, and it is dwarfed by the £4 billion cut in funding for affordable housing that the Chancellor made in his first Budget. Even after that investment the coalition Government’s record will still be a cut of around £10 billion in infrastructure projects.

It says everything about the Government’s attitude that they cut real-terms pay for millions of public sector workers, while giving the green light to slash corporation tax for big business. Research by the House of Commons Library, published today, confirms that the reductions in corporation tax will cost £29 billion in total, £10 billion over the life of the current Parliament alone. That policy enjoys the full support of the Scottish nationalists, who want to see a future independent Scotland at the front of a race to the bottom, a low tax country with an economy like Iceland—or perhaps like

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Ireland. I have not seen the latest Scottish Government press release, so I do not know which country they are modelling their assessment on this week.

Kwasi Kwarteng (Spelthorne) (Con): Am I right in assuming that the hon. Gentleman favours a high-tax economy for Britain?

Anas Sarwar: No, I am suggesting that while people across the country—especially the most vulnerable—see their household income slashed and the poorest people are having to live in more difficult circumstances, the Government see their priority as giving millionaires a tax cut and cutting taxes for the biggest businesses in the country. I know whose side I am on. I am sad to say that I know whose side the hon. Gentleman is on, and I am sure people will punish him appropriately come the next general election.

Mr MacNeil: Will the hon. Gentleman give way?

Anas Sarwar: I have given way twice already, but if I have any spare time at the end of my speech I might let the hon. Gentleman entertain the House.

The Chancellor claimed the Budget showed he was on the side of people who want to get on; instead it has shown just how out of touch this Government really are. The low-paid workers the Government say will pay less income tax will still be worse off at the end of the month, when that saving is clawed back many times over—clawed back through VAT, clawed back through cuts to tax credits and clawed back from thousands of my constituents through the scandalous bedroom tax.

Yes, the Liberal Democrats can celebrate lifting the threshold to £10,000, but household income for many families in that bracket will fall as a result of the Government’s measures. At the same time, the value of an average worker’s pay has fallen by more than £1,000 and persistently high inflation continues.

In these difficult economic times, the Chancellor should certainly accept our proposals for the funding for lending scheme to be enhanced to target small and medium-sized enterprises better by rewarding banks that expand SME lending regardless of their mortgage book. Now is the time when our banks should be supporting SMEs, not hitting them harder. Throughout my constituency, whether I am speaking to small or large businesses, they all make the same complaint: the banking sector is holding back investment in this country, not promoting it. If we can get our banks lending again and get people investing, we will get more people back to work and see growth and regeneration in some of the hardest-hit communities.

The Chancellor should seriously explore our proposals for new regional banks that are committed to their regions and in touch with local business, making it easier for firms to secure the capital investment they require to create the growth and jobs Britain needs. Sadly, my constituents continue to suffer, trapped between this coalition Government, who continue to look out for the wrong people, and a Holyrood Government, who are distracted by their referendum obsession and happy to double Tory cuts and pass them on to local government, washing their hands of all responsibility

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and removing £250 million from Glasgow’s economy. We heard earlier from one of the SNP Members that we should recognise that the fall in unemployment was thanks to action taken by the Scottish Government. It is amazing that when unemployment goes up, it is all Westminster’s fault but when it goes down it is all thanks to the Scottish Government. It cannot be both.

The reason why I and countless others in the House went into politics was to help build stronger communities, not to use the poorest and most vulnerable people as electoral or political dividing lines, writing off millions of people as a drain on the economy for electoral advantage. We want to help to create a sustainable economy to fund world-class public services, ensure that society’s resources are distributed equitably and protect the most vulnerable people in our communities.

Last Wednesday I sat and listened to the Chancellor lay out his vision for the coming years. It is a vision that I and, I am confident, the majority of people in Britain reject.

6.26 pm

Mike Thornton (Eastleigh) (LD): I want to talk about three things: mortgages and how we support them, how local authorities can help and what can be done on commercial lending.

