Income disparity in the United Kingdom has become starker over the past 25 years, with the growth of a class of people the noble Lord Lamont used to describe as the “internationally mobile”. In 1978-79, the top 1% paid 11% of all income tax, while in 2012-13 they paid 24%. The Chancellor made much of this in his address, saying that it proved that the wealthy were making their contribution. However, it is happening not because the

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very rich are being taxed more but because the top 1% of today are much richer than they were 30 years ago. They are also much richer relative to the rest of the population. For the rest of the population, real wages growth has steadily declined from 2.9% in the 1970s and ’80s to 1.5% in the 1990s, with a decline of 2.2% so far this decade. Of course, regular below-inflation pay rises in the public sector have a cumulative effect, and that is why such a policy cannot endure indefinitely. I was disappointed to hear what the Chancellor had to say about that today.

It is a fundamental truth that the gap between the richest and the poorest, in income terms, has increased substantially over the past 40 years. In 1979, the gap in weekly earnings between the richest and poorest 5% was £445; today it is £938. The richest 5% have seen weekly earnings increase by £531 since 1979, while the poorest 5% saw an increase of just £38. We are certainly not all in this together.

Our economy is largely a service-based economy. Services account for 79% of our economy and 83% of jobs. However, we should not forget the importance of manufacturing which, while accounting for 15% of the economy and only 8% of jobs, contributes a greater gross value added to the economy than financial services—£136 billion as against £115 billion. Manufacturing also accounts for over half of all our exports and three quarters of all research and development investment. While the UK economy remains at 1.4% below its pre-recession peak, manufacturing is at 10% below its 2008-09 peak. I am therefore not surprised that the Chancellor felt it necessary to pay some attention to that area.

As a country, we have a long-term productivity problem, which contributes to declining real wage growth and squeezes people’s living standards. Productivity fell by 0.3% on the previous quarter, following declines in 2012 and 2013. Despite improvements in the 1990s and the 2000s, the United Kingdom remained 10% behind the other G7 nations. The gap today is more marked, at 21%. The Government will say that they anticipate improvements as employers seek more from their work forces. I say we should be looking at some of the deeper structural problems that lead to poor productivity, such as education, skills development and training for both employees and employers.

For the north-east, these issues are of vital importance. Despite this morning’s welcome fall in unemployment of 2,000 people in the region and 38 in my constituency, we still have the highest unemployment rate of any United Kingdom region—9.5% compared with the national average of 7.2%. During recent months, the region has not seen consistent progress in reducing unemployment and it is still estimated that a further 60,000 private sector jobs are needed to make up for the gap with the other regions.

The shadow banking system, as a system operated through non-bank financial intermediaries and often beyond the scope of national regulations, requires much greater attention and understanding. The Financial Stability Board has estimated that the size of the shadow banking sector was €51 trillion in 2011, up from €21 trillion in 2002. That accounts for up to 30% of the total financial system, which is not properly scrutinised and, in my view, not even properly understood. Add a large amount of leverage into the equation and it is clear that the

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shadow banking system presents a clear risk to the global financial system. It was razor-thin capitalisation ratios held by financial institutions, created by unsustainable leverage, that contributed to the previous crash. The United Kingdom accounts for 12% of all shadow banking assets held through non-bank financial intermediaries, the third highest following the United States and the euro area.

There is a key question as to whether the state, or even nation states collectively, could once again step in to save financial institutions so soon after taking on the burden from 2008. Many financial institutions’ recorded asset values are close to, or even exceed, that of their host country’s GDP, including France, Belgium, Italy and Germany. The United Kingdom has one of the largest disparities, with the combined asset value of the Royal Bank of Scotland, Barclays and HSBC at 337% of UK GDP. That is a sobering thought.

Following the effect of the financial crisis, the combination of cuts in corporation tax and a weaker growth in taxable profits are contributing to what appears to be a longer-term decline in corporate revenues. Despite the United Kingdom historically receiving a higher proportion of revenues from corporate taxes than comparable countries, the Institute for Fiscal Studies confirms that the UK is seeing a downward trend in corporate tax revenues, which is likely to continue for the best part of the decade.

Corporate tax receipts will be at their lowest share of revenue by 2017-18—the level they were in the mid-1980s. Financial services receipts have declined from over 25% of corporate tax revenues before the crisis, to 11% in 2011-12. With corporate tax revenues declining and the rate being cut, there is concern over the extent of tax avoidance, evasion and non-payment by large corporations in the UK. Estimates of the losses vary. HMRC puts them at £35 billion, while Tax Research UK puts them at £70 billion. Whichever figure one takes, these are big figures.

There are remedies. The international dimension to these issues and the world trading environment is clear. Our country has an important role to play as part of the transnational attempts to deal with transnational offenders. The House should also play an enhanced role in scrutinising the progress that the Government are making on these great strategic issues. It is much to the credit of the Public Accounts Committee and the Treasury Committee that they have become two of the most influential Committees in the House, but we should look further and do more ourselves as a House.

2.5 pm

Mr Mark Hoban (Fareham) (Con): It is a pleasure to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown). As someone who was born and brought up in the north-east, I too understand the deep-seated challenges that the region faces, and I hope that the emphasis in the Budget on rebuilding the manufacturing sector and investing in high levels of skills will make some progress towards tackling those problems.

The Chancellor is absolutely right to highlight the progress that has been made since we came to office in 2010, but also the further progress that we need to

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make. Our job is not done, and that is why the reforms announced by the Chancellor today, which refer to the need to strengthen the roles of the makers, the doers and the savers, are vital if we are to secure the future of our economy in a competitive world.

I want to highlight some of the progress that we have made. Not much has been said about the unemployment figures that have been published today. We have seen a fall in the unemployment numbers, according to both the claimant count and the labour force survey. We have also seen a big increase in the number of people in work. Record numbers of women are in work. Often the Opposition’s criticism is that these jobs are temporary or part time, but the reality is that employment increased by nearly 460,000 last year, and 430,000 of those jobs are full time. During the last year, we have seen a contraction in the number of temporary jobs in the economy, and therefore a significant increase in the number of permanent jobs in the economy.

David Rutley (Macclesfield) (Con): It is appropriate to recognise the important work that my hon. Friend made as a Minister in helping to move this agenda forward, which was a real contribution. On the important point that he has raised, does he recognise that there is also an increase in the number of full-time self-employed people, who have made a conscious decision that they want to have a real say in the future of their own employment?

Mr Hoban: My hon. Friend is absolutely right. The number of people who want to take control over their own lives and employment, and who want the security that comes from self-employment, is significant, and the number of schemes that we have introduced to help young people find self-employment as a route out of poverty and unemployment have been a huge benefit to those who want to set up their own businesses.

The dynamism that we have seen in the private sector, which has led to this increase in employment, has been coupled with welfare reform—a key part of our long-term economic plan. Welfare reform has sharpened the incentive to work, and we expect more of those who are out of work, too. We have brought forward the point when we work with lone parents before their youngest child starts school, so that they are better prepared to start work rather than remain on benefit. For far too long, people who have been out of work through illness have been written off by the system and expected to live on benefits for the rest of their working life. We have been working with them to ensure that they get into employment so that they can look after themselves and their families, and achieve the dignity that we so often take for granted.

The recovery in employment is a product of a strong and dynamic private sector. I welcome the measures that the Chancellor has announced today to encourage business investment and to double the annual investment allowance to £500,000. That will encourage businesses in my constituency that are strong, growing, dynamic manufacturing businesses to invest more in capital equipment. They are aided by the reduction in corporation tax. We should not forget the importance that that has in sending a signal to businesses overseas that the UK is open for business and a place where they should do business. The reduction in corporation tax is mirrored by measures around the employment allowance and

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scrapping national insurance for young workers under the age of 21. These tax changes, along with cuts to red tape, the investment in skills and the reform of training, are part of our long-term plan to sustain the economy and job creation.

I want to spend a few minutes on the savings measures announced in the Budget. Since they took office, this Government have made radical reforms to pensions and savings. They ended compulsory annuitisation and we are seeing the successful roll-out of auto-enrolment, which will give many people their first chance to build up a pension pot for their retirement. In the next Parliament, we will be launching a single-tier pension, which will mean that people will retire on a pension above the level of means-tested benefits. We have seen the launch of the Money Advice Service and strengthened consumer protection through greater powers for the Financial Conduct Authority. They are important steps that will help reform the savings landscape, and as the Chancellor said they also create a fresh platform for radical reform of pension savings.

When compulsory annuitisation was scrapped, people could take full advantage of the flexibility of income drawdown products only if they could demonstrate that they would not be entitled to means-tested benefits. That meant they had to have a guaranteed income of £20,000 a year. That of course predated the introduction of a single-tier pension, and the limit was set at an amount that ensured that people would not fall back on those means-tested benefits. Now that the single-tier pension is in place, it is right to reduce that amount to £12,000 this year.

We also know that for many consumers it is difficult to shop around to buy an annuity. They are bewildered by the choice in the market, and annuities are often the only product that many of them can buy. Recent surveys have shown just how badly off consumers are as a consequence of not shopping around. I think that the Chancellor’s announcement today about the simplification of the way people can use their defined contribution pension pot will radically transform the insurance and savings market. It will force insurance companies to demonstrate that their products are good value, and create room for innovation for others to come up with products that will help people maximise their income in retirement.

George Freeman (Mid Norfolk) (Con): Does my hon. Friend agree that the historic reforms announced today on the pensioner bond, the tax simplification for annuities and the scrapping of the 10p rate will begin the process of rebuilding a savings culture in this country? We last did that in the 1980s, but it was shamelessly attacked by the former Prime Minister through a series of stealth taxes on savings and pensions.

Mr Hoban: My hon. Friend is absolutely right. I think this should be seen as the first stage in a series of reforms, because as the Chancellor also said in his statement, the Office for Budget Responsibility predicts that the savings ratio will continue to fall. As well as ensuring that we can provide a better deal for those in retirement, a better way for them to spend their pension pot and encouragement for them to build up more through individual savings accounts, we need to do more. I will come back to that in a moment.

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These are radical reforms. I welcome another part of the package that goes hand in hand with the increased flexibility. The challenge that many pensioners face is finding advice and someone to help them through complex decisions about what they should do in retirement. Recent surveys have shown just what a bad job some of the comparison websites do for people trying to buy an annuity.

The right to advice is an important part of the package of reform, but I suggest to those on the Treasury Bench that we need to go further. The auto-enrolment savings system assumes that people do not think too hard about saving but save automatically. We then expect them at the point of retirement to engage in saving. We need to make sure that there is more advice and guidance available before they retire, to help them think about what age they want to retire at and what sort of income they want to retire on. I think that a key part of the next stage of reform should be to take that right to advice and see how we can provide better advice for people in the run-up to retirement in order to help them provide more for their retirement.

Mr Redwood: Is there not also a very cruel dilemma in public policy, in that savers want a better rate of interest but we need low interest rates to promote economic growth and to service the Government debt? There is a trade-off, and that is why tax breaks are particularly welcome at a time of low interest rates.

Mr Hoban: Absolutely. My right hon. Friend provides me with the opportunity to praise the Chancellor for introducing the pensioner bond. Those higher rates of interest will provide not only an attractive way of enabling people to save, but some support to the Treasury.

My hon. Friend the Member for Mid Norfolk (George Freeman) made a point about the savings culture. We must recognise that we need to help people on low incomes to improve their savings, too. Although the minimum contributions under auto-enrolment help people get on the savings ladder, they are not high enough to provide them with a reasonable replacement income in retirement that is proportionate to their income in work. Those higher up the income scale tend to do better. Not only do they qualify for higher tax relief, but their pension contribution rates need to be higher, too. They also tend to have additional sources of income and savings in retirement.

I encourage my right hon. Friend the Chancellor to look carefully at this area. I welcome the fact that we have increased personal allowances for those on low incomes. In a constituency like mine, where the average wage is £24,000 a year, increases to the personal allowance are valuable. However, as well as helping the low paid while they are in work, we should think about how we help them prepare for retirement. That would help provide a rounded package of measures to help people build up savings for their retirement and then, once they are in retirement, think about how they will get best value for money from those savings.

