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House of Commons

Wednesday 26 June 2013

The House met at half-past Eleven o’clock


[Mr Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—


1. Jim McGovern (Dundee West) (Lab): What recent discussions he has had with Ministers in the Scottish Government on blacklisting in Scotland. [160884]

The Parliamentary Under-Secretary of State for Scotland (David Mundell): I regularly meet Scottish Government Ministers to discuss a wide range of issues. I commend the work of the Scottish Affairs Committee on investigating the deplorable activity of blacklisting. The Committee’s final report will be given careful consideration by the Government when it is published.

Jim McGovern: I thank the Minister for his response. Perhaps the most ridiculous case of blacklisting that I am aware of is that of the late great Dundonian, Mr Syd Scroggie. He lost a leg and the sight in both his eyes serving his country during the second world war. He found himself on a blacklist. What was his crime? He had written to The Scotsman newspaper to commend the then Dundee district council for buying a portrait of Nelson Mandela. Will the Minister liaise with the Scottish Government to ensure that the odious practice of blacklisting is wiped out?

David Mundell: When the Scottish Affairs Committee report is published, I will undertake to discuss its recommendations with the appropriate Scottish Government Ministers.

Mr Brian H. Donohoe (Central Ayrshire) (Lab): As someone who has been blacklisted three times in the past, I can tell the Minister that it is an obnoxious way of going about business. Will he ensure that legislation is put in place to ensure that people like me and many others in Scotland do not have to face such a practice in future?

David Mundell: The Government take this matter very seriously. As the hon. Gentleman will know, legislation is already in place in the form of the Employment Relations Act 1999 (Blacklists) Regulations 2010. We await the Scottish Affairs Committee report to see whether it proposes any further measures.

Katy Clark (North Ayrshire and Arran) (Lab): The practice has clearly been going on for decades, and the law is not working. Has the Minister looked at the legislation to see whether further action is required to ensure that we bring the practice to an end?

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David Mundell: We have looked at the regulations, which were brought in by the previous Government. We very much respect the work of the Scottish Affairs Committee and if it finds that the current legislation is not working, we will of course look at the matter.

Referendum Campaign

2. Mark Menzies (Fylde) (Con): What steps the Government have taken to fulfil their pledge to campaign to keep Scotland as part of the UK. [160885]

The Secretary of State for Scotland (Michael Moore): The United Kingdom Government are providing evidence and analysis to allow voters to make an informed choice about Scotland within the United Kingdom. We are publishing analysis papers on all the key issues throughout this year and next.

Mark Menzies: Does the Secretary of State agree that the Scotland analysis programme is already highlighting the clear benefits of Scotland being part of the UK, and of the UK having Scotland within it?

Michael Moore: I certainly agree with my hon. Friend on that. It demonstrates that Scotland enjoys the best of both worlds, with a strong Scottish Parliament and a strong voice here in Westminster. Our economy is able to benefit from the scale and support of the whole UK. Our place in the world is all the stronger, and our voice in the world all the louder, for being part of the United Kingdom.

Anas Sarwar (Glasgow Central) (Lab): Yesterday, the Scottish Chambers of Commerce highlighted what it called information gaps, which are a result of Scotland not yet knowing how it would handle business and income taxes and not yet knowing what its currency, its status in the EU or its relationship with international organisations would be. What will this Government do to ensure that all voters in Scotland have the facts, rather than the assertions being made by the Scottish National party and the Scottish Government?

Michael Moore: I commend the Scottish Chambers of Commerce for the work that it is doing, along with others. This week, the Scotland Institute has also highlighted some important deficiencies in the nationalists’ arguments on defence. Our papers on devolution, on the currency and on financial services are setting out the arguments and analysis so that Scotland can make an informed choice. I remain confident that we will decide to stay part of the United Kingdom.

Sir Menzies Campbell (North East Fife) (LD): May I commend my right hon. Friend on the positive case that he is making? As he has just been joined on the Treasury Bench by the Secretary of State for Defence, will he ensure that all Government Departments including the Ministry of Defence take every opportunity to examine critically the defence proposals of the Scottish National party and the Scottish Government, which have yet again been the subject of strong criticism in an independent report this week?

Michael Moore: My right hon. and learned Friend makes a very important point. I can assure him that my right hon. Friend the Secretary of State for Defence is very much engaged in this entire debate. Central to that debate will be the SNP’s attempt to have it both ways by

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reluctantly and belatedly signing up for NATO—three quarters of Scots support it, so that was perhaps inevitable—while not being willing to accept the obligations and rules that go with it, including a nuclear umbrella as part of the strategic concept.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): It emerged at the weekend that insiders of the no campaign against Scottish independence secretly call the campaign “project fear”. This is a campaign based on scaremongering and negativity. Is the Secretary of State embarrassed?

Michael Moore: I think people on the pro-UK side of the campaign could show their Twitter feeds to anyone to show what negativity and scaremongering are all about. I think, too, that hon. Gentleman should be a little careful about casting aspersions and should concentrate on getting on with the proper arguments. From his side of the debate, we have so far seen no arguments and no detail.

Bob Stewart (Beckenham) (Con): Will my right hon. Friend comment on the thought that a possible independent Scotland would have an army? Would that independent Scotland be able to employ the same number of Scottish soldiers as the British Army employs at the moment?

Michael Moore: My hon. Friend, whose distinguished track record in these matters is well known to people across the House, makes a very important point. This week, the report of the Scotland Institute—an independent body—has put real and serious questions to the SNP and the yes campaign that they cannot answer.

Home Buyers

3. Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): Which Department is responsible for promoting in Scotland the UK Government’s policies on supporting home buyers; and if he will make a statement. [160886]

The Parliamentary Under-Secretary of State for Scotland (David Mundell): The Government are providing wide-ranging support to help people buy their homes. That support includes the UK-wide Help to Buy mortgage guarantee scheme, which is led by the Treasury and opens in January 2014. The Treasury has also worked with the Bank of England to implement the funding for lending scheme.

Mark Lazarowicz: Next year, home buyers in Scotland will have the opportunity to access the Scottish Government’s shared equity scheme, the Scottish Government’s mortgage guarantee scheme and the UK Government’s mortgage guarantee scheme. That may sound like a surfeit of riches, but it is leading to confusion, even now, about the best way to access these schemes. Why do the Government not take more action to ensure that there is a close relationship between what the Scottish Government are doing and what the UK Government are doing to make sure that the benefits of these schemes do not go to second home buyers, buying houses of up to £600,000 a year, as the people who need them are first home buyers and people on modest incomes?

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David Mundell: The hon. Gentleman will be pleased to know that we are working closely with the Scottish Government in relation to their equity scheme, which is equivalent to, but not the same as, the equity loan scheme available in England. The Home to Buy mortgage guarantee scheme will be available in Scotland, and we are working with the Scottish Government to ensure that there is a communications plan so that potential home buyers in Scotland fully understand how all the schemes work and how they relate to each other.

Ann McKechin (Glasgow North) (Lab): As my hon. Friend has just pointed out, the capital limit on the mortgage guarantee scheme of the UK Government is £600,000. This is hardly designed for those on low and modest incomes. Would the money not be better spent on providing social housing, which is badly needed across Scotland?

David Mundell: I would have thought that the hon. Lady would welcome the 10% increase in loans to first-time buyers in Scotland in the first quarter of 2012. The limit of the scheme reflects house prices across the United Kingdom, and I believe that it is fair and equitable.

Common Agricultural Policy

4. Neil Carmichael (Stroud) (Con): What assessment he has made of the potential effect on Scotland of the outcome of the recent negotiations on reform of the common agricultural policy. [160887]

The Secretary of State for Scotland (Michael Moore): Negotiations have been making real progress in the last few hours. We aim to deliver a strong outcome for farmers in Scotland, securing full regionalisation of the common agricultural policy to take account of the particular circumstances of Scottish producers.

Neil Carmichael: Notwithstanding the proven need for environmental schemes, does the Secretary of State agree that it is important to enable the farmers to make decisions about their own production mechanisms, so that they can improve production and provide more sustainable food for this country’s future?

Michael Moore: I agree with my hon. Friend. I spoke to the Secretary of State for Environment, Food and Rural Affairs in the last couple of hours after his all-night negotiations in Luxembourg. He remains committed to a scheme that will ensure that farmers get as productive as possible. He wants a scheme that is regionalised for Scotland, and he is delivering that. We have an arrangement that, I hope, will be fair to farmers, fair to consumers and fair to taxpayers.

Mr Ian Davidson (Glasgow South West) (Lab/Co-op): Obviously the most important issue for my constituents is the future of the shipyards, which are threatened by separation, but they are also concerned about the fact that the common agricultural policy supplies public money to landlords who have surplus acres, while the Government fine tenants who are deemed to have surplus bedrooms. Is that fair?

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Michael Moore: Let me first pay tribute to the Chairman of the Select Committee, and welcome his evident return to robust good health. I agree with him about the importance of the shipyards in the context of the debate about independence. As for the agricultural issue, I hope that the hon. Gentleman—who is a long-time campaigner for reform of the CAP—will see an outcome from what is still an ongoing process that is fair to his constituents as well as to farmers.

Miss Anne McIntosh (Thirsk and Malton) (Con): I know that regionalisation is just as important to the delivery of the common agricultural policy as it is to the delivery of the common fisheries policy, but is my right hon. Friend aware of the possible cross-border impact of the way in which the reforms are implemented in Scotland on constituencies that are very close to Scotland?

Michael Moore: Obviously I defer to the hon. Lady’s expertise in this area, but as one who represents what I believe is the longest section of the land border between Scotland and England, I am well aware of the issues that she has raised. What the Secretary of State has been negotiating in Luxembourg is an arrangement that introduces regionalisation for the whole United Kingdom, and allows us to design a common agricultural policy that is fit for local circumstances and fair to farmers throughout the UK.

Dr Eilidh Whiteford (Banff and Buchan) (SNP): I am disappointed that the United Kingdom Government are set to negotiate a CAP deal that will leave Scotland with the lowest rural development budget not just in the UK, but anywhere in Europe. Had Scotland been negotiating on its own behalf, it would have benefited from the rule that no member state should receive less than €196 per hectare by 2020. Does the Secretary of State accept that being tied to the UK in these negotiations will cost Scottish farming £300 million a year for the next seven years?

Michael Moore: I am disappointed by the churlish tone adopted by the hon. Lady. I hoped that she might just have studied the tweets from the Scottish agriculture Minister, which have welcomed the major breakthroughs that we have achieved. We have done that as member of the United Kingdom, sitting at the top table and with the clout to deliver a regionalised CAP. It is now for Richard Lochhead and others to get on with designing a common agricultural policy that suits Scotland’s needs, and Mr Lochhead has the ability to do that.

Graeme Morrice (Livingston) (Lab): If agreement is reached this week on a common agricultural policy that will benefit farmers throughout Scotland, will it not constitute more evidence that Scotland speaks with a louder voice in EU negotiations as part of the United Kingdom?

Michael Moore: I entirely agree with the hon. Gentleman, and the model of the negotiations reinforces his point. It should be noted that the Scottish farming Minister, Richard Lochhead, who has been involved in discussions with the Secretary of State for Environment, Food and Rural Affairs throughout the process, was in Luxembourg overnight, and has seen the United Kingdom deliver for Scotland.

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Employment Figures

5. Alun Cairns (Vale of Glamorgan) (Con): What assessment he has made of the most recent figures on employment in Scotland. [160888]

The Secretary of State for Scotland (Michael Moore): The most recent labour statistics show that between February and April 2013 employment in Scotland has increased by 47,000, while unemployment has fallen by 6,000 and the number of jobseeker’s allowance claimants by 900. The Government will continue to take the necessary steps to build a stronger economy in a fairer society.

Alun Cairns: Unemployment in Scotland has fallen for seven months in a row. Does my right hon. Friend agree that that could be put at risk should Scotland vote to become independent?