We should strip out all the fancy schemes. I talked to some of the people I used to work with at Simply Finance, and apparently there are about 100 viable 90% loan-to-value schemes. The situation is not quite as bad as it was in the past, but the credit-scoring system for those mortgages tends to be so severe that only about 10% of applicants ever get a mortgage. My only concern about our new scheme is that we should make absolutely sure that it results in people being able to borrow money, rather than having their application turned down. The Opposition believe that the scheme will provide second homes for millionaires. I agree with the Secretary of State that that can be sorted out easily.

If mortgage schemes work, they increase demand, but if demand goes up without an increase in supply, prices will increase. I am sure that is not the intention. We need to develop and build houses. To ensure appropriate development while protecting our country’s green spaces, we must innovate. At Eastleigh borough council we work with developers to purchase properties that would not otherwise be bought. We then rent them out. It would be a real help if the Government could lift the borrowing cap on councils building new homes to rent, which would supply an economic boost and provide affordable homes. In places such as Eastleigh, 30% of every new development is reserved for affordable housing. We have 5,830 people on the housing list, so it is vital that we do something about it.

To achieve a significant increase in house building, we need to reverse the banks’ failure to fund it properly, especially for small and medium-sized builders. Before 2007, the inability of banks to assess the true risks resulted in massive losses. Now the situation is reversed. It is the same old story; the banks go from one extreme to another.

We need to co-ordinate our housing policies, our commercial and mortgage lending policies and our planning policies. There is no point in keeping them separate. Banks, local government and builders are all

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part of the same whole. I am confident that this Liberal Democrat-Conservative coalition can act accordingly, but we need to find a way for us all to work together.

6.29 pm

Mr Peter Hain (Neath) (Lab): Contrary to the Chancellor’s mantra, Britain’s return to recession was not made in Europe. It was made in Britain by the severe fiscal squeeze that the Chancellor launched nearly three years ago. Problems in the eurozone spell trouble for the UK economy—of course they do—but the Chancellor never mentions the fact that Britain has benefited from the recovery of the USA economy, which accounts for 20% of our trade, and is currently growing four times faster than the eurozone is slowing, because the USA took the route of economic stimulus and stuck to it. Britain set out on the same path under Labour after the banking crisis, and the economy began to pick up. However, the coalition veered off as soon as the Tories and Lib Dems took office, turning the road to recovery under Labour into the road to ruin.

Cutting too far and too fast means that the Chancellor has missed all his key targets. In the year that is ending, his target deficit—the cyclically adjusted current deficit as a share of gross domestic product—is twice what he originally said it would be. Next year, the Office for Budget Responsibility expects it to be four times what he planned. He has also missed his public sector debt target: instead of falling to 67% of GDP in 2015-16, under the Budget it will fall to 85% two years later, in 2017-18. That is a surreal definition of success: debt falling upwards. Salvador Dali would be proud.

Zero growth has forced the Chancellor to accept higher borrowing targets—more than £200 billion higher over five years than he planned in 2010. Most of the cuts that have been announced have yet to hit home. Cuts and austerity will continue Britain’s economic inertia, with more disastrous, scorched earth economics to come. Growth, not cuts, should be the priority. Sadly, there is plenty of spare capacity in the UK economy, which could easily grow quite quickly for a few years by taking up the slack, with borrowing, the deficit and debt falling. Jonathan Portes, former chief economist at the Cabinet Office, said:

“A few years of 3% growth—and given the amount of spare capacity in the UK economy, there is no reason that should be infeasible…—and much of the problem will simply vanish”.

Growth is the magic bullet for overcoming our deficit and debt problems.

Mr Leigh: If, as the right hon. Gentleman says, the cuts have not yet hit home, which is quite right, why does he think that they have fuelled the recession?

Mr Hain: Cuts have fuelled the recession because they have driven demand out of the economy. Getting the economy growing again, as I said, is the key to cutting the deficit, then stabilising and bringing down the debt burden. Once the economy is growing again, it will be much easier to deliver any remaining tax rises or spending cuts that may still be necessary because, as Jonathan Portes says, jobs will be plentiful, real incomes will rise and companies will invest again.

