The hon. Member for Wigan mentioned the need to ensure that we deal fairly with small businesses. Again, we can compare and contrast the efforts of the UK Government under difficult financial circumstances with what is being done in Cardiff. For example, there have been calls, demands and cries for help from small businesses in the retail sector, which have stated clearly that they need help with business rates. The Chancellor has responded so that, for example, any small business in England that has a rateable value of less than £50,000 will not only have a cap on their business rates this year but get a £1,000 rebate. That might not sound like a lot of money to some Members, but for a small retail business in my constituency that is struggling to survive, £1,000 could make the difference between success and failure. Again, though, what is happening to that £1,000 rebate in
25 Mar 2014 : Column 217
Wales? It is not getting through to small businesses. The Welsh Government are retaining it in Cardiff to support another of their pet projects.
We hear from Opposition Front Benchers—we heard it from the shadow Secretary of State for Work and Pensions today—that people in this country face a cost of living crisis. I invite them to look at the situation in Wales. In my constituency, a Labour-Plaid Cymru council has increased council tax not by 5% or 10% but by 23% since 2010. That increase could have been avoided if the money made available by the UK Government had been passed down to local authorities in Wales, so that they could try to support hard-working families at this difficult time by freezing council tax. It is a fact that only one council in Wales has managed to freeze council tax for two years. Conservative-controlled Monmouthshire has done so for two successive years, despite the lack of financial support from the Welsh Labour Government.
In my own authority of Conwy, we have had increases of 5% and 4.8%, with a total increase of more than 25% since I was elected, simply because the Labour party in Cardiff and in my constituency is happy to place further burdens on hard-working families at a time when they need support. The situation is unacceptable, because money has been made available under difficult circumstances by the Chancellor but the Welsh Government have decided that they would rather keep it than to support hard-working families in north Wales. That is clearly a disgrace.
This is a solid Budget that will allow us to look to the future with confidence. I would be delighted if some of the changes in England were also to be implemented in Wales. Unfortunately, that is not the case, but I hope that the people of Wales will be wise enough to identify the failures of the Welsh Government in that respect.
The other key thing that has been welcomed with open arms by my constituents is the change to pensions. We have heard some reservations from Opposition Members, but not perhaps from Front Benchers, who seem to be aware of the popularity of the change. The change is popular, because it is right to tell people that they need to take more responsibility for their own lives. We have seen that in relation to the changes in personal taxation, on which the coalition have said, “Let’s increase the personal tax allowance and allow people to keep more of the money they earn.” The Labour version is to say, “Give us the tax, and we’ll put it through a bureaucratic system and then we’ll give you something back, which you must be grateful for.” I must say that when it comes to a general election, it was very handy for people to be able to phone up and say that the Conservatives are getting rid of tax credits.
The key point is that we believe in increasing the personal allowance because we trust the people. In the same way, we are making the change to pensions simply because we trust people to make the right decision about their own money. What is key is that if people are willing to save and invest for their own pensions, surely they have the right to make their own decision about how they best make use of their pension pot on retirement. The change will be welcome in my constituency, in which the average age is among the highest of all constituencies in Wales; indeed, my postbag tells me that it is being welcomed now. The key thing is that we
25 Mar 2014 : Column 218
are making the change not because we have a party political agenda, but for the simple reason that we trust the people to make the right decision about their own money.
4.27 pm
Graeme Morrice (Livingston) (Lab): No other issue is more likely to define this parliamentary term and this coalition Government than welfare and the cost of living. The past four years have been very tough for a great number of people, as I am sure all hon. Members are aware. The living standards of the majority of our constituents have fallen and the value of real wages has dropped, while the cost of living has gone through the roof. Many have lost their jobs or their businesses, but as a result of the Government’s welfare changes—I will not dignify them by calling them reforms—it is toughest of all for those who rely on others and for those who struggle to support themselves even in the best of times.
Once again, the Budget was a missed opportunity to address that and other issues. Instead of taking a step back and examining what could be done to make a tangible difference to the lives of some of the most vulnerable people in our communities, the Chancellor and the Government have decided to draw electoral dividing lines. They could have announced measures to mitigate the worst excesses of their welfare changes, or to help young casualties of the financial crisis back to work, funded by a tax on bank bonuses that would be paid by the very people who nearly gambled away their future. The Chancellor could even have made good on his promise to raise the minimum wage to £7 an hour. Instead, he chose to court the UK Independence party vote with tougher platitudes on welfare and to pave the way for more cuts, while those on his Christmas card list enjoy a tax cut larger in value than the average worker’s wage.
The Chancellor boasted of new private sector jobs, but ignored the fact that many of those are low-paid, part-time, agency or zero-hours contracts, and that some people are living not month to month or even week to week, but literally day to day. The Government must take action now to end the scandal of employment abuse, by restricting zero-hours contracts and promoting the living wage.
Government Members brag of an increase in the personal allowance, but that will be completely swallowed up by inflation, stagnant wages, rising energy and food bills, and previous changes to VAT and in-work benefits. According to the Institute for Fiscal Studies, the actual worth of the increase to those on low incomes will be as little as £2 per week, with one in six workers earning too little to benefit at all. The Government are for ever lecturing that austerity measures are unavoidable and that the rich are paying more than anyone else—as if progressive taxation were created only in 2010.
While my constituents are saddled with the bedroom tax, the shambles of universal credit, and months of delays waiting for personal independence payments, millionaires get massive tax cuts and bankers continue to pocket their grotesque bonuses, now totalling £1.6 billion. If the Government were really on the side of working people they could have raised additional income to help my constituents, by cutting back pension tax relief for people earning more than £150,000 a year to 20%—the
25 Mar 2014 : Column 219
same as for basic rate taxpayers. House of Commons Library estimates state that that would raise between £900 million and £1.3 billion—half the amount that will be lost to the economy through the Government’s welfare changes, snatched from the poorest in society. Even the lower estimates of that revenue would cover the cost of Labour’s compulsory jobs guarantee for young people after its first year of implementation.
The Chancellor could have taken meaningful action to help working people, but the figures behind the Budget neatly illustrate the real legacy of this Government: 350,000 people going to food banks; 400,000 disabled people paying the bedroom tax; and millions of working people worse off by, on average, £1,600 a year. The Government believe that the rich will work harder only if they are made richer, and that the poor will only work at all if they are made poorer. The truth is that, sadly, there is precious little in this Budget for ordinary working people. Once again that shows that the nation is worse off under the Tories, with a Government who are out of touch and do not really care.
4.32 pm
Neil Parish (Tiverton and Honiton) (Con): It is a great pleasure to follow the hon. Member for Livingston (Graeme Morrice) although I disagreed with many aspects of what he said, in particular his comments about bankers’ bonuses. Under the previous Labour Government, £12 billion was spent on bonuses but that has dropped to £1.6 billion. That is still too much, but it is less than what Labour intends to spend on its various projects, which it spent many times over.
I welcome this Budget, and I congratulate the Chancellor and the Conservative-led Government on getting to a situation where, by the end of the year, we will have virtually halved the deficit that we inherited from the Labour Government. Let us not beat about the bush: we as a country were borrowing £120 billion, not to build infrastructure projects such as HS2 or anything like that, but just to cover the running costs of day-to-day government in this country such as local government spending and housing benefit. Those things have to be paid for, and we were borrowing the money for it.
Who will pay that money back? Not necessarily my generation, but that of my children and grandchildren, will be the ones who pay back the money borrowed by the last Labour Government. There is no great morality in borrowing more and more money, yet that is all we saw from the last Labour Government, and that is all we will see if—God help us!—there is a future Labour Government. I applaud the Government for taking the right decisions. We have control over spending and that needed to be done.
I want to comment on the help for savers in the Budget. For five years we have had a 0.5% base rate of interest. When I was in business, I lived through interest rates of 7%, 8%, 10%, 12% and even 15%. They were crippling for those who were borrowing money, but for those who were saving and had money in the bank the high interest rates gave them a very good income. In this five-year period with a 0.5% base rate, our retired people and other people with savings have had a very low income from their savings. People will now be able to put up to £15,000 a year per person into an ISA, and that is to be welcomed.
25 Mar 2014 : Column 220
I also welcome abolishing the 10p rate on savings income. If hard-working people on the base rate of tax have paid tax on their savings, why should they then have to pay tax on the income from those savings? This is, therefore, a very helpful measure. From 2015, pensioners will have access to a bond with a 2.8% return for a year’s savings and 4% on a three-year bond. In these very difficult times with very low interest rates for savers, that is very much to be welcomed.
It is a good idea that people will not automatically have to buy an annuity. For too long, pensioners have been held to ransom by those who sell annuities. There will now be competition. I have been on the Lamborghini website, but I have not seen a huge increase in the price of Lamborghinis as a result of what the Chancellor put in his Budget. I trust people to spend their money, which they have worked hard to earn and put into their savings all their life, in a way that they want. If they want to buy property and use it to provide somebody with a rented home, that is also good news for the economy.
Personal allowances are going up to £10,500 in 2015-16. They are always good for my constituents and good for the people of this country. The Government cannot create jobs or increase the buying power in people’s incomes by waving a magic wand, but they can reduce the amount of money they take away from people. That is what the Government are doing. Let us not forget that this is a Conservative-led Government. We are prepared to give hard-working people on low wages as much money as they can in their pockets, so that they are able to buy as much as they can.
Lorely Burt: I am very interested in the hon. Gentleman’s comments on the Conservative-led Government, but this is a coalition Government. The policy on hard-working people keeping more of their money actually comes from the front page of the Liberal Democrat manifesto. He is most welcome to praise it and it is an excellent policy.
Neil Parish: I thank the hon. Lady for her intervention. It is indeed a Liberal Democrat policy, but it is also a Conservative policy. If we look at the make-up of the Government Benches, there are some 307 Conservative MPs compared with 50-whatever it is of Liberal Democrats, so I think the Conservatives can take a fair share of the credit for bringing the policy forward. As I said, the rise in personal allowances to £10,500 in 2015-16 is very good news, because it will take more and more people out of tax.
Taking a penny off the price of a pint of beer is great. The Otter brewery and the Branscombe Vale brewery are in my constituency. Of course, we also have Aston Manor brewery, which creates wonderful cider. While I am very happy that the Chancellor has taken a penny off beer and has frozen cider duty, I hope—being a good west country man—that cider will get its fair share in the form of a duty reduction at some point in the future.
There is no doubt that the council tax freeze that the Government have delivered, through both Conservative-led Devon county council and Mid Devon district council, has helped people greatly with their living costs, and I think that we, as a Government, should be commended for it. We in Devon welcome the help for social enterprise,
25 Mar 2014 : Column 221
because Devon has one of the highest densities of social enterprise in the country, and we welcome the help with fuel duty for the air ambulance service, because Devon has a very successful air ambulance.
The doubling of the business investment allowance to £500,000 is great news for the economy, because businesses do not get any relief unless they invest the money. If we want to see investment in the private sector, it is absolutely right for the allowance to be raised. The help for energy-intensive companies is also absolutely right, because of the rise in energy prices.
For all those reasons, I very much welcome the Budget.