In conclusion, it is not possible simply to repair 13 years of damage in just a few years of this first term of Government. The problems we inherited were deep-seated and challenging: an economy that was unbalanced—it was too dependent on the south and on financial services—and a Government addicted to spending,

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taxing and borrowing. Tackling those problems against the backdrop of economic uncertainty abroad was not easy. Plenty of commentators, including from the Labour party, said that it could not be done. They prophesised huge increases in unemployment as we cut back the public sector, and they said we were cutting too far and too fast.

They have been proved wrong: the economy is recovering, growth in the UK is expected to outstrip that of our main competitors and more people are in work than ever before. Now is not the time for complacency. We need to continue with our reforms and drive the recovery forward.

2.15 pm

Derek Twigg (Halton) (Lab): The Chancellor’s Budget demonstrated clearly just how out of touch this Government are with ordinary people. This Government stand only for the privileged few, not for the millions of people on middle or low incomes who are not feeling any recovery benefit, certainly not in their incomes and standard of living. The cost of living crisis continues, leaving people £1,600 a year worse off under this Tory-led coalition. Of course, from what we have heard today, the Chancellor does not care about that. He does not care that the standard of living has fallen for most people in this country.

The real story—not the story the Chancellor wants to tell—is that of constituencies like mine, where this Government have failed and where many people are struggling to pay their bills and have to choose whether to heat their homes or to eat, while bankers get big bonuses and the richest people earning more than £150,000 get a tax cut. I am pleased that Labour will reverse that cut. We should not forget the 24 Tory tax rises, with the VAT rise alone costing families with children an average of £1,350 over the past three years.

This Government are out of touch with the lives of ordinary working people. No. 10 is being run by old Etonians and a public school cabal. They are not in touch with the lives of people in this country. The Government have never stood up to the energy companies. My party is absolutely right to pledge to freeze energy bills until 2017 and reform the energy market to stop the customer being ripped off. Today’s response to the problem of energy bills was pitiful. I shall return to that issue and the industry shortly.

The real story is that of hundreds of my constituents having to rely on food banks as their source of food on a weekly basis. The number of users has grown massively since this Government came into being. The story is also about many in my constituency having to use payday lenders: Halton has the third highest concentration of payday lenders in the UK. Loan sharks have also been a plague in my constituency, preying on poor and vulnerable people on a regular basis.

The story is also one of still high unemployment in Halton, which has one of the highest levels of long-term youth unemployment in England. My surgery is visited regularly by individual claimants and by the families and parents of individual young people who are desperate for help to find their youngsters some work because

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they cannot get a job. That is why I support our compulsory jobs guarantee, paid for by a tax on bank bonuses.

Under this Government, despite what the hon. Member for Fareham (Mr Hoban) has said, many of the jobs that have become available are part time and low paid, and many are on zero-hours contracts. One of the things that people want is continuity of employment, but one of the big problems under this Government is that people cannot rely on having a job for a very long time, so they cannot plan their income or expenditure properly or save up to buy a house or do things that most families do. It is just not possible with the type of employment available today.

I have been particularly vocal in this House about support for small and medium-sized enterprises, which I believe are the lifeblood of our future economic growth. Many are still finding it a struggle to get money from the banks, but the Government have not done a lot about it. I support my party’s proposal to cut business rates for small firms.

The Chancellor mentioned support for the energy-intensive manufacturing industry. To date, this has been a major failure. I have been lobbied rigorously by companies in my constituency about the Government’s failure, and I have also lobbied the Government regularly. I will look at the detail of what the Government have announced today, but the fact is that until today they have failed this industry. The chemical industry is a particularly important one in my constituency, providing many people with well-paid jobs. The Government need to do more.

The Chancellor referred to housing. Of course we all want people to be able to afford to buy a house if they want to or to have access to social housing, but the recovery is relying heavily on housing—there is a housing boom—and on lending. That is a real concern, which was mentioned today by the Governor of the Bank of England in, I think, the Financial Times. The issue is that the boom cannot be unsustainable, so we have to be very careful. I am really concerned about the unsustainability of the recovery. We can and should of course help more people to get on the housing ladder, but a housing boom will make that even more difficult, particularly for young first-time buyers.

What are the Government doing about social housing? Many constituents come to see me because they need access to social housing, but there is a real shortage. The Government do not have any real proposals to get people social housing, which is what people in my constituency want. That important matter was omitted from the Budget .

The Chancellor’s policy of cuts is destroying local government. In Halton, total revenue grant funding has been cut by £28 million, or 28%, since 2010, and its capital grant funding has been cut by £14 million. Local government is suffering badly, and that is affecting services for local people.

The Chancellor commented on the Mersey gateway, a project which started under Labour and which has received all-party support. Some colleagues and I have had a meeting with him on a cross-party basis, but he did not say what he would do to ensure that people who live in Halton—they currently do not have to pay to use their local road across the existing bridge, the A533—will not have to pay a toll in future. The plan is for them to

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pay a toll on the existing bridge and the new one. The Chancellor has said that he will look at that and see what he can do, but I have not heard back from him, even though he referred to the Mersey gateway today. Given that he announced that the A14 in affluent Cambridgeshire will not be tolled, it is wrong for people who currently use their local road for free in Halton—the 27th most deprived borough in the country—to have to pay for it in future. I do not know of any other such example in this country.

The Chancellor said little about the NHS, but there has of course been a real-terms cut. What about the number of hospital trusts that are running a deficit? Even my own has a £2.9 million deficit. He said nothing about that, although the NHS is in crisis and £3 billion has been wasted on a reorganisation.

Debbie Abrahams (Oldham East and Saddleworth) (Lab): In view of the income given to earners on higher tax rates, does my hon. Friend not think it is absolutely shocking that nurses have been devastated by the fact that many will not receive the 1% pay rise?

Derek Twigg: My hon. Friend makes a very important point. Whose side are this Government on? They are on the side of the rich, not the people who actually run our health service—the nurses, care workers and so on—

Andrea Leadsom (South Northamptonshire) (Con): Will the hon. Gentleman give way?

Derek Twigg: I will not, if the hon. Lady does not mind, because I have given way once and I know that other hon. Members want to speak.

The Government are not on the side of the nurses, as nurses know and understand; they are returning to true form in cutting the NHS, as they did the last time they were in power, while doing nothing about the deficits that hospitals in this country have to carry as a result of their policies and their poor funding of our hospital services.

I want to turn to the important area of defence, which rarely gets mentioned during Budget debates. Under all Governments, the Treasury has always had a vital role in the amount of money provided for defence, but the whole of our defence policy now seems to be run by the Treasury, which is not taking account of our present and future security needs. The massive cuts in the Army, the Navy and the Air Force will create real problems in future years, and we will come to regret those cuts. This Government’s defence policy is all over the place, and we heard nothing today about what they are doing to fund defence in future. That is storing up serious problems for this country’s influence in the world and its ability to respond to threats, such as what is happening in Ukraine and Russia.

At my surgery, I see many people on benefits who deserve and need them but who are now waiting even for their personal independence payment to be assessed—it is taking months and months. The system is in absolute chaos, with people being kicked off benefits for trivial reasons. We are also seeing the impact of the bedroom tax. What is happening to some of the most vulnerable low-income people in this country is an absolute scandal. It is okay for the Chancellor to say that there should be a benefits cap, but we do not know what it actually

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means for those deserving people who need benefits to be able to survive and continue with their lives. We do not know the details of what it will mean, and the Chancellor said nothing about it today.

The Government are clearly out of touch with ordinary people. They are run by a bunch of public schoolboys, and their first priority is to look after the rich and to ignore the rest.

2.24 pm

Ian Swales (Redcar) (LD): This Budget represents another step in dealing with the economic mess left by the Labour party. Everybody at home knows that if they live on borrowings and max out their credit card, they will one day have to cut their standard of living. It is completely disingenuous of the Labour party to pretend otherwise. The Liberal Democrats want a stronger economy and a fairer society. We are proud that our No. 1 manifesto commitment to cut income tax for 25 million people by raising the threshold to £10,000 will be met next month, and that the Chancellor has gone further in this Budget by raising the figure to £10,500.

We hear a lot from the Opposition about tax cuts for millionaires, and they are now complaining about tax rises. Since April 2010, millionaires have paid higher taxes on their income, on their capital gains, on their pension contributions, on their spending and on their private jets, and they have had to engage in less tax avoidance. We know that the Chancellor in the previous Labour Government, the right hon. Member for Edinburgh South West (Mr Darling), put the higher rate of income tax up from 40%—they kept it at that level throughout their time—to 50% on 6 April 2010. That was an important day for two reasons: first, the higher rate went up to 50%; and secondly, Parliament was dissolved. Labour Members were on the Government Benches only for a few hours while the top rate was 50%, so we should not take any lessons from them.

All the Budget documents show that the rich are paying a lot more. [Interruption.] The hon. Member for Wrexham (Ian Lucas) shouts from a sedentary position about VAT, but VAT is on spending, and I have news for him: millionaires spend the most, and they therefore pay the most VAT.

Ian Lucas (Wrexham) (Lab): When the hon. Gentleman sought the votes of the people of Redcar, he assured them that he would not support a rise in VAT, so why did he do so when he went in with the Tories?

Ian Swales: When I stood in Redcar, I had not seen the note left by the then Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), saying that there was no money left.

I am pleased that the Government will give further support to apprenticeships. There have been 1.5 million of them in the country, with more than 4,000 in my constituency, and I welcome today’s news about an extra 100,000 apprenticeships. I welcome the cut in beer duty, and I pay tribute to my hon.—he ought to be right hon. one day—Friend the Member for Leeds North West (Greg Mulholland) for his relentless campaigning on the issue. I also welcome the cut in fuel duty, which

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will help hard-working people all over the country. We would certainly have paid a lot more under the Labour party’s plans.

Lorely Burt (Solihull) (LD): Will my hon. Friend also welcome the scrapping of the duty escalator for wine? Certain Liberal Democrat Members like a glass of wine, but that is beside the point. The wine industry has suffered, but it will be much better off under the new move.

Ian Swales: I am well aware that my hon. Friend enjoys a glass of wine. It is clearly good news for the wine industry that taxes will be frozen.

Players at Beacon Bingo in Redcar—they had to endure my calling the numbers a few weeks ago as part of the Boost Bingo campaign—will be delighted not only that their campaign to cut the duty from 20% to 15% has been successful, but that the Chancellor has gone further by cutting it to 10%. Bingo is a harmless social form of gambling and, from having talked to many players that day, it seems to me exactly the kind of thing that we should not penalise too heavily, as opposed to the high-stakes fixed odds betting terminals visited on us by the Labour party. I totally support the rise in taxes on those machines, of which we would like to see less.

I have a race course in my constituency and have campaigned in this House for the past three years for offshore bookmakers to be charged the betting levy. I am delighted to see that that is in today’s Budget. It will be a huge boost to the racing industry.

Other speakers have mentioned the measures on savings and annuities. I will not say much on those, except that the measures on annuities will be warmly welcomed. I receive a lot of correspondence from constituents who feel locked into products that have a very poor return. In some cases, they are not able to draw down the amounts that they want. Loosening all that is the right thing to do. As the Chancellor said, people should be able to access their own money. I welcome the safeguards in the small print to avoid people spending all their money and becoming dependent on the state. There is a threshold in the detail.

There is a lot of manufacturing in my constituency. We must remember that manufacturing supports many of the service industries. If one looks at the classification of industries, one will see that industries such as logistics exist mainly because of manufacturing. Those who say that the manufacturing industry is only a small part of the economy forget all the service industries that depend on it. The previous Government had a shameful record on manufacturing. It halved as a proportion of the economy and my constituency felt that particularly badly. I am pleased to see the growth that is happening.

I am pleased about the measures on energy-intensive industries. My constituency has not only a steel industry, but a large chemical complex. The employers will welcome those moves. I also welcome the moves on combined heat and power plants, which are relevant to my constituency. All those measures will help Britain to be more competitive and they are certainly needed.

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We worry about the amount of money that sits on companies’ balance sheets and is not invested, so we should all welcome the increase in capital allowances. They were raised from £25,000 two years ago to £250,000 and are now being increased to £500,000. That is a huge incentive for people to invest in new equipment, plant and facilities. I have a special reason for welcoming the £60 million for new technology to support carbon capture, which is mentioned in the Red Book, because it is extremely relevant to my constituency.

Caroline Lucas (Brighton, Pavilion) (Green): The Lib Dems used to pride themselves on their green policies, so I wonder whether the hon. Gentleman is equally happy that the Government are hell-bent on getting every last drop of oil out of the ground, as the Chancellor said? While I am at it, does he agree that, although the £140 million for repairing flood defences is welcome, it is well short of the £500 million that we need?