The Tory charge is that Labour would increase borrowing. The answer is, yes, in the short term, we would, but to reduce borrowing in the long term. Borrowing

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more today can mean borrowing less tomorrow by getting the economy growing again. President Obama’s 2009 stimulus package added to the US federal deficit in the short term, but as US interest rates fell, spending and output rose, and dole queues shortened. As a proportion of America’s expanding GDP, its overall deficit has shrunk every year since 2009, contrary to what has happened to our deficit. A budget boost that triggered real recovery in Britain could follow the same pattern, speeding up the growth of UK national income, cutting the deficit as a proportion of GDP and causing the debt burden to fall.

That is what the Budget should have been about, but old habits die hard as the coalition partners continue to peddle their big deceit. First, they said that the entire global banking crisis was caused by Labour recruiting far too many nurses, doctors, teachers and police officers, and that the trigger for the world financial collapse—sub-prime mortgage defaults in the USA—was all Labour’s fault. The second big deceit is their claim that today’s public sector deficit was caused by excessive Labour spending. To quote utterances of almost every Conservative MP as if on a dreary looped tape, too much Labour borrowing led to too much national debt, so the cuts are all Labour’s fault. They never admit the truth. They never say why, if spending was “out of control” and wildly excessive, the Chancellor in September 2007 committed a Tory Government to matching Labour’s public spending plans for the next three years, up to 2010.

The Chancellor knew only too well that Labour’s spending was affordable, otherwise he would not have signed up to that. The Tories never acknowledge that, until the global banking crisis, British Government debt was low, below that of France, Germany, the USA and Japan, and lower than when we took over from the Tories in 1997. Ten years of steady economic growth under Labour allowed us to pay down debt by the equivalent of £90 billion today, saving taxpayers some £3 billion a year in interest payments. We did fix the roof while the sun was shining.

Between 1997 and 2007, annual Labour borrowing averaged only one third of annual borrowing by the Thatcher and John Major Governments. This is the fourth dreadful Budget by a dreadful Government. It is the same old story from the same old Tories: Budget day blues for Britain. The Chancellor is playing a peculiar game of leapfrog with himself. Every Budget brings worse news. Every autumn statement confirms that things are worse than expected. The Government are failing on growth, failing to improve living standards, and failing on their debt, borrowing and deficit targets. They have got to make way for Labour.

6.35 pm

Richard Graham (Gloucester) (Con): Brushing aside the unhappy attempt by the right hon. Member for Neath (Mr Hain) to rewrite recent history, I shall move on swiftly to discuss the Budget.

Let us begin with the introduction of £10,000 tax-free income.

Mr Hain: Will the hon. Gentleman give way?

Richard Graham: The right hon. Gentleman has had his chance.

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I absolutely relate to my hon. Friend the Member for Reading West (Alok Sharma) and his aspiration that everyone on the minimum wage should in due course pay no income tax. That was a magnificent announcement of Conservative and coalition policy to help those who work hardest on the lowest incomes, and we should all applaud it.

Secondly, the Leader of the Opposition made a great deal recently of apologising for Labour’s axing of the 10p rate, and he now wants to bring it back, but while he is busy executing a second U-turn on 10p tax, my constituents, especially the many thousands who will benefit from the changes in the Budget, prefer the simple Conservative and coalition approach of zero tax for the lowest paid.

The whole House should unite in applauding the Government for announcing an employment allowance of £2,000, which can be used by small businesses for apprentices or new employees who are older, and can help to continue to bring down youth unemployment, which in my constituency of Gloucester, as a result of all the new apprenticeships that started last year, fell by 18% in 2012. Ten days ago, during national apprenticeships week, I visited three new apprentices in Gloucester, in real estate, golf clubs and ski centres, and if ever there was an example of how apprenticeships have spread through previously unknown sectors those three new apprentices proved it. That is why the Government should go on supporting apprenticeships and bringing the young into employment.