4.41 pm
Jenny Chapman (Darlington) (Lab): It is a pleasure to follow the hon. Member for Tiverton and Honiton (Neil Parish), although I wish he had said more about youth unemployment. A golden thread ran through the speeches of many Opposition Members, most notably my hon. Friends the Members for Coventry South (Mr Cunningham), for Liverpool, West Derby (Stephen Twigg), for Telford (David Wright), for Wigan (Lisa Nandy), and for Livingston (Graeme Morrice). Their speeches focused on youth unemployment, which is clearly an issue that matters greatly to Opposition Members. It certainly matters greatly to me, because in my area, the north-east, it has never been dealt with properly since the election. Although we are seeing some very slight decreases, youth unemployment in my constituency is still double the national average, and Darlington actually does quite well in comparison with the rest of the north-east.
Youth unemployment and low pay are the two biggest challenges that face us, and they are two issues about which the Budget said very little. The average wage in Darlington is £440, and youth unemployment is now at 9.6%. That is not acceptable to us, and, to its credit, private sector companies in Darlington were not prepared to accept it either. They were concerned about the end of the future jobs fund, and decided to take matters into their own hands. I pay tribute to Sherwoods, my local Vauxhall car dealer, to The Northern Echo, to my local council and to the local voluntary sector. They got together and decided to do something, because they knew that they would not get much joy if they waited for the Government to take a lead. They then formed the Foundation for Jobs, a local initiative. Let me say at this point that I agree wholeheartedly with my hon. Friend the Member for Liverpool, West Derby that successful initiatives to address youth unemployment are best delivered through local government.
We launched the Foundation for Jobs in April 2012, so it has been going for nearly two years. We have worked with more than 2,700 young people, and have secured 250 new apprenticeships through the foundation. More than 2,000 school-age kids are building closer links with industry, 230 young people are taking part in internships or eight-week work experience placements, and 66 young people have developed their entrepreneurial skills. The foundation is based locally, and has received no funding; it depends entirely on good will. Government Members challenged the shadow Secretary of State for Work and Pensions, my hon. Friend the Member for Leeds West (Rachel Reeves), on Labour’s jobs guarantee,
25 Mar 2014 : Column 222
suggesting that private sector firms would not be interested in taking part. I can tell them that they were completely wrong. More than 150 businesses in my constituency alone have grabbed with both hands the opportunity presented by the Foundation for Jobs, and they would welcome the opportunity to do more. To suggest that small businesses are not interested, do not have the time or are under too much pressure makes them sound a lot less far-sighted than they are.
All that businesses get in return for participating in the initiative, apart from the satisfaction of knowing they are giving a young person a chance, is a little promotion in my local paper, The Northern Echo, which has taken an extraordinary lead. In the absence of a sensible Government scheme, Members across the House will have to take matters into their own hands, and I think local businesses are up for the challenge.
The foundation makes the link between young people and growing industries, which know they need a trained work force. They are looking at the provision available and the skills young people have, and they are looking at the challenges facing young people—who in my constituency are increasingly unwilling to take on the debt they would have if they went into further education—and they are trying to dispel myths about careers such as engineering.
This has been a lot of fun. We have done events with over 100 secondary school youngsters at a time, trying to get them to see the real face of modern engineering. We have performed computer-aided design tasks and we have made basic electric car batteries, wired wind turbines and designed a wind farm. We have built suspension bridges with over 200 young people. It has been quite an education for everybody, and one thing that stands out for me is the absence of advice and guidance for young people now that, thanks to a decision made by the Government a couple of years ago, they are no longer entitled to any face-to-face information, advice and guidance before they leave school, which is disgraceful. If we are to have any hope whatsoever of improving social mobility, particularly in the north-east, we have to improve the offer to young people in terms of advice and guidance.
Labour has made a sensible suggestion in the form of the jobs guarantee, and I am convinced the private and voluntary sectors and the larger public sector employers in the north-east would be very keen to get involved in it. The jobs guarantee would last for the whole of the Parliament for 18 to 24-year-olds who have been out of work for over a year, and twice as many of those young people are out of work now than there were in 2010. If that was my track record, I would be ashamed, and I really do not understand why the Government are not.
Young people will be able to work for 25 hours a week on the minimum wage, the employer must provide training—I think they will be only too willing to do so—and this would rightly be funded by a tax on bankers’ bonuses and on the pensions of people earning over £150,000 a year. I know my constituents support this and local businesses are crying out to be involved, and if the Government had any humility they would be taking on this idea and getting on with it now, rather than our having to wait for a Labour Government.
25 Mar 2014 : Column 223
4.48 pm
Richard Fuller (Bedford) (Con): Budgets aren’t what they used to be. It used to be that there were no surprises in Budgets because the measures were trailed in the media; that is what we got used to under the last Government. Yet one of the most far-reaching and long-term changes came as a surprise in the Budget statement, and I commend the Chancellor for that.
Budgets aren’t what they used to be because they used to be met by a vociferous and articulate Opposition pulling the Budget to pieces and expressing their hostility to measure after measure after measure. That has been replaced by a deathly silence on the Opposition Benches, and here we are with two hours to go still wondering whether the Opposition will decide to oppose anything in the Budget whatsoever. I do not know whether the shadow Chief Secretary to the Treasury has yet worked out with his colleagues whether they are going to be more ambitious and more left wing in their response, or whether they are going to go along with what the Government have provided.
Richard Fuller: Perhaps my colleague in the coalition will enlighten us on what she understands the Labour party may do.
Lorely Burt: As my hon. Friend was speaking, I wondered whether the Opposition have nothing to say because the Budget is so excellent.
Richard Fuller: That is a fair comment, but we would hope for critical thought—a thoughtful Opposition going through the Budget and finding good reasons to oppose what is in it. Again, however, we heard nothing from the Opposition. It is all very well trotting the shadow Chief Secretary into the media studios to claim—despite the fact that growth is up, unemployment is down and inflation is down—that everything is going badly, like a latter-day Chemical Ali, but the truth is the Opposition have no coherent response to what will prove to be one of the strongest foundations for long-term stability in our economy.
That foundation is based on the sensible principle that people know best how to spend the money they have earned. This Government recognise that and, more importantly, in this Budget we recognise that people understand that when they have spent a lifetime saving money from their earnings, they are in the best position to decide how best to spend it. They do not want to be artificially constrained by someone else telling them how best way enjoy their retirement. This Budget delivers that freedom to them and should be applauded. It comes after years of socialist trickle-down, taking money from working people to put into Labour’s big bureaucratic plans—out of touch with the realities of people—to find out whether their Highgate polices are somehow going to deliver from the socialist graveyards in Highgate to the people of Bedford and Kempston. We have dismissed all that top-down, trickle-down, socialist rhetoric, in order to give people back the money they earned. This is a Budget for working people, and I am proud to support it.
The Budget also shows that the Government recognise that as we were so highly leveraged—with so much debt—in 2010, it will take a long time to recover. A few
25 Mar 2014 : Column 224
years ago, I would have urged the Chancellor to go further and cut expenditure more, but he chose a middle path on reducing public expenditure. We have made progress in bringing the deficit down, and sometimes we are now joined by people who said a few years ago that we were going too far, too fast. The Chancellor has found a middle way with that.
The Opposition’s level of coherence on this Budget is most starkly demonstrated by their position on the benefit cap. May I say to the shadow Chief Secretary—if he has the time—that I understand from the speech of the hon. Member for Leeds West (Rachel Reeves) that the Opposition are going to support the benefit cap? Page 88 of the Red Book contains a helpful listing of the benefits that will be included in the benefit cap, which include housing benefit, other than housing benefit passported from jobseeker’s allowance. I presume that that includes the spare room subsidy. So my question to the shadow Chief Secretary, who, let us face it, ought to have some economic competence, is: if the spare room subsidy is included as a benefit, how can he keep referring to it as a tax? Does he understand the difference between a tax and a benefit? If he does not, and if he is going to vote on this, will he stop—[Interruption.] He is saying from a sedentary position that it is not just him, but he is charged with coming up with economic policies. One core feature of economic policy is understanding the difference between a benefit and a tax.
Dame Anne Begg: I just want to make sure that the hon. Gentleman is clear about this. The reference is to housing benefit but not JSA, but most working people who get housing benefit do so as a result of their being on JSA, which does not fall under the cap. Most people on housing benefit in their old age might fall under the cap, but they are not subject to the spare room subsidy—the bedroom tax.
Richard Fuller: I am grateful for that clarification. I hope the hon. Lady also understands that when people turn an important issue such as the spare room subsidy into political slogans it makes it much harder to engage on where the policy perhaps is being applied too aggressively or not aggressively enough. I have found that a tremendous barrier to engaging with people about how we can make sure the Government are getting that policy right. I hope we can use language in a way that people can understand.
Youth unemployment has been mentioned by many Opposition Members, including the hon. Member for Darlington (Jenny Chapman). I agree that youth unemployment should be a priority not just for Government but for each of us as Members of Parliament. That is why I am so proud of Government Members and some Opposition Members, who have proactively gone out and encouraged local employers to give young people a start in their careers—whether it is in an apprenticeship, part-time work or work experience. We should not always look to Government to achieve changes in youth unemployment, particularly now with the national insurance changes that are coming in. There has never been a better time than today to get a young person into work.
It is important that we thank the Government for sticking with their long-term economic plan, for finding a course in the division of pain so that all people, regardless of their background, contribute and that
25 Mar 2014 : Column 225
those who have the broadest shoulders make the largest contribution of all. Most importantly, I encourage Ministers to recognise that the task is only half done and that many difficult decisions remain ahead. Will they maintain the same steadfastness of approach in the future as they have shown in the past?
4.56 pm
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op): I thank you, Madam Deputy Speaker, for calling me to speak in the Budget debate. This Budget was announced at a significant time in this Parliament, coming as it did in a year when, under the usual political time scale, we would all be facing an imminent general election. Indeed it is hard to imagine that originally it was the Government’s intent to use the new five-year Parliament to eradicate the deficit in just four years, leaving scope to offer significant tax cuts in the year ahead. Clearly, that is not where we are today.
Looking at the principal economic objectives the Chancellor set for this Parliament, it is unfortunate that he has not met any of them. Not only is the deficit still extremely large, but we are also still well below the pre-crisis peak, which is not acknowledged by those on the Government Benches. We have not seen a significant rebalancing of the economy, either sectorally or geographically, or a significant boost to exports as we become a more productive, goods-based economy.
To be fair to the Chancellor, I wonder how many of us who make speeches from the Back Benches re-read our own contributions from previous Budget debates before speaking. Certainly, there are a few Government Members who are welcoming levels of debt and deficit today that are much worse than those they opposed four years ago when the Darling plan was before us, but perhaps that is the nature of politics.
One thing that has stayed constant for me in every year that we have had a Budget debate is the sense of permanent inadequacy from the Government that they really have a plan to ensure the UK’s future prosperity in the post-financial crisis era. The 2008 financial crisis was the most profound economic crisis we have had in this country for decades. It was also the biggest political and moral crisis that we have faced, and I do not get any sense from the Government that they aspire to build anything different from what went so badly wrong last time around.