Michael Moore: I believe that Scotland as part of the United Kingdom has the most appropriate opportunities, and that not only its businesses but its consumers benefit from the great strength of the UK economy. They have more choice and more security as part of the United Kingdom, and when times get tough—as we saw at the time of the banking crisis—the United Kingdom is there to help out. That is a good deal, and we should stick with it.

John Robertson (Glasgow North West) (Lab): Like my hon. Friend the Member for Glasgow South West (Mr Davidson), I represent a constituency in which the shipyards are the main employer. Scotstoun shipyard employs 2,000 people. What will happen to them if Scotland votes for independence next year?

Michael Moore: Once again, from the other side of the Clyde, the hon. Gentleman makes a very important point. That question is directed to the SNP routinely and it is one for which it has no answer. The arrangement we have with the shipyards and with construction at Rosyth and elsewhere is very good for Scotland, and we should long continue to be part of the UK.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): Will the Secretary of State confirm that many of the jobs are in the offshore oil and gas industry, and we must not forget that that is a very dangerous environment to operate in, especially as we mark the 25th anniversary of the Piper Alpha disaster, when 167 lives were lost? Will he study the outcome of the conference Piper 25 held last week, to see the redoubled efforts of the industry to make conditions as safe as possible for those who work for us offshore?

Michael Moore: My hon. Friend is right to draw the House’s attention to the tragic events of 25 years ago. The loss of 167 lives is something that the families, communities and area are still dealing with a quarter of a century later. We all remember that tragedy and remain committed to ensuring that we have the highest possible standards of health and safety in the North sea. As a Government, we remain committed to working with the sector, the trade unions and others to ensure that is the case, and of course we will study the recommendations from the conference to which my hon. Friend referred.

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Several hon. Members rose

Mr Speaker: Order. It has suddenly gone quiet, which is very encouraging, but there was excessive noise in the Chamber. I know, however, that Members will want to be quiet for Margaret Curran.

Margaret Curran (Glasgow East) (Lab): Thank you very much, Mr Speaker.

For those who are in employment, will the Secretary of State for Scotland tell the House whether average wages have gone up or gone down in Scotland since the last election?

Michael Moore: I would have hoped the hon. Lady would welcome the fact that more people are in employment as a result of the measures we are taking, and that we have created nearly 150,000 private sector jobs in Scotland. Of course there are still challenges facing the economy, but the hon. Lady will remember the legacy she left us, and she can see for herself the crisis in the eurozone. We remain committed to taking the steps that will continue our progress on the road to recovery.

Margaret Curran: Once again the Secretary of State does not let the facts get in the way of the same old answer. Average wages in Scotland have, in fact, gone down by £1,100 since he took office. That is the equivalent of 14 tanks of petrol, 15 weekly shops, or over nine months of gas and electricity bills. The Secretary of State has said in the past

“the horrible truth is…everyone is going to have to make a contribution”.

Is this what he had in mind?

Michael Moore: Despite the changes from the shadow Chancellor in recent days, the hon. Lady does not seem to have caught up with the new script—the recognition that the Labour party left the decks burning when it went out of office three years ago. She is not going to be credible until she faces up to that. What I have said to her is, “Yes, these are tough times, and they continue to be challenging,” but what we are doing, by raising the tax threshold so that 224,000 Scots are out of tax all together and 2 million Scots are enjoying a £600 per annum reduction in their income tax bill, is very important. We continue to work for fairness and for a successful economy.

Discretionary Housing Payments

6. Pete Wishart (Perth and North Perthshire) (SNP): What discussions he has had with the Secretary of State for Work and Pensions on the allocation of additional funds to local authorities in Scotland for discretionary housing payments. [160889]

The Parliamentary Under-Secretary of State for Scotland (David Mundell): Earlier this month my right hon. Friend the Secretary of State for Scotland and I met the Secretary of State for Work and Pensions and Lord Freud, the Minister for welfare reform, to discuss information received from local authorities in Scotland on this matter.

Pete Wishart: The Minister will of course know that some 80% of affected households in Scotland contain a disabled adult, yet they get only a paltry 6.5% of the total budget. Instead of concentrating on his pathetic

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scaremongering “project fear”, will he concentrate on the real fears of real Scots under this Tory-led Government?

David Mundell: What I am concentrating on is the real concerns of local authorities in Scotland. That is why the Secretary of State and I have met every single local authority in Scotland to discuss the specific concerns they have in relation to welfare reform, and we will meet the Convention of Scottish Local Authorities at the end of July to discuss the outcome of those discussions.

Economic Performance

7. Mr Frank Roy (Motherwell and Wishaw) (Lab): What recent assessment he has made of the performance of the economy in Scotland. [160890]

The Secretary of State for Scotland (Michael Moore): Against a tough economic backdrop of the deficit we inherited from the previous Government and the crisis in the eurozone, we are taking the measures necessary to create a rebalanced economy with sustainable public finances.

Mr Roy: The Scottish economy needs people in work, but last year the Government supported the closure of the Remploy factor in Wishaw, and since then, nearly a year later, very few of those disabled workers have found a full-time job. How does that help the economy?

Michael Moore: I recognise the issue the hon. Gentleman raises on his constituents’ behalf, and others have done similar. I am very happy to meet him to discuss it further if he wishes. However, we want to ensure that we have an arrangement that helps those with disabilities, and others, to get into the workplace in a sustainable manner. [Interruption.]

Mr Speaker: Order. There is far too much noise in the Chamber. The House must and will hear Mr Alan Reid.

Mr Alan Reid (Argyll and Bute) (LD): Superfast broadband is very important for the economy of rural areas. The Government’s target is 90% coverage by 2015, but in the highlands and islands, Highlands and Islands Enterprise’s target is only 75% coverage in each local authority area by December 2016. Will my right hon. Friend meet me to discuss how we can get this target up to something comparable to the rest of the country?

Michael Moore: My hon. Friend is right to champion this cause, and it is very important indeed that we get superfast broadband as far across the UK as possible, and particularly in the highlands and islands. However, he might wish to wait for further announcements from the Government in the next day or so.

Angus Robertson (Moray) (SNP): As part of the “project fear” tactics, there has been a ridiculous level of scaremongering in relation to inward investment, whereas in fact, Scottish Development International and the Scottish Government have helped to deliver a 15-year high in investment levels. Will the Secretary of State apologise for the scaremongering tactics of “project fear” that he is a part of?

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Michael Moore: The hon. Gentleman needs to relax a bit and address this issue sensibly. He surely recognises that that record investment comes on the back of a United Kingdom economic framework that is supportive to businesses wherever they locate in the United Kingdom, and through which businesses can get access to the whole of the United Kingdom economy, without any false barriers created by him and his friends.

Angus Robertson: But the failing austerity policies of the Conservative-Liberal Democrat coalition Government are not delivering the growth we require in Scotland or in the UK. However, will he take the opportunity to welcome the help and support he is getting as part of the “project fear” campaign by those who agree with the austerity course, who will agree with the Conservative spending caps that have been announced, and who now agree with bedroom tax: namely—

Mr Speaker: Order. The question is too long.

Michael Moore: That is another neat diversion by the hon. Gentleman, but he cannot avoid the fact that he and his colleagues have no answers on the central questions of Scotland’s economy: what currency it will have, how the banks and others will be regulated, how trade will work across the United Kingdom. On every single important question, there are no answers from the SNP. It will not be listened to until those answers come.

Iain Stewart (Milton Keynes South) (Con): Later today, the House will debate the High Speed Rail (Preparation) Bill. Does my right hon. Friend agree that this project will assist Scotland’s long-term economic growth?

Michael Moore: My hon. Friend is right: this is absolutely key to the whole of the UK’s economy, and I look forward to the benefits being enjoyed by all parts of Britain—north and south.

Mr William Bain (Glasgow North East) (Lab): This Government have delivered just one fifth of the promised growth since 2010. Is the Secretary of State also aware that the working-age employment rate in Scotland has fallen by 2% from five years ago, leaving a jobs gap for Scotland of more than 71,000? Does that not make the case for a jobs guarantee now to get Scotland’s young and long-term jobless people back into work, generate more tax revenues and help cut the deficit, which rose, not fell, last year under this incompetent Government?

Michael Moore: The hon. Gentleman should perhaps practise his questions a little more. Yet again, there is denial from him and his colleagues of the good progress we have been making on unemployment, and I hope he recognises that. It is absolutely essential that we take the measures to support people into work, which we are doing with the Work programme and the Youth Contract, and we will be making work pay with universal credit. He can shake his head, but he needs to get with the reality.

John Thurso (Caithness, Sutherland and Easter Ross) (LD): Does my right hon. Friend agree that connectivity through regional air hubs to international hubs is vital

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to the performance of the Scottish economy? What can the Government do to assist in maintaining those links, particularly at Inverness and to the highlands?

Michael Moore: My hon. Friend is a real champion of those vital air links to the north and to the far north, which he represents. I know that he has been making strong representations recently, and we would be happy to have further meetings with him to discuss these issues.

Fiona O'Donnell (East Lothian) (Lab): The Office for Budget Responsibility states that real wages in Scotland will be lower in 2015 than they were when Labour left office. Why is the Secretary of State not standing up for hard-working Scots and protecting tax credits, and is instead giving a tax break to millionaires?

Michael Moore: There we go again. The hon. Lady, once again, chooses to ignore the absolute crisis that the Labour party left for the incoming Government three years ago. She forgets the measures we have taken to take low-paid Scots—224,000 of them—out of tax altogether. She forgets all those things. Without the firm measures we have taken in the past three years we would not be moving from rescue to recovery, as we are.

Prime Minister

The Prime Minister was asked—


Q1. [161522] Gordon Henderson (Sittingbourne and Sheppey) (Con): If he will list his official engagements for Wednesday 26 June.

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

Gordon Henderson: Many people in Sittingbourne and Sheppey who have mortgages are benefiting from historically low interest rates. What reassurance can my right hon. Friend give my constituents that their mortgages will continue to be affordable under his Government?

The Prime Minister: My hon. Friend makes an important point. We do enjoy record low interest rates, and that is good news for home owners. What we need to do is stick to the plans that we have set out and have a sensible fiscal policy, so that the Bank of England can keep interest rates low. Here is one piece of advice I will not be taking: on Saturday the leader of the Labour party said that he wanted to control borrowing but on Sunday the shadow Chancellor said borrowing would go up. Perhaps the leader of the Labour party will admit it when he gets to his feet: Labour would borrow more.

Edward Miliband (Doncaster North) (Lab): Last May, the Education Secretary said that “work will begin immediately” on 261 projects under the Priority School Building programme. Can the Prime Minister tell the House how many have begun?

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The Prime Minister: What I can tell the right hon. Gentleman is that infrastructure spending under this Government has been higher than it was under Labour, and we have about £14 billion reserved for capital spending on our schools. But we have had to clear up the appalling mess left by the Building Schools for the Future programme.

Edward Miliband: I do not think the right hon. Gentleman knows the answer. I will tell him the answer: 261 schools were promised, only one has started. Now perhaps he can explain why.

The Prime Minister: We have had to recover from the appalling mess of the Building Schools for the Future programme. That is the mess that we inherited—as well as a record deficit—but it is this Government, as the Chancellor will announce in a minute, who are providing half a million extra school places.

Edward Miliband: I do not think the right hon. Gentleman knows the answer to that one. Let us try another one. In October 2011, he said he wanted to

“bring forward every single infrastructure project that is in the pipeline”.

So, out of 576 projects set out in that plan, how many have been completed?

The Prime Minister: Let me give the right hon. Gentleman the figures for infrastructure spending. Our annual infrastructure investment is £33 billion, which is £4 billion more every year than was ever achieved under Labour. Now let me give him the figures for road schemes. We are investing more in major road schemes in each of the first—[Interruption.]

Mr Speaker: Order. The answer from the Prime Minister must be heard and questions to him, from whichever side of the House, must be heard. It is very clear, very simple—it is called democracy.

