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House of Commons

Wednesday 19 March 2014

The House met at half-past Eleven o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Scotland

The Secretary of State was asked—

Crown Estate

1. Mr Ian Davidson (Glasgow South West) (Lab/Co-op): When he plans to respond to the fifth report from the Scottish Affairs Committee on the Crown Estate, HC 889. [903078]

The Secretary of State for Scotland (Mr Alistair Carmichael): I welcome the Committee’s continued interest in the Crown Estate’s activities in Scotland and the publication of its latest report. I am working on the UK Government response with colleagues in HM Treasury and we will publish it as soon as possible.

Mr Davidson: Does the Secretary of State agree that this is indeed a fine report, which should be accepted in full by the Government? In particular, does he accept the proposal that the devolution of powers from London should be not simply to the black hole that is Edinburgh, but to the local communities and authorities of the highlands and islands of Scotland?

Mr Carmichael: I pay tribute to the hon. Gentleman because, under his stewardship, the Scottish Affairs Committee has become one of the most productive Committees in the House. He knows that I have a particular interest in this issue. He highlights one of the real challenges facing us. People in our island and coastal communities have seen power and influence systematically stripped away by the Scottish Government since they took power in 2007. I do not see any particular attraction in replacing a centralised system from London with a centralised system in Edinburgh.

Mr Alan Reid (Argyll and Bute) (LD): A social enterprise has bought the Ardroy outdoor education centre in my constituency, but it needs to acquire from the Crown Estate the rights to a sewage pipe over the foreshore. After months of legal correspondence and thousands of pounds of legal bills, the matter is still not sorted out. Will my right hon. Friend meet me to help resolve the problem?

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Mr Carmichael: Unfortunately, my hon. Friend highlights a constituency case of the sort that has been all too familiar to me over the years. In fact, in many ways, it makes the case for the need for reform. I would be more than happy to meet him and his constituents and assist them in any way that is open to me.

Angus Robertson (Moray) (SNP): It is now nearly three years since all three UK parties were resoundingly defeated by the Scottish National party. In those three years, there was plenty of time for the coalition Government and indeed the official Opposition to consider further devolution, including that advocated by the Scottish Affairs Committee. Will the Minister confirm whether they will or will not publish a comprehensive joint devolution proposal?

Mr Carmichael: The hon. Gentleman will get the Government’s response at the same time as everyone else, but he cannot get away from the fact that his Government in Edinburgh have systematically stripped power, influence and accountability away from island and coastal communities. They are not to be trusted with this.

Angus Robertson: The coalition parties and the official Opposition have spent the past three years expressing nothing but groundless, relentless negativity about the future of Scotland. They have dubbed it “project fear”. The Conservative party said that it had a line in the sand and that there would be no further devolution. The Labour party is proposing even less than a few years ago, and the Liberal Democrats are in favour of federalism in a lopsided model that will never ever work. Why should the electorate believe a single word of any of the three parties on the issue of devolution—

Mr Speaker: We are grateful, but too long.

Mr Carmichael: It is not lost on the House that the hon. Gentleman’s question has absolutely nothing to do with the Crown Estate. My constituents and those of other hon. Members representing coastal and island communities will no doubt conclude that that is simply because his Government do not care about them.

Zero-hours Contracts

2. Alison McGovern (Wirral South) (Lab): What assessment he has made of the extent of the use of zero-hours contracts in Scotland. [903080]

The Parliamentary Under-Secretary of State for Scotland (David Mundell): The Secretary of State for Business, Innovation and Skills recently concluded a consultation on zero-hours contracts with proposals on exclusivity clauses, transparency and guidance. A summary of consultation responses will be published in due course.

Alison McGovern: The Office for National Statistics has recently had to uprate massively the number of people it estimates are on zero-hours contracts right across the UK. Does the Minister agree that this is the wrong time to see a race to the bottom between UK nations on working standards for ordinary people, whether they live in Scotland, England, Wales or anywhere else?

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David Mundell: I agree with the hon. Lady. She will know that a 670-page White Paper was produced by the SNP Scottish Government. On zero-hours contracts, as on everything else, it is very short on detail.

Ann McKechin (Glasgow North) (Lab): Will the Minister explain what assessment has been made of Government procurement contracts in relation to zero-hours contracts and how we can encourage best practice?

David Mundell: The hon. Lady makes an important point. I will take that up with my colleagues in the Cabinet Office and write to her.

Margaret Curran (Glasgow East) (Lab): Can the Minister tell the House how many people are employed on zero-hours contracts in Scotland?

David Mundell: The answer to that question has not changed since the hon. Lady asked it previously. She knows that there is no legal definition of zero-hours contracts.

Margaret Curran: Well, the House of Commons Library might take issue with that, because according to the Library, 46,000 people in Scotland are on zero-hours contracts and, in fact, it believes that that is an underestimate. Will the Minister join Labour in calling for an end to exploitative zero-hours contracts? Does he agree that, despite all the talk of recovery, there are still thousands and thousands of Scots on very low and insecure incomes? During the Budget process, has he been fighting in the interests of those Scots or, like the rest of the Tories, is he concerned only with those at the top?

David Mundell: It does not surprise me that the hon. Lady does not draw attention to the fact that, on the basis of statistics announced today, employment in Scotland increased by 15,000 over the quarter, and has increased by 79,000 over the year. The Scottish employment rate rose by 0.3%. The way out of poverty is work, and this Government are delivering jobs.

Child Poverty

3. Dr Eilidh Whiteford (Banff and Buchan) (SNP): What assessment he has made of the effect of the Government’s welfare reforms on levels of child poverty in Scotland. [903081]

The Parliamentary Under-Secretary of State for Scotland (David Mundell): The Scottish Government child poverty strategy report was published in September 2013 and states that child poverty in Scotland is at its lowest level since 1994. Welfare reform will be subject to the normal policy review process in due course.

Dr Whiteford: I am appalled by the Minister’s complacency. He should be aware that more than half the children in poverty in Scotland have working parents, and that the Child Poverty Action Group estimates that 100,000 more children will be pushed into poverty as a consequence of welfare reform. Why do his Government think that it is okay to make children pay the price of austerity, and does he think that it is a price worth paying?

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David Mundell: Each month, the hon. Lady raises welfare issues and plumbs new depths of hypocrisy. The Scottish Government produced a 670-page—[Interruption.]

Mr Speaker: Order. I am quite clear that the context in which the hon. Gentleman is using that term is not collective but individual and personal. [Interruption.] Order. I can handle the matter. The Minister will withdraw that term: it was directed at an individual, and it is inappropriate.

David Mundell: I withdraw unreservedly, Mr Speaker. The point I want to make is that the Scottish National party produced a 670-page White Paper on Scottish independence. How many mentions does it make of child poverty? One, on page 41.

Iain Stewart (Milton Keynes South) (Con): Does my right hon. Friend agree that a good way of tackling child poverty in Scotland and England is to raise the personal tax allowance, which would target low earners? That is an effective way of increasing the household incomes of families at the bottom end of the income scale.

David Mundell: I absolutely agree with my hon. Friend. Since the coalition Government came to office, 2.2 million people in Scotland have seen their income tax bills reduced.

Lindsay Roy (Glenrothes) (Lab): Will the Minister confirm what impact the imposition of the bedroom tax has had on child poverty in Scotland?

David Mundell: On the spare room subsidy, the hon. Gentleman is aware that the Government have introduced significant contributions in relation to discretionary housing payment. He knows as well that the Scottish Government have significant powers to contribute to any mitigation that they think is necessary.

Guy Opperman (Hexham) (Con): Surely the best way to address child poverty is by increasing employment and changing education and skills so that young people in Scotland and England have the skills and aspirations to work their way out of child poverty.

David Mundell: My hon. Friend is exactly right, which is why I would have thought that even Opposition Members would welcome the fact that employment in Scotland has increased by 15,000 over the quarter, and that the Scots employment rate rose by 0.3%.

Mr Russell Brown (Dumfries and Galloway) (Lab): Child poverty has long-lasting effects. By the age of 16, children receiving free school meals achieve significantly lower exam grades than their wealthier peers, and they leave school with fewer qualifications, which translates into lower earnings over the course of their working lives. Will the Minister speak with the Secretary of State for Work and Pensions and demand a proper start in life for all children, something that is threatened by this Government’s welfare reform programme?

David Mundell: I do not accept the claim that this Government are responsible for child poverty. I agree with the hon. Gentleman’s Dumfries and Galloway

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council colleague, Marion McCutcheon, who said that the only solution to child poverty is work. That is what this Government are delivering, with 15,000 more people in employment over the past quarter.

Scottish Independence

4. Dr Thérèse Coffey (Suffolk Coastal) (Con): What assessment he has made of the financial benefits for Scotland of being part of the UK. [903082]

The Secretary of State for Scotland (Mr Alistair Carmichael): As part of the United Kingdom, Scotland’s economy is doing well. We benefit from being part of the large, integrated UK domestic market.

Dr Coffey: I thank my right hon. Friend for that answer. He illustrates very clearly the benefits of Scotland staying in the United Kingdom, which will be good for everybody in this country. Having already mentioned the private sector recovery and jobs, does he agree that the Barnett formula provides a generous amount of public sector funding?

Mr Carmichael: Indeed. The Barnett formula has been part of Scotland’s political landscape for almost 40 years and delivers a good level of public spending for people in Scotland—in the region of £1,000 per head each year over the figure for the rest of the United Kingdom. That reflects Scotland’s distinctive needs. That is why it is here to stay.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): There is huge and growing inequality. Staggeringly, according to Oxfam, five families in the UK own as much as 20% of the population do. The Financial Times stated on Monday that the burden of austerity has fallen most heavily on the least well-off. Can the Secretary of State explain to the growing number of people using food banks in Scotland the benefits of being in the UK? They are not better together; they are at the food bank.

Mr Carmichael: No subject, apparently, is so complex or involved that it cannot be trivialised by the Scottish nationalists. The reasons people have to resort to using food banks are complex, and many of them have more to do with the difficulties they face in work than with being on benefits. I am quite prepared to listen to representations from every part of the House about what the Government can do, but frankly I do not expect to hear anything constructive from the hon. Gentleman.

Mr Charles Kennedy (Ross, Skye and Lochaber) (LD): Does my right hon. Friend agree that there is more than a sense of irony about the fact that the devolution cause—to maintain but reform the United Kingdom—was based largely on the correct analysis that too many economic decisions were being concentrated here in London. Yet, now in Scotland, if we look at Highlands and Islands Enterprise and the Crofting Commission, to take just two examples, we see that too many economic decisions are being centred politically in Edinburgh? Does he agree that Scotland’s long-term financial benefit is in the UK, but that we also need a more devolved Scotland?

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Mr Carmichael: Indeed. We see Scotland’s constitutional position as an evolving one. The experience to which my right hon. Friend points is exactly the same as that which I and my constituents see. Week in, week out, the Scottish Government take power and influence away from constituencies and communities such as ours, which know best what will work in growing their economies, and what we get is what people in Edinburgh think we need, rather than what we want.

Mr Speaker: I ask the Secretary of State to face the House so that we get the full benefit of his mellifluous tones.

Ian Murray (Edinburgh South) (Lab): There are tens of thousands of financial services jobs in my constituency, and my constituents are getting increasingly upset by the uncertainty around the independence referendum and the fact that many financial institutions might leave Scotland. What can the Secretary of State say to my constituents to ensure them that those jobs will not only stay, but increase in the future?

Mr Carmichael: The best way to ensure that those jobs stay is to vote no on 18 September and ensure that Scotland remains part of the United Kingdom. In recent weeks we have seen a growing number of companies—Standard Life, Royal Bank of Scotland and Alliance Trust Ltd—explaining that, if Scotland was to become a foreign country, as good Scottish companies operating through the whole of the United Kingdom, they would be required to remove their headquarters from Scotland to the rest of the United Kingdom. That would not be good for Scotland’s economy.