We remain an economy too dependent on the south-east and the housing market and too complacent about where our growth comes from and the quality, not just the quantity, of the work that that creates. In many families, wages no longer keep pace with inflation, and living standards are declining as a result. Very few people in my constituency are genuinely feeling any sort of economic recovery at all. It does not have to be that way. The UK has a serious chance of becoming the largest economy in Europe during the life time of most of us in the Chamber today, which is largely as a result of some of the quite contentious decisions—particularly those on immigration— made by the previous Government. That chance to ensure that we secure and expand our future prosperity is what I wish to talk about today. I have four key points.
25 Mar 2014 : Column 226
First, we must be enthusiastic about Britain being a country that is open and outward facing to the world. That means recognising the benefits that immigration can bring. I strongly support what has been said on the Opposition Benches about preventing abuses and exploitation in immigration because that is how we will win back public support. We should not shoot ourselves in the foot, as the Government have done by including foreign students in the net migration target. Foreign students bring in £8 billion a year to the UK, and that is just in the benefits we can count, and it is madness to dissuade them from coming here. It also means something far more difficult for this Government, which is ensuring that we stay as full and active members of the European Union. There are many specific reasons to stay in the EU. I visited Nissan in Sunderland a few weeks ago, and found it to be an incredible place. I grew up in Sunderland in the 1980s, at a time of large-scale industrial upheaval, with the shipyards and the mines going, and it was fantastic to see such brilliant industrial success back in Sunderland. Amazingly, workers make almost as many cars in that one factory in Sunderland as French workers do in six Renault factories and the factory offers thousands of well-paid skilled jobs.
There are no ifs and no buts about it: those jobs are dependent on our membership of the European Union and we would be crazy to throw that away. More profoundly, if we were ever to leave the EU it would undoubtedly be read by the rest of the world as a sign that we were withdrawing into isolation, regardless of any protestations that might be made. We could simply never afford to do that. Of course, there is much we need to do to reform Europe, but we must be clear that we are in the EU for good and reap the investment and prosperity that will go with that.
Secondly, we must unleash more of the talent we have in this country. One of the figures the Government cite most regularly is the number of apprenticeships that have been created since 2010. That has largely been done by rebadging workplace training schemes such as Train to Gain as apprenticeships, which I do not think is too bad as a policy, but there is a question of quality versus quantity in what is being offered. Any workplace training is a good thing, but we need to protect the brand of apprenticeships as a route into a career and not just as in-job training if we are to succeed. As one of the co-chairs of the all-party group on manufacturing, I am repeatedly told how outdated perceptions of manufacturing and engineering are still big barriers to getting young people involved and we need to acknowledge that. An apprenticeship should give someone a career and a status that is widely understood. That is why I favour the idea of a national baccalaureate for everyone leaving secondary education, with core subjects in maths and English but the possibility of specialisation in technical skills if people want that.
In addition, we need to get serious about devolving economic power to cities and regions. For the first few years of this Parliament, in a large part of the north we had rising unemployment and a rising skills shortage. Local enterprise partnerships, outside my own in Greater Manchester, leave me a little unconvinced but there must be something now that the regional development agencies have gone. The first Chancellor to understand the benefits of devolving resources and decision making will reap huge benefits.
25 Mar 2014 : Column 227
In Greater Manchester we currently spend £21 billion a year and raise £17 billion in taxes. If we had more of a say over spending that £21 billion, we could easily turn the deficit into a surplus, but the Government’s rhetoric on localism has so far proved hollow. “More Heseltine, less Pickles,” should be their motto.
It would be wrong to think that the national Government do not have a role, but they should just do what they do best. To get our economy right, we need many institutions and real industrial strategies, not just side projects for BIS that do not have wider Government support. Renewable energy, for instance, particularly wind power, is a crucial part of the UK’s future and we have all welcomed the decision made by Siemens today. However, although DECC and BIS champion it, DCLG holds up every onshore wind power application it can get in the way of. It is pathetic.
We need consensus on and a step change in investment and the Armitt review and independent infrastructure commission seem to me to be the best way to achieve that.
Finally, we need to orient our economy to the challenges of the future. I have very little interest in who the Prime Minister picks for his Cabinet, but I would simply say that we will not win the global race with people who have not yet got round to accepting that climate change exists.
The Government, by their own admission, have not met any of their aspirations for this Parliament. They have created a weaker, more insecure and more divided nation than the one they inherited. In some areas, such as through their flirtation with the Eurosceptic right’s desire to leave the EU, they have threatened to undermine some of the building blocks of British prosperity. Throughout this Parliament, the Government have failed to deliver and the chance to do that will, I hope, now fall to a different Government.
5.3 pm
Mr Dominic Raab (Esher and Walton) (Con): It is a pleasure to follow the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). He will not be surprised to hear that I disagree with almost every point he made, but he did at least try to present his argument in a reasoned way, which is more than some of his colleagues did.
I welcome three things above all in the Budget. First, there are the measures to strengthen British competitiveness, creating more jobs and boosting exports, and particularly cutting national insurance for under-21s and increasing the business investment allowance and financial support for exporters. These are things that are important for jobs, a sustainable recovery and dealing with the productivity puzzle that still afflicts the British economy. Let us not forget that growth is what produces the revenue to pay for our precious public services.
The second thing that I welcome is the great honesty from the Chancellor about the need to go further in tightening our grip on our debts. Further cuts in Whitehall spending will be necessary, as has been said, as will a long-term limit on welfare spending. These are critical. The idea that the spending restraint we have been under is now at an end is not credible or financially sustainable. We will have to keep on making difficult decisions, and I welcome the Chancellor’s honesty.
25 Mar 2014 : Column 228
We talk a lot about Government debt but not so much about household debt. Household debt has in fact come down by £187 billion since 2009 when it was at its peak under the previous Government, and that is important because if interest rates go up, which they will at some point, small businesses with tight loans and mortgages will need to be vigilant to make sure that they can cope. It is important that we get household debt down. The further measures in the Budget on savings were welcome as well.
Thirdly, we have provided support for working families with the cost of living, in particular the tax break for child care up to £2,000 per child. We know that for low or middle-income families across the country the cost of child care is incredibly important. We inherited the second highest child care cost in the OECD from the previous Government, and it is right that the Government take measures to ease that burden.
For those three reasons, the Budget has been widely endorsed by small businesses through the Federation of Small Businesses and the British Chamber of Commerce as well as by bigger businesses through the Institute of Directors, but also by consumer groups such as Which? and Saga. The Budget helped build on the economic record of the coalition, bearing in mind the horrendous deficit and debt that we inherited from the previous Government. We have the fastest growth in the G7, and 1.7 million private sector jobs have been created under the coalition. Let us remember that in less than four years that is double the rate of private sector jobs growth that Labour achieved in a decade, so it is a huge comparative achievement.
We have done all this fairly. How many times have we heard from Opposition Members that this was a Budget for millionaires and the lowest paid have suffered? Let us be clear about the facts from HMRC. This financial year, someone earning £10,000 to £15,000 is paying 47% less income tax than in the last tax year under Labour. A millionaire is paying 14% more tax. Opposition Members have gone on and on about tax fairness; in fact, it is this Government who are delivering.
Equally, on the current statistics, child poverty, elderly poverty and fuel poverty are all lower than under Labour. Those are the facts, independently verified by all government and other providers of those statistics. Tough decisions have had to be made, but they have been made in a fair way.
We have heard a lot about the cost of living, but the best way to help anyone out of the rut that we know exists is to create more jobs, and unemployment is down from 8% to 7.2%. Youth unemployment is down by 17,000 from the level that was left by the previous Government. I agree with impatient Members on both sides of the House that we have to do more for young people, but it is about job creation, and that will happen only with the dynamism of the private sector.
We have taken 2.4 million of the lowest paid out of tax. We are supporting working families, not just with child care tax breaks but with measures on fuel duty, the council tax and affordable homes. No one would like to see more done to build affordable homes than I would, but we have to look at the facts. The average rate of affordable home building over the 13 years of the previous Government was 31,000 per year, compared with 48,000 per year under this Government. We are doing 50% better than the previous Government. Those
25 Mar 2014 : Column 229
are the facts. For all the talk about the spare room subsidy and the problems of supply, we have built more homes on average in the tough times than the Labour Government did when the money was flowing easily and without restraint.
This has been a transformational Budget for savers, and that is absolutely critical. Auto-enrolment into pensions, the abolition of the 10p rate for low-income savers, the pensioner bond, the flexible pension limits and the increase in the ISA limit to £15,000 are incredibly important. Private saving is important so that people can cater for themselves into old age but also for our long-term competitiveness. Our low rate of private saving is one of the things that the World Economic Forum rankings have picked up. The measures introduced in this Budget are critical to correcting that. Opposition Members have ridiculed the increase in the ISA limit to £15,000 as if no one could afford it. I have to tell them that basic rate tax payers are a majority of those currently investing in ISAs, and it shows the contempt that the Labour party has for aspirational Britain that it mocks the increase in the ISA limit. Many people on low and middle incomes will want to take advantage of it.
This is a good Budget for business, for working families and for savers, and I commend the Treasury team.
5.9 pm
Jack Dromey (Birmingham, Erdington) (Lab): It was a great Conservative Prime Minister, Harold Macmillan, who once said that it would be “quite intolerable” for a modern economy and a compassionate society not to have at their heart social security and a welfare state. Quintessentially a one-nation Conservative, he was right. Sadly, the modern Conservative party is very different. We have a Chancellor who seeks to divide our nation between shirkers and strivers—now doers—and is often engaged in a grotesque demonisation of anyone on benefits in a system that can be cruel in its application and is not fit for purpose.
It is cruel in application on the one hand, as can be seen in the case of Bobby Busby in my constituency. His legs and pelvis were crushed in his youth, and he was on sticks, but he was passed fit for work, and his benefits were cut off. He fell into despair and could not stop crying. He went looking for his father, even though his father had died many years earlier. He retreated to his home and died of a heart attack. The benefits system is not fit for purpose on the other hand, as in the case of one Erdington family. Fiona was diagnosed with cancer of the spine last October, and applied for personal independence payment in November. Only now, four months later and as a consequence of my intervention, will she get a home assessment carried out by Capita. That is one of many cases that demonstrate a shambolic system.
I come from an upstanding working-class background where people believe that if you can work, you should work. It is also absolutely right that we should seek to reduce the benefits bill, but it is how we do it and what kind of society we want to live in that matters. Ours is therefore a very different approach. It involves building homes, because it is crazy that we spend 95p in every £1 that goes into homes as subsidy as opposed to bricks
25 Mar 2014 : Column 230
and mortar. The housing benefit bill is rising to £25 billion because of the biggest housing crisis in a generation and soaring rents. That is why Labour would build 200,000 badly needed homes a year to buy and rent.
Labour would get young people into work, paid for by the bankers’ bonus tax. One in four in my constituency is out of work. We must connect the two things, because I want to see many more young apprentices, such as those I saw at Carillion and Willmott Dixon: young men and women building the homes needed for the future. We would introduce free child care for three and four-year-olds so that families can balance work and home; and we would tackle in-work poverty, as we are seeking to do in Birmingham, by driving the agenda for the living wage. We want to see dignity at work, and more time for people to spend with their family, because they do not have to spend every hour of the day and night at work. That is better for employers and, crucially, it brings down the benefits bill.