The Prime Minister: Thank you, Mr Speaker. The right hon. Gentleman asked the question: how many of the schemes have been completed? You cannot build a nuclear power station overnight. By the way, the Labour Government had 13 years and they did not build a single one. Let me give him the figures on rail. This Government are electrifying more than 300 miles of railway routes. Perhaps he can tell us how many were electrified under Labour? How many? Nine miles—that is the Labour record that this Government are recovering from.

Edward Miliband: I will tell the Prime Minister about our record in infrastructure: 100 new hospitals under a Labour Government, 3,700 schools rebuilt under a Labour Government, and 3,500 new children’s centres—all under a Labour Government. He has no answer, so let me tell him it again: seven out of 576 projects, five of which were started under the previous Labour Government. He said that it takes a long time to complete these projects—I thought he might say that—but 80% have not even been started, despite the promises of three years ago. More promises, no delivery.

Let us see whether the Prime Minister can answer another one. Last year, the Government said that their NewBuy guarantee scheme would help 100,000 people buy a new home. How many people has it helped so far?

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The Prime Minister: It has helped thousands of people and has been welcomed by the entire industry. The right hon. Gentleman talks about what was built under a Labour Government and we saw the results—a private finance initiative scheme on which we are still paying the debt and an 11% of GDP budget deficit that this Government will cut in half. That is the proof of what we are doing and we all know that the one question he has to answer is whether he will now admit that he wants to put borrowing up. Will he admit it?

Edward Miliband: Every time I come to Prime Minister’s questions, I ask the Prime Minister a question and he does not answer it—he just asks me one. The only fact that this House needs to know about borrowing is that contrary to the promise the Chancellor made in his autumn statement, it went up last year. That is the truth we find. Let me answer the question the Prime Minister did not know the answer to. He promised 100,000 new homes under NewBuy, but there have been just 2,000. At that rate, it will take until 2058 to meet the target he set.

The British Chambers of Commerce says that the Government’s plan for infrastructure is

“hot air, a complete fiction.”

Even the Deputy Prime Minister has woken up to the problem. He said yesterday

“the gap between…announcement and delivery is quite significant.”

No kidding, Mr Speaker. Why should we believe the promises the Chancellor makes on infrastructure today when the Prime Minister’s own deputy says that they are failing to deliver?

The Prime Minister: The right hon. Gentleman asks for the figures on housing, so let me give him those figures. We have delivered 84,000 new affordable homes. Housing supply is at the highest level since 2008, house building is increasing at a faster rate than for more than two years and we have put in place £11 billion for housing investment. Let me ask him again the question he will not answer—[Interruption.] I know that he does not want to answer the question, but that is why half the country think he is Bert from “The Muppets”, as they think he belongs in “Sesame Street”, not Downing street. Let me give him another go: will he admit that borrowing would go up under Labour?

Edward Miliband: Let me say to the Prime Minister that we will swap places any time. Here is the reality: the Prime Minister promised to balance the books, but borrowing was up last year; he said that we are all in it together, but living standards are falling; he promised to get Britain building, but the Government have not. All we need to know about this Chancellor’s spending review is that the British people are paying the price for their failure.

The Prime Minister: Let us remember what the Leader of the Opposition said at the time of the last spending review. He said unemployment would go up; it has gone down. He told us crime would go up; it has gone down. He told us volunteering would go down; it has gone up. He told us that poorer students would not go to university; the percentage has gone up. He told us that our immigration policy would not work; we have cut immigration by a third. That is what we have done—as ever, he is wrong about the economy, wrong about everything and never trusted by the British people.

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Q2. [161523] Rehman Chishti (Gillingham and Rainham) (Con): Today, the Government publish the spending round for 2015-16. Will the Prime Minister confirm that it rejects the representations to borrow less by borrowing more, as proposed by the Opposition?

The Prime Minister: My hon. Friend makes a very good point. On Saturday, the leader of the Labour party told us there would be iron discipline on spending, but on Sunday, the shadow Chancellor, on the television, having been asked five times, admitted that yes, borrowing would go up. So there we have it: they want to borrow less by borrowing more; they want to spend less by spending more; they want to cap welfare by spending more on welfare. No wonder it is not just people at Wimbledon saying, “New balls, please.” [Interruption.]

Mr Speaker: Order. In congratulating the hon. Gentleman on his birthday, I call Mr David Winnick.

Hon. Members: Twenty-one today, twenty-one today, he’s got the key of the door, never been twenty-one before—

Mr David Winnick (Walsall North) (Lab): I certainly would not suggest a vote on it, Mr Speaker.

Is the Prime Minister aware how shocking it is that the police apparently spent more time investigating the parents and friends of Stephen Lawrence than the racist murder itself, which took place in 1993? When the Home Secretary meets Mrs Lawrence, will she apologise for what occurred? Is it really right for the police to investigate themselves?

The Prime Minister: The hon. Gentleman makes an extremely serious point about a very serious situation. The Lawrence family have suffered appallingly: they lost their son; there was the failure to investigate properly, year after year; and now they hear these allegations that the police were trying to undermine them, rather than help them. My right hon. Friend the Home Secretary set out in the House on Monday the two inquiries—independent inquiries, already under way—and she met Mark Ellison QC again this morning to make sure that his inquiry will cover the allegations made overnight about the bugging by the police of a friend of Stephen Lawrence, but nothing is off the table. If more needs to be done and if further investigations or inquiries need to be held, they will be held. This is not an acceptable situation, and we must get to the bottom of it.

Q3. [161524] Jane Ellison (Battersea) (Con): My Battersea constituency is attracting a large amount of inward investment from around the world for major infrastructure projects. Does the Prime Minister agree with me that one of the ways in which we are restoring the UK’s credibility overseas is by dealing with our debts and showing how we fund public spending properly?

The Prime Minister: Myhon. Friend makes an excellent point. The redevelopment of Battersea power station, which for all those years under Labour stood there completely empty and unused, is to start this year, because under this Government we take infrastructure

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seriously, we get investors to come into our country, and we get projects started—unlike the wasted years under Labour.

Q4. [161525] John Mann (Bassetlaw) (Lab): Never mind Battersea, what about Bassetlaw? In its last six years, the Labour Government delivered £225 million-worth of major infrastructure projects. Can the Prime Minister confirm that in his three years there has been zero delivery of such projects and zero starts of such projects? When will he stop faffing around and get the new Elkesley flyover and the new Serlby Park school, which were guaranteed by the last Government, started in my constituency?

The Prime Minister: The last Government made a lot of guarantees and wrote a lot of cheques, but they could not deliver and they left us with an enormous budget deficit. Let me give the hon. Gentleman the figures: our spending on capital spending is higher than what Labour planned, and annual infrastructure investment is £33 billion, which is £4 billion more than Labour achieved, even in the boom years. That is what happened: they had an unaffordable boom and a painful bust, and it is this Government who are delivering the recovery.

Ben Gummer (Ipswich) (Con): The Prime Minister knows Ipswich well and he knows that it has some of the poorest wards in the country. He will know that two of those wards were promised schools by the previous Government. They did not deliver them in 13 years. I have just been to the topping out ceremony of one of them, delivered by this Government, and next year we will break ground on the other. When it comes to promises to the least advantaged people in our community, Labour are very good at promising. We deliver.

The Prime Minister: My hon. Friend is absolutely right. The Opposition do not like hearing the evidence of the new schools being built by the Government in difficult times. Also, when we talked about the east of England, year after year, there were calls for improvements to the A11—never delivered, but delivered by this Government.

Q5. [161526] Mr Gregory Campbell (East Londonderry) (DUP): The staging of the G8 proved that Northern Ireland is open to the world for business. Now we need the business of the world to come to Northern Ireland. Will the Prime Minister give us an outline of what he will do in conjunction with the American Administration and the Northern Ireland Executive to deliver a successful inward investment conference in October to deliver thousands of much-needed private sector jobs?

The Prime Minister: I am grateful to the hon. Gentleman, and I look forward to coming to Northern Ireland for that vital investment conference. I think that what we will be able to demonstrate is not only the success of the G8 and the great advertisement that that was for Northern Ireland but the coming together of the UK Government and the Northern Irish Assembly with plans both for economic development and for breaking down the barriers in Northern Ireland between different communities. That shared future agenda is important not just for the future of society in Northern Ireland but for the future of our economy too.

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Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): I recently met Banchory Academy’s Amnesty International group, which has highlighted concerns about the risks to women in Afghanistan. What reassurance can the Prime Minister provide that the Government will continue their efforts to make sure that there is no return to the threats to women that we have seen in Afghanistan in the past?

The Prime Minister: My hon. Friend makes an important point and we should continue to support the Afghan constitution, which gives important guarantees in that regard. I spoke yesterday to President Karzai, including on the issue of the Afghan constitution and how important it is. We are making a major investment by supporting the Afghan national security forces, and through our aid programme—over $100 million a year—we can help to secure the sort of advances in Afghanistan that we all want to see.

Q6. [161527] John Cryer (Leyton and Wanstead) (Lab): Further to the question that the Prime Minister failed to answer last week, can he confirm that he has never had a conversation with Lynton Crosby about alcohol pricing or cigarettes? The question is not “Has he been lobbied?”, but “Has he had that conversation?”

The Prime Minister: As I said last week, I have never been lobbied by Lynton Crosby about anything. The difference between me and, frankly, every Opposition Member is that I can put my hand on my heart and say that I have never been lobbied by trade union after trade union making donation after donation, fixing parliamentary selection after parliamentary selection. That is the real problem in British politics, and it is time that we cleaned it up.

Jake Berry (Rossendale and Darwen) (Con) With Armed Forces day[Interruption.]

Mr Speaker: Order. These are important matters: Mr Berry must be heard.

Jake Berry: Thank you, Mr Speaker. With Armed Forces day in mind this weekend, will my right hon. Friend join me in supporting a campaign in Rossendale and Darwen, supported by Support Our Soldiers, the Rossendale Free Press and the Lancashire Telegraph, encouraging local residents to come and pack boxes to be sent to our troops serving in Afghanistan? We hope that by the end of this weekend we will have packed 500 to be sent to our troops.

The Prime Minister: I congratulate my hon. Friend, and everyone in Rossendale and Darwen who is taking part in this excellent initiative. I have seen these boxes not only being packed in Britain but unloaded in Afghanistan, and I can see the huge pleasure and support that they give our troops in Afghanistan. We should continue to use the money that has been raised in fines from irresponsible bankers following the LIBOR inquiry to invest in the armed forces covenant. Under this Government, we have made real progress in delivering that sort of help and support to armed forces, their families and their communities.

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Q7. [161528] Mr William Bain (Glasgow North East) (Lab): In October 2010, the Prime Minister told the Conservative party conference:

“In five years’ time, we will have balanced the books.”

That promise is going to be broken, is it not, Prime Minister?

The Prime Minister: We have cut the deficit by a third, and we will cut it further by the next election. Frankly, coming to the House complaining about borrowing when you plan to put it up is a pretty odd political strategy. That is the question that the hon. Gentleman has to put to his Front Bench. Why, if borrowing is a problem, is it Labour policy to put it up?

Charlotte Leslie (Bristol North West) (Con): In 2008 Labour buried three reports warning of a culture of fear in the NHS and warning about inspections. Now we find that its Care Quality Commission has buried concerns over baby deaths. Will the Prime Minister support a root-and-branch review of the sinister culture of cover-up in our NHS over the past decade?

The Prime Minister: First, I commend my hon. Friend for this campaign that she is fighting for openness, transparency and clarity in our NHS. She makes an important point, which is that there was a culture under the previous Government of not revealing problems in the NHS. The former Health Secretary is shaking his head, but this is what the former head of the CQC, Baroness Young, appointed by the previous Government, said—[Interruption.] I know the Opposition do not want to hear it, but they are going to have to hear it, because it is important that we understand the culture that went wrong under Labour. She said this:

“There was huge government pressure, because the government hated the idea that—that a regulator would criticise it by dint of criticising one of the hospitals or one of the services that it was responsible for.”