Currency Union

5. Mel Stride (Central Devon) (Con): What recent discussions he has had with the Scottish Government on the prospect of a currency union with an independent Scotland. [903083]

6. Andrew Bridgen (North West Leicestershire) (Con): What recent discussions he has had with the Scottish Government on the prospect of a currency union with an independent Scotland. [903084]

8. Mark Menzies (Fylde) (Con): What recent discussions he has had with the Scottish Government on the prospect of a currency union with an independent Scotland. [903087]

The Secretary of State for Scotland (Mr Alistair Carmichael): I have not had any discussions with the Scottish Government about the prospect of a currency union. The Chancellor, the Chief Secretary to the Treasury and the shadow Chancellor have all said that there will not be a currency union. The only way to keep the pound is to stay in the United Kingdom.

Mel Stride: Alex Salmond claims that an independent Scotland will still use the pound. Given that there is no likelihood of a currency union between the remainder of the United Kingdom and any future independent Scotland and that Scotland would therefore not have the backing of the lender-of-last-resort facility of the

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Bank of England, does my right hon. Friend agree that such a path is disastrous for Scotland—particularly its financial and banking sector?

Mr Carmichael: Indeed. If Scotland made herself a foreign country to the rest of the United Kingdom, there would be no question of the Bank of England and the taxpayers who underpin it continuing to stand behind banks headquartered in that foreign country. That simply does not happen. As we have already explained, a number of financial services and banking companies north of the border have rightly identified that as a risk to their continued future governance.

Andrew Bridgen: Following the First Minister’s admission at the weekend that his own fiscal commission working group is looking at not only a plan B but a plan C, D, E and F, is it not the truth that the Scottish National party can offer no certainty for the people of Scotland about currency provision for an independent Scotland? They cannot keep the pound, because—

Mr Speaker: Order. The hon. Gentleman has had his say, but it did not remotely resemble a question.

Mr Carmichael: On currency, we started with a White Paper and we have now been given an alphabet soup. I cannot believe that the First Minister does not have a plan B; I cannot believe that, six months from an independence referendum about which he appears to be serious, he has not actually decided what that is going to be. What worries me is that he seems so reluctant to tell the people of Scotland.

Mark Menzies: The First Minister, Alex Salmond, has previously described the pound as a millstone around Scotland’s neck and insisted that it was sinking like a stone. Does my right hon. Friend know what has changed?

Mr Carmichael: My hon. Friend invites me to look into the workings of the First Minister’s mind—not a particularly edifying enterprise, and one that goes beyond even my ambition. My recollection is that when the First Minister made that remark, he wanted us to be independent in Europe. I cannot remember whether that was the time when we were going to be part of the arc of prosperity, but it seems to be all change these days. The truth of the matter is that the First Minister does not care about the pound or anything other than independence.

Stewart Hosie (Dundee East) (SNP): On 29 January, the Financial Times reported that on independence, with £100 billion of sales, Scotland would be one of the top 35 exporting countries in the world. If the Secretary of State has his way—I am sure that he will not—when does he intend to run around to the good people of England explaining the impact on their currency when £100 billion of Scottish export sales are no longer receipted in sterling?

Mr Carmichael: The hon. Gentleman should listen to some of the experts. The Institute of Directors, for example, has said in terms, that the well rehearsed risks of a currency union far outweigh the problems of the

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sort of transaction costs that the hon. Gentleman is talking about. He needs to listen to the experts and tell us what he is going to do instead.

Sir Menzies Campbell (North East Fife) (LD): Does it not tell us all we need to know about those arguing for independence that when the Governor of the Bank of England, in an impartial and carefully produced speech, draws attention to the reservations he has about a currency union, he is dismissed out of hand by the Scottish National party?

Mr Carmichael: In that respect, the Governor of the Bank of England is in very good company—he is with the President of the European Commission, the Prime Minister of Spain and the permanent secretary to the Treasury. The truth of the matter is that, day by day, bad news comes to those who want to remove us from the United Kingdom, and they are just not prepared to listen to it.

Mr William Bain (Glasgow North East) (Lab): If and when the Secretary of State does speak to the First Minister, will he remind him that any attempt to use sterling informally without a central bank would mean that an independent Scotland would not meet the terms of entry to the European Union? What could be more damaging for jobs and growth in Scotland than that?

Mr Carmichael: The nationalists are always very keen on telling us about their vision. In fact, if we were to use sterling without the central bank in the Bank of England, the relationship between Scotland and the rest of the United Kingdom would be like that between Panama and the United States of America. That is not a vision; it is a nightmare.

Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab): The Minister will be aware that there is nothing more important in a pensions system than—[Interruption.]

Mr Speaker: Order. Perhaps the House can calm down and the hon. Gentleman can actually have the advantage of free speech, which is what this House is about.

Gregg McClymont: I am delighted by such a reception, Mr Speaker.

The Minister will be aware that nothing is more important as regards the certainty of a pensions system than clarity about the currency in which pensions are paid out and saved. Does he therefore agree that the lack of clarity from the Scottish nationalists about the currency that an independent Scotland would use is very damaging for Scots and their pensions?

Mr Carmichael: Indeed. The future of the pensions industry and the security of pensions for Scots post-independence is one of the biggest risks that comes from that lack of clarity. It is quite remarkable that six months out from the independence referendum date, we still do not know what the nationalists are offering us by way of a currency.

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Scottish Devolution Model (England)

7. Mr Graham Allen (Nottingham North) (Lab): What discussions he has had on the potential benefits of replicating aspects of the Scottish devolution model in England; and if he will make a statement. [903086]

The Parliamentary Under-Secretary of State for Scotland (David Mundell): The devolution settlement is designed to meet the needs and wishes of the people of Scotland. This Government are committed to devolving power across the United Kingdom to the most appropriate level, taking account of local need. In England, we are achieving this in many ways, including the city deals programme in which Nottingham is a participant.

Mr Allen: A lasting democratic settlement in the UK must be based on the twin principles of union and devolution. Does the Minister share my view that separatism will be weaker and devolution will be stronger and more believable, not least to the Scottish people, if its benefits are spread to England too?

David Mundell: This Government are committed to devolution within England, and the hon. Gentleman is a prominent advocate of that. He recognises, as I do, that independence in Scotland is the end of devolution there.

Tim Farron (Westmorland and Lonsdale) (LD): Does my right hon. Friend agree that devolution should absolutely take place in England, but it should be chosen by the people of its regions and not imposed by central Government as it was by the previous Labour Deputy Prime Minister?

David Mundell: I agree that the form that devolution takes within England—and, indeed, within the rest of the United Kingdom outwith Scotland—is a matter for the people of the rest of the United Kingdom.

Pete Wishart (Perth and North Perthshire) (SNP): There are, of course, new proposed models of devolution on offer. Yesterday we had Labour’s devo-dog’s breakfast as an offer to the Scottish people. Does the Minister find anything attractive in Labour’s chaotic plans? Will they form the basis of the joint proposition, and if not, why not?

David Mundell: What we know about the SNP’s position is that it opposes devolution to Scotland and devolution within Scotland with its centralist agenda.

North Sea Oil Industry

9. Graeme Morrice (Livingston) (Lab): What assessment he has made of the potential effect of Scottish independence on investment in the North sea oil industry. [903088]

The Secretary of State for Scotland (Mr Alistair Carmichael): We have already heard from senior business figures that independence presents risk for investment in the North sea oil industry. The sector is facing new challenges, and the United Kingdom offers the strongest basis to unlock the investment needed and ensure that we maximise its potential in future.

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Graeme Morrice: The Secretary of State will be aware that the Scottish Government’s own figures show that oil revenues dropped by £4.4 billion last year. Does he agree, therefore, that the figures serve to demonstrate the weakness of basing the economic argument for a separate Scotland on unstable oil revenues?

Mr Carmichael: The figures illustrate perfectly the opportunities that come to Scotland from being part of the United Kingdom. For an economy that is highly dependent on offshore oil and gas, the size of the UK economy offers us the opportunity to absorb the peaks and troughs that are inevitably part of that commodity.

Prime Minister

The Prime Minister was asked—

Engagements

Q1. [903128] Mrs Cheryl Gillan (Chesham and Amersham) (Con): If he will list his official engagements for Wednesday 19 March.

The Prime Minister (Mr David Cameron): I am sure that the whole House will wish to join me in paying tribute to Tony Benn, who died last week. He made many memorable speeches in this House, and alongside a record of ministerial, parliamentary and public service, he was also a great writer, a great diarist and a great campaigner, no matter whether one agreed with his views or not. He will be missed by both sides of the House, and our thoughts are with the right hon. Member for Leeds Central (Hilary Benn) and other members of his family at this time.

I am sure that the House will also join me in paying tribute to the fantastic Team GB winter Paralympics team, following its great success at the Sochi games. Special congratulations must go to Kelly Gallagher, who won our first ever gold medal at the winter Paralympics, and Jade Etherington, who is now our most successful winter Paralympian, with four medals.

This morning, I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall have further such meetings later today.

Mrs Gillan: I am sure that the whole House will want to be associated with the remarks made by the Prime Minister today about Tony Benn, and his congratulations to the Paralympics team. The Paralympics started, of course, in Buckinghamshire.

Today, unemployment has fallen by 63,000, with youth and long-term unemployment also falling, and that has been evident in Chesham and Amersham, where we have seen growth in the private sector continue. Does my right hon. Friend agree that we must sustain this growth by continuing to tackle the deficit and support industry, and continue with our long-term economic plan?

The Prime Minister: My right hon. Friend is absolutely right about Buckinghamshire’s link with the Paralympic games. The flame from Stoke Mandeville came to No. 10 Downing street recently. She is also absolutely right

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about the unemployment figures, which show employment going up and unemployment coming down, a record number of people in work in our country, a record number of women in work in our country, and youth unemployment coming down too. What is particularly remarkable over the last quarter is that private sector employment has gone up by 118,000 and public sector employment has gone down by just 13,000, so 10 times more jobs have been created in the private sector. The important thing is what that means for Britain’s families. For millions of people, it means a pay packet, the chance of work, the chance of dignity, the chance of stability and security, and I hope it will be welcomed across the House.

Edward Miliband (Doncaster North) (Lab): Let me begin by joining the Prime Minister in paying tribute to Tony Benn. The death of Tony Benn represents the loss of an iconic figure of our age. He will be remembered as a champion of the powerless and a great parliamentarian who defended the rights of Back Benchers in this House against the Executive, whichever Government they came from. He spoke his mind and he spoke up for his values. Everyone knew where he stood and what he stood for, and that is why he won respect from all Members of the House. All our condolences go to his children, Stephen, Hilary, Melissa and Joshua, and to his wider family. In their different ways, they take forward what he taught as a father, a socialist and as someone of great decency.

I also want to join the Prime Minister in paying tribute to the fantastic Team GB winter Paralympics team, following its great success in Sochi. In particular, special congratulations go to Kelly Gallagher and Jade Etherington.

This weekend we saw a referendum in Crimea take place in the shadow of Russian military intervention in Ukraine. Does the Prime Minister agree that the referendum was illegal, illegitimate and in direct violation of the terms of the Ukrainian constitution? Does he also share my deep concern following the news that a Ukrainian serviceman was shot and killed at a military base in Crimea yesterday?

The Prime Minister: The right hon. Gentleman is absolutely correct to say that the referendum in Crimea is illegitimate and illegal. It was spatchcocked together in 10 days and held at the point of a Russian Kalashnikov. This cannot be accepted or legitimised by the international community.

We should be absolutely clear about what has happened: it is the annexation, effectively, of one country’s territory by another country. We must also be absolutely clear about our interest, which is to see a rules-based international system where countries obey the rules. If we turn away from this crisis and do not act, we will pay a very high price in the longer term. We should be clear that this referendum is illegitimate, we must be clear that consequences must follow and we should work with our European partners and the United States for a strong, consistent and robust response.

Edward Miliband: I thank the Prime Minister for that answer and would like to ask him about the meetings that are coming up. The White House has indicated that its sanctions will be expanded, and I am sure the whole House will support the idea that the list of Ukrainian

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and Russian officials targeted by asset freezes and travel bans will also be extended at the EU Council meeting tomorrow. Will the Prime Minister tell the House the circumstances in which he would also support additional, wider economic and trade sanctions on the Russian Federation?