Ours is a progressive approach that builds a stronger economy in a better society, tackling the price of failure. Ours is an approach that builds a sustainable recovery and one that works for working people. The Government boast of recovery—any progress is welcome, but this is the slowest recovery in 100 years. The Government are borrowing £190 billion more than they planned; there have been 24 tax increases; and working people are £1,600 a year worse off. A building worker I recently met in Kingstanding has had his wages cut by £80 over the past three years. It is little wonder therefore that when I was at the school gates at St Barnabas last Friday, a working mum came up to me and said, “I heard all week about recovery. Jack, what planet do they live on?”
It is not just falling wages; it is also growing insecurity in the world of work. The Bannions in my constituency are an excellent family with a disabled son. The dad has been made redundant three times in the past three years—each new job was on lower pay and was more insecure—and sadly, there are millions like him who live in a twilight world of zero-hours contracts and agency work.
In conclusion, this is a Government who are simply out of touch, and the Tory chairman’s patronising poster said it all. I used to play bingo when I was a young man. I drank too much beer and my waistline suffered as a consequence. We have excellent bingo halls and pubs throughout Erdington, but beer and bingo are not the summit of working people’s ambitions.
Erdington has the 14th highest unemployment level of any constituency in the United Kingdom. It is a constituency of high need, with pockets of severe deprivation, but it is rich in talent. There is Angela Maher, the mother of two disabled kids, who sings in a local choir; Linda Hines, who has built 200 homes in Witton Lodge; and Maurice Weston, a former industrial worker, now a volunteer at Slade school who has written an excellent history of Slade school. There are working-class scientists and working-class engineers from Erdington working in Jaguar Land Rover. There is an airline pilot and outstanding artists such as Jim Allmark and a collective of artists with whom he works. There is our very own Billy Elliot, Amanda Cutler, the chair of the Castle Vale pool user group. She is a mum of two, living on the Vale, who danced with the Royal Ballet in “Swan Lake”.
25 Mar 2014 : Column 231
This is a Government who are out of touch, oblivious to the consequences of their actions, divorced from the reality of ordinary people’s lives and who simply do not get it. We want to see a stronger, fairer, better economy that works for all, but that will not happen under this Government. That great task will fall to the next Labour Government.
5.16 pm
Chris Heaton-Harris (Daventry) (Con): It is a pleasure to follow the hon. Member for Birmingham, Erdington (Jack Dromey). I thank him for his valiant attempt to explain his party’s economic policy using real-life examples, but he has to admit that it is a very confused policy. A bit like a chameleon that has fallen into a bag of Smarties, it is changing almost by the day, by the hour. On the Government side of the House, we are waiting to find out what his party will vote for or against in this Budget, with about two hours to go before the vote.
However, the hon. Gentleman identified a really important point, which I would like to come back to. He spoke about the diverse nature of our individual constituencies—Birmingham, Erdington and mine of Daventry. Maybe, just maybe—this follows points made in speeches from Opposition Members—we are all missing a trick in trying to tackle some of the long-term unemployment problems our country faces.
However, I start by saying that this is a very good Budget. A record number of people are now in work. The pace of net job creation under this Government has been three times faster than in any other recovery on record. Unemployment figures for March show a 20% fall in the claimant count in just one year and the fastest fall in the youth claimant count since 1997. That is something we should all be able to welcome. The Office for Budget Responsibility forecast 1.5 million more jobs over the next five years. Again, that is something we can all welcome. There are a record number of women in work, and for the first time in 35 years we have a higher employment rate than the United States of America.
There are good measures in the Budget for our exporters and good financial support to put them on an even keel with their international competitors. We are lifting people out of paying tax—3 million by 2015. So many of them will be better off by £800 each year because of the changes in the tax system. There are 450,000 fewer workless households, which is surely something to celebrate. It might not be enough, but it is something to be pleased about.
We have a fantastic new policy for pensions. We have introduced the workplace pension, the single-tier pension and now the change in policy for annuities will allow people to help shape their futures as they choose, with their own money. Three quarters of a million more people are in full-time work—that is something to celebrate—and 300,000 more people are in part-time work.
I hope that Opposition Members will stop their attack on part-time work, because it is important for all sorts of sectors in the economy, and indeed all types of people, whether students in the summer or mothers returning to work after having children. Part-time work is fundamentally important in helping to drive our economy.
Like the hon. Member for Birmingham, Erdington, I am unsure about zero-hours contracts, having heard good and bad stories about them. However, I remind
25 Mar 2014 : Column 232
him that he was the head of a trade union that pushed for a European measure that led to less flexibility in our work force here in the United Kingdom. Indeed, a Labour Secretary of State went to the European Parliament to plead for the United Kingdom to be allowed more flexibility. I suggest that the lack of flexibility in our employment market might have led businesses to look around for something that would allow greater flexibility, and that seems to be zero-hours contracts.
Jack Dromey: I take it that the hon. Gentleman is referring to the agency workers directive.
Chris Heaton-Harris: That was one of them, yes.
Jack Dromey: Then I plead guilty. I was one of those involved in those discussions, and absolutely rightly so. If there are two people doing the same job alongside each another, one who is an agency worker and one who is directly employed, it is absolutely right that they should be paid at the same rate. To fail to do that divides work forces and, as we have seen in some areas of economy, damages social cohesion.
Chris Heaton-Harris: I thank the hon. Gentleman for that point. He and I have a difference of opinion on the matter, which I would happily talk to him about over one of those beers he used to have too many of. The point I was trying to make is that the lack of flexibility in our employment market might have led employers to try various tactics to reintroduce flexibility by a different route.
Like the hon. Gentleman, I have been talking to my constituents about the Budget over the past few days. Unlike him—I might be wrong about this—I go to a gym, which is a privilege. My doctor told me I should go. In fact, he says that I have the lower limbs of a runner—“athlete’s foot”, as he puts it colloquially. I was talking to a personal trainer at the gym who recognised the importance of lifting the tax threshold and how much it would mean to him. I also met a man there who has three jobs: he is a pest control expert, he sells logs and he is a gritter for my local authority. He recognised the importance of the change in the tax threshold and welcomes any changes that bring about a healthy welfare cap. I also met a neighbour of mine there who is very pleased with the pension changes because they will allow him to plan for his retirement flexibly, and hopefully spend his own money which he has already earned and paid tax on.
The Government have delivered some good thing for my constituency, such as the university technical college and massive investment in the further education sector, which will help with long-term youth unemployment in future. There has been massive investment in the town of Daventry, helped by the council, and massive investment coming into the Daventry international rail freight terminal, where new businesses and logistics are settling. That means that my constituency is remarkably different from Birmingham, Erdington. There are only 1,000 JSA claimants in my constituency—it is still too many—which is down by 30% from last year. That is a claimant rate of 2.1%. For 18 to 24-year-olds, the rate has fallen by almost 30%. The number of people claiming for more than 12 months has also fallen by over 30%.
25 Mar 2014 : Column 233
As the hon. Members for Birmingham, Erdington and for Liverpool, West Derby (Stephen Twigg) and, to a certain extent, the hon. Member for Wigan (Lisa Nandy) said, we all have completely different constituencies. Perhaps the one-size-fits-all nature of Government delivery in trying to get people out of long-term unemployment simply will not work. We need a much more flexible solution.
Unlike some Opposition Members, I am quite pleased with the developments in the Work programme. It is a very big programme that has had more than its fair share of teething troubles, but up to December 2013 A4e, one of the two providers in my constituency, has achieved over 100 positive job outcomes in Daventry, which in the majority of cases means someone being supported into a job lasting over six months. On Friday, I went to A4e’s offices and met some of the people who work there helping to get people in my constituency back to work. I met Jodie, Hollie and lots of A4e staff giving their all to try to remedy this problem that we have in all our constituencies. I say to Labour Members that the one-size-fits-all approach does not work all the time. We need flexible solutions, and sometimes private providers are just as good as the public sector in achieving that.
5.25 pm
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): Listening to the Chancellor, I could not help but conclude that my constituents simply do not inhabit his world. Indeed, very few people share his world, and therein lies the problem. For example, unemployment in my constituency has risen dramatically. Ten years ago, the figure was 1,500 in total, and that included youth unemployment. Under this Government, it peaked at 3,341, so it more than doubled under the coalition. It is now almost 2,600, but that is well above any acceptable level, especially when it includes over 700 young people without a job.
This is a Chancellor for the wealthy, and, apart from a few gimmicks, this was a Budget for the wealthy. That is what brings me into conflict with him. I acknowledge that the economy of Britain as a nation is far more complex than that of each household. Furthermore, I accept that there will be a disparity in household budgets depending on income and expenditure. However, each household has basic needs that must be fulfilled. My assertion is that the Chancellor is out of touch with hard-working people. He does not get what is obvious to everyone: that families are struggling, especially in my constituency.
We have what I can best describe as a cost of living crisis. Wages are down by £1,600 a year. To many households throughout Britain, that amount of money could be the difference between living in poverty and living reasonably comfortably. I know that the Chancellor does not get it—after all, how could he, when we know that the Bullingdon club uniform costs about £3,500? What is even more a matter for despair is the confirmation by the Office for Budget Responsibility that people will be worse off in 2015 than they were in 2010. We have had the slowest recovery for 100 years, with the Government forecast to borrow over £190 billion more than planned. Ordinary, decent hard-working people are doing all the heavy lifting as regards who is actually bearing the brunt of the austerity measures introduced by this Government.
25 Mar 2014 : Column 234
Businesses in my constituency constantly complain to me that banks have withdrawn their overdraft facility, making it even tougher for them to survive. Bank bonuses are rising again, even though businesses cannot get the financing they need. Just before Christmas, I was most grateful to secure a meeting, with representatives of such a business in my constituency, with the Business Secretary. Although I thank him sincerely, I am puzzled that the Department for Business, Innovation and Skills and the Department for International Development are taking so long to respond.
Another business in my constituency, and in several other Members’ constituencies, Verve car showrooms, went bust. The problem was that many consumers who had paid money for cars or signed up with finance agreements still had not received their cars at the point of administration. With the Sunday Mail, we jointly did our best to expose the poor consumer protection in those unique circumstances. I also wrote to the consumer affairs Minister. The owner of the company, for whom I have no brief, claimed that his company had been stitched up by the banks. Had he been a constituent of mine, I would most certainly have called for an inquiry into the behaviour of the banks.
The Government know full well that energy bills have risen by almost £300 since their election. The most powerful and effective speech on the subject of energy bills was delivered not during the Budget statement, but by my right hon. Friend the Leader of the Opposition during the party conference season. Central to his theme was a freeze on energy bills until 2017 and reform of a broken energy market, which would give consumers a welcome break from huge increases. I have always argued that, in effect, a cartel is operating in the energy market. The energy companies were terrified by the resonance of and public support for that policy. By contrast, the Government appeared incapable and unwilling to stand up for consumers.