Ian Swales: I am disappointed that, having given way to the hon. Lady, she took quite a lot of my time. I will see her outside the Chamber with the answers to those questions.

There are many further measures in the Red Book on corporate tax avoidance, about which the Chancellor did not go into detail. It is good to see that further steps are being taken on electronic services and the shifting of profits. There is more to do, but there are some good things in the Red Book about that.

I was interested to hear what the Labour party had to say. I must say that I was hoping for a lot more. We heard about the bankers bonus tax—the gift that keeps on giving. I was thinking about this the other day. If the Labour party wants to put income tax up to 50% and to tax bank bonuses at 50%, I have news for it: 50 plus 50 is 100. How many banks will keep on paying bonuses if the entire amount goes to a future Labour Government? They will find different ways to reward their staff, as they already are doing.

That policy does not hang together at all, and neither does the electricity price freeze, which is criticised by everybody, from large energy companies down to organisations such as uSwitch and Age Concern, for being completely impractical. I was at an event last week about the price freeze, where even a Labour shadow Energy Minister failed to defend it. I think that we will hear the end of that one quite soon.

The hon. Member for Halton (Derek Twigg) spoke about social housing, but made no apology for the fall of 421,000 homes under the Labour Government—a truly shocking record.

The right hon. Member for Newcastle upon Tyne East (Mr Brown), who is not in his place, made some powerful points about inequality. I was listening very carefully. I do not necessarily understand how it is calculated, but the Red Book states that

“inequality is at its lowest level since 1986.”

That is because we are taxing people with the broadest shoulders, despite what the Opposition claim. I know that we have a long way to go, particularly in my area in the north-east, which has stubbornly high unemployment and many social issues.

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I welcome the child care credit and, in particular, the 85% for people who are on universal credit. That will certainly help people get into work.

Overall, this is a Budget for a stronger economy and a fairer society, and I commend it to the House.

2.35 pm

Sammy Wilson (East Antrim) (DUP): I welcome the announcement that the Chancellor made about the growth figures. In my constituency in Northern Ireland, there has been a 19% fall in unemployment as a result of the increased growth over the past year. That means that 550 individuals are earning money who were not earning money this time last year. That is to be welcomed.

I do not want to take a partisan view of the Budget. Fortunately, we in Northern Ireland do not have to be involved in the competition between the Government parties and the Opposition party here. I want to look objectively at what was said in the Budget.

My first concern is about growth. The Chancellor gave the growth figures, but we must remember that the figures have been revised time and again. Even though it has the imprimatur of the Office for Budget Responsibility, one has to ask what that growth is predicated on and whether it is sustainable. The growth up until now has been determined by consumer expenditure. According to the figures in the Budget, consumer expenditure will not jump dramatically, but, compared with the last two years, we will see a 48-times jump in private investment and a three-times jump in exports. If all the measures that the Government have taken to improve investment, such as the reduction of corporation tax and the enhanced capital allowances that were announced last year, and all the measures that they have taken to improve exports have not worked in the past two years, on what is the Chancellor basing the massive jump in private investment and exports that he is predicting will sustain growth for the next year?

Mr Brooks Newmark (Braintree) (Con): The hon. Gentleman makes a good point, but from a business man’s standpoint, the decision to invest is based on business confidence. When there is growth, they feel confident about investing in their businesses, which, in turn, creates jobs and more growth.

Sammy Wilson: I would accept that point if I had not heard Government Members saying for the past three years that businesses are now more confident because there is a firm hand at the helm. We have not seen that come through in the figures to date. That is my first concern. I want growth to be sustained. I want the Chancellor to succeed. It does not matter to me electorally whether he succeeds or fails, but it matters to my constituents.

My second point is about the distribution of growth. Most of the growth has been in the south-east of England. Regions such as Northern Ireland, where there has been growth of 0.3%, have not benefited.

Mr Nigel Dodds (Belfast North) (DUP): My hon. Friend has picked up on a point that I was going to raise, which is the unevenness of growth across the UK. Northern Ireland has a relatively low level of growth, which is having an impact on jobs and investment. Given his expertise in, and experience of, Northern

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Ireland’s finances, I would be grateful if he indicated what more the Government could do to help regions such as Northern Ireland.

Sammy Wilson: I listened intently to the Chancellor, and I was pleased when he made the point that he wanted to ensure that growth occurred in all the regions of the United Kingdom. However, I was disappointed to listen to the rest of the speech, because I wanted to know what policies would be introduced to effect that more even distribution of growth. I welcome the setting up of the enterprise zone in Coleraine, but one has to bear in mind that that will just balance out the 350 jobs that have been lost in that town, where severe unemployment had already been caused by the closure of some companies. It is intended to balance out the impact that the central Government’s decisions have had on my constituents in Northern Ireland.

Mr Redwood: I would just like to correct the record. The forecast is for only a 4.7% increase in exports next year and an 8% increase in investment, which I think is achievable.

Sammy Wilson: The percentage growth in exports was 0.8% last year, and in the next year it is forecast to be 2.6%. By any calculation, that is more than a three times increase in the rate of growth. The Government have talked about the reduction in the cost of finance for exporters, but measures that were introduced in previous years did not have the intended effect. Of course, that is against the background of a strengthening pound, so there will be a difficulty there. On what is the Government’s optimism based? If it is on export and investment-led growth, past patterns do not show that happening.

My second point is about the Chancellor’s throwaway lines saying, “I am not in the job of easing up just because things are getting better”, and “We don’t want to spend more.” I am not asking the Government to spend more; I am asking them to spend differently and better. Of course we have to get the deficit under control, but what is the increase in that deficit at the moment? Of the percentage of our GDP that is debt, what is most of it made up of? It is made up of paying people to sit on their backsides doing nothing, instead of spending on investment in infrastructure projects, which would have a return. It would put people back to work, increase tax revenues and stimulate growth. We can examine the infrastructure projects in Northern Ireland, such as in tourism. For modest amounts of money, the Titanic signature project is now bringing in millions of pounds and half a million visitors a year, mostly from outside the state. There has also been the extension of the gas pipeline. Many Members have talked today about the cost of living, and one way of bringing fuel prices down is to give people alternatives. For modest public investment, we have been able to increase the coverage of gas pipelines in Northern Ireland, bringing people cheaper fuel and helping to bring down their cost of living.

Mr Andrew Love (Edmonton) (Lab/Co-op): Will the hon. Gentleman give way?

Sammy Wilson: I do not have much time; otherwise I would be happy to give way.

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Help has been given to industry in Northern Ireland for research and development, machinery and so on. I welcome the increase in capital allowances. In fact, one thing that we suggested was that if corporation tax could not be devolved to Northern Ireland, capital allowances should be increased so that companies were more able to invest using that mechanism. Such measures could stimulate growth and add to the productive potential of the economy. That is not about spending more; it is about spending differently. If we are finding it difficult to get private investment in the economy, it can be pump-primed with public investment, which can have an important impact.

I welcome some of the specific spending proposals in the Budget, such as the extra spending on infrastructure, filling in potholes and so on, all of which has Barnett consequences. I hope that in spending money to fill in potholes, the Government will not find themselves having to look for money to fill the financial holes in this Budget in a couple of years.

I also welcome the changes to pensioners’ savings. They will not have an impact on all pensioners, because many pensioners in my constituency have never earned enough to accumulate huge savings. Nevertheless, those who have saved should be able to experience the rewards.

The Chancellor has made a lot of helping industries with their energy costs. It is one thing to make temporary changes and give big energy users temporary help, but it is another thing to continue the mad policy of increasing reliance on renewables, which have pushed up energy bills. Once the temporary measures are over, firms will still have to face that problem. This country will have to reconsider its energy policy. I welcome the fact that the Chancellor wants to improve the extraction of oil from the North sea, despite what the hon. Member for Brighton, Pavilion (Caroline Lucas) said, and frack gas, which is a natural resource that will give us cheap energy. If we stick to a policy of dear energy, we will pay the consequences.

2.46 pm

Mr Andrew Mitchell (Sutton Coldfield) (Con): It is a pleasure to follow the hon. Member for East Antrim (Sammy Wilson), who speaks with passion for his constituents. Towards the end of his speech, he focused on the changes that the Chancellor has made to savings policy today. Those are significant reforms. We will obviously need to have a look at the details of them, but I suspect that although this Budget will be remembered for many things, it will be remembered above all for those important reforms to savings.

Fair’s fair; the Chancellor deserves considerable credit for today’s Budget. The facts seem to me to speak for themselves. He set a course some time ago, and he has stuck to it. He has taken an immense amount of incoming fire from his detractors for many of the decisions that he has made in the past four years, but the United Kingdom is in a far better position today than most other countries. He deserves credit for his constancy and the decisions that he has made.

I want to pick up on a number of things that the Chancellor mentioned. First, it is a small point, but he mentioned that Minouche Shafik was returning to be a

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deputy governor of the Bank of England. She was my first permanent secretary at the Department for International Development, and it is a wonderful piece of good news that she is returning and that the Chancellor has managed to onshore her. Many of us were extremely sorry when she went off to the International Monetary Fund and will be glad that she is coming back to take up her new position.

Diana Johnson (Kingston upon Hull North) (Lab): The right hon. Gentleman pays tribute to the woman who, as I understand it, has been appointed to the Monetary Policy Committee. Does he agree that that appointment was purely on merit?

Mr Mitchell: I believe that Minouche Shafik is an absolutely outstanding public servant, and she has been appointed as a deputy governor of the Bank. I am sure the whole House will agree that it is an outstanding appointment.

The economic plan that has been introduced is right. We had to make those decisions, because the United Kingdom has racked up far too much debt. Siren voices effectively urge us to head back in the direction from which we have come, but it does not seem likely to me that the public will accept that. Today’s Budget enhances and underlines the difference between the Government and the Opposition, and in my view it will stand the test of time.

Mr Redwood: Has my right hon. Friend noticed that despite all the efforts to control the debt, which we need to do, debt interest will still be £60 billion next year, which is more than the education budget?

Mr Mitchell: My right hon. Friend is absolutely right, but can he imagine what it would be like today if the Opposition’s policies were being pursued?

I wish to make a point that the Chairman of the Treasury Committee, my hon. Friend the Member for Chichester (Mr Tyrie), will not agree with, although I thought his speech was excellent in every other respect. The Government deserve huge praise for sticking to their plans on international development. The House will be aware that as a result of the all-party support for that policy, countless lives have been saved. Hundreds of thousands of children are alive today in the horn of Africa who would not have been but for British leadership on the issue.

Through the House strongly supporting the Government’s policy to vaccinate, the British contribution means that we will vaccinate a child every two seconds in the poor world, and every two minutes it will save a child’s life from the effects of diseases that none of our children die from today. As a result of reforms introduced by the Government, such as building up governance structure and ensuring that poor countries have the benefit of effective taxation, independent media and so forth, we should all be incredibly proud of the success of that policy. I am enormously proud to have served in a Government who stuck to their promises to the poorest people in the world, and who did not seek to balance the books on the backs of the poorest, either in Britain or overseas. That is also hugely in British interests—this is not just soft-hearted altruism—because it is not only aid from Britain, but aid and development for the

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benefit of Britain. It enhances the security and stability of our generation and of future generations, and it builds on the prosperity that our generation enjoys, and that future generations will enjoy to a greater degree as a result of those successful international development policies.

I also believe that the Chancellor was right to raise the threshold at which tax becomes payable, and—at a time of great austerity—to target help on those who earn the least. Of course the 40% level bites much earlier than we intended, but the austerity we have faced was harder and deeper, and inevitably those with a little more have had to pay a little more in those circumstances. I am clear, however, that the 40% band needs to be raised as soon as we can, and the drag of people into that band should be reversed once the economy can withstand it.

Mr Newmark: Most importantly, does my right hon. Friend agree that raising the personal allowance from £10,000 to £10,500 will save up to 3 million individuals up to £800 extra a year, which is good news for their pockets?

Mr Mitchell: My hon. Friend, as always, is absolutely right, and bearing in mind the speech by the right hon. Member for Newcastle upon Tyne East (Mr Brown), it is important to remember that in 2010 the richest 1% in Britain paid a quarter of all income taxes. Today the richest 1% are paying a third, and everyone in the House would agree that under these circumstances, that is correct.