Today, housing is at the core of the debate, and I believe that it is the key to growth stimulus, as it was after the recession of the 1930s and the recession of the second world war. The Centre for Cities rightly said in its recent note that

“there is one area where effective interventions have the potential to generate jobs and growth in the short term: housing.”

It went on to say that

“100,000 new houses…could boost Gross Domestic Product by 1% and support up to 150,000 jobs.”

The Centre for Cities, which recently moved Gloucester up the ratings for cities from 49th to 21st, is clearly a research institute to be followed closely, and I agree with its conclusions on the ratings and with its analysis on the importance of housing.

The right hon. Member for Leeds Central (Hilary Benn) said that he believed that the response to the Budget on housing was largely critical. He was right in one respect, as the National Housing Federation said:

“The Government should be focusing on unlocking investment to build more new homes”.

However, we cannot new build new homes unless there is a market for them, which is why the Government’s policy, through help to buy, of providing £3.5 billion for new homes, will make a significant difference to make sure that people can afford to buy those new homes. The National House Building Council said that it is

“great news that housing has been the centre piece of this Budget. This is a positive step for homebuilders and homeowners alike.”

Both Barratt and Persimmon welcomed the development, and Barratt said:

“We are now gearing up to meet the increase in inquiries that we expect to see.”

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Mr MacNeil: The hon. Gentleman said that we cannot have new homes unless there is a market for them, but the problem is not the market but price and affordability; it is the supply of homes.

Richard Graham: That is precisely why the help to buy scheme, which guarantees 20% of deposits on new homes, will make a significant difference.

There is one aspect on which I agree with the right hon. Member for Leeds Central and on which I hope the Government will be able to move faster: the need to restructure some of the arm’s length management organisations that provide social housing and enable them to use their balance sheets to build and regenerate, rather than just adding to the public sector borrowing requirement. My right hon. Friend the Financial Secretary to the Treasury knows well that I hope that that will move forward fast, and that discussions between the Homes and Communities Agency, the Department for Communities and Local Government and the Treasury, which have been ongoing on for almost 18 months, will move forward swiftly so that we can deliver new housing in the social sector to my constituents as soon as possible.

New housing worked in the 1930s and 1950s and it can work today, so let us get on with it and build those new homes as soon as possible so that the economic growth that the Centre for Cities research anticipates can happen as soon as possible. I will be supporting the Budget to achieve that.

6.40 pm

Julie Elliott (Sunderland Central) (Lab): I am grateful for the opportunity to speak in the debate. I intend to focus on three central issues emanating from the Budget: housing, infrastructure and employment practices.

Increasing the level of house building is vital to any economic recovery and to assisting families and young people to get on to the housing ladder, yet under this Government house building has fallen while rents have risen. Young people in Sunderland, where house prices are not as high as in other parts of the country, still face massive challenges in getting into the housing market. Those difficulties are augmented by the Government’s wider economic failures, and banks remain reluctant to give mortgages, even to financially secure applicants. Renters in Sunderland can only hope that the Government’s help to buy scheme will be more successful than the new homes bonus, which has led to housing starts falling by 11%, or the NewBuy scheme, which has helped just 1.5% of the 100,000 people who the Prime Minister claimed would be able to buy their home.

I welcome any action to help people get on to the housing ladder, but increasing credit without increasing supply will simply raise house prices, further widening the gap between those who own their own home and those who want to. Gentoo, the largest social housing provider in my constituency, manages over 29,000 properties in Sunderland, but it has over 22,000 people on its waiting list, and that is without taking into account new and emerging need. Simply put, Sunderland needs more homes.

In his Budget speech, the Chancellor used the phrase “work hard and get on” three times. What he does not understand is that people are working hard, despite stagnant wages, and they are getting on, despite cuts to vital services.

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The Government are dithering on improving energy efficiency standards for new homes. Those delays are hugely damaging for investment in new homes and signal the Government’s abandonment of their “greenest ever” commitment.