That is what Barbara Young said. And she said:

“We were under more pressure. . . when”—

the right hon. Member for Leigh (Andy Burnham)—

“became minister, from the politics.”

There was a culture problem under Labour, and the sooner the Opposition admit it, the better.

Q8. [161529] Barry Gardiner (Brent North) (Lab): We now know from the latest Office for National Statistics figures that borrowing did rise last year, and the Prime Minister will recall that the Chancellor of the Exchequer two years ago said, “We have asked the British people for all that is needed, there is no need to ask for more.” Today, why is he asking for more?

The Prime Minister: We have to have a spending review to cover the year 2015-16, which was not covered by previous spending reviews. We have got the deficit down by a third. It is hard, painful and difficult work but we are clearing up the mess left when the hon. Gentleman was a Minister in the previous Government.

Ian Swales (Redcar) (LD): Sixteen to 18-year-olds can receive free school meals in schools, academies, free schools and university technical colleges, but not in sixth-form colleges and further education colleges, such as those in my constituency. Will the Prime Minister act now to end this clear injustice left by Labour?

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The Prime Minister: I am very happy to look at this issue. I know that school meals are very much in the news this week because it is a week when we should be promoting healthy eating in our schools. I am happy to look at the issue, but we have to think very carefully about how best to use the education budget to get money directed to schools for all our children.

Q9. [161530] Mr Barry Sheerman (Huddersfield) (Lab/Co-op): I think the Prime Minister will agree that both his generation and mine were lucky enough to come on to the labour market at a time of full employment and great opportunity. Has he seen the OECD figures this morning in a report that shows the gravity of youth unemployment in our country? May we please, at this late stage in this Government, have a determination to stop unemployment up to the age of 25, as is the case in the Netherlands? Why cannot we deliver that for young people in our country?

The Prime Minister: I absolutely agree with the hon. Gentleman that youth unemployment is a scourge. There is good news in the fact that unemployment has been coming down and youth unemployment has been coming down, but he is absolutely right that it should not be the case that we have youth unemployment of 55% in Spain, yet it is under 8% in Holland. We need to make sure here in the UK that we are performing alongside Holland, Germany and the countries with the lowest rates of youth unemployment. We do that by having a flexible labour market and by helping businesses to invest and locate here. As we stand today, employment is growing faster here than it is in any other G7 country, including Germany, so we are doing the right thing, but we need to focus more on young people.

Mr Crispin Blunt (Reigate) (Con): I have the Prime Minister’s helpful recent letter to me, underlining in his own hand that housing development does not trump the green belt. I gave his letter to Martin Pike, the planning inspector reviewing Reigate and Banstead’s core strategy, and I regret to report that he upheld the principle that green fields in the green belt could be identified for development against the wishes of local people. Will my right hon. Friend now direct the amendment of the national planning policy framework to better protect green fields in the green belt from unwanted development?

The Prime Minister: I remember underlining that part of the letter. The rules about the green belt have not changed. A local authority can change the green belt only by taking something out of the green belt and putting something back in, in consultation with local people. I know my hon. Friend is having that discussion with his local authority and I am quite convinced that, with the NPPF that we have in place, we can get the balance right between environmental protection on the one hand and the need for more housing on the other.

Q10. [161531] Graham Stringer (Blackley and Broughton) (Lab): This afternoon I shall vote enthusiastically for the High Speed Rail (Preparation) Bill, but can the Prime Minister explain why he has instructed his officials and Ministers to oppose the extension of the trans-European network north of London, which will mean that if we stay in the European Union, High Speed 2 and other transport links to the north of England will not be eligible for funding?

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The Prime Minister: Obviously we will be looking at all the ways we can increase the funding available for high-speed rail because, as the hon. Gentleman says, it is very important not only that we achieve high-speed rail between London and Birmingham, but that we build the next stages as well.

Daniel Kawczynski (Shrewsbury and Atcham) (Con): The Prime Minister knows how hard the Shropshire MPs have worked to get a direct train service from London to Shrewsbury. Virgin wants to implement that direct service in December, but unfortunately Network Rail is trying to prevent that from happening. We are the only county town in England without a direct rail service to London. Will he use his good offices to ensure that that blockage is resolved?

The Prime Minister: I am happy to tell my hon. Friend that the Transport Secretary will be meeting him next week to discuss the issue. In terms of the answer I just gave on high-speed rail, I think that we have to recognise that there is a lot of congestion on our existing main lines and that high-speed rail will help free up services so that we can have more direct connections, particularly to important towns such as Shrewsbury.

Q11. [161532] Meg Munn (Sheffield, Heeley) (Lab/Co-op): The Department for Business, Innovation and Skills proposes to abolish the protection for the name “Sheffield” that guarantees the quality of our manufactured goods. The Ministry of Defence proposes to move the headquarters of our Territorial Army regiment out of the city. What have this Government got against the businesses and people of Sheffield?

The Prime Minister: Sheffield is a fantastic city and a very important part of Britain’s industrial base, and I am proud of the fact that, through the regional growth fund and other schemes, we are investing in its future. We are actually putting more money into the reserves—an extra £1.5 billion—to ensure that we get them up to the level of strength needed for Future Force 2020. On the other issue, I am reliably informed that the hon. Lady should have some confidence.

Sir Bob Russell (Colchester) (LD): Military bands are important not only to Her Majesty’s armed forces, but to the civilian population. The previous Labour Government cut the number of Army bands by a quarter. In this Armed Forces week, will the Prime Minister give an assurance that there will be no further cuts to Army bands?

The Prime Minister: The assurance I can give my hon. Friend, as the Chancellor will say in a few minutes, is this: yes, of course we have had to make difficult efficiencies in the Ministry of Defence, but there will be no further reductions in the size of our Army, Navy or Air Force, and we will continue with an equipment programme that I think is second to none in terms of the capabilities we will be giving our brave armed service personnel.

Q12. [161533] Stephen Pound (Ealing North) (Lab): Mr Speaker, you will recall that over a year ago—you probably know the exact date—the Prime Minister announced an internal inquiry, to be led by the lustrously named Lord Gold, into the cash-for-access

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scandal, in which major Conservative party donors were richly, if not royally, entertained at Downing street and Chequers. When does the Prime Minister plan to produce and publish the results of that inquiry?

The Prime Minister: I am very happy to set out for the hon. Gentleman all the things Lord Gold recommended and all the steps that we will be taking, but as we do so perhaps he could impose the issue of donations on his Front Benchers and ask them when they will pay back the taxes they managed to dodge from their donor?

Q13. [161534] Stephen Mosley (City of Chester) (Con): School dinners are vital to ensuring that children eat healthily and in helping to tackle childhood obesity. Will my right hon. Friend join me in welcoming the parliamentary launch of national school meals week, which will take place in the Jubilee Room this afternoon?

The Prime Minister: I certainly join my hon. Friend in that. I think it is a very important cause, because we have had several problems with school meals over the years. They are not attractive enough for young people who want to take them, and there are also problems with obesity, so getting this right, which has been happening over recent years, is extremely important. I speak as someone with two children who enjoy their school meals, and I want the school to go on winning the battle for school meals, rather than parents having to make the packed lunches.

Clive Efford (Eltham) (Lab): The revelation that the Metropolitan police may have withheld evidence from the Macpherson inquiry has rightly been met with public derision, but the Prime Minister’s answer earlier on really did not go far enough. The public are not satisfied by the police investigating the police, nor will an inquiry held in secret, no matter how eminent the QC, satisfy public opinion. Will the Prime Minister now give an undertaking to hold a public inquiry with the power to summon people and hear evidence under oath?

The Prime Minister: As I said earlier, I rule absolutely nothing out. We have got to get to the bottom of this. But to be fair, this is not the Metropolitan police investigating the Metropolitan police. Two inquiries are under way. One is led by Mark Ellison QC, who played a very major role in prosecuting some of those responsible and who met the Home Secretary today, and the second is led by the chief constable of Derbyshire police force. We need to make sure that they have all the powers and everything that they need. But as I said very clearly, if we need to go further to get to the truth, we will.

Q14. [161535] Mr Mark Spencer (Sherwood) (Con): As the spending round is published, will the Prime Minister assure the House that Her Majesty’s Revenue and Customs will be given the resources to clamp down on tax avoidance, such as the £700,000 avoided by the Labour party?

The Prime Minister: My hon. Friend makes a very good point. I said that I would mention this at every Prime Minister’s questions; I have already managed to

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get it in once and it is a great pleasure to get it in again. They owe £700,000 of tax that could be going into schools or hospitals. It is about time they realised what hypocrites they are and paid up the money.

Q15. [161536] Ann McKechin (Glasgow North) (Lab): With more than 400,000 house building plots with planning permission remaining unbuilt on in this country, does the Prime Minister agree with me that we should now put pressure on companies to start building and creating jobs rather than simply waiting for their profits to increase?

The Prime Minister: I agree with the hon. Lady that we need to do more to encourage businesses to build on the plots they already have. That is why we have taken unprecedented steps, with schemes such as Help to Buy that are making mortgages available to young people. All those initiatives are actually making a difference, and housing starts are radically up compared with two years ago. But I do not rule out taking further steps as well.

Mr John Baron (Basildon and Billericay) (Con): The Government deserve credit for having introduced the cancer drugs fund, which has helped more than 30,000 cancer patients since 2010, but can I share with the Prime Minister the fact that there is growing concern about the lack of clarity regarding its replacement at the beginning of the year? Will he look at this as a matter of urgency?

The Prime Minister: I am looking at it as a matter of urgency. I am very proud of the cancer drugs fund; as my hon. Friend says, it has saved many lives and made drugs available to more than 30,000 people. It has been expanded to include some treatments as well as drugs. I certainly want to see this a record that we build on and in no way put at risk.

Sheila Gilmore (Edinburgh East) (Lab): Last week, the Prime Minister said that people on the Labour Benches had forgotten about the bedroom tax. I can assure him that my constituents certainly have not. In my city last week, only 23 one-bedroom homes were available for let. Of those, four had more than 200 applicants. When is the Prime Minister going to admit that this is not the best way of reducing the housing benefit bill?

The Prime Minister: The point I make to the hon. Lady is that we are removing the spare room subsidy because it is right for there to be fairness as between people in privately rented accommodation and people in socially rented accommodation. But this, in a way, is the perfect prelude to the spending review that we are about to hear. Labour has told us that it is now going to be responsible about spending and that it is going to accept the cuts that have been made, yet we hear, week after week, Back Bencher after Back Bencher, Front Bencher after Front Bencher complaining about the difficult decisions that we have had to take and promising to reverse them. That is why Labour has absolutely no credibility whatever.

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Spending Review

12.33 pm

The Chancellor of the Exchequer (Mr George Osborne): This coalition came into office with a commitment to address with firmness and resolve one of the biggest economic crises of the post-war era. The action we have taken, together with the British people, has brought the deficit down by a third, helped a record number of people into work, and taken our economy back from the brink of bankruptcy; and it allows us to say that while recovery from such a deep recession can never be straightforward, Britain is moving out of intensive care, and from rescue to recovery.

Today we announce the latest action to secure the recovery. We act on behalf of every taxpayer and every future taxpayer who wants high-quality public services at a price our country can afford. We act on behalf of everyone who knows that Britain has got to live within its means. We have applied three principles to the spending round I will set out today: reform, to get more from every pound we spend; growth, to give Britain the education, enterprise and economic infrastructure it needs to win the global race; and fairness, making sure we are all in it together by ensuring those with the broadest shoulders bear the largest burden and making sure the unfairness of the something-for-nothing culture in our welfare system is changed.

We have always understood that the greatest unfairness was loading debts on to our children that our generation did not have the courage to tackle ourselves. We have always believed, against much opposition, that it is possible to get better public services at lower cost—that you can cut bureaucracy and boost enterprise by taking burdens off the back of business. In the face of all the evidence, the opposition to these ideas has collapsed into incoherence. We have always believed that the deficit mattered—that we needed to take tough decisions to deal with our debts—and the opposition to that has collapsed into incoherence too. Today I announce the next stage of our economic plan to turn Britain around.