The focus on getting younger people in particular into work is enormously important, and the raised thresholds clearly provide some help to that group. Reducing and ending employer’s national insurance contributions for those under 21 was an important measure made last year that I strongly support, just as I support the emphasis from across the House on increasing the minimum wage. All those things are extremely important.

We have also seen other ways of improving the situation for those entering the world of work. Last year, 510,000 apprenticeships started, while in 2010 there were only 230,000. That is enormously important in the part of the world I represent in the west midlands. Money has also been announced for new locally generated policies in eight core cities in Britain, which is right. However, we still have 1 million people in this country—children who have left school or students who have left university—who are not in education, employment or training, and we need an unremitting attack on that. It is quite wrong that young people who have left school or university should find themselves doing anything other than earning or learning. Although we have seen a significant decrease in the JSA claimant count, unemployment—particularly among young people—remains far too high in the west midlands, and we must continue that unremitting attack.

My final point was touched on in an excellent speech by my hon. Friend the Member for Fareham (Mr Hoban) and concerns the changes that the Government are making to welfare. I believe there are aspects of those changes that Members across the House can, and should, support. Many right hon. and hon. Members will have seen “Benefits Street” on Channel 4, which I think did a huge service to public broadcasting. Benefits Street is

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six miles from my constituency of Sutton Coldfield as the crow flies, but light years away in most other respects. What that programme showed in connection with welfare was the effect over many years of a very non-interventionist policy. It was almost as if benefits were paid, and once paid the recipients were forgotten.

The Government deserve considerable credit for helping those who cannot help themselves—for example by maintaining disability benefits throughout the stage of austerity—while also ensuring that we give help to those who can work and should do so. It is tough, difficult and hard to re-craft welfare policy, but in that Channel 4 programme we saw why it is essential to tackle the issue.

In conclusion, I believe that the welfare reforms, aspects of which command support throughout the country, could be one of the coalition Government’s finest achievements during their term in office. I shall end where I started by saying that the Chancellor and his colleagues on the Treasury Bench deserve considerable credit for crafting this Budget, which tackles needs at this stage of the economic cycle. I have no doubt whatsoever that his own share price will be rising, and rightly so.

2.56 pm

Mr Tom Harris (Glasgow South) (Lab): May I say how glad I am that the hon. Member for Fareham (Mr Hoban) is still in his seat? I enjoyed his contribution and it had passed me by that he had left the Government and returned to the Back Benches—the curse of Harris strikes again; just about every Conservative Minister that I have any time for, like, or respect has somehow found their way back on to the Back Benches—[Interruption.] You’re welcome.

I begin by welcoming the good news not only in today’s Budget, but the wider economic news against which speeches are being made. Unemployment in my constituency has fallen to 4.8%—a total of 2,187 jobseeker’s allowance claimants—and it is important that Labour Members welcome good news when it arrives. It is good news for my constituents, and good news for the whole of Scotland and the UK that unemployment has taken such a large dip in the latest published figures, and we welcome that without a “but” at the end.

The Lib Dems are like a broken clock—they are right at least twice a day. [Interruption.] Yes, they are clearly keen to attend the debate; perhaps they scarpered when they saw me standing up. I know that raising the tax threshold to £10,500 is not a policy supported by those on the Labour Front Bench. That is a matter of some regret for me as it is a policy I have supported for some time, and fundamentally I think that the lowest paid should be taken out of tax altogether. One argument against raising the threshold is that it also benefits people higher up the income scale, but I support the policy not despite its tax-cutting effect on the better-off, but because of it. I do not think there is anything wrong with reducing the tax take of people further up the income scale, and I do not regard tax as an unalloyed good thing. I see tax as a necessary evil, and where we can reduce the tax burden, we should do so.

The Labour party introduced the national minimum wage—that is often forgotten in these enlightened days when we see the right hon. Member for Sutton Coldfield

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(Mr Mitchell), and even the Liberal Democrats, welcoming a big increase in the minimum wage. It is often forgotten that when it was introduced, only the Labour party supported it, and it was opposed by the Conservative party and the Liberal Democrats—




I wondered whether Scottish National party Members were going to say something, because there would be a riposte to any claims that the SNP supported the national minimum wage.

I believe that the national minimum wage must be entrenched in some way, and what better way of doing that than by instituting a change that means that someone who earns the minimum wage will not pay a penny in tax? That is the situation the Labour party should be pursuing, and such a policy would be welcomed throughout the country.

Mr Mark Prisk (Hertford and Stortford) (Con): I was one of those who opposed the national minimum wage, and I was wrong. It was introduced sensibly and modestly by the last Labour Government, to my surprise. The challenge for us all, however, is that those on the edge of the labour market can be priced out if future Governments are too ambitious about where it stands. That is the fear about entrenching it. Does the hon. Gentleman respect that point?

Mr Harris: Yes. I absolutely believe that when the minimum wage was introduced, it was set at the right level. It disappointed a lot of people who wanted it to be higher. There will always be those who want the minimum wage increased beyond what the market can sustain. The hon. Gentleman is absolutely right: it has to be generous, but it has to be moderate so that we do not have the negative effect of losing workers.

But what about help for ordinary working families? I am loth to use some of the more overused phrases that we are encouraged to use like “cost of living crisis”—trademark patent pending—but the fact is there is such a crisis. If average wages in real terms have dropped by £1,600—and I have yet to hear any Minister saying that is not the case—that is something of a crisis if not for people in this House then certainly for families and workers in my constituency. Yet despite the high number of headline-grabbing announcements, many of which I would support, there is absolutely nothing in what the Chancellor said that will address this urgent issue that faces the whole nation.

Mr Redwood: The hon. Gentleman is right that there has been quite a big fall in real wages, but will he accept that the biggest part of the fall occurred in 2008-10?

Mr Harris: I am, as always, very grateful to the right hon. Gentleman for intervening as I was just about to get on to the events of 2008-09. I want to address the deficit, because so many Government Members have raised it in the House whenever they have got the chance in a way that I find completely disingenuous, not worthy of an adult debate and not related to what actually happened in 2008-09.

An observer from Mars who tuned into what the Chancellor said today might have come to the wrong conclusion that when the right hon. Gentleman was in

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opposition he somehow opposed the last Labour Government’s spending plans. That is not the case: right up to November 2008 the official Conservative party policy was to support our spending plans. That either means that the Conservatives believe the deficit was created in the 18 months from that point until the general election, which frankly none of us believes, or that they are now saying something that is completely the opposite of what they were saying in opposition. I remember sitting on those Government Benches—in a couple of years’ time I hope to be back there—and I do not recall any Conservative Member, or indeed Liberal Democrat Member, calling for an end to spending on their local schools, their local hospitals, their local roads. The fact is that the deficit was almost entirely caused not by profligate spending by the Labour Government, but by a disastrous fall in tax revenue caused by an international recession—the deepest any of us have seen in our lives. That is the truth of the matter.

Conservatives and Liberal Democrats—and I have to say especially Liberal Democrats, who seem to get more incensed about this than anyone, even though they said not a word about it in opposition—stand up and demand all this nonsense about apologies for the deficit and for mistakes that were made. Of course all Governments make mistakes, but let us be honest with the British public about how the deficit was created. It was not created because new schools were built. It was created because of a recession that put a lot of people out of work and that cut off revenue to the Treasury. That is why we are where we are. It is not because of Labour’s spending plans.

There are some items in this Budget that I welcome, but I fear it will be most notable not for the issues it addresses, but for those issues it needs to address and, sadly, ignores.

3.4 pm

Mr John Redwood (Wokingham) (Con): I would like to remind the House of my declaration of interests: I provide some advice on global economies and investments to an industrial company and an investment company.

I greatly welcome this Budget, because I think it is right that we need to do more to help the promotion of exports, industrial investment, the rebalancing of our economy and continuing the long process of getting the deficit under control. In our exchanges already I have highlighted the fact that debt interest will be higher than the education programme next year, despite the Government’s best endeavours, and that unless we carry on to make good and rapid progress to get the deficit down and eliminate it, that debt burden will build up and future Governments, whoever they may be, will find they are spending more and more money on debt interest and have less and less for the public services that our electorates expect us to provide.

I would like to clear up a common misunderstanding about how that is being done that I think has occurred because of the use of jargon and economists’ language in describing the process. The reduction in the deficit has been described as 80% by spending cuts and 20% by tax rises. That is true if the programme is successfully completed by 2018 and if we measure it as a percentage of GDP at that point, but that is not how most people

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think about how an excessive deficit is curbed. If we have a large deficit in our own accounts, we have either to find a way of earning more money or to make immediate cuts in the amount of cash that we spend. I think a lot of people outside the House think that, because we inherited a deficit of £160 billion, 80% by spending cuts meant £132 billion-worth of cash cuts in public spending. Of course it does not, and I am very glad that it does not, because that would have done huge damage to important public services.

What the Government have decided to do is limit the rate of increase in public spending and promote a more active economy so that tax revenues eventually catch up, and we are in that long process. The first three years of this Government saw very little growth in the economy, which delayed the reduction in the deficit because we did not get the surge in tax revenues we were hoping for. Now it looks as if there is better news, with faster growth coming through, and so the process can be completed, assuming the economy still recovers.

I had thought we might cut public spending in real terms in the first two or three years, but it appears from the latest figures that there was a small real increase in public spending. In the first three years, current public spending went up by more than inflation, and if we look at the impact on the economy as a whole, it gives the lie to all those who suggest too much was cut too soon, and that that reduced output and was the cause of the delay in growth. If we look at the attribution of growth and decline in activity and incomes, we see that the public sector made a small positive contribution to the economy in every one of the first three years of the coalition Government. I hope that reassures some of those on the Opposition Benches who felt too much was being cut and damage was being done. The good news is that it was not. There will have to be some reductions in some programmes in the years ahead in order to hit the targets, however, because although public spending will continue to rise in cash terms, there will need to be a little bit of a real reduction in the next Parliament; and because some of the programmes need to go up quite a lot—debt interest will go up quite a bit anyway—we will have to make reductions in other programmes, whoever is in office.

Mr Newmark: My right hon. Friend is making an excellent point. Does he agree that, notwithstanding the austerity he is talking about and the fact that more than 500,000 jobs were lost in the public sector, what is particularly remarkable about these tough times was that 1.7 million jobs were created in the private sector?

Mr Redwood: Yes, that was magnificent news and it shows that the private sector is remarkably resilient despite all that has been thrown at it. That is why we can now look forward to both better living standards and a better public sector: we need all those people to be in work and paying more tax in order to pay for those public services that are much-wanted by our constituents.

I would also like to deal with the argument from the Opposition, which I thought was put in a very exaggerated form by the Labour leader in his response to the Budget, in what was a rather partisan appearance which was out of sympathy with his new style at Prime Minister’s questions. I am not one to condemn partisan debate, as I think sometimes it livens the place up, but it was a very partisan speech by the Leader of the Opposition.

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Charlie Elphicke (Dover) (Con): It was a rant.

Mr Redwood: The Leader of the Opposition’s rant, as my hon. Friend says, had just one basic message: the wrong belief that the Conservatives want tax cuts for the rich and misery for everybody else. What we want is tax cuts for everyone, and what this and the previous Budget offer is tax cuts for everyone.

Let me explain how we have different types of tax cut for people at different levels of income. We take those on the lowest incomes out of tax altogether, so they get a genuine tax cut: they go from paying something to paying no income tax at all. The House is, I think, united on the wisdom of that. At the top end, we cut the rate, and what happens is that the rich and successful people actually pay more tax, not less. That seems to me to be magic, because then everybody is happy—or they should be. Only the very jealous should be miserable, because what we then have is the rich staying here, investing here, creating jobs here, creating more money here and paying more tax because the rate is lower. What is not to like about that proposition?

What is odd is that the Labour party in office, until the last couple of days, knew that and kept the top rate of tax below the level that we inherited and below the level we have now fixed. It is a bit rich that Labour is now complaining that we are light on the rich, given that our tax rates are collecting a lot more tax from the rich and are higher than the rates that Labour imposed. Indeed, we could collect even more tax from the rich if we brought the rates down a bit more, which I hope, come a Conservative Government, we might be able to do. Surely what we want is to maximise the revenue from such people, not to make a political point and drive them abroad, so that we have a society with less money, fewer jobs and less creativity.