The Prime Minister: As we discussed previously in the House, the European Union set out some very clear triggers. We said that if the Russians did not take part in a contact group with the Ukrainian Government to take forward discussions, asset freezes and travel bans should follow. Those were put in place at the Foreign Affairs Council on Monday, and I believe further action on that front should be taken at the European Council of Ministers, which I will take part in on Thursday.

I also think we should be responding to the fact of this annexation. We said that if there is further action to destabilise Ukraine—and this annexation is that action—further consequences need to follow. We need to set that out on Thursday, in concert with our European partners. At the same time, we need to put down a very clear warning that if there is further destabilisation—for instance, going into eastern Ukraine in any way—we will move to a position of the sorts of economic sanctions we discussed in the House last week.

Edward Miliband: The Prime Minister should know that he will have the support of Members on this side of the House for the toughest possible diplomatic and economic measures against the Russian Federation, given the totally illegitimate action it has taken.

I also welcome yesterday’s announcement that the G7 allies will gather next week at The Hague. Given Russia’s actions, it seems inconceivable that it can remain in the G8, so does the Prime Minister now agree that a meeting of the G8 should go further and explicitly decide to suspend Russia from the group of G8 advanced economies?

The Prime Minister: I was one of the first people to say that I thought it was unthinkable for the G8 to go ahead as planned. We were one of the first countries to suspend all preparations for that G8 and I strongly support the meeting of G7 countries that will take place on Monday. It is important that we move together with our allies and partners, and we should be discussing whether or not to expel Russia permanently from the G8 if further steps are taken. That is the meeting we will have on Monday and I think that is the right way to proceed.

Q2. [903129] Dr Julian Huppert (Cambridge) (LD): May I add a few words about Tony Benn? He was a great man and it was my pleasure to work with one of his sons, Stephen, for a number of years on science policy. Lifting the income tax threshold to £10,000 so far has lifted 2.7 million poorly paid people out of paying any income tax, making a difference to them. Is the Prime Minister pleased that he abandoned his pre-election objection to that and that he is implementing an excellent Lib Dem policy?

The Prime Minister: The hon. Gentleman brings the House together in his usual way. What I am sure we can agree on is that it has been an excellent move by a Conservative Chancellor in a coalition Government to

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make sure that you do not pay tax on the first £10,000 of income you earn. That benefits people earning all the way up to £100,000. It is worth, so far, more than £700 to a typical income tax payer and it is highly worth while, and I look forward to hearing what the Chancellor has to say.

Sir Gerald Kaufman (Manchester, Gorton) (Lab): Is the right hon. Gentleman aware that this week I received from a Palestinian friend an e-mail telling me that the Israelis assassinated a friend in his house and that

“another brother of a friend has been shot dead by the army. So we spent our time from one funeral to another”?

When the right hon. Gentleman was in Israel last week, did he raise with Netanyahu this constant stream of killing of innocent Palestinians by the Israelis, and what is he going to do about it?

The Prime Minister: I did not raise that specific case, which the right hon. Gentleman quite rightly raises in the House today, but I did raise with the Israeli Prime Minister the importance of how the Israelis behave in the west bank and elsewhere, and I raised the issue of settlements, which I believe are unacceptable and need to stop.

I also strongly supported both the Israeli Prime Minister and the Palestinian President in their efforts to find a peace. There is a prospect and an opportunity now, because the Americans are leading a set of talks that could lead to a framework document being agreed, and it is in everyone’s interest to put all the pressure we can on both the participants to take part and to get on with these negotiations, which I believe would mean so much to ordinary Israelis, ordinary Palestinians and, indeed, the rest of us.

Q3. [903130] Andrew Stephenson (Pendle) (Con): Unemployment in Pendle has now fallen over the past 12 months from 4.9% down to 3.8%, helped by a resurgence in British manufacturing. Compared with the 1.8 million manufacturing jobs lost under the previous Labour Government, would our Prime Minister agree that our long-term economic plan is delivering for the north of England?

The Prime Minister: My hon. Friend makes an important point, which is that we want to have a balanced recovery: we want to see growth and employment right across the country. It is worth noting that since 2010, 80% of the rise in private sector employment has taken place outside London. The unemployment rate in the north-west, where my hon. Friend has his seat, is lower than it is in London. We are beginning to see a balanced recovery, but we have got to do everything we can—backing apprenticeships, backing industry—to make sure that continues.

Yasmin Qureshi (Bolton South East) (Lab): Primodos was a drug given to women to determine pregnancy in the 1960s and 1970s. Its potency is 18 times that of morning after pills. As a result, thousands and thousands of babies were born with deformities. Up to now, there has never been a public inquiry or compensation for the victims. Will the Prime Minister meet me, my constituent Nicola Williams and a representative of the victims’ association to discuss this?

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The Prime Minister: I am very happy to look at the case that the hon. Lady mentions. Clearly, this is an important issue. Anyone who has had a disabled child knows the enormous challenges that that brings. I am very happy to look at the case that she raises, and get back to her about it.

Q4. [903131] Sir Alan Haselhurst (Saffron Walden) (Con): Will my right hon. Friend acknowledge that the benefits of economic recovery in my constituency are somewhat tempered by uncomfortable pressures on housing development and inadequate rail infra-structure? Notwithstanding the need for these matters to be dealt with quickly, is it not increasingly clear that there is a need to do more to stem the continuing flow of population to the south-east, by imaginative measures that will spread the benefits of recovery throughout all regions of the country?

The Prime Minister: My right hon. Friend makes an important point. As I said, we want a balanced recovery. Our long-term economic plan is working. An important part of that long-term economic plan is the infrastructure investment that we are making. Obviously, HS2 is important in rebalancing between north and south, but let us be clear: we are spending three times more on other transport schemes in the next Parliament as we are on HS2, and that includes projects such as rail electrification to Bristol, Nottingham and Sheffield, and between Liverpool and Manchester. All of these things can make a difference, and they are all part of our plan.

Edward Miliband: In recent days, the country’s leading mental health charities have joined together to warn of deep concerns about mental health services. Members from across this House have spoken out bravely on this subject, including about the impact on those who experience mental heath problems, their families and our country. Does the Prime Minister agree that mental health should have equal priority with physical health in our heath care systems?

The Prime Minister: First, let me agree with what the right hon. Gentleman said about the debate that took place in this House about mental health. I read the debate carefully and thought that a number of hon. Members took some very brave and bold steps to talk about issues and problems in their own lives. I thought that was an incredibly brave and right thing to do. In terms of whether mental health should have parity of esteem with other forms of health care, yes it should, and we have legislated to make that the case.

Edward Miliband: I thank the Prime Minister for that answer. Let me ask him about some specifics that suggest that we are moving away from the equal footing that we both want to see. The mental health share of the NHS budget is falling, services for children and young people are being squeezed, there are fewer mental health beds, and more young people are being treated on adult psychiatric wards. We know that those things are not just bad for the individuals concerned, but can store up bigger costs for the future. Does the Prime Minister agree that they really should not be happening?

The Prime Minister: First, taking the big picture on health spending, we have decided to increase health spending, rather than reduce it. Health spending is up by £12.7 billion across this Parliament. We have legislated

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for parity of esteem, as I have said, and we have put in place proper waiting times and disciplines for things such as mental health therapies, which were not there before. Of course, there is still further to go. We need commissioners to really focus on the importance of mental health services—but the money is there, the legal priority is there; we need the health service to respond.

Edward Miliband: The problem is that the mental health budget has fallen for the first time in a decade. It is not getting the share of health spending that it needs. I urge the Prime Minister to look at the specifics that I have raised. We need to ensure that the consensus that clearly exists in this House is reflected in the daily decisions that are made up and down the country about mental health in the health service. Will the Prime Minister agree to enshrine equality for mental health in the NHS constitution in order to send a message to decision makers about the priority that mental health deserves and to ensure that those who are affected by mental health problems get better access to the treatment and care that they need?

The Prime Minister: The right hon. Gentleman raises an important point not just about parity of esteem for mental health in law, but about what we see on the ground. We have put £400 million into talking therapies, which are a very important part of mental health provision. Mental health provision is referenced very clearly in the mandate that is given to NHS England, which in many ways is the absolutely key document for the health service. He is absolutely right that a culture change in favour of mental health and helping with mental health problems is still needed in the way the health service works. On that, there can be all-party support.

Q15. [903142] Gordon Henderson (Sittingbourne and Sheppey) (Con): Many small business entrepreneurs in Sittingbourne and Sheppey have personal incomes below the current welfare cap. With that in mind, will my right hon. Friend consider doing more for small businesses by reducing the burden of regulation, lowering tax and increasing thresholds, as well as by offering them extra assistance in taking on more apprentices?

The Prime Minister: My hon. Friend makes an important point, which is that a key part of our long-term economic plan is to help small businesses take more people on. Absolutely key to that is the employment allowance—the cut in national insurance contributions of £2,000—that will come in this April. It is very important that we all encourage all small businesses to take up that money and therefore to take on more people. At the same time, we are abolishing employer’s national insurance contributions for the under-21s from April 2015. Companies, including those in his constituency, can therefore start planning to take on more people.

Q5. [903132] Albert Owen (Ynys Môn) (Lab): Last week, the Deputy Prime Minister wrongly told the House that child care costs were coming down in England, while they continued to go up in Wales. The House of Commons Library says that that is not the case. This week, the Deputy Prime Minister is offering a pre-election bribe on child care, which will

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not come into effect until September 2015. Will the Prime Minister get a grip on this policy and help hard-working families with their child care costs now, in this Parliament, because of the cost of living crisis that they are facing today?

The Prime Minister: I am afraid that the hon. Gentleman is wrong on both counts. We are seeing some easing in cost pressures in England on child care costs, but I am afraid in Wales they are still going up. He might want to talk to the Welsh Assembly Government about that.

The point that the Deputy Prime Minister and I were making yesterday was that we want to help hard-working families with their child care costs. Therefore, from 2015, £2,000 on child care costs can be saved for every child. Is it not interesting, Mr Speaker, that we can now hear that the Labour party opposes that move? Clearly, it does not welcome it, so there will be a very clear choice at the election: if you vote for parties on this side of the House, you get help with child care, and if you vote Labour, you get nothing.

Q6. [903133] Nigel Mills (Amber Valley) (Con): Will the Prime Minister join me in praising Conservative-run Amber Valley borough council, which has frozen its council tax for a fifth straight year, providing real help to hard-working people, in stark contrast to the three Labour parts of the area, where it is going up this year?

The Prime Minister: My hon. Friend is absolutely right. We should do everything we can to help hard-working people meet their budgets and meet their needs. That is why councils’ freezing council tax provides a huge amount of help. The Government are doing their part by freezing fuel duty, by raising the personal allowance and by doing everything we can to help hard-working people get on with their lives.

Mike Kane (Wythenshawe and Sale East) (Lab): The Prime Minister assured the House on 27 November that the Government had exempted disabled people who need an extra bedroom from the bedroom tax. Does he think it is right that my constituent Mr Gunning has to pay the tax with his disability living allowance because he lives in Tory Trafford?

The Prime Minister: What I said to the House was absolutely correct, and I am happy to repeat that today, but there are obviously also the discretionary housing payments, which are there for local councils to deal with difficult cases. I would recommend that the hon. Gentleman takes that up with the council.

Q7. [903134] Bob Stewart (Beckenham) (Con): Russia is not just expanding into the Crimea, but its ships, submarines and aircraft are increasingly appearing off our shores. Bearing in mind that we have great news on the economy and that the Ministry of Defence sent back an underspend last year, is it possible, as suggested by the House of Commons Defence Committee, that we could have a new maritime patrol aircraft before the next strategic defence and security review?