I will now turn my attention to infrastructure and the Government’s response to the Heseltine report. Two things were clear from Lord Heseltine’s evidence to the Business, Innovation and Skills Committee: first, his passionate belief in the Government’s ability to boost growth, create jobs and raise living standards; and secondly, his concern about the Government’s direction and the fact that

“the UK does not have a strategy for growth and wealth creation”.

I agree that local leaders are best placed to understand the opportunities and obstacles to growth in their own communities. That the Chancellor has finally committed to investment in infrastructure projects is welcome, but those projects should have been announced in his first budget, not his fourth. I welcome the single local growth fund, but it will not be operational until 2015. We simply cannot wait that long. We cannot accept a five-year gap between the announcement of the abolition of the regional development agencies and the devolution of funds proposed by Lord Heseltine. We will not see economic growth until our regional economies are growing.

Where growth takes place matters, too. A report on foreign direct investment by the Institute for Public Policy Research North shows that since the Government announced the closure of the RDAs, FDI decreased by 31% in the north-east from 2010 to 2011, while it has increased in the south-east by 102%. We do not yet know the size of the “devolved pot”. Lord Heseltine recommended that a fund of £49 billion was needed, but Government sources now suggest that it will be in the low billions. The success of the Heseltine plan will be determined not by the quantity of recommendations that the Government will implement, but by the size and timing of the investment.

My final point in response to the Budget is on employment practices. The Chancellor looked particularly pleased to announce that the private sector had created 1.25 million new jobs since 2010. Although I welcome new jobs, I hope that my hon. Friend the Member for Dumfries and Galloway (Mr Brown) will get an answer to his question on what sectors those jobs are in and what hours people are working so we can understand better what is happening in the labour market, because I fear that many of the jobs are low-wage and low-hours. People on zero-hour contracts cannot take advantage of the Government’s child care help because they do not know when they will need child care. They cannot take advantage of the mortgage policies because they will not be eligible for mortgages.

It is vital that the Prime Minister and the Chancellor change course so that a lost Government do not lead to a lost decade.

6.45 pm

Fiona Bruce (Congleton) (Con): I refer to my entry in the Register of Members’ Financial Interests.

I welcome the Budget on behalf of the almost 4,000 hard- working small and medium-sized enterprises in my constituency—companies such as Dutton Contractors in Middlewich, which I visited on Friday and had the privilege of opening two new warehouses for. It is a

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family business that was started in 1974 by the father, John Dutton, who is a farmer. It sells and transports building construction materials. The son, Richard Dutton, has so developed the business recently that it now has 80 employees. The decision in the Budget to further stop Labour’s planned fuel rises is worth £7 to every family each time they fill up a family car, but it is worth considerably more to companies such as Dutton Contractors, which has a fleet of vehicles, so it very much welcomes the Budget.

Dutton Contractors also welcomed the £2,000 national insurance allowance. It was also welcomed, in particular, by Neon Freight Ltd, which is based in Holmes Chapel. Honours go to Ian Mallon, the proprietor of that freight forwarding company, and currently its sole employee, for giving the fastest response to the Budget. He sent me an e-mail at 1.28 pm—the Chancellor can barely have sat down. The e-mail’s subject was, “Employers tax/Budget”, and it reads:

“Great news… please send my thanks to G.O… I will be taking on staff this year.”

That is what I call a result.

Having said that, however, I am disappointed that the Government appear once again to have done nothing to honour their manifesto commitment—it is a coalition commitment and certainly a Conservative manifesto commitment—to recognise marriage in the tax system through transferable tax allowances for couples where one partner stays at home. Many people are genuinely bemused that such an important commitment should remain completely untouched well into the second half of this Parliament. They are increasingly bemused by the announcement of the introduction of tax-free child care worth up to £1,200 every year for children aged up to 12, but obtainable only by either single parents working or couples where both partners work. The Prime Minister said:

“This is a boost direct to the pockets of hard-working families in what will be one of the biggest measures ever introduced to help with childcare costs.”