This is one subject that unites the entire country. Everyone knows that the energy companies are ripping off households. If I may say so, I was making that point under the previous Government—my assertion is not new, but the Budget is a missed opportunity. My right hon. Friend the Leader of the Opposition set out a coherent strategic plan to introduce transparency and fairness for consumers. Cabinet Ministers sought to undermine that excellent solution to the problem.
That proved conclusively to me, yet again, that this is a Cabinet of millionaires running the Government in favour of the wealthy. [Interruption.] I speak for my constituents. Such selfishness and unfairness will ultimately lead to this Government’s downfall. Until then, I shall continue to expose the less than even-handed treatment dished out to the vast bulk of households—those on medium and modest incomes—while this Government favour the wealthy. This is a Government for the few and what we need is a Government for the many.
5.31 pm
Priti Patel (Witham) (Con):
Thank you, Madam Deputy Speaker, for calling me to speak in this debate. I am delighted to be able to contribute to a debate on what I consider to be an historic and era-defining Budget. In my view, this is a first-in-a-generation Budget that empowers the people. It is about putting people
25 Mar 2014 : Column 235
first and back in control of their savings, spending and pensions. That has been made possible not only because of the hard and tough decisions this Government have had to make—we all recognise and acknowledge that—but because, importantly, there is a long-term economic plan that will safeguard and secure the future of Britain’s hard-working families.
Judging by what I have heard from Opposition Members this afternoon, they spend a lot of time talking down Britain, our economy and British industries and companies. To be frank, why would a business want to invest in some of their constituencies, let alone think about long-term investment in this country, given some of their negative and hostile remarks about business?
As the economy grows, employment is reaching record levels, for which Opposition Members should be grateful. The country now has record numbers in terms of employment growth and, importantly, new business growth. It is businesses that pay the taxes in this country—they employ people, and the money, jobs and prosperity that are created contribute to taxes, which pay for the welfare budgets that Opposition Members have been speaking about.
This is a Budget that rewards hard work, cuts taxes for those on lower incomes, empowers people to go out to work and gives families greater choice over how they spend their money—their savings and their pensions. What is so wrong about that? I find the hostility of Labour Members overwhelming; I really do.
My constituents will benefit from the increase in the personal allowance, which I assume the Labour party does not support, and fuel duty will be 20p lower under this Government than it would have been had Labour’s plans been implemented. We are helping people to keep more of what they earn, in contrast to Labour.
The Leader of the Opposition talks about a temporary and unworkable freeze in energy prices, but it is this Government and Conservatives who are cutting energy bills for families and businesses by removing and reforming the costly green levies that the right hon. Member for Doncaster North (Edward Miliband) advocated when he was Energy Secretary—he championed them. The investment that the Government are supporting to develop new technologies, such as carbon capture and storage and the exploration of shale gas, is very important. Opposition Members have overlooked that. Those technologies will bring energy security to this country and create jobs. It should not be lost on the Chamber that they will help to reduce our dependence on energy imports from regimes such as Russia. That point is particularly salient right now.
It is the Conservatives that are giving people genuine help with their living costs by cutting taxes, including council tax, and using tax incentives to encourage investment, rather than by following the policies of the Labour party, which would tax with one hand and give less back with the other.
We have heard about the importance of work in this debate. Developing an economy that supports business and business investment is one of the most important ways in which we can get more people into meaningful employment. Under Labour, businesses were penalised by a legacy of high taxes. Labour went into the last general election wanting to increase corporation tax on small firms and national insurance contributions. We have
25 Mar 2014 : Column 236
slashed those rates. We are bringing corporation tax down to 20%, making the UK one of the most competitive places in the world for enterprise. That is another point that is lost on Opposition Members.
The Conservatives and the coalition Government know that it is the genius, entrepreneurial spirit and wealth-creating acumen of businesses that create jobs. This afternoon, I met a prominent Essex business, Claridon Group, which is based in south Essex. It made that exact point to me. Such businesses are the wealth creators. They are the ones that have created the jobs and the prosperity in Essex. Claridon Group is exporting to a range of emerging markets, which are difficult to do business with. It praised the Budget, the Government’s approach to exports, and the incentives for companies to go overseas and expand their businesses.
The best way for the Government to help such businesses is to remove the barriers to growth, cut corporation tax and cut red tape so that they can invest in creating new jobs. They want to keep more money in this country. Taxes need to be low so that they can continue to invest and create jobs. I commend not just businesses in the entrepreneurial county of Essex, but businesses across the country that are doing the same things. It is small and medium-sized enterprises in the private sector that are creating the record number of jobs, and they should be supported and commended.
There are plenty of other policies in the Budget that will help businesses to grow and to support employment. The cut in beer duty should not be overlooked, despite the disparaging remarks of Opposition Members, and neither should the abolition of the alcohol duty escalator, which will help to create thousands of new jobs in the sector. There is high demand for British wines and spirits, and the market for them overseas is growing hugely. My constituency contains the West Street vineyard, which is producing award-winning wines that will start to go overseas, and Hayman Distillers.
I want to touch briefly on air passenger duty. The abolition of bands C and D will make Britain more attractive to travellers from east Asia, India and Latin America, which are important markets for communities in this country. That is to be commended.
In conclusion, this is a very sound Budget. It is also a refreshing Budget. It is the first Budget in a generation to send out a powerful message to savers, investors and British businesses. It is a Budget that will help to secure the economic foundations of our country.
5.38 pm
Dame Anne Begg (Aberdeen South) (Lab): There was a lot in the Budget that I would like to talk about this afternoon, including on the issue of welfare, but in the short time that I have, I will concentrate on the pensions announcements. The only thing that leaked out about the Budget was that a rabbit would come out of the hat. I suspect that the rabbit was the announcement about the annuities market.
Everybody has said that annuities need to be reformed. I have said that annuities need to be reformed, my Select Committee has said that annuities need to be reformed, Opposition Front Benchers have said that annuities need to be reformed, the shadow pensions Minister has said constantly that annuities need to be reformed and even the Government have said that annuities need to
25 Mar 2014 : Column 237
be reformed. Indeed, the industry itself has said that annuities need to be reformed. The rabbit that came out of the hat was the reform of that important market. However, what the Chancellor said in his Budget went far further than anyone had been calling for or expected—particularly the industry, and also the stock market if its reaction to the announcement is anything to go by.
Why do annuities need reforming? They lack flexibility, and people are often tied in to an inappropriate amount and an inappropriate time and do not shop around. We want a system that is much more flexible, perhaps with an open-market option so that people have different choices available to them when they reach their pension age and the time comes for them to buy an annuity. We must also consider the high costs and charges that have existed, and the fact that people have needed a lot of advice.
As Government Members have emphasised again and again today, we need consumer choice so that people can make the right decision about how they will spend their own money. For some people who still have a high mortgage when they draw down their pension, paying it off might be the most sensible thing to do. Paying off another debt might be the most sensible thing to do. However, the best thing for many people to do is to buy an annuity. Annuities are an excellent principle—someone saves into a pot and then buys something that lasts them to the end of their life. We do not know how long we will live after reaching pension age, so an annuity provides insurance: we know it will not run out before we reach the end of our life. It insures against old age.
All of that is right. However—this is the big but—what if there is no annuity market? What will the many people for whom an annuity is the right choice do then? That is the question that I have for the Government. Did they intend to undermine and destroy the annuity market, or did they hope that a new form of annuity would rise phoenix-like out of the flames of their announcements last week? If the annuity market were to collapse, the choice that they say they want to give consumers will not be there for those for whom an annuity is absolutely the right choice. Do the Government anticipate that the annuity market will be undermined or strengthened?
The Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), has talked a lot recently about his “defined-ambition” pensions—his collective defined contribution schemes. Where does the Budget leave his great defined-ambition scheme? Collective schemes for investing money during the investment period might be possible, but I cannot see how the defined-ambition system can pay out on a collective DC scheme given the proposals in the Budget.
I wonder whether the Government have done any cost-benefit analysis of the increased benefits bill for older pensioners. If people go down a different route from annuities and then run out of money before they reach the end of their life, they will become dependent on more than just the basic state pension. I know that the Government have made great play of the fact that the basic state pension will be high enough to lift people out of means-tested benefit, but that is not true of housing benefit or council tax rebates, so there will be a cost. How much work has been done on that?
25 Mar 2014 : Column 238
Annuities have got a bad name because there have been low interest rates and low returns, but other products have the same problem. Some of them might actually give a worse return than annuities. What guarantee can the Government give that people who buy another product will not get a worse return than if they had chosen an annuity? We know that high charges and costs need to be dealt with.
I wonder whether the Government thought about just rebranding annuities because they have such a bad name. Perhaps they could have called an annuity a pension for life, which might have changed people’s attitude. I wonder whether the Government intend to turn the UK private pension system into a saving system, and if they do, will tax reliefs remain? Was that the Government’s intention, or is it an accidental consequence of last week’s proposals?
I was going to say a great deal about the need for independent advice, because I am not sure that the guidance guarantee comes anywhere near what is required. There are a number of such questions, and I hope that the Government can answer them, because if they cannot, people will not perhaps be as keen about the Government changes as they may at first have appeared.
5.46 pm
Susan Elan Jones (Clwyd South) (Lab): It is a huge privilege and pleasure to follow my hon. Friend the Member for Aberdeen South (Dame Anne Begg), who speaks with such knowledge, expertise and passion in this most important area.
At a time when there seem to be days for celebrating pretty much everything in this country, I do not think that there will ever be a national Department for Work and Pensions day. That is a bit of a pity, because the areas it covers represent some of the major challenges that any Department faces. For instance, how do we deal with the issue—I prefer to see it as a good thing—of people living longer lives? How do we incentivise work? Critically, how do we empower and enable people whose lives often seem to be blighted from the very start, if not from before they were even born?
I want to start on a note of consensus. Several years ago, the centre-right Centre for Social Justice had a point in relation to some of its arguments in the debate about broken Britain. Some of the arguments went over the top, but it pointed out that bits of our social fabric were not working as well as they could or should have done, and some of the questions it asked then are just as valid today.
How are we helping and enabling people who are battling to make a decent livelihood for themselves and who are often hampered by the system? How is family stability supposed to be enhanced by the burgeoning practice of zero-hours contracts? Most of us would contend that it will not be, and there is also the whole issue of the pension provision or the lack of it for people on those contracts. Can it be right that a family with a severely disabled child—so disabled that they require large medical equipment—should be penalised for essential space in their home? What about the taxes of ordinary people the length and breadth of our country subsidising ever-growing housing benefit payments to buy-to-let landlords? Why have we turned food banks from charitable outlets for emergency use, primarily for
25 Mar 2014 : Column 239
rough sleepers and certain immigrant groups who have fallen on hard times, into what they have now become—monuments of a failure to tackle systemic poverty? This Government will still not listen to the Trussell Trust and call an in-depth public inquiry on food poverty in Britain. That is broken Britain Cameron-style.
There can be no serious debate about welfare that does not speak the language of jobs and job opportunities. That is the one issue of greatest concern in my constituency. I welcome the fact that youth unemployment fell in January, although not that it rose again in February. This Government all too often have the approach of a bad post-Christmas dieter: gaining half a stone in weight at Christmas, but back on the scales at the end of January thinking it has been a great triumph to lose 3 lb.