Let me start with the overall picture on spending. In their last year in office, the previous Government were borrowing £1 in every £4 that they spent. It was a record for a British Government in peacetime and a calamitous risk with our economic stability. As the note we saw again this week from their outgoing Chief Secretary put it,

“I’m afraid there is no money.”

So we acted immediately. Three years ago, we set out plans to make savings and to reduce our borrowing. Instead of the £157 billion the last Government were borrowing, this year we are set to borrow £108 billion pounds: that is £49 billion less in borrowing. That is virtually the entire education budget.

So we have made real progress, putting right what went so badly wrong. But while we have been acting, the challenges from abroad have grown: a eurozone in crisis, rising oil prices, and the damage from our own banking crisis worse than anyone feared. The truth is that we have to deal with the world as it is, not as we would wish it to be, so this country has to continue to make savings. I can report to the House that the biggest single saving we have made in government is the £6 billion a year less we are paying to service our debts than the

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previous Government budgeted for. Bear that number in mind when you hear the Opposition complaining about cuts.

The deficit has come down by a third, yet at over 7% it remains far too high, so we must continue to take action—not just because it is wrong to go on adding debts to our children’s shoulders, but because we know from the global turbulence of the last few years that the economic risks are real and the recovery has to be sustained. If we abandoned our deficit plan, Britain would be back in intensive care. So the figures today show that until 2017-18, total managed expenditure—in other words, the total amount of Government spending—will continue to fall in real terms at the same average rate as it is falling today.

The task before us today is to spell out what that means for 2015-16. Total managed expenditure will be £745 billion. To put that huge sum into context, consider this: if Government spending had been allowed to rise through this Parliament at the average rate of the last three decades, that total would have been £120 billion higher. This Government have taken—[Interruption.]

Mr Speaker: Order. The Chancellor must not have to shout to be heard. Members know that I will always accommodate the interests of Back Benchers on both sides in scrutinising these matters intensively, but the Chancellor and, in due course, the shadow Chancellor must be properly and fairly heard.

Mr Osborne: This Government have taken unprecedented steps to achieve that expenditure control. Now we need to find £11.5 billion of further savings. I want to pay a personal tribute to my right hon. Friend the Chief Secretary for the huge effort that he has put into delivering them. Finding savings on that scale has not been easy. These are difficult decisions that will affect people in our country, but there never was an easy way to bring spending under control. Reform, growth and fairness are the principles. Let me take each in turn.

I will start with reform and the obligation that we all have in this House to ensure that we get more for every pound of taxpayers’ money that we spend. With the help of my right hon. Friend the Minister for the Cabinet Office, we have been combing through Whitehall, driving out costs, renegotiating contracts and reducing the size of government. Cutting money that the previous Government were spending on marketing and consultants, reforming Government IT and negotiating harder on behalf of the taxpayer have already saved almost £5 billion. In this spending round, we will find a further £5 billion of efficiency savings. That is nearly half of the total savings we need to achieve.

We are reforming pay in the public sector. We are holding down pay awards, and public sector pay rises will be limited to an average of up to 1% for 2015-16. However, the biggest reform that we will make on pay is to automatic progression pay. That is the practice whereby many employees not only get a pay rise every year, but automatically move up a pay grade every single year, regardless of performance. Some public sector employees see annual pay rises of 7%. Progression pay can at best be described as antiquated; at worst, it is deeply unfair to other parts of the public sector that do not get it and to the private sector that has to pay for it. So we will end automatic progression pay in the civil service by 2015-16,

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and we are working to remove automatic pay rises simply for time served in our schools, NHS, prisons and police. The armed forces will be excluded from those reforms.

Keeping pay awards down and ending automatic progression pay means that, for every pound we have to save in central administration, we can better limit job losses. I do not want to disguise from the House the fact that there will be further reductions in the number of people working in the public sector. The Office for Budget Responsibility has forecast that the total number of people working for the Government will fall by a further 144,000 by 2015-16. I know that for those who are affected that is difficult. That is the consequence of the country spending far beyond its means.

When I presented the spending round three years ago, I said that about half a million posts in the public sector were forecast to have to go. That is indeed what has happened, and we are saving £2 billion a year, with a civil service now smaller than at any time since the war. I also said three years ago that I was confident that job creation in the private sector would more than make up for the losses. That prediction created more controversy than almost anything else at the time, including with the Opposition. The shadow Chancellor called it “a complete fantasy”. Instead, every job lost in the public sector has been offset by three new jobs in the private sector. In the last year, five new jobs have been created for every job cut in the public sector. The central argument of those who fought against our plan is completely demolished by the ingenuity, enterprise and ambition of Britain’s businesses. I pay tribute to the hard-working people of this country who proved their pessimism wrong.

In this spending round, the Treasury will, as one would expect, lead by example. In 2015-16, our resource budget will be reduced by 10%. The Cabinet Office will also see its resource budget reduced by 10%. However, within that we will continue to fund support for social action, including the National Citizen Service. Ninety thousand places will be available for young adults in the citizen service next year, rising to 150,000 by 2016. It is a fantastic programme that teaches young people about their responsibilities as well as their rights, and we are expanding it.

Local government will have to make further savings too. My right hon. Friend the Communities and Local Government Secretary has set an example to all his colleagues by reducing the size of his Department by 60% and abolishing 12 quangos. He is a model of lean government, and has agreed to a further 10% saving in his resource budget. But we are committing to more than £3 billion capital investment in affordable housing and we will extend the troubled families programme to reach 400,000 more vulnerable families who need extra support. We are proving that it is possible to save money and create more progressive government. That is the right priority.

Here is another of the Government’s priorities: helping families with the cost of living. Because we know that times are tough, we have helped to keep mortgage rates low, increased the personal allowance, cut fuel duty and frozen council tax. That council tax freeze is due to come to an end next April. I do not want that to

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happen, so I can tell the House today that because of the savings we have made we can help families with their bills. We will fund councils to freeze council tax for the next two years. That is nearly £100 off the average council tax bill for families, and brings savings on these bills for families to £600 over this Parliament. That demonstrates our commitment to all those who want to work hard and get on.

There is one more thing that we can do to help with the cost of living in one part of the country. For years, Members from the south-west of England have fought on behalf of their constituents who face exceptionally high water bills. Nothing was done until we came to office. Now we have cut those water bills by £50 per household every year until 2015. My hon. Friend the Member for Camborne and Redruth (George Eustice) and many others have campaigned to extend that rebate beyond 2015. I am happy to confirm today that we will do that. Taking money out of the cost of government and putting it in the pockets of families—that is what we mean by reform.

Local government has already taken difficult decisions to reduce staff numbers, share services and make savings. I pay tribute to Sir Merrick Cockell for all he has done in showing how this can be achieved. We were told by the scaremongers that savings in local government would decimate local services. Instead, public satisfaction with local council services has gone up under this Government. That is because, with our reforms, communities have more control over their own destiny. That is because we have devolved power and responsibility to manage budgets locally. That is because we have let councils benefit from the tax receipts that come when the local economy grows. Today, we give more freedom, including greater flexibility over assets, and we will drive greater integration of local emergency services. I thank my hon. Friend the Member for Bournemouth East (Mr Ellwood) for his fresh thinking in this area, which has helped to inform us.

We are also embarking on major reforms to the way we spend money locally through the creation of the single local growth fund that Lord Heseltine proposed. This will be £2 billion per year, which is at least £10 billion over the next Parliament. Local enterprise partnerships can bid for that sum, and the details will be set out tomorrow. Our philosophy is simple: trust people to make their own decisions and they will usually make better decisions. But in return for those freedoms, we have to ask local government for the kind of sacrifices central Government are making. The local government resource budget will be reduced by 10% in 2015-16, but when all the changes affecting local government that I will set out are taken into account, including local income and other central Government funding, local government spending reduces by approximately 2%.

I set out today the block grants to the devolved Administrations. Because we have prioritised health and schools in England, this feeds through the Barnett formula to require resource savings of about 2% in Scotland, Wales and Northern Ireland. The Scottish resource budget will be set at £25.7 billion, and Scotland will benefit from new capital borrowing powers of almost £300 million. Being part of the UK means that Scotland will see its capital spending power increase by almost 13% in real terms in 2015-16. It is rightly for the

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Scottish Parliament to decide how best to use it. That is devolution within a United Kingdom delivering for Scotland.

The Welsh resource budget will be £13.6 billion, and we will shortly publish our response to the Silk commission on further devolution of taxation and borrowing. When we do so, we will be able to say more about the impressive plans to improve the M4 in south Wales that my hon. Friend the Member for Vale of Glamorgan (Alun Cairns) and others have been campaigning for. The Northern Ireland resource budget will be £9.6 billion. We have agreed to provide an additional £31 million in 2015 to help the Police Service of Northern Ireland tackle the threat posed by terrorism. Those police officers do an incredibly brave job on our behalf, and we salute them. Separately, we will make 10% savings to the Scotland, Wales and Northern Ireland Offices.

We believe that the cultural heritage of our nations is not just an economic asset, but has intrinsic value. When times are tough, they too must make a contribution to the savings this country requires. The Department for Culture Media and Sport will make savings of 7% in its resource budget. Elite sports will be protected and the funding of community sports, arts and museums will be reduced by just 5%, but because we recognise the value of our greatest museums, galleries and English Heritage, we are giving them much greater freedom from state control, which they have long called for, applying our reforming principles across the board and empowering those on the front line who know best—what the director of the British Museum called:

“good news in a tough economic climate”.

And while we are at it, we will make sure that the site of the battle of Waterloo is restored in time for the 200th anniversary to commemorate those who died there and to celebrate a great victory of coalition forces over a discredited former regime that impoverished millions.

We still have the finest armed forces in the world, and we intend to keep it that way. The first line of national defence is sound public finances and a balanced defence budget, and my right hon. Friend the Defence Secretary is helping to deliver both. He and his predecessor, my right hon. Friend the Member for North Somerset (Dr Fox), have filled the £38 billion black hole they inherited in the finances of the Ministry of Defence. We will continue to ensure we get maximum value for money from what will remain, which, at over 2% of our GDP, is one of the largest defence budgets in the world. The defence resource budget will be maintained in cash terms at £24 billion, while the equipment budget will be £14 billion and will grow by 1% in real terms thereafter. We will further reduce the civilian work force and their allowances; renegotiate more of the hopeless private finance initiative contracts signed in the last decade; and overhaul the way we buy equipment.

My right hon. Friend the Prime Minister has rightly been clear throughout, however, that he is not prepared to see a reduction in Britain’s military capabilities. This spending round not only protects those capabilities, but enhances them with the latest technologies. We will not cut the number of soldiers, sailors or airmen—we need them to defend our country—and we will give them the best kit to do that job: new aircraft carriers, submarines, stealth fighters, destroyers and state-of-the art armoured

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vehicles. We also make a major commitment to invest in cyber. It is the new frontier of defence and a priority for the Government.

We will look after families who have lost their loved ones and those injured protecting us long after the wars they fought in are over. We previously committed to fund the military covenant for five years, and today I commit to funding the armed forces covenant permanently. We will do that with the money we have collected from the LIBOR fines, so those who represented the very worst values will support those who represent the very best of British values. Our veterans will not be forgotten.

The intelligence services are on the front line too. Silently, and often heroically, these fellow citizens protect us and our way of life, and so we will protect them in return, with a 3.4% increase in their combined resource budget. The Foreign Office is the public face of our diplomacy, and my right hon. Friend the Member for Richmond (Yorks) (Mr Hague) is quite simply the best Foreign Secretary we have had in a generation. He, too, has demonstrated how we can make our taxpayer pound go further. While making savings in his budget, he has managed to expand our network of embassies in the emerging world and focus his diplomats on British commercial interests. There will be further savings in that budget of 8% in 2015, but he is still committing to strengthen our embassy network in high-growth markets, from Shanghai to Abuja.