The Prime Minister: I say to my hon. Friend, first, that we are able to have these sorts of discussions and considerations only because we have sorted out the defence budget and got rid of the enormous deficit in it, and we have a successful and growing economy. In

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terms of maritime patrol, we are currently using the airborne warning and control system aircraft, and of course the Sea King, Merlin and Lynx helicopters, as well as Royal Navy ships and submarines. We work in very close partnership with our NATO allies, but I am sure the Ministry of Defence will be listening to my hon. Friend’s representations for the forthcoming SDSR.

Steve McCabe (Birmingham, Selly Oak) (Lab): Are the 24 Tory tax rises evidence of the Prime Minister’s tax-cutting instincts?

The Prime Minister: This is a great Labour campaign—I spotted it this morning. They have enumerated a number of tax increases that we had to put in place in order to deal with the deficit. Just to remind people, we said it was right to deal with the deficit with 80% spending reductions and 20% tax increases. There is a problem, though, with this Labour campaign. When the spokesman was asked, “Would you change any of these tax increases?” the answer was no. I am not the world’s biggest expert in campaigns, but I would say that was a bit of a turkey.

Q8. [903135] Ian Swales (Redcar) (LD): I welcome the Prime Minister’s help for those hit by flooding, but I am told that it applies only to areas affected since December. My constituency had its worst ever flooding last September. Will he visit the area, and will he extend his help to the homes and businesses that are still suffering?

The Prime Minister: I absolutely understand the hon. Gentleman’s concern, because the sea surge that took place at Redcar and across Teesside last September led to some of the worst floods that have been seen in the area for a long time. What is absolutely key is that we improve the sea wall to protect properties in Redcar from future flooding. My understanding is that, working with partners, there is a £30 million investment going ahead across 3 km of coast, which will protect something like 1,000 homes. Obviously there may well be more that we need to do, and I am very happy to discuss that with him.

Mrs Mary Glindon (North Tyneside) (Lab): In 2010, the Chancellor said that the budget deficit would be eliminated by 2015. What went wrong?

The Prime Minister: What we said we would do was cut the deficit, and we have cut the deficit. We said we would get Britain back to work, and we are getting Britain back to work. We said we wanted a private sector-led recovery; we have got a private sector-led recovery. The hon. Lady asks what went wrong. I can give it to her in one word: Labour.

Q9. [903136] Christopher Pincher (Tamworth) (Con): This week, BMW announced that it is coming to Tamworth and bringing with it 100 skilled new jobs. That is on top of the hundreds of new jobs that are already in the pipeline. When my right hon. Friend is next in the midlands, which is the manufacturing heart of our country, will he drop into Tamworth and commend our local enterprise partnership and Tamworth borough council for helping to deliver our long-term economic plan and make Tamworth the place in the midlands to do business?

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The Prime Minister: I am always delighted to visit Tamworth, not least to pay homage to the statue of Sir Robert Peel. I would be happy to go back and do that. What my hon. Friend says about the manufacturing revival is important, because we really can see it now in the west midlands, with the news from Jaguar Land Rover, the new engine plant that is opening up, and also what he says about BMW. One in four BMWs, I think, now has a British-made engine. That is great news for what we want to see: more jobs making things, more jobs exporting things, and a manufacturing revival in the UK.

Q10. [903137] Kerry McCarthy (Bristol East) (Lab): Speaking for myself, my right hon. Friend the Member for Bristol South (Dawn Primarolo) and the people of Bristol, whom Tony Benn served so well for 30 years, may I join in paying tribute to him and expressing condolences to his family? Tony Benn was from a very privileged background, yet he spent his political life fighting for the working people. With a cost of living crisis, wages falling by £1,600 a year, people queuing at food banks and so much that requires the Prime Minister’s attention, why does he seem so obsessed with plans to bring back fox hunting by the back door for the benefit of a privileged few?

The Prime Minister: I join the hon. Lady in paying tribute to Tony Benn as a constituency MP. He was always an incredibly busy Back Bencher and Minister, but he never forgot about his constituents. He was also very good with a friendly, helpful word for new Back Benchers, whatever side of the House they happened to be on. I am sure that, like me, many Members experienced that from him.

In terms of what we are doing to help the poorest in our country, the most important thing is getting people back to work. We have now seen 1.7 million new private sector jobs under this Government, and that is the best way of helping people sustainably out of poverty. As they come out of poverty, they will see a higher minimum wage, and also the ability to earn more money before they pay any taxes at all. Those are the Government’s priorities, that is our long-term plan, and that is what people are going to hear about.

Q11. [903138] Mr John Whittingdale (Maldon) (Con): May I join my right hon. Friend in paying tribute to Tony Benn, whose ancestral seat of Stansgate is in my constituency? He was held in high regard by my constituents, even though they may not have agreed with his views. Is my right hon. Friend aware that today’s figures show that unemployment in Maldon has fallen by 27% since the last election, and does he agree that that is further proof that the Chancellor was absolutely right to ignore his critics on the Opposition Benches and stick to his guns?

The Prime Minister: I thank my hon. Friend for what he has said. As I said, there is good news in the unemployment figures about getting women and young people into work and about falls in long-term unemployment, but there has also been the largest annual fall in the claimant count—the number of people claiming unemployment benefit—since February 1998.

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Getting people back to work and giving them the chance of a job, dignity and security in their lives is really important. That is what our economic plan is all about.

Alison McGovern (Wirral South) (Lab): At the weekend a young woman from Eastham in my constituency, Sophie Jones, died of cervical cancer, leaving her family and friends bereft and unable to understand why she did not get the smear test that she asked for. Will the Prime Minister send his sympathies to her friends and family, and will he work with me to ensure that once we understand what went wrong, we have the right policies in place to ensure that that does not happen to anyone else?

The Prime Minister: The hon. Lady is absolutely right to raise that case. Many of us will have read about it in the papers at the weekend, and it seems an absolutely tragic case. We have made huge breakthroughs in this country, under Governments of both parties, in the screening programmes and public health information that is available, but something seems to have gone wrong in this case. I am very happy to look into it, and to write to the hon. Lady and seek any views that she has about it too.

Q12. [903139] Mr David Ward (Bradford East) (LD): Today’s unemployment figures show a reduction in Bradford East of 14, which—I concede—is better than an increase of 14, but is very disappointing nevertheless and leaves us ninth highest for unemployment in the country. I recently visited a training provider in Bradford, who said that there were 600 apprenticeship vacancies in Bradford. Is the Prime Minister confident that we are doing enough to ensure that young people in particular are aware of apprenticeships, but also prepared to take them on?

The Prime Minister: My hon. Friend makes a very important point; pockets of quite high unemployment are often found right next to areas that have a lot of apprenticeships or jobs available. There are two things that we have to get right. One is that we have to make sure that more of our young people are leaving school with the key qualifications, including English and maths, which are absolutely vital to taking on an apprenticeship—we need to stress that those subjects are vocational subjects and must be at the heart of

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education. Secondly, we need to do more to explain to young people in school what is available in terms of apprenticeships and training, and that is exactly what our National Careers Service is going to do.

Q13. [903140] Ian Murray (Edinburgh South) (Lab): Are we really all in this together when the Prime Minister thinks that some public sector workers do not even deserve a 1% pay rise while he signs off on bumper pay rises of up to 40% for his own Government’s special advisers? Does that alone not show that not only is the Prime Minister out of touch, but he only stands up for his own privileged few?

The Prime Minister: Well, it is interesting: it is 12.30 pm and 29 seconds and not a single Labour MP has mentioned the unemployment figures today. Let me answer the hon. Gentleman very directly: under our plans, everyone in the NHS will get at least a 1% pay rise, and this is something I was told was supported by the Labour party. This is what the leader of the Labour party said:

“we’re talking, actually about a pay increase limited to 1%...as I say, this Labour party is going to face up to those difficult choices we have to make.”

How long did that one last? Confronted by a trade union campaign, he demonstrates once again his complete weakness and unfitness for office.

Q14. [903141] Paul Uppal (Wolverhampton South West) (Con): A recent report into female foeticide suggests that the female population has been reduced in the UK by 4,500 and worldwide by 200 million. As a proud British-Asian father of two daughters, may I ask my right hon. Friend to call for an end to this most appalling practice? This once taboo subject clearly must end, not just in the UK, but in the world as a whole.

The Prime Minister: My hon. Friend is absolutely right. It is a simply appalling practice, and in areas such as that, and female genital mutilation and forced marriage, we need to be absolutely clear about our values and the messages we send and about these practices being unacceptable. The Government have made clear that abortion on the grounds of gender alone is illegal. The chief medical officer wrote to all doctors on 22 November last year reminding them of their responsibilities. I am meeting the chief medical officer this afternoon and I will raise this issue with her, and I think it is absolutely right of my hon. Friend to run this campaign.

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Ways and Means

Financial Statement

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

12.33 pm

The Chancellor of the Exchequer (Mr George Osborne): I can report today that the economy is continuing to recover, and recovering faster than forecast. We set out our plan, and together with the British people we held our nerve. After the mess we were left, we are putting Britain right, but the job is far from done. Our country still borrows too much; we still do not invest enough, export enough or save enough, so today we do more to put that right.

This is a Budget for building a resilient economy. If you are a maker, a doer or a saver, this Budget is for you. It is all part of a long-term economic plan—a plan that is delivering security for the people of this country. I have never shied away from telling the British people about the difficult decisions we face, and just because things are getting better, I do not intend to do so today. Yes, the deficit is down by a third, and now in the coming year it will be down by a half, but it is still one of the highest in Europe, so today we take further action to bring it down.

Yes, investment and exports are up, but Britain has 20 years of catching up to do, so today we back businesses who invest and export. Yes, manufacturing is growing again, as my hon. Friend the Member for Pendle (Andrew Stephenson) just reminded us, and jobs are being created across the country, but manufacturing halved under the last Government, with all bets on the City of London. So today, we support manufacturers and back all regions of our country. While as a nation we are getting on top of our debts, for many decades Britain has borrowed too much and saved too little, so in this Budget we make sure hard-working people keep more of what they earn and more of what they save.

Yesterday we set out our support for parents with tax-free child care. Today support for savers is at the centre of this Budget, as we take another step towards our central mission: economic security for the people of Britain.

Let me turn to today’s forecasts from the Office for Budget Responsibility. I am grateful to Robert Chote, Steve Nickell and their team, and thank Graham Parker for agreeing to serve with them for another term. It is a credit to the OBR that we now take it for granted that the figures presented at this Dispatch Box are not fiddled but fair and independent. A year ago at the Budget, the OBR forecast the economy to grow by just 0.6% in 2013. It now confirms that it grew by three times as much. At the autumn statement, it significantly revised up its expectations for future growth. Today I can tell the House it is revising up its forecast again. A

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year ago, it predicted that growth in 2014 would be 1.8%; at the autumn statement, 2.4%; today, the OBR forecasts growth in 2014 of 2.7%. That is the biggest upward revision to growth between Budgets for at least 30 years. Growth next year is also revised up, to 2.3%; then, it is 2.6% in 2016 and 2017; and with the output gap closed around a year earlier than previously predicted, growth returns to around its long-term trend, at 2.5%, in 2018. Taken together, these growth figures mean our economy will be £16 billion larger than was forecast just four months ago.

There is another prediction the OBR makes today that the House will want to know about. Six years ago, Britain suffered a great recession. We had the biggest bank bail-out in the world. We had the biggest deficit since the war. We suffered the deepest recession in modern times—or as the shadow Chancellor put it, some mistakes were made. But later this year the OBR expects Britain to reach the point when our economy is finally larger than before it collapsed six years ago. That is because we are now growing faster than Germany, faster than Japan, faster than the United States—in fact, there is no major advanced economy in the world growing faster than Britain today.

But we should be alert to the risks. The euro area is slowly recovering, but as the OBR cautions today,

“further damaging instability remains possible”.

There is volatility in emerging markets, and while for now the OBR does not expect the situation in Ukraine to have a “large impact” on us, it does warn that an escalation risks higher commodity prices, higher inflation and lower growth. It is a reminder of why we need to build our economy’s resilience.