It is a disgrace that the number of young people stuck on jobseeker’s allowance has almost doubled under the current Government. More than 900,000 young people are out of work, at a time when bank bonuses are rising and the wealthiest are given tax cuts. That is why I am proud of my party’s proposal for a jobs guarantee that will give young people real job opportunities. It is right that we as the Labour party—that is what it means by Labour—want to invest in a high-quality scheme such as that, and it is important that we put the emphasis on Labour and make it clear that we will not put up with abuses from the minority, because that is not fair on everyone else.
What does that type of programme mean? In Wales we have seen it with the Labour-led Welsh Assembly, and we are seeing the benefits. We have delivered the sharpest reduction anywhere in the UK among NEETs—those not in education, employment or training—with figures falling faster in Wales than anywhere else in the UK. Let it be known that under Jobs Growth Wales, a programme for 16 to 24-year-olds, 80% of those traineeships are in the private sector, and 78% of participants secure work. That compares, I think, with 15% under the UK Government’s Work programme which, as one Government Member said earlier, had teething problems.
Job opportunities for young people matter. I recently saw that very clearly in Chirk in my constituency at what we will always think of as Cadbury’s, although now it goes under the name of Mondelez International. One thing that struck me as I spoke to the apprentices in Chirk is that they were a pretty diverse group of young people. Some had got on well in traditional school settings and some had not, but they were all enthused by their new programme of work and the prospects their new skills offered. That is why tailored apprenticeships in different fields matter, and we need to be passionate about working with different types and sizes of employers in providing them. Absolutely nothing matters more than providing job opportunities for young people, because how can we hope to develop a work ethic where there is no serious work?
5.52 pm
Mrs Mary Glindon (North Tyneside) (Lab): I apologise for being absent for part of this debate to attend a delegated legislation Committee, but I have heard the majority of the speeches. It is an honour to follow my hon. Friend the Member for Clwyd South (Susan Elan Jones), and to hear her witty but correct analysis of the Budget and the things she thinks need to be done.
25 Mar 2014 : Column 240
This Budget holds mixed fortunes for my constituents, but I will first thank the Chancellor for extending the period in which enhanced capital allowances are available in enterprise zones by a further three years. Why? The former world-famous Swan Hunter shipyard, which the previous Tory Government closed 20 years ago, was purchased by our Labour council in 2009. It is now being developed by our Labour mayor, Norma Redfearn, under the name of Swans, as a site for companies in the offshore and renewable supply industries. The new Swans site sits alongside successful companies such as oil and gas fabricators OGN, and award-winning subsea fabricators SMD. It borders Shepherd Offshore, which lies in the neighbouring constituency of Newcastle upon Tyne East. Most importantly, it forms the bulk of our enterprise zone on the north bank of the Tyne. The news announced by the Chancellor gives more commercial leverage to North Tyneside council’s excellent regeneration team, to support businesses that already want to come to the Swans site, and that will create thousands of jobs for local people over the next few years.
But mixed fortunes it is. My researcher in North Tyneside, Eddie Darke, goes to the Innisfree social club in Longbenton every week. He told me about two of his pensioner friends who remarked to him, “There is nowt in the Budget for us, Eddie”. Those gentlemen, I am sure they will not mind me saying, are hardened drinkers, yet they know that with just a penny off a pint, it would involve an awful lot of drinking before they feel any economic benefit, even at club prices.
It has been said many times in this debate that the Budget will benefit the most well off. This is certainly true, as the Chancellor extends his austerity measures well into the future. What comfort is there for thousands of public sector workers who will, in effect, see their living standards cut further, in a mere 1% pay increase, if they get even that? The real cost of living crisis is hurting single people, families, those who are employed, those who are unemployed, and young and old alike. The crisis has not been addressed to any degree, and that will not help people to feel confident about their future fortunes.
I recently carried out a survey across a community in my constituency where households live in a range of accommodation from lovely riverside apartments to local authority sheltered homes. The community is made up of mixed age groups and those in different economic circumstances. I found that since the coalition Government came to power, 67% of those constituents said that they are worse off, with only 6% saying that they are no worse off. Some 54% thought they would be worse off over the next two years, while only 30% thought they would be better off in future. Sadly, 71% are worried about their energy bills and 42% are very concerned about the rising cost of food.
I do not see anything in the Budget that will change those statistics significantly, or help any of my constituents improve their lot in relation to the high cost of living. Why did the Chancellor not freeze energy bills and take up some of the sound proposals from Labour that would see the books balanced in a much fairer way? I am optimistic about jobs being created on the north bank of the River Tyne. We are desperate for those jobs. I am, however, equally pessimistic for my constituents, whether they are working or, through no fault of their own, on benefits. They will not benefit from the Chancellor’s Budget and they will continue to struggle to make ends meet. This is in no way a Budget for them.
25 Mar 2014 : Column 241
5.57 pm
Mr Michael Meacher (Oldham West and Royton) (Lab): Listening to the Chancellor and then turning to the Office for Budget Responsibility’s analysis of the Budget is like being seduced by “Fifty Shades of Grey” only to be brought down to earth by a harsh and unrelenting textbook on morality and sexual ethics. Leaving aside all the election giveaways, the truth is that the underlying economics of the Budget are truly awful.
The economy is still, after four years of austerity, 1.5% smaller than it was in 2008, while the US economy is 5% larger. To put it another way, the UK economy is today 14% smaller than it would have been if growth had continued in the way already being achieved in 2010, when the then Labour Chancellor’s economic stimulus produced 2.4% growth over 12 months up to the third quarter of 2010. As a result of this Chancellor’s about-turn, in favour of fiscal consolidation and austerity, the UK has lost output totalling £210 billion. That is completely gone for ever, down the drain and irrecoverable, and it is equal to one-seventh of Britain’s entire GDP.
Even the deficit reduction, which was supposed to be the aim of the exercise, has worked disastrously. The Chancellor inherited a deficit of £149 billion and pledged to reduce it by £60 billion now and £20 billion next year. In fact, the deficit is projected to be £108 billion this year—nearly double what he promised.
Even more serious is that the Chancellor predicts a strong and lasting recovery, but the OBR believes that this so-called recovery is built on sand. Unemployment and spare capacity have fallen so quickly that the OBR thinks there is very little scope for rapid growth beyond this current year. Hence, it has cut its growth forecast for next year from 2.7% to 2.3%. That is a very ominous forecast. If the economy is still below the output level of 2008 and unemployment is still 2.4 million, the premature petering out of growth will speak volumes. The OBR also says that, given the current policies, Britain will continue to lose export share steadily over the next five years, although it already has the biggest deficit in traded manufactured goods in its history, at £110 billion 7% of GDP—and rising.
The whole honest OBR scenario is grim. The public finances are still terrible, none of the components for sustainable growth is present, the upswing is largely dependent on excessive consumer borrowing and yet another asset-price bubble boom and bust, and the recovery—such as it is—is expected to fade when it has hardly begun. One has to ask, almost unbelievingly, how the Chancellor could have got it so unutterably wrong.
Part of the answer, I think, is that the Chancellor seems to have genuinely believed, at least for the first two years, the dogma of expansionary fiscal contraction. That is the idea that the less a Government spend, the faster the economy will grow, because the public sector will no longer crowd out the private sector, which will then have the space in which to grow. Well, it is all right to believe that if you are a first-year economic student, but to believe it when you have the power to trash the British economy for three years—as the Chancellor has, in fact, done—is quite another thing. The theory is economic illiteracy, and we have suffered that for two to three years.
What prompts the private sector to invest is obviously the prospect of future demand, and hence the prospect of future profits. When the economy is stagnant or
25 Mar 2014 : Column 242
contracting, what incentive have private companies to invest at all? That, of course, is precisely why business investment today is completely flat—20% below the pre-crash level—and what does that tell us? What it tells us is that business itself does not actually believe in this recovery either.
But there is another explanation for all this folly, namely that the Chancellor and the Prime Minister are first and foremost ideologues, obsessed with the idea of shrinking the state to the smallest size they can get away with via the privatisation and outsourcing of everything that moves. For them—as opposed to all the people about whom Opposition Members have been talking—austerity was not a painful instrument of reform so much as a heaven-sent gift enabling them to realise their deepest prejudices. That is why, although the policy clearly is not working, the Chancellor is committed to continuing it, and indeed intensifying it, into the next Parliament.
So what should be done? I think it is obvious that what Britain urgently needs is a big and sustained increase in investment, which can only come—at least in the first instance—from the public sector, as the private sector, like the OBR, regards the recovery as far too fragile and risky. At today’s interest rates, the Chancellor could launch, at a cost of only £150 million a year, a major £30 billion drive of investment in manufacturing, public services and job creation which would bring the deficit down much faster, would shrink the dole queues—which are currently costing £19 billion a year—and would be sustainable. He could even finance it at no cost in public borrowing at all—by targeting a tranche of quantitative easing directly at manufacturing rather than the banks, by instructing the publicly owned banks, Royal Bank of Scotland and Lloyds, to prioritise their lending on British industry and not on overseas speculation, or by taxing the super-rich, who have monopolised more than 70% of the income gained since 2008, and, over the same period, increased their wealth by some—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The right hon. Gentleman’s time is up.
6.4 pm
Jim Sheridan (Paisley and Renfrewshire North) (Lab): The Budget was trailed as being
“for the makers, the doers and the savers.”
I say “trailed” because this Budget was simply a campaign tour for the Tories, telling us about what their core voters want and what they think ordinary working people want. It hid the truth about those whom it really helped. It certainly did not help the makers or the doers and it failed to get to grips with the serious cost-of-living crisis affecting many people and households across the country.
It was disappointing that the Chancellor came to the House last Wednesday gloating about growth. After three years of flatlining, it is about time, even if it is much slower than predicted and slower than that in the United States of America or Germany. Working people are still getting worse off month by month. Real wages will have fallen by 5.6% by the end of this Parliament, and most people are not feeling this modest growth, but this out-of-touch Government certainly do not get that.
25 Mar 2014 : Column 243
The proposals in the Budget to tackle tax avoidance are welcome, although I doubt whether this Tory-led Government have the political will or courage to stand up to the big businesses. After all, they are funded by these tax-avoiding enterprises and any measures they suggest may not be as big or bold as we would like.
Last year I was involved in highlighting the tax avoidance conducted by what I would have thought was an upstanding British company: Alliance Boots. We need to do something to stop these companies taking our country for granted, and I hope the Chancellor’s proposals will go some way towards doing that.
An excellent briefing paper has been produced by Change to Win and War on Want. They say that Alliance Boots allocated the bulk of its debt to UK entities and that otherwise the UK would have been one of its most profitable jurisdictions. The company’s actions would have been suspect under two proposed models in action four of the briefing. A meaningful earnings-stripping rule would have limited the amount of debt interest the company could deduct, and the attribution of interest across the group on a more equitable basis would have resulted in the company deducting less from its UK taxable income. That is how some of these measures could stop companies such as Alliance Boots, and I hope to see this happening.
These methods could work, but are the Government willing to take on the large private equity-backed companies using sophisticated financial engineering? As I said earlier, I think this Government are either weak or in the pockets of these companies. I would like to be proved wrong and see these measures making a difference. We will have to wait and see.