The Foreign Office projects our values abroad, and the Home Office protects our values here in Britain.

Chris Ruane (Vale of Clwyd) (Lab): Is she the best Home Secretary for a generation?

Mr Osborne: Police reform is a model of what we can achieve across Government. Police forces are more accountable to the public, with modern working practices, the latest equipment and democratic oversight, and all that on a smaller—

Hon. Members: Is she the best for a generation?

Mr Osborne: Yes, she is the best Home Secretary for a generation—and a hell of a lot better than the ones who went before.

What was the Opposition’s prediction? They said that crime would rise, and what has happened instead? Crime has fallen by more than 10%. Thanks to the hard work of police officers up and down this country, crime is at its lowest level for 30 years. What was their prediction about our borders? They said that because of cuts we would not be able to control immigration, and what has happened instead? Net immigration is down by more than one third.

This Home Secretary is demonstrating that responsible budgets and reform can deliver better services for the public. In 2015, she will work with a resource budget of £9.9 billion, which is a saving of 6%, but the police budget will be cut by less than that. There will be further savings in the central Department, police forces will be encouraged to share services and some visa fees will go up, but protecting Britain from the terrorist threat remains a top priority, so I can confirm that the police counter-terrorism budget will not be cut at all.

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For the police to do their job, they need a criminal justice system that works a lot better. A case of common assault can take 240 days to pass through the courts and involves five separate sets of case papers generated on three different computer systems. In some prisons, the cost of keeping a prisoner is £40,000 a year, but in others, it is one third of that, while the cost of legal aid per head is double the European average. My right hon. Friend the Lord Chancellor is reforming all these things, and by doing so will make savings of 10% in his departmental budget—and he will do that while for the first time offering probation services for those who have served short sentences to help to end the revolving door of crime and reoffending.

That is an example of the reform we are bringing in across Government, and every step of the way, every penny saved, every programme reformed, every entitlement reduced, every difficult choice taken, has been opposed by vested interests and those who got Britain into this mess in the first place. We will not let up. I will not let that happen. The reform will continue.

Government spending does not alone create sustainable growth; enterprise does, and the job of the state is to provide the schools, science, transport links and reliable energy that enable business to grow. Britain was once the place where the future was invented, from the railway to the jet engine to the world wide web. We can be that country again, and today we set out how to get there. A huge amount of innovation and discovery still goes on, but successive Governments, of all colours, have put short-term pressures over long-term needs and refused to commit to capital spending plans that match the horizons of a modern economy. Today we change that. We commit now to £50 billion of capital investment in 2015. From roads to railways, bridges to broadband, science to schools, it will amount to more than £300 billion of capital spending guaranteed to the end of this decade.

Today, we raise our national game. That means that Britain will spend on average more as a percentage of its national income on capital investment in this decade, despite the fact that money is tight, than in the previous decade, when Government spending was being wasted in industrial quantities.

My right hon. Friend the Chief Secretary to the Treasury will tomorrow set out the next stage of our economic infrastructure plan, with specific plans for more than £100 billion of infrastructure projects. Here is what that will mean for the Departments. The Department for Transport will make a 9% saving in its day-to-day resource spending, bearing down on the running costs of Transport for London and on rail administration, but its capital budget will rise to £9.5 billion—the largest rise of any part of Government—and we will repeat that commitment for every year to 2020.

We are already massively expanding investment on major road schemes, but we will do more. We are announcing the largest programme of investment in our roads for half a century. We have already expanded our investment in the railways, but we will do more. We are committing to the largest investment in our railways since the Victorian age, and with the legislation before this House today, we should give the green light to HS2,

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which will provide a huge boost to the north of England and a transformation of the economic geography of this country.

Here in London, we are digging Crossrail, the largest urban infrastructure project in Europe, but we will do more. We are looking now at the case for Crossrail 2, linking London from north to south. We are going to give the Mayor almost £9 billion pounds of capital spending and additional financing power to the end of this decade.

Ms Rosie Winterton (Doncaster Central) (Lab): Is he the best ever? Better than the Prime Minister?

Mr Osborne: Well, he’s a lot better than Ken Livingstone, that’s for sure.

Investing in our economic infrastructure also means investing in energy, so we will provide the certainty that investors are crying out for in western countries. This country is already spending more on renewables than ever before. Now we will provide future strike prices for low carbon. We are restarting our civil nuclear programme when other countries are unable to continue theirs, and now we are providing guarantees for new nuclear. Our exploitation of gas in the North sea is already second to none. Now we are making the tax and planning changes that will put Britain at the forefront of exploiting shale gas. We will provide our country with the energy of the future at a price that we can afford. Taken together, this should support over £100 billion of private sector investment in energy.

The Department of Energy and Climate Change will do this while reducing its resource budget by 8%. The Department for Environment, Food and Rural Affairs will see a 10% reduction, but we will set out plans for a major commitment to new flood defences for the rest of this decade. Again, we are prioritising long-term capital through day-to-day cost savings, which is exactly the tough choice that Britain should be making.

It is not enough to have roads, power stations and flood defences. That is just the physical infrastructure we need to compete in the 21st century. We need the intellectual capital, too. This country needs to invent, pioneer and export around the world. That means backing the Department for Business, Innovation and Skills, which helps us to do that. And it means taking tough decisions about what we should support. My right hon. Friend the Secretary of State for Business, Innovation and Skills has agreed to a reduction of 6% in the cost of the Department. That means that we are making savings to student maintenance, keeping grants but not increasing them, and the cost of the central Department will also be cut further. That means that, within the reduced budget, we can put more money into apprenticeships and continue with the dramatic increase in support that we have provided to exporters through UK Trade & Investment.

We are not going to shift medical training and research out of that Department, because they are working well where they are. And in that Department too, we can shift from day-to-day spending to a huge 9% increase in capital investment. That includes a huge investment in science. Scientific discovery is first and foremost an expression of the relentless human search to know more about our world, but it is also an enormous strength for a modern economy. From synthetic biology to graphene,

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Britain is very good at it and we are going to keep it that way. Today, I am committing to maintaining the resource budget for science at £4.6 billion, to increasing the capital budget for science in real terms to £1.1 billion, and to maintaining that real increase to the end of this decade. Investment in science is an investment in our future. So yes, from the next generation of jet engines to cutting-edge supercomputers, we say: keep inventing, keep delivering; this country will back you all the way.

We have infrastructure and we have science, but we still need an educated work force to make it happen. Because of our ongoing reforms to our universities, they are now better funded than before—[Hon. Members: “What?”] Well, Mr Speaker, people will remember that the reforms to higher education were bitterly contested in the House. We remember the scaremongering about fees, and the claims that they would destroy social mobility and put off students from poorer communities applying. And what has happened since? We now have the highest ever proportion of students from the most deprived neighbourhoods applying to universities. We should all welcome that.

There is no greater long-term investment a country can make than in the education and skills of its children. Because of the tough decisions that we have taken elsewhere, we have been able to invest in education and accelerate school reform. When we took office, our country’s education system was falling behind other parts of the world. Now, thanks to the brilliant programme of reform by my right hon. Friend the Secretary of State for Education and the Minister for Schools, my right hon. Friend the Member for Yeovil (Mr Laws), we are once again leading the way.

We have applied our reform principles in education too, freeing schools and teachers to concentrate on teaching and turning the majority of secondary schools into academies. In this spending round, that momentum of reform will grow. The Department for Education’s overall budget will increase to £53 billion and schools spending will be protected in real terms, fulfilling the pledge we made at the beginning of this Parliament, for all of this Parliament. We will transfer power and money from town halls and central bureaucracy to schools, so that more of the money for education is spent on education. So, while grants to councils and spending on central agencies are reduced, the cash going to schools will go up.

I can announce today that schools spending will be allocated in a fairer way than ever before. School funding across the country is not equally distributed; it is distributed on a historical basis with no logical reason. The result is that some schools get much more than others in the same circumstances. That is unfair and we are going to put it right. Many MPs on both sides of the House have campaigned for that. My hon. Friend the Member for Worcester (Mr Walker) has been a particular champion in this Parliament. Now, the lowest-funded local authorities in this country will at last receive an increase in their per-pupil funding as we introduce a national funding formula to ensure that no child in any part of our country is discriminated against. We will consult on all the details so that we get this historic reform right. The pupil premium that we have introduced also ensures that we are fair to children from low income backgrounds. It will be protected in real terms, so that every poor child will have more cash spent on their future than ever

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before. The capital budget will be set at £4.6 billion in 2015-16, with over £21 billion of investment over the next Parliament.

We will also tackle the backlog of maintenance in existing schools and we will invest in new school places. We will fund 20 new studio schools as well as 20 new university technical colleges, as they are outstanding new vocational institutions. Free schools are giving parents the opportunity to aspire to a better education for their children. The Opposition have said that they want no more of them, but we will not allow such an attack on aspiration to happen. Instead, we must accelerate the programme and bring more hope to more children. That is why I can announce that we will fund an unprecedented increase in the number of free schools. We will provide for 180 great new free schools in 2015-16.

The schools budget will be protected, there will be fairer funding across the nation, the pupil premium will be extended to more students than ever before and there will be a transformation in the free school programme. We will not make our children pay for the mistakes of the past. We will give them every chance for the future, because that is the single best investment we can make.

Our education settlement is also consistent with the third and final principle of this spending round—fairness. It is not possible to reduce a deficit of this size without asking all sections of the population to play their part, but those with the broadest shoulders should bear the greatest burden. The Treasury’s distributional analysis shows that the top fifth of the population lose the most after this spending round, and the independent Institute for Fiscal Studies is unequivocal that the richest 10% have paid the most. In every year of this Parliament, the rich will pay a greater proportion of income tax revenues than they did in any one of 13 years under the last Labour Government.

When it comes to Her Majesty’s Revenue and Customs, despite the fact that this Department will see a 5% reduction in its resource budget, we are committed to extra resources to tackle tax evasion. The result is that we expect to raise over £1 billion more in tax revenues from those who try and avoid paying their fair share.

Fairness also means refusing to balance the budget on the backs of the world’s poorest. I know that not everyone believes we should fulfil our commitment to spend 0.7% of our national income on development—but I do. I am proud to support a Government who are the first in our history to meet our pledge and meet it not only this year, but next year and the year after that. Of course, overseas development is about more than just the Department for International Development budget, and we comply with internationally policed rules. The DFID budget is, however, the lion’s share, and it will be set at £11.1 billion in 2015-16. Even in these tough times, the decisions we make mean we keep to our commitments.

That includes our commitment to the national health service—an institution that is the very embodiment of fairness in our society. The NHS is much more than the Government’s priority; it is the people’s priority. When we came to office, the health budget was £96 billion; in 2015-16, it will be £110 billion—and capital spending will rise to £4.7 billion. New medical treatments and an ageing population mean that the demand for NHS services is rising, so we have not spared in also demanding reform and value for money in this service. This will not

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insulate the health service from tough choices; there are already 7,000 fewer managers, and the NHS will continue to make efficiency savings. Those savings will, however, enable new investment in mental health and funding for new treatments for cancers such as prostate and breast cancer. Let me respond directly to the breast cancer research campaign in which so many have taken part. We will continue to back the charity research support fund and look into making it easier for these organisations to benefit from gift aid.

Many older people do not just use the NHS; they also use the social care system. If we are honest, they often fall between the cracks of the two systems, being pushed from pillar to post, not getting the care they should. None of us here would want that for our parents or grandparents, and in a compassionate society, no one should endure it. It is a failure that also costs us billions of pounds: Britain can do better.

We said in the 2010 spending review that the NHS would make available around £1 billion a year to support the health needs of people in social care. It worked, and saved hundreds of millions in the process. Last year, these improvements meant almost 50,000 fewer bed days were lost to the NHS. So today, I can announce that I will bring together a significant chunk of the health and social care budgets. I want to make sure that everyone gets a properly joined-up service where they will not have to worry about whether a service is coming from the NHS or the local council.