But do families with one parent who stays at home not work hard, too? That has not sent out a positive message to mothers and fathers who stay at home and commit themselves to parenting; it does not say to them, as I think we should, “We value you.”

Mr Leigh: One advantage of the child tax allowance announced in the Budget is that it makes it almost inevitable that we will have to fulfil our coalition promise on a transferable tax allowance for married couples.

Fiona Bruce: My hon. Friend is absolutely right. I am not criticising the Government’s decision to support child care costs; I am saying that they have got the balance wrong by doing that while not at the same time honouring the coalition commitment for transferable tax allowances for married couples.

I have massive respect for those mothers and fathers who stay at home. I have never stayed at home to work and have always worked outside the home, but many parents do so sacrificially, and many parents in one-earner families, as Department for Work and Pensions figures clearly show, stay at home because they have to. Many have significant child care responsibilities for very young children, or care for sick or disabled relatives. It is interesting that the Government quoted OECD figures

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in support of its decision last week. Let me quote some OECD figures: the tax burden on a one-earner, married couple family on an average wage in the UK is now 42% greater than the OECD average.

I have raised this issue in respect of every Budget since I have been in this House. Two years ago, having tabled an appropriate amendment to the Finance Bill, I received from my hon. Friend the Exchequer Secretary to the Treasury a letter that said:

“Dear Fiona

I am writing to about the new clause on transferable personal allowances for married couples that you have tabled for the Finance Bill. I agree entirely that marriage is a positive institution and it is clear from our manifesto that we believe this should be recognised in the tax system.

We are keen to send a clear message that family and marriage matters and that strong and healthy families help create a strong and healthy society. We must do more to support families and the tax system is one way in which this can be achieved…you can rest assured that our commitment to bringing forward these changes remains firm and that we are assessing various options with a range of different costs and will bring forward proposals at the appropriate time.”

I believe that that time is now. If we genuinely believe in choice—a word much trumpeted last week on the announcement of support for child care costs—we should not be making it more difficult for mothers to stay at home but should give them that choice, too. The Prime Minister has said:

“If we are going to get control of public spending in the long term…we should target the causes of higher spending, one of which is family breakdown. We should do far more to recognise the importance of families, commitment and marriage”.—[Official Report, 2 June 2010; Vol. 510, c. 429.]

This year, I again call on the Government, at the third time of asking—it sounds a bit like calling the banns of marriage, but that is quite appropriate—to insert a provision into the Finance Bill, this time by way of their own amendment, to introduce transferable allowances for married couples. That is quite simply the right and honourable thing to do.

6.51 pm

Dame Anne Begg (Aberdeen South) (Lab): As time is short and lots of hon. Members still want to speak, I will concentrate my remarks on two matters: something I was disappointed not to find in the Budget and something I was completely surprised to find in it.

The thing I was disappointed not to find was any change in the Government’s attitude to what has become known as the bedroom tax. I was not naive enough to think that they would make a complete volte face having realised it is such an insidious and wrong-headed policy, but I did think there might be some movement on the kinds of people in households who should be completely exempt. I am thinking of households with a profoundly disabled child or where a house has been specially adapted for someone with a disability. The Government say that people who have had their house adapted can apply for a discretionary housing payment, but it should not be at the discretion of the local authority to decide whether it is affordable to pay the rent on a house that has been specially adapted for an individual.

As someone who has had to adapt a number of houses, I know how difficult it is, how expensive it can be, and how upsetting it can be for the individual. I also

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know that very often the adaptations are made specifically for the individual, so if the family has to move out of their home as a result of not getting their housing benefit paid in full, the house will not necessarily be any good for any other disabled person. This is wrong-headed—it should never be discretionary. I hope that it is not too late for the Government to make sure that that group of people is exempt from the bedroom tax.

The thing I was surprised to see in the Budget was the change in the date for the introduction of the new single-tier pension. I recognise that this might be a bit academic for hon. Members in the Chamber today, but my Select Committee, the Work and Pensions Committee, was asked to carry out the pre-legislative scrutiny of the changes to the state pension. The Bill that was published had a start date of April 2017, and we had taken all our evidence on that basis. We had asked the industry whether it could be ready by April 2017 and asked the various user groups whether that was a reasonable time scale.