I am pleased that the Chancellor made some moves on energy. We need a much bigger and stronger industrial recovery than we have generated so far. The first thing we need to do to have such a recovery is to ignore the advice of the Green MP, and to go for cheap energy. America is going for cheap energy, and it is re-industrialising very quickly. America is now super-competitive against companies in the European Union. A leading chemical major in Germany has recently said that it will put more of its investment abroad, outside the EU altogether, because, in the light of the energy crisis, the gas feed stock is uncompetitive. We need to find that gas and to get it out as quickly as possible. We need to match the United States’ shale revolution if we wish to save our high-energy-using industries and to re-industrialise and give some hope to the northern cities in particular, with their long tradition of industrial activity, because they need much cheaper energy.

We need to do more for savers, and I am delighted by an elaborate and interesting set of measures from the Chancellor on saving. Savers have had a miserable time after the collapse. Rightly, successive Governments and Governors of the Bank of England have kept interest rates on the floor, as they had to do, to try to stimulate activity and to prevent a worse collapse than we experienced in 2008, at the height of the crisis. That has been very bad news for savers. The tax changes will help savers, and the pensioner bond offer, if the rates are around the level we are now looking at, makes sense and would be a bit more attractive and something for pensioner savers to look forward to. I also welcome more flexibility for

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pensioners generally. Annuities are not good news at the moment, and if people can put that off or have a better choice, that may well be an excellent answer.

This Budget needs to be good for savers, for industry and for exports, and we are going in the right direction. It will help to promote a bit more growth, and only if we get a lot of growth will we get out of this debt bind.

3.13 pm

Stewart Hosie (Dundee East) (SNP): I start by welcoming a number of the measures that the Government announced, such as the increase in the revenue non-compliance budget, increased export funding and the further doubling of the annual investment allowance. If the Government carry on like this, we will be back to having an industrial buildings allowance policy, which should never have been scrapped in the first place. There is also the halving, at last, of bingo duty—my favourite cause. All these one-off measures are very sensible, could be implemented by any Government and ought to be welcomed by everybody.

However, that does not change this Government’s underlying direction of travel or the underlying shape of the economy as described to us in the Red Book. Scotland has suffered an 11% cut in the fiscal departmental expenditure limit, a 27% cut in capital and a real-terms 9.9% cut in the overall budget. The numbers announced today imply a further real-terms cut in the budget. I do not want to speak too much about Scotland, but it is important that we get on the record just how damaging this Government continue to be.

What the Budget speech and the Red Book tell us is that, by every measure the Chancellor has set for himself, he has failed. In his first Budget, he told us that in 2013-14 the current account deficit would be 2.3% of GDP, borrowing would be reduced to £60 billion and the net debt would be 70% of GDP. Today, he told us that for the same year, the current account deficit is higher, borrowing is actually at £95.6 billion and the net debt is around 75% of GDP.

Let me be generous: any Government can make a mistake for one year, so what about the big targets the Chancellor set for himself? They were: that debt would begin to fall as a share of GDP by 2014-15; that the current account would be in balance the following year; and that in the same year, public sector net borrowing would fall to £20 billion. Debt will not begin to fall until 2016-17—two years late. The current account will not be back in the black until 2017-18—two years late. Public sector net borrowing in 2015-16 will not be £20 billion; rather, the forecast figure—£68 billion—is more than three times that. Not a single one of the Chancellor’s key targets has been met.

Mr Redwood: Has the hon. Gentleman noticed the forecasted very sharp fall-off in petroleum revenue tax, and is that reflected in SNP plans?

Stewart Hosie: It is extremely convenient that, once again, we have a “North sea oil price crash” story on Budget day, some six months before the referendum. If the right hon. Gentleman keeps saying it, I am sure someone somewhere will finally believe him. I am not dreadfully convinced.

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The bottom line is that—just like the right hon. Gentleman’s intervention—the Chancellor’s speech was hugely political. He did not tell us about recovery; he did not tell us that he is trying to lift the burden from hard-working families; he did not apologise for trying to rebalance the economy on the backs of the poor. This Budget speech was a political platform for the next election, and if it was supposed to be a vindication of his policies, then it failed, because the policies have failed.

The Chancellor did of course have a deal to say about tax. He is right to increase the basic rate threshold to £10,000, and then to £10,500. Raising the threshold from £6,500 to £10,000, resulting in savings this year of £700 for the average person, is sensible, but of course, that is only part of the personal tax story. This Government have pushed ahead with a tax cut for millionaires and have continued to squeeze the middle—the genuine middle class. The threshold for those paying the 40% rate of tax has come down from £37,500 to under £32,000, so for every penny saved at the bottom, they have had to pay more than a penny at 40%. I therefore welcome the fact that the 40% threshold is going to be increased, but that is not until 2014-15. It will not change the fact that the proportion of people paying the 40% tax rate has doubled over the past two decades, and there are now 2.1 million more people paying a rate of tax that was previously only for the rich.

It is not just the middle: it is the poorest in society who have been hit hardest. We know—the right hon. Member for Wokingham (Mr Redwood) told us—that the proportion of tax cuts to tax rises is 4:1. We knew from previous Budgets that the impact of the discretionary consolidation would be £155 billion. Interestingly, the Government have removed that figure from the Red Book: they have removed the year 2016-17 from the forecast, and are now telling us that the discretionary consolidation will be only £126 billion. However, that forecast goes only to 2015-16, and I am concerned that they are not making a longer forecast, so we can see the real scale of the damage they are trying to do.

We in the SNP know where the pain of this Budget and of this Government’s policy direction will be felt. It will be the 144,000 households in Scotland who are losing some £3,500 each through changes to incapacity benefit. It will be the 372,000 Scottish households who have seen tax credits reduced to the tune of £800 a year. It will be the 620,000 families hit by changes to child benefit, who have lost an average of £360 a year. It will be felt by the 55,000 people who are losing an average of £3,000 a year as disability living allowance is removed. Those are the people whom we should be thinking about and who should be helped. Instead, the Government continue to try to balance the books on the back of the poor.

I welcome the fact that the Budget forecast at least says that there will be some growth, but it is once again heavily predicated on business investment growth. In Budget after Budget, the Government have produced five-year growth forecasts. In 2010, growth was predicted to be between 8% and 10% a year, but by the time we got to 2011 it had turned negative and they had to set yet more ambitious targets for the next five years. So it went on, and we find in the Red Book that the forecast business investment growth for last year turned negative again. I am desperate to see positive business investment

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growth, and the jobs that come with it, but we keep seeing the same story from the Government. They keep failing.

What should the Government have done? There are any number of policies that they might have adopted. Instead of tinkering with air passenger duty, they might have cut it properly or acted sensibly to boost international connectivity. Instead of simply freezing fuel duty, they might have introduced a real fuel duty regulator to smooth out future spikes. They might have cancelled some of their austerity measures, or at least removed the cap on discretionary housing payments to help the poorest. There are so many things that they might have done.

In the North sea, the Government announced that they would implement the Wood review in full. That will save the industry some £45 million, and it is to be welcomed. However, they are keeping the offshore chartering regime that they announced last year, which will cost the industry £600 million. They keep getting it wrong every single time.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): Should the Government not acknowledge that the North sea is booming, and that the drop in revenues is due to investment being tax deductible? What we are seeing is a healthy North sea for the years to come.

Stewart Hosie: I am sure that we all support £14 billion-worth of investment this year and £100 billion in the plans, and the drilling of 133 oil and gas wells to invest for the future. We would all be far less happy if that investment was not taking place. The problem is that all the good things that the Government could and should have done would have required them to change their policy fundamentally, away from billions more in austerity cuts and away from the policies that have stifled growth and recovery over the past few years.

I am not at all convinced that this was a Budget for recovery. It was a political Budget from an all-too-political Chancellor. I saw Tory Back Benchers waving their Order Papers not only after the Budget statement but before it was even made, and I suspect that such hubris will come back to haunt them. I hope that with a yes vote in this year’s referendum, this will be the last Tory Budget ever to affect Scotland.

3.23 pm

Mrs Cheryl Gillan (Chesham and Amersham) (Con): It is a pleasure to follow the hon. Member for Dundee East (Stewart Hosie), although my Scottish father would be turning in his grave if he thought that Scotland would ever go down the independence route. With your Scottish ancestry, Mrs Laing—although, sitting in the Chair, you could not possibly acknowledge this—you probably agree with me. I heard what the hon. Gentleman said, and I hope that there are many more Budgets to come for the whole United Kingdom. Scotland remains better off with the rest of the United Kingdom.

In the brief time available, I welcome the provisions in the Budget. The Chancellor has held firm despite the many voices that have tried to steer him off his course. Today he is beginning to reap the rewards of his courage in sticking to a path, however difficult, and making sure that he was not diverted from it. I was particularly

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pleased to see the help for savers, because we must rebuild our savings culture in this country. The simplification of ISAs, the extension of the annual limit and the introduction of the pensioner bond will make a great deal of difference to many of my constituents. I am also pleased to see the new pension flexibility. Treating pensioners like grown-ups by not forcing them to buy annuities will be welcomed across the board, and it is long overdue. I am glad that a Conservative Chancellor has seen sense on that.

I am particularly proud that a Conservative Chancellor is pursuing our natural Conservative tax-cutting instincts. It has to be right to take more and more people out of paying income tax. Equally, it is right to make the other changes that make a difference to people’s lives, and which the Opposition welcomed. Even the halving of the bingo tax from 20% to 10% is something that nobody, on either side of the House, could quibble with.

I was pleased to see the support for manufacturing and businesses. Having been Secretary of State for Wales, I was particularly pleased to see the continuation of support to energy-intensive industries through compensation for green levies. That has been an enormous problem in Wales for companies such as Tata Steel, and the measures will make a great deal of difference to our manufacturing base and its recovery. It is good that we are doubling the annual investment allowance. Giving our companies the most competitive export finance in Europe will certainly help. In the official EUROSTAT figures announced yesterday, I was pleased to see that the UK recorded the strongest export growth in the European Union last year and outstripped every other large economy by a large margin. I want that to continue, and the Budget will help to keep our businesses on track.

I would like to thank the Chancellor for the attention that he has given to the fuel duty incentives for cleaner fuels. In the autumn financial statement, it was noted that the fuel duty differential between the main rate of fuel duty and the rate for road fuel gases such as compressed natural gas would be maintained until March 2024. That, together with the differential on liquefied petroleum gas reducing year on year by 1p a litre, remained to be reviewed on vehicle uptake and public finance grounds at Budget 2018. In Zero-m, a company in my constituency, Mr Peter Dodd has been pursuing that relentlessly with his team, and I think it will make a great deal of difference in future. Methanol is a clean fuel, which pollutes less than other fuels. It produces virtually no particulates or oxides of nitrogen, and a reduced amount of CO2. It is less explosive than petrol, and therefore even safer. Those measures are most welcome.

I want to make a point on my pet project, High Speed 2. I notice that HS2 is again included in the infrastructure pipeline. In the words of Sir Rod Eddington in his 2006 transport study:

“The risk is that transport policy can become the pursuit of icons. Almost invariably such projects—‘grands projets’—develop real momentum, driven by strong lobbying. The momentum can make such projects difficult—and unpopular—to stop, even when the benefit:cost equation does not stack up…The resources absorbed by such projects could often be much better used elsewhere.”

Public sector overspend is certainly the trend. Two recent projects—HS1 and the channel tunnel—went 36% and 99% over budget respectively, and the average

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overspend on 11 recent major public sector building projects has been 158%. If HS2 continues, that trend will cost around £72 billion, and the Institute of Economic Affairs has estimated that it could go up to £80 billion.

We do not even know what the HS2 compensation packages will add up to. There are nearly 500,000 properties within 1 km of the proposed line, but the Government have not yet been able to give us details of the compensation package. I hope that when the Financial Secretary to the Treasury responds to the debate, he will be able to provide a light at the end of that particular tunnel, although I hope that it will not be in the form of a train coming towards me. Those people need to know what the compensation package will be, and when it will become available. Constituents of mine are losing their houses and their livelihoods. They are being evicted from their properties without proper compensation, and they need to know that the Government are listening and paying attention to this matter.