Let us stop the tragedy of people being dropped in A and E on a Friday night to spend the weekend in hospital because we cannot look after them properly in social care. By 2015-16, over £3 billion will be spent on services that are commissioned jointly and seamlessly by the local NHS and local councils working together. It is a huge and historic commitment of resources to social care, tied to real reform on the ground, to help end the scandal of older people trapped in hospitals because they cannot get a social care bed. This will help relieve pressures on A and E, help local government to deliver on its obligations and will save the NHS at least £1 billion. This is integrated health and social care—no longer a vague aspiration, but a concrete reality transforming the way we look after people who need our care most.

So these are the three principles that guide the spending round: reform, growth and fairness. Nowhere could these principles be more clearly applied than in our approach to welfare. Two groups of people need to be satisfied with our welfare system: those who need it who are old, vulnerable, disabled or have lost their job, whom we as a compassionate society want to support. Then there is a second group: the people who pay for this welfare system who go out to work, pay their taxes and expect it to be fair on them, too.

So we have taken huge steps to reform welfare: changing working age benefits with universal credit so that work always pays; removing child benefit from the better off; capping benefits so that no family out of work gets more than the average family gets in work. And we have been making sure that benefit payments do not rise faster than wages. The steps we have taken will save £18 billion a year—and every single one of them was opposed by the welfare party on the Opposition Benches.

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Now we propose to do three further welfare reforms. First, as I said in the Budget, we are going to introduce a new welfare cap to control the overall costs of the benefits bill. We have already capped the benefits of individuals, and now we cap the system as a whole. Under the system we inherited, welfare spending was put into a category called annually managed expenditure, but the problem was that it was not managed at all. The cost of welfare went up by a staggering 50%—even before the crash. Our welfare cap will stop that happening again. The cap will be set each year at the Budget for four years. It will apply from April 2015 and will reflect forecast inflation, but it will be set in cash terms. In future, when a Government look to breach the cap because they are failing to control welfare, the Office for Budget Responsibility will issue a public warning. The Government will then be forced to take action to cut welfare costs or publicly to breach the cap and explain it to Parliament.

We will exclude a small number of the most cyclical benefits that directly rise and fall with the unemployment rate to preserve the automatic stabilisers: housing benefit, tax credits, disability benefits and pensioner benefits will all be included—but the state pension will not. I have had representations that we should include the basic state pension in the welfare cap. That would mean that a future Government could offset a rise in working age benefits by cutting the pensions of older people. That penalises those who have worked hard all their lives. Cutting pensions to pay for working age benefits is a choice this Government are certainly not prepared to make. It is unfair; we will not do it and we reject those representations completely.

The new welfare cap is proof that Britain is serious about living within its means: controlling spending, protecting the taxpayer and being fundamentally fair. Today we are introducing a limit on the nation’s credit card. The principles enshrined in the cap apply to our second reform today. We will act to ensure that we stop the cost of paying the winter fuel payments made to those who live abroad rising in a way that no one ever intended. EU law now says that people living in the European economic area can claim winter fuel payments from us, even if they did not get them before they left the UK. Paying out even more money to people from all nationalities who might have worked in this country years ago, but no longer live here is not a fair use of the nation’s cash. So from the autumn of 2015, we will link the winter fuel payment to a temperature test; people in hot countries will no longer get it. It is, after all, a payment for winter fuel.

The third welfare reform I announce today is about making sure we do everything to help people get into work. My right hon. Friend the Secretary of State for Work and Pensions has changed the national debate about welfare, and has comprehensively won the argument. He has committed himself to finding a further 9.5% of savings in his Department’s running costs. That will require a difficult drive for efficiency, and a hard-headed assessment of underperforming programmes.

However, welfare reform is about much more than saving money, vital though that is. It is about reducing dependency and changing people’s lives for the better. I am determined to go further to reduce worklessness with all its social consequences. Where is the fairness in condemning people to a life on benefits because the system will not help them to get back into work?

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Today we are introducing Upfront Work Search. We are going to make sure that people turn up with a CV, register for online job search, and start looking for work. Only then will they receive their benefits. Thanks to this Government, lone parents who are out of work can now receive free child care for all their three and four-year-olds, so it is reasonable to ask that they start regularly attending jobcentres and preparing to return to work.

We are announcing further changes today. Half all jobseekers need more help with looking for work, so we will require them to go to the jobcentre every week rather than once a fortnight. We will give people more time with jobcentre advisers, and proper progress reviews every three months. We will also introduce a new seven-day wait before people can claim their benefits. Those first few days should be spent looking for work, not looking to sign on. We are doing those things because we know that they help people to stay off benefits, and help those who are on benefits to get back into work faster.

Here is a further change. From now on, if claimants do not speak English, they will have to attend language courses until they do. That is a reasonable requirement in this country. It will help people to find work, but if they are not prepared to learn English, their benefits will be cut.

As a whole, this new contract with people on benefits will save more than £350 million a year, and all that money will enable us to afford extra support to help people to get into work. Help to work, incentives to work, and an expectation that people should do everything that they can to find work: that is fair to people who are out of work, and it is fair to those in work who pay for them. Together, these reforms bring the total additional welfare savings in 2015 up to £4 billion.

Step by step, this reforming Government are making sure that Britain lives within its means. The decisions that we make today are not easy, and these are difficult times; but with this statement, we make more progress towards an economy that prospers, a state that we can afford, a deficit coming down, and a Britain on the rise. I commend our economic plan to the country.

1.22 pm

Ed Balls (Morley and Outwood) (Lab/Co-op): The Chancellor spoke for more than 50 minutes, but not once did he mention the real reason for today’s spending review: his comprehensive failure on living standards, growth and the deficit. We have seen prices rising faster than wages, families worse off, long-term unemployment up, welfare spending soaring, a flatlining economy, and the slowest recovery for more than 100 years. As a result of that failure, for all the Budget boasts, borrowing last year was not down but up. The Chancellor has not balanced the books, as he promised to do, and in 2015 we will see a deficit of £96 billion. There has been more borrowing to pay for the Chancellor’s economic failure, which is why he has been forced to come to the House today to make more cuts in our public services.

Does the Chancellor recall what he said to the House two years ago? He said:

“we have already asked the British people for what is needed, and…we do not need to ask for more.”—[Official Report, 23 March 2011; Vol. 525, c. 951.]

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We do not need to ask for more! Is not the Chancellor’s economic failure the reason why he is back here today asking for more? More cuts in the police, more cuts in our defence budgets, more cuts in our local services: this out-of-touch Chancellor has failed on living standards, growth and the deficit, and families and businesses are paying the price for his failure.

Of course, it was not supposed to turn out like this. Does the Chancellor remember what he told the House three years ago, in his first Budget and spending review? He said that the economy would grow by 6%, but it has grown by just 1%. He pledged to get the banks lending, but bank lending is down month on month on month. He made the number one test of his economic credibility keeping the triple A credit rating, but on his watch we have been downgraded not once but twice. He promised that living standards would rise, but they are falling year on year on year. He said “We’re all in this together”, but then he gave a huge tax cut to millionaires. He promised to balance the books, and that promise is in tatters.

We see failed tests and broken promises. The Chancellor’s friends call him George, the US President calls him Jeffrey, but to everyone else he is just Bungle—and I see that even Zippy on the Front Bench cannot stop smiling. Calm down, Zippy, calm down.

Did we get an admission from the Chancellor that his plan has not worked, and that Britain needs to change course? Did we get the plan B for growth and jobs that we and the International Monetary Fund have called for? It does not have to be this way. Surely, rather than planning for cuts in 2015, two years ahead, the Chancellor should be taking bold action now to boost growth this year and next. Investment would get our economy growing and bring in the additional tax revenues that would mean that our police, armed forces and public services would not face such deep cuts in 2015. Why did the Chancellor not listen to the IMF, and provide £10 billion in infrastructure investment this year? Given that house building is at its lowest level since the 1920s, why is he not building 400,000 more affordable homes this year and next? If the Chancellor continues with his failing economic plan, it will be for the next Labour Government to turn the economy around and make the tough decisions that will get the deficit down in a fair way.

I have to say to the Chancellor that there is no point in boasting about infrastructure investment in five or seven years’ time; we need action now. I must also say to him that he ought to brief the Prime Minister better for Prime Minister’s questions, because three years after the infrastructure plan was launched, just seven of the 576 projects that were announced have been completed. More than 80% have not even been started, just one school has been provided, and in the first three months of this year, infrastructure investment fell by 50%. On infrastructure, we need bold action now, not just more empty promises for the future.

As for the idea that this spending review will strengthen our economy for the long term, let me ask the Chancellor some questions. Where is the proper British investment bank that business wants? Where is the 2030 decarbonisation target that the energy companies say that they need if they are to be able to invest for the future? Where is the backstop power to break up the banks if there is no reform, which the Parliamentary

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Commission on Banking Standards called for? And whatever happened to the Heseltine plan’s much-heralded £49 billion single pot growth fund for the regions? A mere £2 billion is pathetic.

Is this not the truth? Instead of action to boost growth and long-term investment, all we got today was more of the same from a failing Chancellor, and we got more of the same on social security and welfare spending too.

We have had plenty of tough talk and divisive rhetoric from the Chancellor and the Prime Minister, but on their watch the benefits bill is soaring. Social security spending is up £21 billion compared with their plans. We have called for a cap on social security, and we fully support the triple lock on the pension—something not even mentioned in the Chancellor’s statement—but the fact is that in 2010 the Chancellor tried to set a cap on social security spending and he has overspent his cap by £21 billion.

If the Chancellor really wants to get social security bills down, why not get young people and the unemployed back to work with a compulsory jobs guarantee paid for by a tax on bank bonuses? Why not get our housing benefit bill down by tackling high rents and the shortage of affordable homes? Why not stop paying the winter fuel allowance to the richest 5% of pensioners? And why not make work pay with a 10p tax band paid for by a mansion tax, instead of huge tax cuts for millionaires?

The Chancellor is making the wrong choices on growth and social security spending, and he is making the wrong choices on departmental spending as well. Let me ask him: when thousands of front-line police officers are being cut, why is he spending more on police commissioners than the old police authorities? Why is he wasting £3 billion on a reckless reorganisation of the NHS that the public do not support? Why is he funding new free schools in areas with enough school places, while parents in other areas cannot get their children into a local school?

We will study the Chancellor’s departmental spending plans for 2015-16. There is a lot of detail that he did not provide for the House. We look forward to seeing whether he will confirm the continuation of free national museum entry—maybe he can tell us in his response—but I have to say to the Chancellor that the country needs to know the detail, so let me ask him: will this spending review mean fewer police officers in 2015-16, on top of the 15,000 we will lose in this Parliament? Will it mean fewer nurses in 2015, on top of the 4,000 we have lost so far? Will it mean fewer Sure Start children’s centres, on top of the 500 that have already closed? And will he continue to impose deeper cuts on local authorities in areas with the greatest need, when already in this Parliament the 10 most deprived local authorities are losing six times the spending per head of the 10 least deprived areas? People up and down the country want to know the answers to these questions, and they should be in no doubt that the scale of the extra cuts the Chancellor has announced today to our police, defence and local services are the direct result of his abject failure to get the economy to grow.

The Chancellor is failing on living standards; they are falling. He is failing on growth; it is flatlining. He is failing on the deficit, and all we got was more of the

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same: no plan to turn our economy around, no hope for the future, and Britain’s families and our public services are paying the price for this Chancellor’s failure.