At home, the biggest risk is clear: abandoning the economic plan that is working. And nowhere is the success of that plan more evident than in job creation. Today again we are reminded that the most important consequence of our plan is more people in work, with each job meaning a family more secure. Some in this House predicted that our plan meant a million jobs would be lost. They were spectacularly wrong. The pace of net job creation under this Government has been three times faster than in any other recovery on record: 1.3 million more people in work. The latest figures today show a staggering 24% fall in the claimant count in just one year, and the fastest fall in the youth claimant count since 1997. The OBR now forecasts one and a half million more jobs over the next five years and unemployment down from the 8% we inherited to just over 5%., and the OBR predicts earnings will grow faster than inflation this year and in every year of the forecast. That is why the country can afford a real-terms increase in the national minimum wage. This is a Government whose plan is delivering jobs. We now have a record number in work; a record number of women in work; and for the first time in 35 years, a higher employment rate than the United States of America. That is what we mean when we say we are getting Britain working.

There can be no economic security if there is no control of the public finances. Before I presented my first Budget to this House, the Government were borrowing £1 in every £4 they spent, and we were faced with the threat of a sovereign debt crisis. We have taken difficult decisions, each and every one of which was opposed. But thanks to those decisions, the IMF now says that we are achieving the largest reduction in both the headline

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and the structural deficits of any major advanced economy in the world. There were those who said repeatedly that the deficit was going to go up. Instead, I can tell the House that the OBR has revised down the underlying deficit in every year of its forecast. Before we came to office the deficit was 11%. This year it says it will be 6.6%—lower than forecast and down a third; next year, 5.5%—down a half; then it will fall to 4.2%, 2.4% and reach 0.8% in 2017-18. In 2018-19, it is forecasting no deficit at all; instead, at plus 0.2%, a small surplus. But only if we work through the plan.

The Government’s fiscal mandate is met, and continues to be met a year early, yet while the underlying structural deficit falls, it falls no faster than was previously forecast, despite higher growth. This goes to the heart of the argument this Government have made: faster growth alone will not balance the books. Securing Britain’s economic future means there will have to be more hard decisions—more cuts. The question for the British people is: who has the credibility to deliver them?

Let me turn to the underlying cash borrowing numbers. Britain was borrowing £157 billion a year before we came to office. This year we expect to borrow £108 billion. That is £12 billion less than forecast a year ago. Indeed, even since the autumn statement the OBR has revised down borrowing in every single year. In 2014-15 it says it will fall to £95 billion. Then it falls again to £75 billion in 2015-16, then £44 billion, and then down to £17 billion. In 2018-19 we will not be borrowing at all—we will have a small surplus of £5 billion.

Taken together, these new figures mean Britain will be borrowing £24 billion less than was forecast. That is more than we spend in an entire year on the police and criminal justice system. Lower borrowing and a smaller deficit mean less debt. While we meet the debt target one year late as before, the OBR has revised down national debt in every single year of the forecast. It expects it to be 74.5% of GDP this year, 77.3% next year, peaking at 78.7% in 2015-16—lower than the 80% previously forecast—before falling to 78.3% in 2016-17, then falling to 76.5% and then 74.2% in 2018-19.

So, growth is up, the deficit is set to halve, debt is lower. and the biggest single saving of all is a £42 billion reduction in the interest payments we will have to make on that debt, saving every family in the nation the equivalent of almost £2,000, money that was going to creditors around the world, now going to pay for the NHS and other public services.

It is because we have a credible fiscal plan that the Bank of England can provide the support needed to businesses and families. Yesterday I confirmed the appointments of Anthony Habgood to chair the court and Ben Broadbent and Minouche Shafik to be the new deputy governors for monetary policy and for markets and banking respectively. All three make a strong team at the Bank stronger still.

I today reconfirm my remit for the Monetary Policy Committee, including the target of 2% CPI inflation, which the OBR expects will be met this year, next year and in the years ahead. I also set out the remit for the Financial Policy Committee, the body created by us to avoid the mistakes of the past. Although the OBR forecast that house prices will remain below their real-terms peak until at least 2018, I have asked the committee to be particularly vigilant against the emergence of potential

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risks in the housing market. To enhance our resilience and protect us from economic shocks, we will also continue rebuilding our foreign exchange reserves. Those reserves are now 50% higher than when we came to office.

Of course, the prerequisite of sound money is a sound currency, and the £1 coin has become increasingly vulnerable to forgery. It is now among the oldest coins in circulation, and one in 30 £1 coins is counterfeit. That costs businesses and the taxpayer millions each year, so I can tell the House that we will move to a new, highly secure £1 coin. It will take three years. We will consult industry. Our new £1 coin will blend the security features of the future with inspiration from our past. In honour of our Queen, the coin will take the shape of one of the first coins she appeared on: the threepenny bit. A more resilient pound for a more resilient economy.

Sound money depends, too, on sound public finances. We are entering a critical phase and we must learn from the past. Every time a post-war Government have embarked on public spending cuts, real spending has risen back to its previous heights within three years. Sure enough, there are those today who say: “Ease up, spend more, borrow more.” That would mean debt rising towards 100% of GDP, undermining growth. It would be a huge mistake, and we are not going to let that happen.

Many Chancellors faced with a recovering economy and improved borrowing forecasts before an election would be tempted to squander the gains. I will not do that today. These gains were hard won by the British people, and we are not going to jeopardise their economic security. Britain is not going back to square one, so in this Budget all decisions are paid for. Taxes are lower but so, too, is spending, for we must bring our national debt substantially down. Analysis published today shows that just running a balanced current budget does not secure that. Instead, Britain needs to run an absolute surplus in good years. We will fix the roof when the sun is shining, to protect Britain from future storms.

So I can confirm that, in addition to the cuts this year and next, there will be cuts in the next Parliament too. To lock in our country’s commitment to this path of deficit reduction, we will seek the support of Parliament in a vote, and I will bring forward a new charter for budget responsibility this autumn. We are taking further difficult decisions now so we can reduce the deficit and protect our NHS and schools and meet our obligations to the world’s poorest by contributing 0.7% of our national income to help them. I am proud that we are doing that.

On public service pensions, we implemented the reforms proposed by John Hutton. Once again the House will want to thank him for his work. We will ensure that schemes are properly valued, saving the taxpayer over £1 billion a year. We are continuing with pay restraint in the public sector—an essential part of maintaining sound finances and economic stability. We will also insist on the prudent management of departmental finances. Thanks to the efforts of my colleagues in Cabinet, these now regularly come in under budget. In order to lock in these underspends, I said in December that we would reduce spending by £1 billion in 2015-16. Today, I am making that overall billion-pound reduction permanent.

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I look forward to the work my excellent colleague the Chief Secretary is now doing, with the Cabinet Office, to find further efficiencies. Difficult decisions on public service pay and pensions, further savings in Departments, a cap on welfare bills—none of these decisions is easy, but they are the right thing to ensure that Britain lives within her means.

We set out today the details of that welfare cap, and we will seek the support of Parliament for it in a vote next week. From housing benefit to tax credits, the full list of benefits included in the cap is published in the Budget document today. Only the state pension and the cyclical unemployment benefits are excluded. I am setting it at £119 billion in 2015-16. It will rise, but only in line with forecast inflation, to £127 billion in 2018-19.

Britain should always be proud of having a welfare system that helps those most in need, but never again should we allow its costs to spiral out of control and its incentives to become so distorted that it pays not to work. In future, any Government who want to spend more on benefits will have to be honest with the public about the costs, will need the approval of Parliament, and will be held to account by this permanent cap on welfare.

The distributional analysis published today shows that the Budget decisions, and the decisions across this Parliament, mean that the rich are making the biggest contribution to the reduction of the deficit, because we are all in this together. [Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The right hon. Gentleman needs to get to the end of the speech without anybody having to intervene.

Mr Osborne: The independent statistics show that under this Government income inequality is at its lowest level for 28 years, lower than at any single moment under Labour. Thanks to my right hon. Friend the Prime Minister’s leadership we have driven the international efforts to develop tough new global tax rules that stop rich individuals hiding their tax and companies shifting their profits offshore. Here at home we are collecting twice as much as before through compliance—collecting the taxes that are due—and the number of registered tax avoidance schemes has fallen by half.

While the vast majority of wealthy people pay their taxes, there is still a small minority who do not. We will now require that those who have signed up to disclosed tax avoidance schemes pay their taxes, like everyone else, up front. This will apply in future to schemes covered by our general anti-abuse rule too. If people feel they have been wronged, they can of course go to court. If they win, they get their money back with interest. We have already consulted on this idea; now we will implement it. The OBR confirms that this will bring forward £4 billion of tax receipts and it will fundamentally reduce the incentive to engage in tax avoidance in the future.

Public tolerance for those who do not pay their fair share evaporated long ago, but we had to wait for this Government before there was proper action. Today we go further still. I am increasing the budget of Her Majesty’s Revenue and Customs to tackle non-compliance. We will block transfers of profits between companies within groups to avoid tax. We will increase tax credit debt recovery rates for those with sufficient earnings.

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We will give HMRC modern powers to collect debts from bank accounts of people who can afford to pay but have repeatedly refused to do so, like most other western countries. We will increase compliance checks to catch migrants who claim benefits that they are not entitled to, saving the taxpayer almost £100 million. We will take action to curb potential misuse of the enterprise investment and venture capital trust schemes, and we are expanding the new tax that we introduced to stop people avoiding stamp duty by owning homes through a company.

We will expand the tax on residential properties worth over £2 million to those worth more than £500,000, and from midnight tonight anyone purchasing residential property worth more than £500,000 through a corporate envelope will be required to pay 15% stamp duty. None of this applies to homes that are rented out. Many of these are empty properties held in corporate envelopes to avoid stamp duty. This abuse will end.

Another abuse has been the manipulation of the LIBOR rate. Our regulators are broadening their investigation to the foreign exchange markets and I will keep the House informed. Financial services are a hugely important industry to this country which I want to promote around the world. But I also want the fines paid by those who have demonstrated the worst values to support those who demonstrate the best of British values. I am talking about the men and women in our armed forces who risk their lives to keep us free. So I will continue to direct the use of the LIBOR fines to our military charities and our emergency service charities too. Because the sums continue to grow through the fines, I can today extend that support to our search and rescue and lifeboat services, and provide £10 million of support to our scouts, guides, cadets and St John Ambulance. I am today waiving inheritance tax for those in our emergency services who give their lives protecting us.

I will also relieve VAT on fuel for our air ambulances and inshore rescue boat services across Britain, and provide a new air ambulance for London, all in response to huge and heartfelt public demand and the campaigns of my hon. Friends the Members for Hexham (Guy Opperman), for Brentford and Isleworth (Mary Macleod) and for Argyll and Bute (Mr Reid).

Tomorrow is the 21st anniversary of the IRA bomb that killed young Tim Parry and Johnathan Ball. Survivors for Peace was set up by Tim’s parents, Colin and Wendy, and it no longer receives lottery funding. My hon. Friend the Member for Warrington South (David Mowat) and the right hon. Member for Dulwich and West Norwood (Dame Tessa Jowell) have both raised this issue, and I know myself what incredible work they do. To honour the memory of all victims of terrorism, we will provide the funding that this programme needs. Last month with the Under-Secretary of State for Scotland, my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), I visited Lockerbie to pay my respects on the 25th anniversary of that tragedy. We will support the scholarships created for local people there to study in the United States.

Further, this summer, many services of remembrance will be held in our cathedrals to mark the great war, so we are providing £20 million to support the repairs that these historic buildings need. We will also support the celebration of the 800th anniversary of the signing of

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the Magna Carta next year. King John’s humbling defeat centuries ago seems unimaginably distant—a weak leader who had risen to the top after betraying his brother, compelled by a gang of unruly barons to sign on the dotted line. I will provide a grant to the Magna Carta Trust to ensure that today’s generation learns the lessons of the past.