This project has to be queried at every step along the way. We are still paying down a large debt, and to pay down the money that will be spent on HS2 will involve us in untold interest and expenditure. Even business and industry do not want HS2. The Institute of Directors recently surveyed more than 1,300 directors to gather their views. The results revealed that the IOD’s members would rather see £50 billion spent on bringing Britain’s existing transport infrastructure into the 21st century. Over the past two years, the importance of high-speed rail to IOD members’ businesses has fallen significantly. HS2 is not the infrastructure project that Britain needs; nor is it the one that British business wants. Not enough businesses stand to benefit from it. It will benefit the few businesses, rather than the many.

I ask the Treasury to take the opportunity of this 2014-15 Budget, which is excellent in many ways, to re-evaluate the value for money on this project. If it cannot cancel it, will it at least look at how the benefits could be spread more widely and people’s interests could be protected, and announce proper compensation as soon as possible?

3.31 pm

Ian Lucas (Wrexham) (Lab): It is a real pleasure to follow the right hon. Member for Chesham and Amersham (Mrs Gillan). As always, she has made a powerful case on behalf of her constituents.

In 2010, the Chancellor had what he called an emergency Budget. There was in fact no emergency. His predecessor’s Budget had already set out the deficit reduction strategy, and that policy was largely supported at the time by the Liberal Democrats. However, the present Chancellor—supported by the Liberal Democrats, who preferred Government to consistency of policy—made a choice and promised in 2010 that he would eliminate the deficit by 2015. On his own terms, he has failed. Today’s Budget is a confirmation of that central fact.

In 2010, when the economy needed stimulus and support, this Government provided neither. Instead, we and our constituents have endured four years of mistaken economic policy, which has resulted in most of the people I represent being £1,600 a year worse off than they were in 2010. Yet the Chancellor stood at the

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Dispatch Box today and expected plaudits. Following the delayed return of growth in the economy, the Government parties exude an air of complacency, but that is at variance with the views of most of the country and certainly of most of the people I represent in Wrexham.

The Government imposed substantial increases in VAT in 2010, contrary to the assurances given before the general election by both parties. The immediate result was that money was taken out of local economies and paid directly to the Government, suppressing demand in the retail and construction sectors. The long-term result has been a reduction in business activity. Lack of demand locally has been exacerbated by the failure of investment in local business. This Government’s failure to tackle the issue of business investment endures to this day, and is a consequence of their fundamental failure to implement meaningful reform of the banking sector. We heard nothing about that today.

In the early months of this Government, they talked a good game. They even set up an inquiry into high pay, although only in the public sector, not in the private sector. They have done nothing about the issue, however. We hear the occasional bleat from the Secretary of State for Business, Innovation and Skills, but the coalition Government have done nothing.

Again and again, Wrexham businesses tell me about the failure of the banks to provide adequate investment. Based as the banks are in the square mile, and focused as they are on financial services, that is not surprising. Why should those institutions understand the modern manufacturing and retail economy that is Wrexham, when none of their meaningful decisions is made by those who live in our community or have any knowledge of it?

Guy Opperman (Hexham) (Con) rose

Ian Lucas: I will give way to the hon. Gentleman; I know that he takes an interest in this subject.

Guy Opperman: The hon. Gentleman must surely accept that it was a mistake for Labour to vote against the provisions in the Financial Services Bill on 23 April 2012. Those provisions would have introduced greater competition, greater choice and a greater degree of local banking.

Ian Lucas: The fundamental mistake was the demutualisation of organisations such as Northern Rock by the Conservative Government in 1986 and the years thereafter. The hon. Gentleman should be arguing against such decisions, so that we can start creating institutions like local building societies again.

Our current banking system is not the only model of banking. In Germany, the Sparkassen model was affected much less than most economies by the 2007 recession. Local banks known as Sparkassen operate within geographically restricted areas and provide both retail and business banking there. Notwithstanding the existence of ordinary multinational banks, over 20% of ordinary local residents choose to invest in their local Sparkassen.

I welcome what the Chancellor said today about ISAs, but I believe that people would invest in local banks and institutions that supported the local economy and created jobs for young people. We want to see that

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happening, which is why we support the development of regional banks. Ever since the Conservative Government started to demutualise in the 1980s, destroying institutions such as Northern Rock, the Leeds Permanent building society and the Halifax building society, the move has been ever more towards centralising investment by the banks in this country. Local economies have suffered as a result.

Business investment has not recovered since 2007, and the City still dominates the economy. The growth that we are seeing in the UK is growth of the kind that led to the problem in the first place. We can all see the train coming down the track. We know what kind of a recovery this is, and we need to do something about it. The people I represent are not benefiting from the recovery at all. Women in my constituency are still earning less than they were in 2010, and men there have also seen a reduction in their incomes since that time.

Alun Cairns (Vale of Glamorgan) (Con): Will the hon. Gentleman give way?

Ian Lucas: I must make some progress; I have a particular point that I want to make.

This Government are not even addressing those issues. They do not seem to understand that they exist. Nothing that the Chancellor said today will help the people I represent. They are fed up with inequality in this country, and with the massive support that is given to those in the City and those who earn millions of pounds a year, who are so remote from the lives of my constituents that they can have no understanding of how the rest of the country works.

Believe it or not, there was a time when the Prime Minister supported a move towards greater equality. He quoted “The Spirit Level” in 2009, before he was elected, when he was trying to present a positive face for the Conservative party for the election. Those days are long gone.

We need to take responsibility ourselves. Inequality is the issue of the time. I am a member of the Nationwide building society.

Alun Cairns: Will the hon. Gentleman give way?

Ian Lucas: I will not give way; I have a particular point to make.

The chief executive of the Nationwide building society was paid £2.3 million last year. I have written to him asking him to support a motion within the society that his salary should be no more than 75 times the rate of the lowest paid employee in the organisation. This is a mutual society that we should all support. He has refused, and I as a member, acting as an individual, intend to present a resolution to the annual conference of the Nationwide building society. A mutual organisation should respect the principles of mutuality and should accept that it is not appropriate for investors’ money to be used for that level of executive pay. If people want executives paid at that level, they can go and bank with Barclays. When I shifted my account to the Nationwide building society, I did so because I believed in mutuals. I want my chief executive’s pay, like that of the chief executive of the John Lewis Partnership, who operates

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precisely on those terms and has been in his position for many years, to be linked to that of other employees in the organisation.

I am looking for support. Members in all parts of the House can join my campaign. I need 500 signatures by 4 April, and I hope the Chancellor of the Exchequer will consider joining it, if he is a member of the Nationwide building society. We need to ensure that the people we represent know that we understand that this country faces a cost of living crisis and that individuals are worse off now, and that we will not put up with increased executive pay of millions of pounds for people who are not supporting the local economies in our constituencies.

3.40 pm

David Mowat (Warrington South) (Con): It is a pleasure to follow the hon. Member for Wrexham (Ian Lucas).

There are four tests of a Budget that we could reasonably apply. First, is the cake growing? Secondly, are we distributing it fairly? We will come to that. Thirdly, did the Budget get tempted by short-term electoral considerations or was it long-term and structural? Fourthly, when the Chancellor had an opportunity, was he radical and reforming? On all four measures, this Budget is a success.

First, on growth, as we have heard, we are the fastest-growing country in the OECD—that is a tremendous statistic—and growing faster now than even the United States and Canada. In particular, we are growing faster than France, the country on which I believe the Opposition base their policies. Secondly, are we distributing the results of that growth fairly? We just heard a speech about fairness from the hon. Member for Wrexham. Income inequality in our society is at its lowest level for 28 years. Why is that? Because this Government increased capital gains tax by around 40% when they came in and have increased stamp duty by more than that. Both measures are bringing in significant amounts of revenue.

The Opposition are caught up in the debate on the 45% and 40% income tax rates. That is not how to achieve more equality in society. People are getting rich because of capital gains. Five years ago I knew people who were paying 10% capital gains tax under the previous Government when they sold their businesses. We have fixed that, which is why income inequality is much lower now. A further reason is that we are getting a great deal more in revenue from sorting out tax avoidance.

The third test is whether the Budget was designed for short-term electoral gain or whether it introduced long-term structural change. Some measures will kick in fast. The £500 extra on the personal allowance will come in quickly, but the Chancellor has spent just as much money as he spent on that on the carbon price floor, support for energy-intensive industries and the investment allowance. None of those things will take effect in the short term and all of them are important to the structural rebalancing of the economy.

Sheila Gilmore (Edinburgh East) (Lab): I do not know whether the hon. Gentleman has had time yet to look at the OBR report. The comment on the investment allowance in that report is that it will make very little difference to economic growth.

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David Mowat: I have not had a chance to read the report. According to the Red Book, the cost of that allowance will be £1.2 billion next year, an awful lot of money. I will not respond to the hon. Lady’s point about growth, because my point was that the Chancellor has introduced medium-term structural measures into the economy, which is a responsible approach.

The fourth test is whether this is a radical and reforming Budget. The measures on pensions, ISAs and particularly annuities are genuinely reforming, genuinely radical and potentially genuinely transformative.

I want to talk a bit about all those things, but first I want to say something about the support the Chancellor has been able to give the Foundation for Peace—the peace centre in Warrington. There was an issue to address, as it was funded from the lottery and that funding will run out in April. The work the centre does for victims, both of the troubles in Northern Ireland and of 7/7, was under threat, and the support that has now been given will fix that. It is also true—I know Colin and Wendy Parry agree with this—that the funding must be put on a sustainable basis, as the centre needs to do more projects over time with the Home Office and the Foreign Office and all that goes with that.

Guy Opperman: I totally endorse what my hon. Friend said. Does he also welcome the use of the LIBOR funds to support the scouts, girl guides and emergency services, and the waiving of the VAT for air ambulances, which is much welcomed after a long campaign in this House?

David Mowat: I support that, and I just reiterate the words the Chancellor used: those who have the worst values in our society are being used to fund those who have the best values in our society. That just about sums it up.

Jim Shannon (Strangford) (DUP) rose

David Mowat: I have given way twice already, so I am sorry but I am not going to do so now.

I wish to say a little about the carbon price floor, because I was delighted that the Chancellor has acted on it. The action makes no difference to our commitments on the overall carbon reduction profile that this country has made, but it makes a great difference to the potential carbon leakage we are facing in our great energy-intensive industries, particularly in the north-west and north-east. Some 900,000 people work in energy-intensive industries in our country, and I sometimes think they are forgotten in our dialogue about energy prices. It is worth understanding that what the Chancellor has done is remove the straitjacket on costs, which would have put a great deal of those jobs at risk. For example, we have already lost primary aluminium smelting in this country—it has moved out of the UK—and we are losing marginal chemicals capacity from this country. I am surprised that a number of Opposition Members are not more exercised about this issue in general, given that they represent parts of the north-east, where there is heavy chemical manufacturing, and there are a lot of energy-intensive industries and a lot of jobs, because we cannot rebalance our economy back towards manufacturing if we have differentially high energy prices in this country. We just will not be able to do that—it will not happen.

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This issue is not just about what is happening in the United States on shale gas and shale prices; it is also about what is happening on mainland Europe. It is an inconvenient truth—to use a known phrase—in this whole issue of carbonisation that we produce not only considerably less carbon per head than the EU average, but less carbon per capita. We produce 30% less carbon per head and carbon per capita than Germany, yet Germany is pursuing a policy of building unabated coal power stations at scale. We are being left behind in all that, and what the Chancellor has done on the framework is absolutely spot on and will make a difference to those 900,000 jobs. I predict that we will be revisiting this issue at the next Budget and certainly into the next Parliament, because there is a great deal of unfinished business in this area.

Before I leave the field of energy, may I say in passing that the infrastructure plan is very welcome? Two big parts of the national infrastructure plan are Hinkley Point C and Wylfa—together they make up about a quarter of it. They are both vital to our country and our economy. Both are currently under EU state aid investigation, which is holding up the projects. I have heard Ministers saying that they are confident that they will have that agreed, and I very much hope that is the case, because it would be a great paradox if those low-carbon projects, which are essential to our energy security and to our decarbonisation efforts, are held up within the EU at the same time as our EU partners are building unabated coal power stations at scale in countries such as Holland, Germany and Belgium.

I want to move on now to tax avoidance and tax evasion. The Red Book shows incremental revenue of £2 billion over the next two years from the anti-abuse legislation that we introduced. I very much welcome the Chancellor reducing the level of corporate avoidance of stamp duty from £2 million to £500,000. The closure of that tax loophole has brought in hundreds of millions of pounds. It is an example, as I said at the start of my remarks, of why income equality is so much better now than it was under the previous Government.