Action three looks to strengthen controlled foreign company rules and encourage more countries to adopt these rules. This is key when it comes to Alliance Boots. The company is based in Switzerland, which has no CFC rules. It has a subsidiary in the Cayman Islands and if Switzerland had a meaningful CFC regime the Cayman profits could be subject to some taxation in Switzerland, but do we have the credibility to push other countries to implement strong rules, given the limitations of our own regime? We have seen company after company revealed as tax avoiders over the last year or so. They have been getting away with it, and we really do not have a leg to stand on. With such a pro-big business party in power, I am sure other countries will doubt our efforts and it will be difficult to find a genuine solution to this issue. We need to build our own credibility and then work tirelessly to encourage others to do the same.
My party is, I think, planning to vote with the Government on the welfare cap. I want to put on the record now that I will not be joining it. Capping benefits is not the solution to unemployment; it will only serve to bring more people into poverty. Out-of-work benefits account for less than a quarter of welfare spending, meaning that a large group of people are in work and on low pay. As transport and child care costs go up, cuts and freezes will have a bigger impact on those in work. The Government have offered no solution to low pay or zero-hours contracts. They will not accept a living wage and they will not make companies treat their employees fairly, yet they will make it even more difficult for these people through capping spending. I did not come into politics to demonise welfare claimants. I do not want to
25 Mar 2014 : Column 244
give welfare to those who do not need it, but only 0.7% of the benefits bill was overpaid due to fraud in 2011-12—that is 70 times less than the amount lost through illegal tax evasion.
I wish to make two final points. First, on the continuous freeze of the council tax, I heard the patronising comments about bingo and a penny off beer, but people want decent public services that are properly funded to make sure that they are warm in their house and their kids are looked after. That is what the ordinary working people want. Secondly, on a more positive note, as chair of the all-party group on scotch whisky and spirits, I am delighted that the coalition Government have decided to freeze the tax on whisky, which is a major driver of the economy, not just in Scotland, but throughout the UK. I thank the coalition Government for that measure.
6.11 pm
Mr Iain McKenzie (Inverclyde) (Lab): We have heard from this Government for some time that we are all in this together, but with Budgets such as this one we are not getting out of it all together, as it would seem that the coalition Government are determined to fast-track the wealthiest. I say that because this Budget did nothing to tackle the cost of living crisis, and the Government just do not understand the difficulties ordinary people are facing. Yet in this Budget the Chancellor did create a structural welfare cap—it is the only thing this Budget does on welfare.
Worse still, the Budget does nothing to address the multiple failings of the Department for Work and Pensions. The DWP appears to be a in a total shambolic mess, so it is depressing to note that DWP inefficiency throws large amounts of taxpayers’ money away on failed IT projects. In autumn 2013, it was announced that the DWP had written off £34 million of IT work on the universal credit programme. In addition, a further £140 million of money already spent was under review to determine whether the IT developed had any lasting value. Despite the write-off, the projected IT budget for the universal credit programme was increased by 60%, from £396 million to some £635 million. Early this year, we were given more bad news; the DWP had completed an internal audit of its IT strategy which revealed serious deficiencies in the Department’s technology plans. This Government seem to be focused more on waste than welfare.
Where better to witness the waste of time, effort and money than the Government’s Work programme? It was devised to incentivise prime contract holders to focus extra efforts and resources on those who are hardest to get into the labour market. It would seem that instead of doing that, the prime contract holders have been creaming and parking: focusing on the easiest to place and reducing attention on the hardest to place. The Government’s own assessment of how the Work programme is going, conducted for the DWP by independent experts, suggests that it is still badly under-performing. The Work programme evaluation interim report was signed off ready for publication in September, but has been sat on ever since—I wonder why that is. Could it be that the whole payment-by-results contract structure does not seem to be doing what it was meant to do? So we have no work for the long-term unemployed, and delays to benefits and benefits assessments resulting in people using food banks. Some 73% of the people
25 Mar 2014 : Column 245
using food banks are doing so because of benefit delays. The Department for Environment, Food and Rural Affairs report on food poverty has not been made public. I suspect that is because it links food poverty with this Government’s welfare reform.
What can we say about the performance of these reforms? Incapacity benefit is being replaced with the employment and support allowance, with those already claiming IB being reassessed to decide whether they are capable of work or eligible for ESA, and with the assessments being carried out by Atos Healthcare. Like many MPs, I regularly meet sick or disabled people who are not able to work but who have been described as fit to work by Atos or by the DWP. The Minister with responsibility for disabled people, the right hon. Member for Hemel Hempstead (Mike Penning), has described the contract with Atos as a “mess”. Some 600,000 people across the country have appealed against decisions made by the Government to cut their benefits. Of that number, 60% have been successful. Such figures clearly prove that something is wrong with the process.
Atos is now saying that it wants to pull out of the contract early because of the threats being made against its staff. The chaos is costing taxpayers millions of pounds in assessments and tribunals, and it is causing distress and anxiety for thousands of disabled people.
Let us look at how the personal independence payment is shaping up. Atos will continue to carry out assessments on more than 3 million people receiving disability living allowance, soon to become PIP. Some constituents have been waiting months to be dealt with. However, even when Atos proves it is decent in its assessments, the Department for Work and Pensions overrules it, which is scandalous.
Let us look at another reform, the work capability assessment, because there is clearly a pattern forming here. In my constituency of Inverclyde, I have seen first hand the way in which people can be treated. One constituent was diagnosed with brain cancer. His surgeon, GP and even Atos said that he would never work again, but the DWP said that he should work and sanctioned him. It has taken many months to get back his payments. On top of all the worry, his family were faced with financial worry.
Another constituent suffering from cerebral palsy who could not travel for assessment was refused a home visit. Similarly, a constituent who was seriously injured in an accident at work was advised to travel to Glasgow for assessment, but, again, they were unable to travel because they were in so much pain. It gets worse. This constituent then had their benefit stopped because Atos sent the assessment forms to the wrong address. If it cannot get the address right, what chance do my constituents have? Those are just a couple of examples of people I have been dealing with. Clearly, my constituents have not been treated with the fairness and decency that they deserve, and the Budget does nothing to address that.
Last but not least is the bedroom tax. The best I can say is that in Scotland, thanks to a Labour Bill in the Scottish Parliament which was at last supported by the Scottish Nationalist party Government, the bedroom tax will not apply there next year. The bedroom tax is inhuman and should be abolished and Labour will abolish it across the UK.
25 Mar 2014 : Column 246
Mr Jeremy Browne (Taunton Deane) (LD) rose—
Mr McKenzie: I will not give way, as I am just about to finish. We will also introduce a Budget that recognises and addresses the cost of living crisis that people up and down this country face.
6.17 pm
Mrs Emma Lewell-Buck (South Shields) (Lab): It is a pleasure to follow my hon. Friend the Member for Inverclyde (Mr McKenzie).
Much of the post-Budget media coverage has focused on what the Chancellor’s measures mean to the average member of the public, but debates about the average do not translate very well in my constituency. In South Shields, people are more likely than the average to be unemployed, or to be in part-time work or on a zero-hours contract. They are more likely to have a disability or long-term condition and to be living in fuel or food poverty. The reality is that the Chancellor offered next to nothing for those households, and they are the very people his Government’s policies have hit worst of all.
Under the coalition’s cost of living crisis, families in my constituency have seen their incomes fall relative to prices month after month. They are twice as likely to be unemployed as they were five years ago, and those out of work, nearly four in 10, have been unemployed for 12 months or more. If they are lucky enough to have a job, there is a one in four chance it will be part time, and for those on part-time contracts, hours have fallen since 2010. The situation is even worse for the young. The number of 16 to 24-year-olds out of work for 12 months or more has increased more than 10 times under the coalition.
Now that we are finally seeing a return to growth, this Budget should have been an opportunity to help the people who have suffered hugely during the recession. Instead the Chancellor all but ignored them. He said this was a Budget for savers, but that will mean nothing to those whose incomes are so squeezed that they have nothing left at the end of the month to put aside. What little savings some people have are being spent right now to cover the gap between their income and their living costs. That is a growing problem.
The Office for Budget Responsibility reports that the savings ratio will fall by a fifth this year, and the Bank of England’s figures show that families are drawing on their savings at record levels, at a sum of about £900 for each household in the country. The Chancellor tells us that he wants to reward savers, but many people do not have that option. Raising ISA limits to £15,000 does not make my constituents more likely to save; in fact, that is more than most of them would ever earn in a year.
People who can take advantage of that policy will do well out of it, but they are already quite comfortable if they have that kind of money to put aside. The Chancellor will reward those people, who might put off buying a new car or taking a holiday to save a little more, for their responsibility, but I want to know how he will reward the responsibility of my constituents who sacrifice hot meals to give them to their children.
Government Members have pointed out some of the patronising gimmicks the Chancellor threw into the Budget to convince people that he is on their side: a cut in beer duty and lower duty for bingo halls. Once again, he proved how out of touch he and the Government
25 Mar 2014 : Column 247
parties are. People in my constituency do not have beer and bingo at the forefront of their concerns. They care about the dignity that decent, well-paid work gives them. They care about providing for their families. They care about being able to pay their bills and to afford to eat. To put it simply, bingo and beer are far from the minds of those queuing at food banks.
The Government argue that raising the personal allowance has the effect of helping those who are worst off, but again the reality is far from the rhetoric. The Resolution Foundation has pointed out that the 5 million lowest earners will not get a penny because they already earn less than the personal allowance. One in four workers in my constituency is in part-time work and many earn the minimum wage. Those people are not earning enough to feel any effect from the threshold being raised. They are the people who are suffering the most, yet the Government’s flagship policy for helping the poorest brings them no benefits whatsoever.
Single-earner households, which are more common among low-income groups, benefit half as much as dual earners even though they clearly have greater need. As if that was not enough, the vast majority of gains from raising the personal allowance are expected to be wiped out when universal credit is introduced, as that system calculates people’s benefit entitlement on post-tax rather than pre-tax income. People who receive benefits or tax credits might see their incomes rise because they are paying less tax, but for every extra pound they keep they will lose 65p in universal credit. It is therefore poorly targeted as a policy for helping the worst off.
The Prime Minister and the Chancellor have claimed that we are all in this together, yet this was not a Budget for the whole country, just as this is not a recovery for the whole country. Yes, it is true that families on all incomes have found things harder in recent years, but the effect has been felt most strongly in constituencies such as mine. As far as my constituents are concerned, there is no recovery. They face yet another miserable year ahead under this miserable Government.
6.23 pm
Jim Shannon (Strangford) (DUP): As the last Back Bencher to be called to speak in the debate, I am reminded of that biblical verse, “The first shall be last, the last shall be first”. I am more than pleased to make a contribution.
There are many things in the Budget that we should be applauding. Some of the good things include the reduction in air passenger duty, the changes to pensions and to corporation tax, the fact that unemployment is down and the £21 million for potholes in Northern Ireland.
Dr William McCrea (South Antrim) (DUP): Although we welcome the reduction in APD that is recommended, it is important to remember that my constituency’s international airport competes with Dublin airport, which has no APD, whereas ours is still significant. I therefore want the Government to go further than they propose in this Budget.