Mr Osborne: One thing is for certain after that performance: the right hon. Gentleman is the worst shadow Chancellor for a generation, and we want to keep him right where he is. What is amazing is that he spoke for 11 minutes and never said Labour wants to borrow more. Did anyone hear that in his comments? That is his argument: he wants to borrow more. Why does he not have the courage to get up and make his economic argument at the Dispatch Box? He finds himself in a situation where the entire argument he has been advancing for the last three years has completely collapsed. Where was the reference to the temporary VAT cut? Abandoned. Where was the reference to the five-point plan? Abandoned. He complains about all the cuts; here is a very simple question. We shall spend £745 billion in 2015; what will he spend? Does he match those plans or not? Hands up on the Labour Benches from those who want to match our spending plans. On Saturday, the Labour leader—

Mr Speaker: Order. May I just say—[Interruption.] No help from the hon. Member for Colne Valley (Jason McCartney) is required; he would not have the foggiest idea where to start. Let me just say to the Chancellor of the Exchequer that there is a way in which these matters are handled, and it is not by the Minister responding to questions posing a series of questions. That is in breach of parliamentary protocol, it is not proper, and it must stop right away—and others, including at the very highest level, ought to take note of that for future weeks. Let’s be clear about it.

Mr Osborne: I will leave it to the country to ask these questions. I make this point. In this spending plan I have set out total managed expenditure of £745 billion, and it is up to all Members of this House to decide whether they support that. We do not know the position of the Opposition, because on Saturday the Labour leader said there would be no more borrowing, but on Sunday the shadow Chancellor said “yes, of course” there would be, so we will see what the position of the Opposition is on this.

The shadow Chancellor mentions what has been said in this House before. Well, let us be clear about what he said in this House before, and how we have responded to it in this spending plan. On 6 June 2011 he said there would be a return to mass unemployment. We have set out welfare plans that help people get back into work. Does he support those or not? That is the question the public will ask of him. He said in October 2010 that we were taking a huge risk with crime. Crime is down 10% or more. He said in July that year that the university reforms would shut out those from disadvantaged backgrounds from university, but actually a record proportion of pupils from disadvantaged backgrounds applied to go to university. He said, in his own words, that the cuts to the border agency would mean we would be unable to enforce our immigration policy. That was wrong, too. Every prediction he has made, including the prediction that there would be no more boom and bust, has proved to be completely wrong, so why would anyone believe a word he has got to say about this?

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The simple point is this: we have set out our plans—we have set out our economic strategy, we have set out our spending plans—and those who disagree with them should advance an alternative or retreat from the battlefield, because the shadow Chancellor finds himself in no man’s land. He has abandoned his economic argument but stuck with a disastrous economic policy of borrowing more, and in the end, if we want to know why, we only need to hear what he said this month:

“Do I think the last Labour government was profligate, spent too much, had too much national debt? No, I don’t think there’s any evidence for that.”

All people want Labour to say is, “We’re sorry, we got it wrong, we borrowed too much and we spent too much, and we won’t do it again.”

To answer the specific question that the shadow Chancellor asked me, yes we will have free museum charges—so that people can go to our museums and see the antiquated economic policy advanced by the Opposition, which brought this country to its knees and gave us the worst economic crisis for a generation, and they can learn how this Government cleared up that mess.

These reductions and the control of public expenditure are absolutely essential. That will bolster the credibility of fiscal policy in the markets and it creates room for the private sector to lead the recovery and create the jobs we need, particularly in small businesses in our constituencies, which are desperately trying to find the funding to expand.

Mr Andrew Tyrie (Chichester) (Con): Behind all the noise, most Members actually do agree that both the deficit and public spending are much too high and have to come down, and we should be under no illusions among ourselves just how tough and remorseless a task that is. Those reductions and that control of public expenditure are absolutely essential. They will bolster the credibility of fiscal policy in the markets and create room for the private sector to lead the recovery and create the jobs we need, particularly in small businesses in our constituencies, some of which are desperately trying to find the funding to expand. Sustaining public expenditure control over this period, and now being able to set out plans for the years ahead, is a great achievement by the Chancellor, the Chief Secretary to the Treasury and the coalition.

I want to draw attention to and ask a question about a particular proposal. The cap on nominal welfare spending will need careful scrutiny; it may well be an essential measure to give teeth to controlling annually managed expenditure, which frankly has not been well managed and is threatening to get out of control. Will the Chancellor publish today all the necessary detail to enable Parliament and the Treasury Committee to examine this extremely important proposal?

Mr Osborne: I thank my hon. Friend for his support for the difficult steps we needed to take. Our trying to set out these spending plans further in advance, so that Departments have time to make the necessary adjustments, is a good innovation in fiscal policy. The certainty we now have for 2015 will, I think, mean better public policy.

We have set out some of the details of the welfare cap in my speech today, but in the document we publish, we have set its parameters, how it will be set in cash terms,

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the period over which it will be set and when it will be set—at the Budget. However, it is absolutely my intention to listen to the Treasury Committee, which I hope will take an interest in this issue, and to examine best practice and make sure we get the final details absolutely right. If we want to change the Office for Budget Responsibility charter, we will have to legislate, but that is something we need to examine. We absolutely should work on the details, but the principles and the principal components of the cap have been established.

Mr Alistair Darling (Edinburgh South West) (Lab): I was interested in the Chancellor’s claim to have rescued the economy. I think I am right in saying that in 2010, the economy was actually growing, whereas unfortunately, in 2011 it stopped growing. That is why he is borrowing more than he intended and why his target to reduce national debt has been moved well into the next Parliament.

On the new growth items the Chancellor announced today, particularly those relating to transport, how much of that is public money and how much is expected to be raised from the private sector? Can he also give us some idea of how much additional growth he expects to see in the economy as a result of the measures he has announced, most of which, I think I am right in saying, will not take effect until the next Parliament? Given the delay in delivery of these projects—a problem that has dogged successive Governments—it may be some considerable time before we actually see their economic benefit.

Mr Osborne: The right hon. Gentleman and I have, I hope, a cordial relationship, but I will just disagree on one point. The idea that he handed me a golden economic legacy and an easy set of books, and that somehow it was all fantastically booming after a 6% contraction in the economy, is something that will turn out, if I check his memoirs, not to have been the case.

To answer the right hon. Gentleman’s specific points, the transport money we set out is public investment; of course, there are opportunities to lever in additional private investment. He was gracious enough to acknowledge that all Governments have had the challenge of how to deliver infrastructure projects, given the planning system we have and so forth. We are reforming planning and will set out this week changes to infrastructure delivery in Whitehall to try to accelerate the delivery of projects—something that has bedevilled the British Government for decades, and we shall do our best to put it right.

Mr John Redwood (Wokingham) (Con): I fully support the Chancellor’s wish to reduce the growth rate of public spending in cash terms; it is a very necessary thing to do to get the deficit under control as economic growth picks up, as I think it is now doing. On the welfare reforms, will he look at the idea that any non-British citizen coming to our country should have to work for a period and pay taxes before being eligible for any welfare benefits?

Mr Osborne: I am certainly prepared to look at any ideas that my right hon. Friend puts forward on welfare. Of course, one of our challenges—one of the debates in this country and in other European countries—concerns the eligibility for benefits of people who move here. In that regard, we are hemmed in by European law, but there may be opportunities within it to make some adjustments, and we are looking closely at those.

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Margaret Hodge (Barking) (Lab): The Chancellor said that one of the objectives of his statement today was to stimulate growth, and he announced £50 billion of investment in 2015-16. In 2009-10, this country spent £48.4 billion in cash terms. Will he now accept that that 2015-16 figure represents a real-terms cut in investment?

Mr Osborne: I inherited from the last Chancellor a plan greatly to reduce capital spending—to cut it by 50%. In the 2010 review, we increased it from the plans we inherited. We increased it in the years since, and now we are maintaining it in the years going forward and setting it out for the rest of the decade. So the big reduction in capital spending that the right hon. Lady refers to is one I guess she must have supported, because she was a Minister of that Government.

Stephen Williams (Bristol West) (LD): We all know that if we try to live a £40,000 lifestyle on a £30,000 salary, it soon leads to misery unless corrective action is taken. That was the legacy, at a national level, that we were left by the last Government. Despite that tough backdrop, have not this coalition Government secured funding for the national health service and for schools, including more money for children on free school meals, and today announced a massive boost to infrastructure spending and scientific research in order to smooth the way to sustainable economic growth?

Mr Osborne: My hon. Friend is right, and in the end this is about choices. I say to all the Labour Members getting ready to ask questions that, given that the Labour leader says that he will take these resource plans as a starting point, if they complain about any cut, they have to suggest what else they would cut. We have made choices as a Government. We have committed to protecting the NHS, committed to schools, committed to the pupil premium—we have done these things because we want a fairer society, and we also believe that investing in infrastructure and growth enhances our country’s economic performance. Those are our choices: if people have an alternative plan, we have not heard of it.

Mr Peter Hain (Neath) (Lab): Why does the Chancellor think he is so right, and Keynes wrong?

Mr Osborne: We have drawn on the best economic evidence that the recovery from a banking crisis of the severity that we went through is long and protracted, but we have to de-lever as an economy and try to fix our banking system. That is what I set out at the Mansion House. We also have to have a credible fiscal policy in order to allow monetary policy to be loose. I think that is the best economic approach.

Mr Brian Binley (Northampton South) (Con): My grandmother taught me that there are only two things people can do when they are in serious financial difficulty: cut spending, and earn more. The Chancellor’s record on cutting spending has been commendable, but more needs to be done on earning more. What will he do to enhance productivity to help this country earn more?

Mr Osborne: My hon. Friend is absolutely right that Britain has got to earn its way in the world, and that is about increasing our earnings as well as dealing with our expenditure. In the Budget, we set out a number of

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tax changes, such as the new employment allowance, which I know he strongly supports and which will help small firms by wiping out the first £2,000 of national insurance, taking a third of those firms out of national insurance. We have made a series of other tax changes to promote investment, and where we had to make tough spending choices, I have chosen in this spending round to prioritise things that will help businesses to create jobs.

Mr Geoffrey Robinson (Coventry North West) (Lab): Is the Chancellor not aware that he has been in post for three years now, that he owns these policies and that their failure is his responsibility? All the empty rhetorical questions directed at the Opposition and the shadow Chancellor will not airbrush away the failings on growth, living standards and borrowings. Is it not time he faced up to that and changed the policies that have failed so far?

Mr Osborne: I tell you what has happened while this Government have been in office. First, borrowing has come down—[Interruption.] The shadow Chancellor says it has gone up, but the problem is that if this really is his maths, the country would be in very serious trouble if he ever got himself back into Downing street. We were borrowing £157 billion a year under Labour and now we are set to borrow £108 billion in the coming year—£118 billion if we remove the asset purchase facility transfer. So borrowing has come down.

Secondly, more than 1 million jobs have been created. Thirdly, we can look around the world and see that this country is seen to have got its act together and is making the big reforms we need to education, welfare and the like. That is why we are absolutely determined to win the global race and people see us as a country capable of winning that race.

Andrea Leadsom (South Northamptonshire) (Con): I sincerely congratulate my right hon. Friend on his statement. Not that he needs any advice from me, but he should stick to his guns because he is on the right track. I find myself agreeing violently with my neighbour, my hon. Friend the Member for Northampton South (Mr Binley), that this is about earning. In particular, I congratulate the Chancellor on his policies on education and apprenticeships to get young people better educated and in work. May I bring to his attention the fact that I have just recruited a new apprentice for my parliamentary office from Magdalen college school in Brackley? Will he join me in urging all colleagues to look into the apprenticeship scheme and how it might help them in their work?

Mr Osborne: I thank my hon. Friend for her support and kind words. We are absolutely going to stick to this economic plan—that is what is taking Britain out of rescue into recovery. If we abandon that plan and if we listen to the advice of the Labour party—although the shadow Chancellor did not mention it in his statement, Labour’s plan is to borrow more—we would be back in intensive care. She is right also to highlight the success of apprenticeships, as there are over 1 million more of them. We are committing to the funding of apprenticeships in this programme. A significant part of my statement was also about school reform, and when people look at it they will see that it is one of the most important parts of the statement.