I also welcome the up-front taxation of tax schemes, which means that if people get involved in controversial schemes, they will not be saving tax and cash flow as they wait to go to tribunal. Her Majesty’s Revenue and Customs is also able to act more quickly than it has hitherto been able to do.

There were four tests today, and the Chancellor has passed them and any reasonable expectation of this Budget. I am happy to support it.

3.51 pm

Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op): The Budget mentioned two of the biggest issues in my constituency, which are housing and child care. However, the Help to Buy provisions solve the problems for only some people, but not for those who rent. That is a real issue in my constituency, and I will touch on it in a minute.

On child care, another initiative has been announced, but the practicalities of it have not been addressed. We still have a Government who are looking to threaten the quality of child care, which, for parents in my constituency, is a real concern.

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One of the key things that is missing from the Budget statement today is a Treasury commitment to freeing up public land for housing. Under Treasury rules, public land needs to be sold at the highest price. Years ago, when I was a councillor in Upper Holloway in Islington, I had to fight over the then Royal Northern hospital site to ensure that it was sold to improve housing in the area. Most of the housing there ended up being privately owned because of that very Treasury rule. Some 20 years later, we still have that same rule.

The Budget provided a great opportunity for the Chancellor to allow land to be sold at slightly lower than market rates so that more affordable homes could be built, thus improving public health and the general and economic well-being of people in my constituency. The St Leonard’s hospital site in my constituency is a worry as it is now owned by NHS Property Services and will have to be sold—if it is sold—for the highest rate.

Support for affordable housing in areas such as mine is very important. There are now more private renters than home owners. However, both private renting and ownership are out of the reach of people who live in social housing, and the waiting list for social housing is immense.

This Government treat the country as two halves. Over the past six months, a home owner in Hackney will have seen property prices increase by 3.58%. Someone could earn £15,060 in six months on an average property. The average price of a property in Hackney is now more than half a million pounds—£554,306. A flat would cost £347,000. Someone owning a property could earn £45,000 in a year—nearly double the national average wage. It is fine for those people who own properties, but for those who do not, ownership is a long-distant dream.

Let me quote from a letter from my constituent, Tommy. He said:

“I have been looking to purchase my first home. I am 35, and in full time work since I left university in 2001. I have worked hard my whole life but I still require assistance from my parents to purchase my first home.”

In some ways, Tommy is one of the lucky ones. Although he has not found a home, he has parents who may be able to provide him with some help. Many of my constituents are not in that situation.

Tim Loughton (East Worthing and Shoreham) (Con): The hon. Lady is making some good points about the shortage of affordable housing. Does she support an increase in the threshold of £4,250 for the rent a room scheme, in which landlords can rent out a room or floor of their house tax-free, which has not changed for many years, and does not reflect current rental values? I do not see such a measure in the Budget, but would she support an increase?

Meg Hillier: I completely support that. Only last night, I was talking to tenants in Haggerston about rent a room and the ability to take in a lodger. They worried about getting into tax and so on, and they were worried about the threshold. That is exactly the concern. In my constituency, someone could legitimately rent out a room in their home for £200 or even £250 a week, so they would quickly reach the threshold. That is a real issue: it is one small way in which we could help some people to find a home, but it does not solve the major problem.

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New home starts in the UK have gone down by 10% from February 2013 to just under 9,500, according to figures from the National House Building Council. Completed homes were just over 8,000, so we are a long way short of the target for the new homes that need to be built, and certainly for those that are genuinely affordable. I commend to the House the Co-Operative Housing Tenure Bill introduced by my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds). It is a great shame that the Chancellor did not take the opportunity to look at co-operative solutions that enable people to be much more in control of their own destiny.

I mentioned at the outset that child care is a huge issue in my constituency. I represent a very young borough, and parents want quality. It is a great shame that the Government took a “pile them high, teach them cheap” approach, although that was eventually dropped after their surprise at the backlash from parents. The tax break is welcome for those it helps, but there is confusion about how it will work. It is really important in child care policy that these things are simple, clear and do not change too often, as that makes it confusing for parents to navigate their way through.

Sarah Newton (Truro and Falmouth) (Con): Child care is really important to enable women to participate fully in the work force. Will the hon. Lady join me in celebrating the fact that the figures show record numbers of women in employment and setting up businesses? Does it not sadden her that today the Leader of the Opposition denigrated the achievements of women by attacking Conservative women, calling us “girls”. How would she like it if he called her a girl?

Meg Hillier: I do not need to be told by the hon. Lady about the leader of my party. He is an enormous champion of women. There are a lot of women, as we can see, in the shadow Cabinet and in his ministerial team. I do not doubt his commitment to women who work, and to women who do not work, in this country. The record of the Labour Government stands for itself.

On the issue of women’s employment, many women in work are in part-time jobs or on zero-hours contracts. The women I meet from day to day in my constituency are often keen to work more hours, but they cannot find them. Child care is often part of the problem. The figures from the Family and Childcare Trust show that the average cost of a nursery place for a child under two is £5.60 an hour in London. That is 28% more than the national average. The cost of child care in London is a big concern, especially as my constituents increasingly live in expensive private rented accommodation, which squeezes their budget. The cost of living is a big issue.

In London, the average cost of a childminder looking after children under two is £5.46 an hour, but in Hackney, it is much more, ranging from £6.50 an hour to £10 or even more. The supply and cost of child care are a real challenge. Providing support for the cost is one thing, but it does not deal with the question of supply. Cross-party work needs to be done on the issue. My party supports the right initiatives on child care, because we support women who want to work and have their children looked after properly, but we need to make sure that there are policies that we can support in the first place. Sadly, although there is much noise and talk about this, there has not been action at the right level.

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I have mentioned my view that the Government treat this country as two halves: the very wealthy, and then there are my constituents, who work on zero-hours contracts, are in part-time jobs, and are on the minimum wage, which has risen, but it is still tough to live in London on £6.50 an hour. A man came to see me. He was a kitchen porter and, although he was out of work, he was seeking a job. The distances he was being asked to travel to work, plus the extra hours of travel, meant that child care and travel costs made those jobs uneconomical, even though he was living in social housing. Those are real concerns for London, and we need to look at London weighting on some of the issues.

The increase in VAT has had a regressive impact on my poorer constituents. I was surprised to hear the hon. Member for Redcar (Ian Swales) defend the increase. I thought that as a Liberal Democrat he would not defend such a regressive measure.

For those people not in work, there is the whammy of the bedroom tax. Last night I met tenants in Haggerston who are very concerned about it. Those who are hit are having to pay £767 a year if they have one so-called spare bedroom, or £1,370 a year if they have two. Many of them will not leave their homes of many years, as one woman told me only last week. They will find the money somewhere or get into debt. The Government are contributing to indebtedness for people who do not have places to move to, even if they wanted to, and they do not have the money out of their benefits. The women I spoke with said, “I am temporarily not working. I want to work again, but I’m not going to leave my home, where I have lived for 32 years.” She was adamant about that and will go to great lengths, possibly getting into debt, to avoid moving.

Another opportunity has been missed. The housing benefit disregard in tax credit will be abolished when universal credit comes into place, which means that 100,000 people will see their child care support drop from 96% to 70% of costs. As my right hon. Friend the Leader of the Opposition said from the Front Bench, this Government give with one hand and take with the other. That will have a particular impact in my constituency because of the high private rents.

There are some things in the Budget that I welcome, such as the export loan changes, which will help many of the businesses in my constituency, particularly in Shoreditch. However, there was no move to make banks more locally accountable, as my hon. Friend the Member for Wrexham (Ian Lucas) highlighted. Although more data are now published on where banks lend, there could have been an opportunity for the Chancellor to look at a US-style community reinvestment Act. I hope that the Government will still consider that.

The tax avoidance measures, following up on the work of the Public Accounts Committee, are also very welcome. I hope that they will do something to stop big companies trying to dodge their bill to the British taxpayer. The stamp duty increase for companies purchasing properties worth over £500,000 might do something to stop overseas purchasers. The changes for air ambulance services will be of great benefit not only to my constituents—the Royal London hospital is just on the edge of my constituency—but to many people up and down the country.

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Finally, I am delighted that my constituents of Caribbean origin will now see a fairer deal on air passenger duty. It is about time that the people who broke their backs for Britain when they arrived in the ’50s and ’60s got a fair deal. It is an injustice that has now been righted. I also welcome the bingo tax changes. I support my local Mecca bingo hall, where I have called out the numbers, to my embarrassment and that of regular bingo-goers. It really is an important provision for many people, so it is good that that wrong has now been righted.

4.2 pm

Andrea Leadsom (South Northamptonshire) (Con): This Budget has been billed as a resilient Budget for a resilient economy. I say that it is a robustly, and indeed resolutely, resilient Budget for a really strong future economy. I completely agree with my hon. Friend the Member for Warrington South (David Mowat) that it passes all the tests of looking to the long term, rather than at short-term give-aways, which is so important in any Budget.

The first thing I would like to say is a huge thank you to the Chancellor on behalf of Northamptonshire for the contribution to a pothole fund, which Northamptonshire will be universally delighted about—[Interruption.]

Andrew Selous (South West Bedfordshire) (Con): It is not just for you.

Andrea Leadsom: That is a great shame. The Chancellor mentioned my hon. Friend the Member for Northampton North (Michael Ellis), so I was rather hoping that we would get to keep it all, but perhaps not.

I would like to mention the efforts that the Chancellor has made for business, which is the source of our country’s long-term recovery. Doubling the annual investment allowance to £500,000 per annum is superb for businesses and will allow manufacturing companies in my constituency, for example in motorsport valley—the area around Silverstone—to invest in plant and equipment. Doubling the UK’s direct export lending programme will enable us to create the export-led recovery for the long term that we so much want to see. Capping the carbon price support rate will save costs for manufacturers in the medium and long term. That is great news for the east midlands, the west midland, the north of England and the entire UK. I hope that Opposition Members will be honest enough to welcome those measures.

I commend the Chancellor on his work for savers and pensioners, which is truly groundbreaking. I also want to pay tribute to Dr Ros Altmann, who has long campaigned for changes to annuity rates. She has been pointing out the weakness in the annuity construction of pensions for many years. I understand that she was in fact an adviser to Opposition Members when they were in government. She has been trying to persuade Governments of all colours to lift the unfair obligation to buy an annuity on reaching retirement age. I am delighted about the news, which will really change the fate of future pensioners.

The annual ISA cap has been lifted to £15,000, but much more important is the allowing of investors to choose whether they want to invest in cash or stocks to meet their savings needs. These things are incredibly important. When it was introduced, quantitative easing was essential to try to prevent further harm to our

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economy. However, there can be no doubt that the historically low interest rates that have resulted from the QE programme have very badly harmed savers and pensioners—those on fixed incomes. The structural change that the Chancellor has made is really important and will be welcomed not just in my constituency but across the UK.

I have paid tribute to Dr Ros Altmann, who I feel sure is a woman of absolutely high enough calibre to be considered for the next post available on the Monetary Policy Committee, the Financial Conduct Authority or the Financial Policy Committee. I defy any Member to disabuse me of that notion. I also welcome the appointment, announced yesterday, of Dr Shafik to the Monetary Policy Committee.

Diana Johnson: On merit.

Andrea Leadsom: Absolutely on merit, as is the case for all high-calibre women. The Governor of the Bank of England is showing real foresight in recognising that he needs committees of a diverse range of talents—not just the white middle-class theoretical economists whom he has tended to inherit from the previous Governor. The appointment is incredibly important. Dr Shafik will be leading the Bank’s review of its market intelligence following the fixing of foreign exchange rates. The Treasury Committee will follow that with great interest. Sadly, there may be many more fines as a result of the appalling behaviour that we continue to see among the banks. Those fines will be put to good use.

I want to use the last few moments of my contribution to talk about a real game-changer for the banks. I commend to all Members something in page 84 of the Red Book. It is perhaps the most ground-breaking, profound proposal of the Government’s in this Budget:

“The government has today announced that it will switch on the Market Investigation Reference powers of the Payment Systems Regulator a year ahead of schedule.”

That means that there will be a regulator of payment systems. Until now, there has been a small group of powerful banks that are, yes, too big to fail, as we have discovered only recently to our enormous cost. They have also been determined to put up barriers to prevent the entry of second-tier, smaller banks and shut out new competitors. A regulator of payment systems will surely reduce those barriers and enable the new banking competition that Members across the House want.