We will not have a secure economic future if Britain does not earn its way in the world. We need our businesses to export more, build more, invest more and manufacture more. Our exports have grown each year and the OBR today forecasts rising export growth in the future. Our combined goods exports to Brazil, India and China have risen faster than those of our competitors, but we are starting from a low base and we have many lost years to catch up. Britain has to up its game on exports, and today we do. With Stephen Green, and now Ian Livingston, we are expanding the reach and support that UK Trade & Investment offers British businesses. For many firms the truth is that they can win the contract only if they are backed by competitive export finance. For decades the British Government have been the last port of call, when we should be backing British businesses wanting to sell abroad. Today, we fundamentally change that, and we are going to start with the finance we provide our exporters. We will double the amount of lending available to £3 billion, and I can announce that from today the interest rates we charge on that lending will be cut by a third. Instead of having the least competitive export finance in Europe, we will have the most competitive.

We will also reform air passenger duty to end the crazy system where you pay less tax travelling to Hawaii than you do travelling to China or India. It hits exports, puts off tourists and creates a great sense of injustice among our Caribbean and south Asian communities here in Britain. From next year, all long-haul flights will carry the same, lower, band B tax rate that you now pay to fly to the United States. Private jets were not taxed at all under the previous Government. Today they are, and I am increasing the charge so they pay more. And because we want all parts of our country to see better links with the markets of the future, we are going to provide start-up support for new routes from regional airports, such as Liverpool, Leeds or, indeed, Inverness. More support for businesses; competitive finance; cheaper global flights—I want the message to go out that we are backing our exporters, so that wherever you are around the world you cannot fail to see “Made in Britain”.

One key British export is the North sea’s oil and gas. We will take forward all recommendations of the Wood report, and we will review the whole tax regime to make sure it is fit for the purpose of extracting every drop of oil we can. We will introduce now a new allowance for ultra-high pressure, high temperature fields to support billions of pounds of investment, thousands of jobs and a significant proportion of our country’s energy needs. Even with these measures, the North sea is a mature basin, and the OBR has today revised down the forecast tax receipts by a further £3 billion over the period. The Scottish economy is doing well and jobs are being created, but this is a reminder of how precarious the budget of an independent Scotland would be. These

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further downgrades in the tax receipts would leave independent Scots with a shortfall of £1,000 per person—Britain is better together.

Our country needs to export more and it also needs to build more. House building is up 23%, but that is not enough. That is why we are making further reforms to our planning system and offering half a billion pounds of finance to small house building firms; it is why we are signing city deals across the country to get more built, with a new funding deal this week for Cambridge; it is why we are giving people a new right to build their own homes and providing £150 million of finance today to support that; it is why we are funding regeneration of some of the worst conditions in urban housing estates that we have in this country, and we are extending the current support for mortgage interest scheme to 2016; and it is why we have got Help to Buy.

We are extending the Help to Buy equity loan scheme for the rest of the decade, so that we get 120,000 new homes built. In the south-east, where the pressure is greatest, we are going to build new homes in Barking Riverside, regenerate Brent Cross and build the first new garden city in almost 100 years at Ebbsfleet. The Opposition have said they already announced the homes in Ebbsfleet a decade ago, and they did make the announcement. Do you know how many homes have been built since then? It is less than 300; it was more “ebb” than “fleet”. Instead, we are going to build 15,000 homes there, put in the infrastructure, set up the development corporation and make it happen. I thank my hon. Friends the Members for Dartford (Gareth Johnson) and for Gravesham (Mr Holloway) for their tremendous support. And we will be publishing a prospectus on the future of garden cities. Taken all together, the housing policies I announce today will support over 200,000 new homes for families—we are getting Britain building.

We are also going to get Britain investing. Britain has under-invested for decades. We are the first Government to have committed to long-term and rising capital budgets, and this autumn I will set out the detailed plans for the projects that will be supported for the rest of the decade. We have been reminded again this week of the benefits of high-speed rail and what that will bring to the north of our country, and I am determined that it goes further north faster. Today, I have approved a £270 million guarantee for the Mersey gateway bridge, thanks to the hard work of my hon. Friend the Member for Weaver Vale (Graham Evans). And, tomorrow we introduce legislation to give new tax and borrowing powers to the Welsh Government to fund their infrastructure needs, and they can start now on work to improve the M4 in south Wales.

Because of the exceptionally poor weather this winter, I am making an additional £140 million available, on top of what has already been provided, for immediate repairs and maintenance to damaged flood defences across Britain. Our roads have taken a battering, too. My hon. Friend the Member for Northampton North (Michael Ellis) has been a very persistent campaigner for resources to repair the potholes in his constituency and across the country. His persistence has paid off and I am making £200 million available, which local authorities can bid for—I trust Northampton will be making an application.

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Modern infrastructure is part of a successful economy. So, too, is a modern industrial strategy. If Britain is not leading the world in science and technology and engineering, we are condemning our country to fall behind. So we will establish new centres for doctoral training, for cell therapy and for graphene—a great British discovery that we should break the habit of a lifetime with and commercially develop in Britain. To make sure we give young people the skills they need to get good jobs in this modern world, we have doubled the number of apprenticeships, and I will extend the grants for smaller businesses to support over 100,000 more apprentices. And we will now develop new degree-level apprenticeships, too.

In my maiden speech here in this House I spoke of Alan Turing, the code breaker who lived in my constituency, who did more than anyone else—almost—to win the war and who was persecuted for his sexuality by the country he helped to save. I am delighted that he has finally received a posthumous royal pardon. Now, in his honour, we will found the Alan Turing Institute to ensure that Britain leads the way again in the use of big data and algorithm research. I am determined that our country is going to out-compete, out-smart and out-do the rest of the world.

Government investment is part of the story, but we need business investment, too. When we came to office, Britain had one of the least competitive business tax regimes in Europe—now we have the most competitive. Thanks to the Office of Tax Simplification, we have already cut burdens on administration, and I am grateful to Michael Jack, John Whiting and their team for their hard work. Today, we accept their recommendation to move the collection of class 2 national insurance contributions into self-assessment, abolishing for 5 million people this wholly unnecessary bureaucracy. And we have cut business tax rates, too. Corporation tax was 28% when we came to office. In just two weeks, corporation tax will be down to 21%, high street stores will get £1,000 off their rates and every business in the country will get the employment allowance—a £2,000 cash-back on jobs. Next year, corporation tax will reach 20% and we take under-21s out of the jobs tax altogether.

So businesses are keeping more of their money to create jobs and invest in the future—today, I want to go further. Many of the enterprise zones we created are now flourishing, so the business rates discounts and enhanced capital allowances will be extended for another three years. And I can confirm that, with the Northern Ireland Executive, we will establish the first enterprise zone there near Coleraine. I am raising the rate of the research and development tax credit for loss-making small businesses from 11% to 14.5%. Two years ago, I launched the seed enterprise investment scheme to help finance start-ups. It has been a great success and I am making it permanent. We are backing investment into social enterprises with a social investment tax relief at a rate of 30%. And we are supporting our creative industries, too. The European Commission has today approved the extension of our film tax credit, and I will apply the same successful approach to theatre, especially regional theatre. From this September, there will be a 20% tax relief for qualifying productions—and 25% for regional touring. And we are expanding by a third the size of the cultural gift scheme.

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But I want to do something today that helps all businesses to invest. In 2012, I increased the annual investment allowance tenfold to £250,000. This generous allowance was due to expire at the end of this year, but all the business groups urged me to extend it. So we will, but we will do more. We will double the investment allowance to £500,000, extend it to the end of 2015 and start it next month—99.8% of businesses will get a 100% investment allowance. Almost every business across Britain will pay no up-front tax when they invest in the future. It costs £2 billion in the short term, so when we say that we are going to get Britain investing and to back growth around the country, we mean it.

A resilient economy is a more balanced economy, with more exports, more building, more investment and more manufacturing too. We have got to support our manufacturers if we want to see more growth in our regions. To those who say that manufacturing is finished in the west, I say look at America, which will see up to 5 million new manufacturing jobs by the end of this decade, and I will tell you why. US industrial energy prices are half those in Britain. We need to cut our energy costs. We are going to do this by investing in new sources of energy, new nuclear power, renewables, and a shale gas revolution. We are going to do this by promoting energy efficiency. Today, we are tilting the playing field—extending the 2% increase in company car tax in 2017-18 and 2018-19 while increasing the discount for ultra low emission vehicles, and reducing the rate of fuel duty on methanol. But above all, we are going to have a £7 billion package to cut energy bills for British manufacturers, with benefits for families and other businesses too.

First, I am capping the carbon price support rate at £18 per tonne of carbon dioxide from 2016-17 for the rest of the decade. This will save a mid-sized manufacturer almost £50,000 on its annual energy bill, and it will save families £15 a year on their bills too, over and above the £50 we have already taken off.

Secondly, I am extending the existing compensation scheme for energy-intensive industries for a further four years to 2019-20. Our steelmakers, chemical plants, paper mills and other heavy energy users make up 35% of our manufacturing exports and employ half a million people. This scheme helps the companies most at risk of leaving to remain in the UK.

Thirdly, I am introducing new compensation worth almost £1 billion to protect these energy-intensive manufacturers from the rising costs of the renewables obligation and the feed-in tariffs, otherwise green levies and taxes will make up over a third of their energy bills by the end of the decade.

Fourthly, I am exempting from the carbon price floor the electricity from combined heat and power plants, which hundreds of manufacturers use. This entire package will be delivered without any reduction in the investment in renewable energy.

Today, I have cut the cost of manufacturing in Britain. Half of the firms that will benefit most are in the north of England, and a third are in Scotland and Wales. Thousands of good jobs are protected. We have a more resilient economy, a Government on the side of manufacturers and a Britain that makes things again.

We are backing exports, backing manufacturing and backing a Britain that builds. We also want to help hard-working people keep more of what they earn and of what they save. That is what we have done by freezing

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council tax, freezing fuel duty and raising the personal allowance to £10,000. From next year, there will be tax-free child care—20% off for up to £10,000 of child care costs for parents, and an early years pupil premium to help the most disadvantaged.

Today we can do more to help. Let me start with duties. I can confirm that the fuel duty rise planned for September will not take place. Petrol will be 20p lower per litre than it would have been under the plans of the previous Government.

Turning to gambling duties, fixed odds betting terminals have proliferated since gambling laws were liberalised a decade ago. These machines are highly lucrative, and therefore it is right that we now raise the duty on them to 25%. We will also extend the horserace betting levy to bookmakers who are based offshore, and we will look at wider levy reform and at introducing a “racing right” to support the sport.

While the number of betting machines have grown, the number of bingo halls has plummeted by three quarters over the last 30 years, yet bingo duty has been set at the high rate of 20%. Now that fuel duty is frozen, my hon. Friend the Member for Harlow (Robert Halfon) has turned his energy and talent into a vigorous campaign to cut bingo duty, ably assisted by my hon. Friend the Member for Waveney (Peter Aldous). They want the rate cut to 15%. I can go further. Bingo duty will be halved to 10% to protect jobs and to protect communities.

Let me turn now to tobacco and alcohol duties. Tobacco duty has been rising by 2% above inflation and will do so again today, as previously confirmed. This escalator was due to end next year, but there are no sound health reasons to end it, so it will be extended for the rest of the next Parliament.

We have introduced new laws to prevent alcohol from being sold below minimum tax rates, and this helps to prevent supermarkets from undercutting pubs and it helps to stop problem drinking. It is a far more targeted approach than the alcohol duty escalator, which was introduced by the previous Government and hated by so many responsible drinkers. Today, I am scrapping that escalator for all alcohol duties. They will rise with inflation, with these exceptions: Scottish whisky is a huge British success story. [Hon. Members: “Scotch whisky.”] To support that industry, instead of raising duties on Scotch whisky and other spirits, I am today going to freeze them, and with some cider makers in the west country, who have been hit hard by the recent weather, I am going to help them by freezing the duty on ordinary cider too.

Then there is beer. I know the industry, led so ably by my hon. Friend the Member for Burton (Andrew Griffiths), has been campaigning for a freeze, but beer duty next week will not be frozen; it will be cut again by 1p—pubs saved, jobs created and a penny off a pint for the second year running.