Having taken all that evidence and done the scrutiny work that the Government had asked us to do, it came as a complete surprise when we found in the Budget that the date was to be brought forward by a whole year and the measure will now be implemented from April 2016. It makes a mockery of the pre-legislative scrutiny process that we were not able to do our job properly and ask the right questions. Just a week before, the Minister responsible had said that there would be no slippage in the timetable and that April 2017 would be the implementation date.

One might think that perhaps, because the Budget was covered by all the usual purdah arrangements, the Government were unable to tell us that the measure was going to come in a year earlier, but the information was leaked and was all over the papers the Sunday before. Clearly, the Government knew they were going to change the date. This was obviously very tempting for the Chancellor given that some £5.9 billion is generated by bringing in the change to contracting out, because no one will be contracted out under the new single-tier pension. I am very angry, as you can tell, Mr Deputy Speaker, that this was landed on my Committee at the very last moment.

6.56 pm

Henry Smith (Crawley) (Con): The Budget reaffirmed the Government’s economic strategy of focusing on reducing the deficit, restoring stability, rebalancing the economy and equipping the UK to compete globally. With over 1.25 million new private sector jobs created and the deficit reduced by a third since the general election, Great Britain is clearly on the right course.

There is one issue, however, that I would have liked my right hon. Friend the Chancellor of the Exchequer to address—tackling the severe inherited levels of air passenger duty. That was a missed opportunity to boost UK competitiveness further still, to reduce the cost of business travel to stimulate trade and investment, and to help hard-working families who want to visit their friends or family or to take a well-earned family holiday.

The previous Labour Government inherited a very modest level of APD and, over time, significantly increased the rates, particularly for long-haul travel. Since taking office, my right hon. Friend has recognised this problem by delivering a temporary one-year freeze and limiting

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increases to the level of inflation. While this action has been very welcome, we should be going further to undo Labour’s damage. Most countries do not charge an international air travel tax at all, but of the handful that do, the UK has by far the highest such tax—more than double that of the next highest charging country, which is Germany. Levying the world’s highest air passenger tax is not a sustainable position for an island nation seeking to increase international trade and to attract millions of new in-bound visitors.

There is significant public concern about APD. Hon. Members have received hundreds of e-mails from constituents, and over 200,000 people have contacted their Member of Parliament to say that APD rates are too high. However, public concern has not, until now, been supported by detailed and credible evidence. Four airlines, including Virgin Atlantic, which is headquartered in my constituency, and EasyJet, the majority of whose services go from London Gatwick airport, commissioned an independent report by PriceWaterhouseCoopers that provides that missing analysis. It makes interesting reading with regard to the nature of APD and its role in the UK economy. It finds that APD is the highest tax of its type in the world by a considerable margin; that it is a highly distortive tax that is at least as damaging to the economy—and probably more so on a pound for pound basis—than corporation tax, and second only to fuel duty among major UK taxes; and that UK businesses in aggregate pay about £500 million in APD each year.

The report’s main analysis relates to the impact on the economy and tax revenues if APD were to be abolished. The report’s modelling suggests that by abolishing APD the UK could boost its gross domestic product by 0.45% in the first year, with continuing benefits through to 2020. Abolishing APD would also increase investment by 6% and exports, including earnings from foreign tourism, by 5% between 2013 and 2015. Abolishing APD would pay for itself, with increased business growth leading to higher tax receipts from other sources, outweighing the lost APD revenue, and it would lead to the creation of up to 60,000 jobs between now and 2020. The report acknowledges that it is uncommon but not unprecedented for tax cuts to pay for themselves.

Even though this has been a step too far for this Budget, I hope that I have made the case that abolishing APD would have been a significant contributor to the UK economy and the Exchequer and to boosting growth in what was otherwise an excellent Budget for hard-working families and businesses in my constituency and throughout the country.