Specifically, the really important measure in the Budget is the requirement on the payments regulator to review the effectiveness of the current account switching service and look at instant account portability before the next Budget. If someone wants to switch bank account now, they have to move their account number, cheque book, bank cards and so on. People get to keep their mobile phone numbers when changing mobile phone provider; it would be so much easier for people if they got to keep their bank account numbers when switching bank accounts. It would also be so much easier for new challenger banks to persuade us to switch—“Just give us a try. If you don’t like us, you can go back to your old bank tomorrow.”

People could literally switch bank once a week or fortnight. That would significantly encourage new competition, but most importantly it would persuade the big banks that they needed to enter into customer

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retention strategies, which they have not had to do for years. Such a change would significantly improve the fate of small and medium-sized enterprises, which desperately need to be able to access new sources of financing. It would also mean that the Bank of England could easily step in to move accounts from a failed bank to a survivor bank, thereby ensuring that the awful situation of people queuing down the street to take their money out, as happened with Northern Rock, would never happen again.

In summary, this is a resolutely resilient Budget which I believe contains some seriously game-changing proposals that will have a significantly positive impact on the future of our economy for many years to come.

4.9 pm

Mr Russell Brown (Dumfries and Galloway) (Lab): It is a pleasure to follow the hon. Member for South Northamptonshire (Andrea Leadsom). She concentrated on banking, but my contribution will be somewhat more mundane, because I regret to say that far too many of my constituents have probably never even seen the inside of a bank, let alone know about the workings of a bank.

We again heard today about a drop in unemployment figures. That really has to be welcomed, but I remind the House, as I have done over a period of time, that some parts of the country are not seeing the recovery that others are experiencing. I listened intently to the Chancellor’s fantasy figures and tried to picture in my mind his portrayal of this rapidly improving economic situation across the country. I tried desperately to engage with that, and probably to be as imaginative as the Chancellor himself in entering his world, but I can tell him that far too many individuals and their families, many of them hard-working indeed, have simply not been given a chance to enter that imaginary world.

There can be no doubt—I would be the first to admit it—that thankfully, after some three years, there is a return to growth. However, the Chancellor needs to recognise that in my local authority area an increasing number of people are claiming jobseeker’s allowance. This month, yet again, we saw a further rise in unemployment on the back of last month’s rise. The figure now stands at 2,740—an increase of a further 0.1%. In May 2010, 75 young people were claiming jobseeker’s allowance for more than 12 months; that figure has almost doubled to 145. In February, youth unemployment rose to 740—an increase of 0.3% on the previous of month to 6.7%, which is 1% above the Scottish average and 1.5% above the UK average. In May 2010, the number of adults claiming jobseeker’s allowance for more than 12 months stood at 460; last month, the figure rose to over 800.

That is a tragedy for each and every one of those people. If they took time today to listen to the Budget statement, it will only have confirmed what they have probably suspected for a very long time—that the Chancellor has lost touch with those at the bottom end and does not understand the battle and the sheer struggle that still goes on for many people right across the country.

Geraint Davies (Swansea West) (Lab/Co-op): My hon. Friend might be interested to know that in Swansea,

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65% of people on JSA have been sanctioned. These are people on less than £72 a week. It is not that the Chancellor has lost touch with them; he is crushing them under his boot.

Mr Brown: My hon. Friend is right. If I have time, I want to mention an experience I had with a young couple who came to my surgery last Friday.

Earlier today, I met a representative of the Prison Officers Association from my area who was down in London taking part in a rally that had been timed to coincide with the Chancellor’s Budget speech. He explained to me that morale in the prison service is at an all-time low because of increases in serious violent attacks on prison staff, a five-year pay freeze and continuing demand for front-line staffing cuts, and an increase in pension contributions that is driving down the take-home pay of hard-working public servants. I suspect that it is not a job that many of us would relish doing. That driving down of take-home pay is coupled with working in an environment that is physical and, all too often, dangerous. These public servants are now being asked to work up to the age of 68. It is little wonder that they are angry and have taken to the streets today.

The Resolution Foundation’s report “Low Pay Britain 2013” shows that 4.8 million workers—20% of all employees—earn below the living wage, which is a massive leap from the 3.4 million in 2009 at the height of the recession. The growth of poverty has an uneven impact on particular sections of the population, and the tragedy is that young workers have been hit particularly hard: one in three 16 to 30-year-olds—2.4 million—are on low pay and are low skilled. These young people deserve better than this. Decent adults they are and will be, but they need greater chances in life. Living standards are down for far too many people, and as colleagues have said, that has been compounded by the 24 tax rises, households £1,600 a year worse off, and a reduction in tax credits.

On the positive side, I applaud the decision to reduce bingo duty to 10%. I am sure that the industry will be very much relieved at that. Like hon. Members on both sides of the House, I have visited my local bingo club, but there were fewer customers than I had ever seen before. The simple reason behind that is that people’s incomes have reduced so significantly that they simply do not have the wherewithal to spend time at the bingo hall in the way that they did for many years.

I also applaud the steps being taken to support pensioners through the relief measures in respect of savings, but again I have to say that many pensioners have no savings at all, and struggle to get by from week to week or month to month. These may be pensioner couples where one of them has been a carer for a son, daughter or elderly parent. They have struggled to get through their working life and they are now struggling in their old age.

I suspect that many energy-intensive industries will be delighted to hear of the extension of the existing compensation scheme. I have one in my constituency that has been pursuing me for answers to various questions that it had. Perhaps now that the Budget is over, I will be able to get those answers without any pre-Budget leak.

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I am critical of the youth unemployment levels in my local authority area, and with some justification, but I welcome today’s announcement on apprenticeships, providing that genuine opportunities will be there for young people. I came across a young woman on a Government employment scheme working 32 hours in a retail business. When the scheme ended, the company said that she could remain with them, but that did not mean 32 hours’ work, but eight hours spread over a Saturday and Sunday. She is now out looking for a second job, and—who can tell?—perhaps a third job. It is a throwback to where we were in the early and mid-’90s.

I welcome the decision not to increase fuel duty, but as I have said on many occasions in the House, under the previous Government we saw nine years and 11 potential increases that were either suspended or not introduced at all.

The decision on the personal tax allowance will be welcome, but—here I disagree with my hon. Friend the Member for Glasgow South (Mr Harris)—many people are not even in the tax bracket, so they will see no benefit from the increase from £10,000 to £10,500.

4.19 pm

Charlie Elphicke (Dover) (Con): It is a pleasure to follow the hon. Member for Dumfries and Galloway (Mr Brown). I want to start by welcoming the Budget and reflecting on the legacy the Chancellor inherited before bringing us to where we are today. Let us not forget that we had a deficit of £156 billion a year, which has now gone down by a third to £109 billion a year. There was a structural deficit from 2002 onwards, and throughout the Labour years there was a total failure to regulate the banks and our banking system, which left it massively exposed, and unemployment rocketed.

The Chancellor had the most difficult inheritance in this country’s history in many ways. He has turned things around these past four years so that this country is now on the path to recovery. The economy is growing, jobs are up and the future looks promising for Britain. In the past, the roof was not fixed while the sun was shining, but while it has been raining we have been furiously fixing the roof and doing so with some success.

Areas such as my constituency of Dover and Deal do not have enormous amounts of money and there is a lot of deprivation. The rise in the personal allowance to £10,500—it was £6,475 when I was elected—will make a real difference to those constituents of mine who are not well paid. It will make an enormous difference for people without a lot of money.

The freeze in fuel duty will make a massive difference for the many people in my constituency who have to travel by car. It is now 20p lower than it would have been under the previous Government’s plans. A freeze in council tax year after year makes a massive difference to my constituents, after it had doubled in previous times. Moreover, given that unemployment in Dover and Deal rose by 50% in the previous Parliament, it makes a massive difference to my constituents that it has fallen by 20% in the past year alone: more jobs, more money, more aspiration and more success. Aspiration matters, too: the number of apprenticeships has risen from 440 when I was elected to 880 today, so there are more chances for our young people.

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Not everyone in my constituency is extremely badly off; there are areas where people have more money and are trying to find somewhere to save it in order to get a return. I greatly welcome the fact that we are incentivising ISA saving with a £15,000 limit. It is really important that we encourage a savings culture in this country. Let’s face it: it was destroyed by the pensions tax and everything that followed in previous times. We have to rebuild that savings culture, the idea of a rainy day fund and the ability of our constituents to take more responsibility.

What this Government have done is not just about practical help in terms of more jobs, more money, more prosperity and fewer taxes. In my constituency they have made a much bigger difference in terms of infrastructure and investment. When I was elected, the port of Dover was about to be sold off, having been stuffed in a car boot sale by the previous Prime Minister in a desperate bid to raise some cash. It was going to be sold off to the French or whoever—we did not know who. Our hospital had been decimated over the past decade and was not fit for purpose. A new hospital was needed and had been talked about for years. There were stalled construction sites all over Dover and Deal. I ran a campaign against “coming soon” signs, because they had said “coming soon” for so long—for the past decade—that one of them had rotted away and had to be replaced.

Fast-forward to 2014 and the port has been saved: we are now talking about a community-led port that can get the investment that the port of Dover has needed for so many years. A new hospital is being built, which will make a practical difference to people in their daily lives and will open its doors next year. More jobs have made an enormous difference to people. A compulsory purchase order has been served on Burlington house, which scars the seafront of Dover. That is making a difference and giving people more confidence and hope and a greater sense of belief in the town’s future. A fast train now rolls up at Deal—which was previously considered a village—and shortly will do so all day long. That kind of infrastructure makes a massive difference to people’s prosperity, success and aspiration.

Whereas in previous times the regional South East England Development Agency spent £20 million building a business park near Deal without anything on it—there were not even any buildings—now the coastal communities fund and the Homes and Communities Agency are supporting the Hadlow college project at the former pit site of Betteshanger, which promises to create 1,000 new jobs. That sort of practical help on the ground, which goes beyond high-level policy discussions, makes such a very big difference to people in their daily lives.

That is why I regret hearing the Leader of the Opposition’s speech. He reminded me of Marshal Foch saying, “My centre is collapsing, my left is in retreat and my right has gone altogether”—because all the Blairites have been chased away, sacked and discredited or have resigned. The Labour party’s lurch to the left has done it no good whatever. In its centre, Labour Members have no economic policy, except for more spending, more welfare, more debt and more taxes. Those discredited policies of the past will not take this country forward. To try by sleight of hand to say that they will have a current surplus—thinking that people will not notice a 25 billion quid bit of wriggle room and that he will get away with it—is not the right way to do it. The Leader of the Opposition should have come to the Dispatch

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Box today with a plan and a positive case, but all he did was rage against iniquities largely created by his party in past times or during the previous Parliament.

Mark Garnier (Wyre Forest) (Con): My hon. Friend will also have noticed that the Leader of the Opposition referred to nothing having been done to reform the banks. He seems to have been asleep for the past four years, during which banking reform and financial services legislation has gone through and a huge amount has been done to reform the banks. Does my hon. Friend think that the Leader of the Opposition has been asleep or has just ignored what has happened?

Charlie Elphicke: My hon. Friend asks a very important question about what the Leader of the Opposition has been doing for the past four years. He has certainly not been preparing a high-quality response to this Budget, that is for sure.

Even though the Leader of the Opposition wants to say, “Situation excellent; I am advancing”, not only is there a complete hole or collapse in the centre of the Labour party, with the Opposition having no long-term economic plans, but on its left flank, which is in retreat, Labour Members are talking about the cost of living. What will they say if wages rise above inflation in a few months’ time? It little behoves them to talk in that way, because people will start to see through everything they say. They are now saying that long-term unemployment is terribly high and all that sort of thing. However, when they talked about high unemployment, it started falling, and when they then talked about the lack of full-time jobs, people started getting such jobs. The risk is that the number of long-term unemployed will start to fall in a few months’ time, and they will have to look for another selective statistic to cite. Such talk will not do them any good, because people will see through it.

It is therefore time for the Labour party to think more carefully and more long-term about what it can offer this country, because right now it can offer very little indeed. This Government can and rightly do now say that we cannot give back the keys to the people who crashed the car, particularly when they are still drunk, still will not listen and still have not learned anything, but will carry on and do it all again.