It is a central part of our long-term economic plan that people keep more of the money they have earned. When we came to office, the personal tax allowance was just £6,500. In less than three weeks time, it will reach £10,000. That is an income tax cut for 25 million people. Today, because we are working through our plan, we can afford to go further. Next year, there will be no

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income tax at all on the first £10,500 of your salary—£10,500 tax free and £800 less in tax every year for the typical taxpayer. Our increases in the personal allowance will have lifted over 3 million of the lowest paid out of income tax altogether, and I am incredibly proud of what we have achieved.

I can also confirm today that the higher rate threshold will rise for the first time this Parliament, from £41,450 to £41,865 next month, and then by a further 1% to £42,285 next year. Because I am passing the full benefit of today’s personal allowance increase on to higher rate taxpayers, people earning £42,000, £43,000, £50,000, £60,000—all the way up to £100,000—will be paying less income tax because of this Budget. We have tax cuts for those on low incomes, and those on middle incomes too—help for hard-working people as part of a long-term economic plan delivered by a coalition Government and a Conservative Chancellor. I am linking the rate of the transferable tax allowance for married couples to the personal allowance, so it will also rise to £1,050—help for 4 million families that they will take away and that we are proud to provide.

Our tax changes will help people in work, but there is a large group who have had a particularly hard time in recent years, and that is savers. This matters not just because they are people who have made sacrifices to provide for their own economic security in retirement. It matters too because one of the biggest weaknesses of the British economy is that it borrows too much and saves too little. This has been a problem for decades and we cannot fix it overnight. It is no surprise that the OBR forecasts the savings ratio falling, so today we put in place policies for savers that stand alongside deficit reduction as a centrepiece of our long-term economic plan.

The reforms I am about to announce are only possible because, thanks to this Government, we have a triple lock on the state pension; more people are saving through auto-enrolment; and we are introducing a single-tier pension that will lift most people above the means test. That secure basic income for pensioners means that we can make far-reaching changes to the tax regime to reward those who save. Here is how. First, I want to help savers by dramatically increasing the simplicity, flexibility and generosity of individual savings accounts. Twenty-four million people in this country have an ISA, and yet millions of them would like to save more than the annual limits of around £5,500 on cash ISAs, and £11,500 on stocks and shares ISAs. Three quarters of those who hit the cash ISA limit are basic rate taxpayers. So we will make ISAs simpler by merging the cash and stocks ISAs to create a single new ISA. We will make them more flexible by allowing savers to transfer all of the ISAs they already have from stocks and shares into cash, or the other way round, and we are going to make the new ISA more generous by increasing the annual limit to £15,000—that is £15,000 of savings a year tax free, available from 1 July. I am raising the limits for junior ISAs to £4,000 a year too.

But the £15,000 new ISA is just the first thing we are doing for savers today. Secondly, many pensioners have seen their incomes fall as a consequence of the low interest rates that Britain has deliberately pursued to support the economy. It is time Britain helped them out in return, so we will launch the new pensioner bond, paying market leading rates. It will be issued by National

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Savings & Investments, open to everyone aged 65 and over, and available from January next year. The exact rates will be set in the autumn, to ensure the best possible offer, but our assumption is 2.8% for a one-year bond and 4% on a three-year bond. That is much better than anything equivalent in the market today. Up to £10 billion of these bonds will be issued. A maximum of £10,000 can be saved in each bond. That is at least a million pensioner bonds. Because 21 million people also invest in premium bonds, I am lifting the cap for the first time in a decade from £30,000 to £40,000 this June, and to £50,000 next year, and I will double the number of million-pound winners.

I still want to do more to support saving, so, thirdly, we will completely change the tax treatment of defined contribution pensions to bring it into line with the modern world. There will be consequential implications for defined benefit pensions upon which we will consult and proceed cautiously, so the changes we announce today will not apply to them. But 13 million people have defined contribution schemes, and the number continues to grow. We have introduced flexibilities, but most people still have little option but to take out an annuity, even though annuity rates have fallen by half over the last 15 years. The tax rules around these pensions are a manifestation of a patronising view that pensioners cannot be trusted with their own pension pots. I reject that. People who have worked hard and saved hard all their lives, and done the right thing, should be trusted with their own finances, and that is precisely what we will now do: trust the people. Some changes will take effect from next week. We will cut the income requirement for flexible draw-down from £20,000 to £12,000; raise the capped draw-down limit from 120% to 150%; increase the size of the lump sum small pot fivefold to £10,000; and almost double the total pension savings someone can take as a lump sum to £30,000. All of these changes will come into effect on 27 March.

These measures alone would amount to a radical change, but they are only a step in the fundamental reform of the taxation of defined contribution pensions I want to see.

I am announcing today that we will legislate to remove all remaining tax restrictions on how pensioners have access to their pension pots. Pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, anytime they want: no caps; no draw-down limits. Let me be clear: no one will have to buy an annuity.

We are going to introduce a new guarantee, enforced by law, that everyone who retires on these defined contribution schemes will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have. Those who still want the certainty of an annuity, as many will, will be able to shop around for the best deal. I am providing £20 million over the next two years to work with consumer groups and industry to develop this new right to advice. When it comes to tax charges, it will be possible to take a quarter of your pension pot tax-free on retirement, as today, but instead of the punitive 55% tax that exists now if you try to take the rest, anything else you take out of your pension will simply be taxed at normal marginal tax rates, as with any other income—so not a 55% tax, but a 20% tax for most pensioners.

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The OBR confirms that in the next 15 years, as some people use these new freedoms to draw down their pensions, this tax cut will lead to an increase in tax receipts. Government Members understand that when you cut a tax rate that is punitively high, that can increase revenues. These major changes to the tax regime require a separate Act of Parliament, and we will have them in place for April next year. What I am proposing is the most far-reaching reform to the taxation of pensions since the regime was introduced in 1921.

There is one final reform to support savings that I would like to make. There is a 10p starting rate for income from savings. It is complex to levy and it penalises low- income savers. Today, I am abolishing the 10p rate for savers altogether. When I abolish a 10p rate, I do not sneakily turn it into a 20% rate like the last lot: I am turning it into a 0% rate: no tax on these savings whatsoever. We will almost double this zero-pence band to cover £5,000 of saving income. One and a half million low-income savers of all ages will benefit. Two thirds of a million pensioners will be helped.

The £15,000 new ISA; the pensioner bond; people given access to their own pension pots; a right to impartial advice; the 10p rate for savers abolished to zero—the message from this Budget is this: you have earned it; you have saved it; and this Government are on your side. Whether you are on a low or middle income, whether you are saving for your home, for your family or for your retirement, we are backing a Britain that saves. The central mission of this Government is to deliver economic security. We are not promising quick fixes. Instead we are taking the next steps in our long-term plan. The forecasts I have presented show growth up; jobs up; and the deficit down. Now we are securing Britain’s economic future with: manufacturing promoted; working rewarded; saving supported. With the help of the British people, we are turning our country around. We are building a resilient economy. This is a Budget for the makers, the doers, and the savers, and I commend it to the House.

Hon. Members: More!

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. If you like the Budget, I need to put the Question.

Provisional Collection of Taxes

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

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

Pension schemes (registration of pension schemes etc) (Motion No. 29.)

Alcoholic liquor duties (rates) (Motion No. 45.)

Tobacco products duty (rates) (Motion No. 46.)

Stamp duty land tax (threshold for higher rate applying to certain transactions) (Motion No. 73.)—(Mr George Osborne.)

Question agreed to.

Mr Deputy Speaker (Mr Lindsay Hoyle): I now call upon the Chancellor of the Exchequer to move the motion entitled “Amendment of the Law”. It is on this motion that the debate will take place today and on the succeeding days. The remaining motions will be put at the end of the Budget debate on Tuesday 25 March.

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Budget Resolutions and Economic Situation

Amendment of the Law

Motion made, and Question proposed,

That,—

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

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

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

(b) for refunding an amount of tax;

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

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

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

1.30 pm

Edward Miliband (Doncaster North) (Lab): The Chancellor spoke for nearly an hour, but he did not mention one central fact—[Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I think that the deputy Chief Whip knows better. We have not even got started. I hope that he will calm down.

Edward Miliband: The Chancellor spoke for nearly an hour, but he did not mention one central fact: the working people of Britain are worse off under the Tories. Living standards are down, month after month, year after year. In 2011, living standards, down; 2012, living standards, down; 2013, living standards, down. Since the election, working people’s living standards are £1,600 a year down. You are worse off under the Tories—[Interruption.]

Mr Deputy Speaker: Order. To be quite honest, I thought that the House was doing really well today. Courtesy was quite rightly shown to the Chancellor of the Exchequer. I expect the same courtesy to be shown to the Leader of the Opposition. I want to hear it, and your constituents want to hear it.

Edward Miliband: They do not want to talk about the falling living standards of people across this country, Mr Deputy Speaker.

The 2010 Tory manifesto promised an economy where people’s

“standard of living… rises steadily and sustainably”

but they have delivered exactly the opposite: standards of living falling sharply and steeply. Today the Chancellor simply reminded people of the gap between his rhetoric and the reality of people’s lives. Living standards have been falling for 44 out of 45 months under this Prime Minister, unmatched since records began. No amount of smoke and mirrors today can hide it. We already know the answer to the question that millions of people will be asking in 2015: “Are we better off now than we were five years ago?” The answer is no. They are worse off, much worse off—worse off under the Tories.

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The Chancellor trumpeted the tax allowance today, but what he did not tell us is that it is the same old Tory trick. He did not tell us the rest of the story. He did not mention the 24 tax rises introduced since he became Chancellor. He forgot to mention that he put up VAT, taxed away child benefit, raised insurance tax and gave us the granny tax. It is a classic Tory con: give with one hand and take away far more with the other—same old Tories.

The Chancellor painted a picture of the country today that millions of people will simply not recognise. This is Cameron’s Britain 2014, with 350,000 people going to food banks, 400,000 disabled people paying the bedroom tax, 1 million more people paying 40p tax and 4.6 million families facing cuts to tax credits. But there is one group that is better off—much better off. We all know who they are: the Chancellor’s chums, the Prime Minister’s friends—[Interruption.] The Prime Minister rolls his eyes, because he does not want to talk about the millionaires’ tax cut. There was no mention of it in the Budget speech. They are the beneficiaries of this year’s millionaires’ tax cut.

If you are a City banker earning £5 million and feeling the squeeze, do not worry, because they feel your pain. This year that City banker was given a tax cut, and not just any tax cut. It is a tax cut worth £664 a day, £20,000 a month and more than £200,000 a year. So the Prime Minister chooses to afford a tax cut worth more than £200,000 a year for that banker, but he cannot afford a pay rise of £250 a year for a nurse. And these are the people who have the nerve to tell us that we are all in this together. It is Tory values and Tory choices—same old Tories. Of course, the leader of the Liberal Democrats is with them every step of the way. Day after day he claims that he does not support Tory policy, but day after day he votes for Tory policy.

Now, to listen to the Chancellor today, for a recovery that arrived three years later than he promised, he expects the country to be grateful. Back in 2010 he told us that by the end of 2014 the economy would have grown by nearly 12%. Today the figures show that it has been barely half that, and he wants the country to be grateful. Back in 2010 he said that the Government would clear the deficit in this Parliament, by 2014-15. Today he wants the country to be grateful because he says that he can do it by 2018-19. Three years ago he told us, in his 2011 Budget speech, that he would deliver an economy

“carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]

But what has actually happened since then to the rebalancing he promised? Manufacturing output has fallen by 1.3%, construction output has fallen by 4.2% and infrastructure investment is down by 11.3%. Every time he comes to this House he promises a rebalancing, and every time he fails. The Chancellor talked about housing today, but what has he actually delivered? The Government have overseen the lowest level of house building since the 1920s and rents have risen twice as fast as wages.

At the heart of the argument we will have over the next 14 months is this question: whose recovery is it under the Tories? Under them, it is a recovery for the few, not the many. Bankers’ pay in London is rising five times faster than that of the average worker. This recovery is not working for working people whose living standards

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are falling. It is not working for the millions of women who see the gap between men and women’s pay rising. It is not working for the low-paid people promised by the Chancellor—

[

Interruption.

]

Mr Deputy Speaker: Order. Mr Williamson, you are in danger of exploding, which would be good neither for you, nor for the Chamber. Come on. Let us listen.

Edward Miliband: They do not want to talk about the low-paid workers promised a £7 minimum wage by the Chancellor but given just 19p more an hour. Under this Government it is an economy of the privileged, by the privileged and for the privileged.

Instead of admitting the truth about what is happening in most people’s lives today, the Government want to tell them the opposite. They tell people that their wages are rising when they are falling, just like they tell people that their energy bills are falling when they are rising. They tell people that they are better off, but everyone knows the truth. They can change the shape of the pound—it does not matter if it is square, round or oval—but if you are £1,600 a year worse off, you are still £1,600 a year worse off. You are worse off under the Tories.

They cannot deliver because of what they believe. His global race is a race to the bottom. It means people being forced to do two or even three jobs to make ends meet, not knowing how many hours they will get from one week to the next, and with no idea what the future holds for their kids. Low wages, low skills, insecure work—that is how they think Britain succeeds. That is why they are not the solution to the cost of living crisis. They are the problem.

We needed a Budget today that would have made the long-term changes that our economy needs, in housing, banking and energy. But they cannot do it. They will not stand up to the vested interests. They will not tackle developers sitting on land, even though they cannot solve the housing crisis without that. They will not force the banks to improve competition even though small businesses say they need it. They will not stand up to the energy companies and freeze energy bills, even though the public support it. Same old Tories. We know what their long-term plan is: more tax cuts for the richest, while everyone else gets squeezed. [Interruption.]

Mr Deputy Speaker: Order. This is getting totally out of hand and we certainly do not want any more pointing. I am worrying about the danger to Anne Milton’s hearing; the way she is shouting is not good for her or the Chamber. I want to hear the rest of the speech in peace. I certainly do not want all the muttering and challenges that have been running along the Benches. I will take it more seriously if I have to get up next time.

Edward Miliband: We know what their long-term plan is: more tax cuts for the richest while everyone else gets squeezed. What does the Chancellor say about the people dragged into paying 40p tax? He says that they should be happy and that it is good news for them. So this is the new Osborne tax theory: if you are in the middle, paying 40p, you should be pleased to pay more, but if you are at the top, paying 50p, you should be helped to pay less. Same old Tories.

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It is no wonder that even their own side think they are totally out of touch. Even now, after all the embarrassment of the millionaires’ tax cut, they will not rule out going further. Maybe today we can get the straight answer that we have not had so far. Will the Chancellor rule out a further tax cut for millionaires to 40p? Just nod your head if you will rule it out. Come on, come on. Just nod your head. Maybe the Prime Minister would like to. Just nod your head. [Interruption.]

Mr Deputy Speaker: Order. There may be an influence of the wolves and the pack running around. That can be used in the zoo, but it will not be used in this Chamber.

Edward Miliband: It is very simple—all the Prime Minister needs to do is to nod his head if he is going to rule out cutting the 45p tax to 40p in the next Parliament. Just nod your head. Come on. There we have it. There they go again—they will not rule it out. Does that not say it all about them? They really do believe that the way you make the rich work harder is to make them richer and the way you make everyone else work harder is by making them poorer.

Just as they paint a picture of the country that working people will not recognise, so, too, themselves. The Prime Minister is an expert in rebranding. Remember the huskies, the bike and the tree? That was before they said, “Cut the green crap.” What is the latest rebranding from the Bullingdon club? It is beyond parody. What do this lot now call themselves? [Interruption.]

Mr Deputy Speaker: Order. Mr Williamson, I will not tell you again. I am sure your roast beef is ready for you—you might be better off eating a little raw meat than giving us the noise that we are getting in here.

Edward Miliband: What do this lot now call themselves? They call themselves the workers’ party. Who is writing the manifesto for this workers’ party? We have a helpful answer from one Conservative MP:

“There are six people writing the manifesto…five…went to Eton”.

By my count, more Etonians are writing the manifesto than there are women in the Cabinet—no girls allowed. This week, we have heard it right from the top. Here is what the Prime Minister’s former best friend—[Interruption.] They do not like to hear it do they, Mr Deputy Speaker? Here is what his best friend—[Interruption.]

Mr Deputy Speaker: Order. If Members wish to go outside and show people, they can do so by all means. I certainly do not need you to hold up papers all the way through. Quite seriously, respect is due to the Leader of the Opposition the same way it was given to the Chancellor. I want to hear him; if you do not, there is the door—please leave.

Edward Miliband: Here is what the Prime Minister’s former best friend, his closest ally, the Education Secretary, had to say about the Prime Minister’s inner circle. He said it was ridiculous, preposterous, unlike anywhere else in the world. They know they are in trouble when even the Education Secretary calls them a bunch of out-of-touch elitists. Where is the Education Secretary? I think he has been banished. Ah—he is hiding! He has

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been consigned to the naughty step by the Prime Minister. It is time we listened to Baroness Warsi and took the whole Eton mess out of Downing street.

We do not need a party for the privileged few; we need a party for the many. That is why a Labour Government will freeze energy bills, guarantee jobs for unemployed young people, cut business rates, reform the banks, get 200,000 homes built a year and abolish the bedroom tax. This is the Budget that confirms that people are worse off under the Tories—a worse-off Budget from an out-of-touch Chancellor. Britain can do better than them. Britain needs a Labour Government.

Several hon. Members rose—

Mr Deputy Speaker: Order. Before I bring in the next speaker, I announce an eight-minute limit.

1.46 pm

Mr Andrew Tyrie (Chichester) (Con): It is my job to take away the political punchbowl, just as the party was just getting going. What we have just heard is the most difficult speech that anybody has to make in the House of Commons, and I am sure we will all read it with interest.

First, I should like to say a few words in a personal capacity about what has been announced on savings. They look extremely interesting and long-term reforms. For a start, the ISA reform is resonant of PEPs; that goes right back to the beginning, as those introduced the savings allowance. It was a tremendous idea. I am really pleased that the cash and equity ISAs have been merged and that we have raised the cap. The Treasury Committee will have to look at the provisions. I hope I will not have to come to the House and say that it has a different view.

Getting rid of the defined contribution rules that force people into annuities is a tremendous achievement—a very far-sighted announcement. The last Labour Government were also looking at that for a while, but they could not find a way to do it. This Chancellor has found a way to do it, and we should commend him for that.

Before I say a few words about some of the other measures in the light of past Treasury Committee recommendations, I should like to say a few personal words about the deficit. When the Chancellor set out his initial Budget judgment on behalf of the new coalition, many thought that the coalition would collapse—that the political strains of implementing spending cuts would be too great and shake the coalition Government apart. Well, the opposite has been the case. The coalition has stuck with it and the deficit reduction plan has become the cement of the coalition.

Both sides deserve credit for the fact that the coalition is still going and dealing with the deficit. Particular credit goes to the Liberal Democrats. If I may say so—I hope they do not mind—I never thought they had it in ’em. But they have, and they have stuck with it.

Mr John Redwood (Wokingham) (Con): Will my hon. Friend give way?

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Mr Tyrie: May I make a bit of progress?

The deficit is down from the stratospherically high figure of 11% of gross domestic product to just below 7%, and next year it is forecast to fall to 5%, as we have just heard announced by the Office for Budget Responsibility. The consolidation is already significant. It has been achieved despite a massive external shock which was not built into the forecast four years ago and which I do not think the Chancellor mentioned—the eurozone crisis and the economic stagnation in our largest export markets. It was primarily that crisis that forced the deficit reduction plan to fall behind schedule. The key question for the Government a couple of years ago was whether to relax fiscal policy sharply in response to the almost 4% loss of forecast GDP, most of which was a consequence of the eurozone crisis.

Rightly, in my view, the Government showed considerable flexibility within the overall framework, in two important ways. First, they authorised the Bank of England broadly to double the quantitative easing programme; and secondly, equally importantly, the so-called economic stabilisers—the falls in tax receipts and rises in public expenditure that come with lower growth—were allowed to kick in.

To give an idea of the importance of the stabilisers and QE on policy, it is worth reminding ourselves of the numbers. Since the election, an additional £175 billion has been put into the economy through QE and £140 billion has been put in through the automatic stabilisers. The latter figure is based on Institute for Fiscal Studies estimates; no one knows exactly, but it is of that order of magnitude. These are very large numbers. That showed flexibility by the Government.

Mr Redwood: Does my hon. Friend agree that the Government’s flexibility included putting public spending up every year in cash terms over the period and relying on higher tax receipts to get the deficit down, which is how they maintained political agreement to the policy?

Mr Tyrie: I do not know about the political agreement point, but of course the effects of the stabilisers operate on both the tax and the spending sides. I think the Government were right to do what they did.

The Government have also been right to see off calls fundamentally to alter fiscal policy by sharply relaxing deficit reduction and increasing public spending. One of the main reasons it was important that they did not listen to those calls is that credibility in fiscal policy is hard won. It is built up over time—over many years—and it can easily be squandered. The Government resisted that temptation.

I will say a few words about the historical context. Looking to the 1930s, when stagnation set in and the agony was prolonged, partly because automatic stabilisers were suppressed and partly because far from engaging in QE, the then coalition Government did exactly the opposite: they lengthened the maturity of the debt and sucked money out of the economy. That is why the 1930s were so painful.

Now that we have a recovery, some are complaining that it is not the one we ordered. They complain that the recovery is consumer-led or uneven across sectors, regions and income groups. Well, of course it is. All recoveries of any value trigger a reallocation of resources, and therefore all recoveries change the shape of the economy.

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A recovery rarely takes root where the jobs were lost or the firms failed; it was ever thus and it will be the same this time. As the Chancellor stressed in his speech, jobs are being created at a record rate, but we cannot expect those jobs to be in exactly the same places as the jobs lost in the downswing. I am confident that, as in all previous recoveries, if we can sustain this recovery—and even if it is uneven, as it will be—it will, in time, deepen and spread through the whole economy. The figures for previous upswings support that.

The crucial question now, though, will be whether we can sustain the deficit reduction plan. A threat to deficit reduction will come from siren voices who say, “With the recovery under way, we can go back to spending money we haven’t got.” We are already hearing that. We need to remind ourselves that we are still spending about £7 for every £6 we collect in tax. It is true that we are in better shape, but with a deficit of about 6.6% of GDP, as the Chancellor announced today, we will remain vulnerable to economic shocks unless we do more to tackle it.

Another risk to deficit reduction is one of simple arithmetic caused by ring-fencing—something that the Treasury Committee has flagged up on several occasions. It will become increasingly difficult to find cuts to an ever-shrinking share of non-ring-fenced departmental spending. In other words, with ring-fencing of nearly half departmental expenditure, finding these savings will get tougher year by year. The Chancellor has argued, rightly, that polling evidence shows that that ring-fencing reflects public preferences. I think that is true for health and education, but it is not supported in the area of overseas aid. Spending on aid has risen by over a third in real terms and will rise even more because it is linked to GDP. Politics always points to ever-more ring-fencing; economics to less. Eventually, ring-fencing will have to be revisited, however difficult it is for all political parties.

Perhaps I should say a little about the risks—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order.

1.56 pm

Mr Nicholas Brown (Newcastle upon Tyne East) (Lab): It is a pleasure to follow the hon. Member for Chichester (Mr Tyrie) in this debate. I acknowledge the work that he and his Select Committee do on behalf of us all.

Some of the measures in today’s Budget will be welcome in the north-east of England, including the emphasis on manufacturing, the apprenticeships scheme, and the extension of the capital tax regime in enterprise zones. It would not be fair to say that the new leader of the worker’s party does not understand us; the statement on bingo duty shows that he has got to the very heart of our concerns. In my short contribution, I would like to address a number of the structural questions that form the context of today’s Budget, both nationally and internationally.