Jim Shannon: I thank my hon. Friend and colleague for that intervention. He outlines the fact that although we have seen a lot of movement, we need to see more. It is always good to see such movement happening.
25 Mar 2014 : Column 248
I also applaud the introduction of the married couples transferable tax allowance, which was in the Conservative manifesto and which the Democratic Unionist party has supported. I suspect that we may be the only party on the Opposition Benches that has done so, but we have, and we put that on record. The perplexing thing about it is that there is to be no child care element for those in the middle band, while a child care element is in place for the lower and higher bands. My party will continue to push for that, and I hope that we get some concessions. Having liaised with various bodies about the Budget, I would like to highlight a few issues, most of which are important health issues. On tobacco and alcohol duty, Professor Sheila Hollins, chair of the British Medical Association board of science, has said:
“The Government is giving with one hand and taking with another, with a step forward on measures to reduce smoking but backward on tackling alcohol related harm.”
I understand her viewpoint. The extension of the tobacco tax escalator is certainly welcome from a health perspective, as it will reduce the affordability of cigarettes, which is an essential component in deterring children from taking up smoking. That is the greatest concern. However, while Cancer Research UK welcomes the extension of the 2% above inflation annual tobacco tax rise for the whole of the next Parliament, it has been suggested to me that a one-off increase of 5% above inflation in this Budget would lead to a fall in the number of smokers by 334,000, or 0.7 percentage points. How can we go against those figures supplied by Cancer Research? That is a measure that should have been introduced.
Furthermore, Cancer Research suggests that considerable benefits would accrue to the public finances from a reduction in smoking—a total of £199 million in the first year and more than £1 billion over the next five years —never mind the direct health and disease reduction benefits. Perhaps a way of achieving that would have been to narrow the price gap between manufactured cigarettes and hand-rolling tobacco. I am aware that a submission to the Treasury in advance of the Budget by Action on Smoking and Health and the UK Centre for Tobacco Control Studies, endorsed by 80 health organisations including Cancer Research UK, urged the Chancellor to increase the tobacco tax escalator to 5% above inflation in order to reduce smoking, while at the same time raising much-needed revenue, and I again press the Government to consider that for the future. Perhaps the Minister can tell us when that might happen or what the Government’s intentions are.
I use this opportunity to ask the Government to continue to prioritise tackling tobacco and urge that we press ahead with standardised packaging once the independent review of the public health evidence has concluded.
David Simpson (Upper Bann) (DUP): It has been advocated for some time that we should consider a minimum price for alcohol, which in the long term will have an effect on liver disease or whatever. Surely a lot of money could be saved if that was introduced.
Jim Shannon: My hon. Friend must have read my notes. I slipped out for a while so I suspect that he had a look at them.
Mr Jeremy Browne:
Will the hon. Gentleman consider the alternative perspective from a personal liberty viewpoint?
25 Mar 2014 : Column 249
People can decide for themselves how much they wish to drink. The hon. Member for South Shields (Mrs Lewell-Buck) identified households’ problems with affording their budgets. Is it a good idea to penalise poorer people by making alcohol more expensive for them to buy?
Jim Shannon: As I said, there is a health issue to be addressed and whether we like it not, we have to do that. I am an advocate of using whatever we can within the health process to do so. The scrapping of the alcohol duty escalator and the reduction in beer duty, coupled with the Government’s U-turn on plans to introduce a minimum unit price, show that the Government have abandoned any serious efforts to tackle alcohol-related harm, which cost £20 billion in England alone last year, £2 billion of which was on health care. We cannot ignore those figures because people are involved and they are clearly affected. We will continue to call on the Government to introduce a minimum unit price because we know that minimum pricing reduces alcohol-related harm among the heaviest drinkers while leaving responsible drinkers largely unaffected.
In debates on the Care Bill, I, along with many others, raised the issue of free social care at the end of life. It would be inappropriate to go into everything that was outlined during those debates, but the key statistic is that the quality, innovation, productivity and prevention —QIPP—data suggest that net savings of £958 could be made for every person who dies in the community rather than in hospital. Health Ministers support such a move, but I would appreciate it if the Treasury, which has not yet made its stance clear in the Budget, indicated its intentions on the matter for future reference.
Finally, I wish to highlight issues in relation to the welfare spending cap. For many people, the financial impact of cancer is a major issue, as they face a loss of income as well as having to cope with additional costs. Research commissioned by Macmillan Cancer Support has found that 83% lose an average of £570 a month, which is comparable to the average monthly mortgage payment in the United Kingdom of Great Britain and Northern Ireland. It is, therefore, no surprise that people calling the Macmillan helpline are 25 times more likely to seek help with financial issues than with end-of-life issues. Although in many cases they are dying, they are more concerned about their finances and the position for their families. That is what Macmillan Cancer Support says, and it is important that that matter is dealt with. Will the Chief Secretary to the Treasury clarify and explain how the Government intend to ensure that the cap on welfare spending does not impact negatively on people with cancer? The welfare system provides thousands of cancer patients with a financial lifeline at a time when they most need it, and spending should be determined in no other way.
There are many other issues that I should like to raise, but I shall express great disappointment at not seeing a drop in fuel tax for Northern Ireland, which has the highest fuel costs in the United Kingdom. I represent a rural area, and there are many Members in the Chamber who are not from Northern Ireland but are from rural areas, who would make the point that the impact of fuel costs is greater in rural communities than anywhere else. My colleagues who represent constituencies
25 Mar 2014 : Column 250
in Northern Ireland would all adhere to that statement. We would like a reduction in fuel tax and a pilot scheme for Northern Ireland. I understand that there is such a scheme for Mid and South Down, and it should be extended to the whole of Northern Ireland, because we deserve that opportunity. Perhaps we will see that in future.
We must have a Budget that helps to reduce our outgoings, but that should not be done at the expense of our health service and vulnerable people. Macmillan Cancer Support, Cancer Research UK and the British Medical Association have all outlined suggestions for saving money that can benefit those most in need, and again I suggest that the Chief Secretary and Chancellor give that serious consideration.
In conclusion, I give this Budget the grade that I often saw in my school reports, “C-plus, Chancellor: easily distracted; could do much better.”
6.32 pm
Penny Mordaunt (Portsmouth North) (Con): I shall be brief. I want to welcome the pension reforms outlined in the Budget, especially as I am the co-chair of the all-party group on older people and ageing.
As part of my campaign to secure a Minister for older people, I have often spoken in the House about the freedoms that we wish to see for older people. Policies and financial products are often skewed towards a “Werther’s Original” image of older people that does not reflect the diverse reality. I remember going to the physiotherapy department at my local hospital and seeing an elderly gentleman exercising. He was recovering from a major operation on his knee and hips. I asked him his name and how old he was. He was 84, and I asked him how his recovery was going. He described the incredible number of breaks he had had in his pelvis and legs. I had a vision of him shuffling down an icy driveway in his slippers, and I said, “That must have been one hell of a fall, Don.” He said, “No, actually, it was a hang-gliding accident.”
That just goes to show that older people are a diverse bunch. They have incredibly diverse plans and ambitions. They wish to be entrepreneurs, they wish to travel, and they have diverse responsibilities. We need to give them as much freedom as possible. We would not tolerate the restrictions on our freedoms that we have expected them to accept in the pension system and other policies, so I am pleased that that has changed. How that dovetails with our care reforms is a vital question. The new financial products that we want in the marketplace will probably not be fit for purpose for another couple of generations. That is also the case for the type of product that Dilnot wished to see and measures allowed under the Care Bill reforms. While we are waiting for those things to come on-line, it is vital that we make sure that people have as much freedom and as much choice as possible as to how they spend their money.
Finally, and briefly, I put it on record that I am very pleased to see help for high energy-use businesses. That is a major issue in the constituency I represent. The president of the Aluminium Federation, who has his factory in Portsmouth, is absolutely delighted and he is not alone in that. In Portsmouth, we are at a very exciting juncture. The maritime task force that was set up at the tail end of last year is just about to report, setting out a blueprint of what we need to do in marine and manufacturing to turn the Solent and Portsmouth
25 Mar 2014 : Column 251
at its heart into the maritime heart of the UK. There is a clear blueprint for that and investment earmarked for precisely those things.
We are able to compete really well and I think that is because of the business environment that is being created not only from this Budget, but from successive Budgets. We have managed, in just a few months, without a formal marketing process in place, to gain interest for an order book for the shipyard at Portsmouth of over £1 billion. That shows that we are able to compete not only with northern Europe, but with Dubai and shipyards around the world, and that Britain is an attractive place to do business and Portsmouth is a stellar yard to build ships in.
I particularly welcome the announcements on energy and on pensions in the Budget and commend the Chancellor and the Front-Bench team for their excellent work.
6.36 pm
Chris Leslie (Nottingham East) (Lab/Co-op): First, I thank so many of my right hon. and hon. Friends for making important contributions to the debate, highlighting constituency concerns, offering a critique of the Chancellor’s strategy and questioning the wisdom of his short-sighted short-termism. To name only a few, that includes my hon. Friends the Members for South Shields (Mrs Lewell-Buck), for Wigan (Lisa Nandy), for Coventry South (Mr Cunningham), for Livingston (Graeme Morrice), for Darlington (Jenny Chapman), for Stalybridge and Hyde (Jonathan Reynolds), for North Tyneside (Mrs Glindon), my right hon. Friend the Member for Edinburgh South West (Mr Darling), and my hon. Friends the Members for Inverclyde (Mr McKenzie) and for Liverpool, West Derby (Stephen Twigg). They all made the case very strongly.
The country needed a Budget to deliver a recovery built to last and a recovery that is felt by all. We needed a Budget to ensure that growth is sustained; to support a balanced approach across industrial sectors; to spur on business investment and productivity; to drive exports; and to lift growth in all the regions and nations. We needed a Budget to make sure that a recovery is shared by the whole country, not just the wealthy already at the top.
Yet what we had last Wednesday was a Budget more notable for the reforms it did not contain. There was nothing to tackle long-term youth unemployment, which has doubled since the Government came to power. There was nothing to reform the big six gas and electricity companies, who are hitting families and pensioners with ever-higher energy bills. There was nothing to bring forward real help now with child care costs that are spiralling upwards year after year. There was nothing to drive forward the infrastructure investment that we so urgently need and nothing to address the wages crisis leaving the typical working person £1,600 worse off than they were in 2010. There was not even a mention by the Chancellor of the cost of living crisis, or even a passing reference to it in the 120 pages of the Budget Red Book. Instead, it fell to the Office for Budget Responsibility to spell out the realities to the British people: you will be worse off at the coming election than you were back in 2010—and that is official.
What sort of Budget was it? It was a Budget attempting to get the Government from here to election day, rather than to entrench, extend and enhance a recovery for all.
25 Mar 2014 : Column 252
That is why we had a few small give-aways and that patronising little pat on the head for hard-working people to do more of the things they enjoy—and was it not interesting to see the Chancellor looking so authentic playing bingo earlier today? What a great offer from the Chancellor: buy 300 pints of beer and get one free. They give a little with one hand, but take away so much more with the other.
Amazingly, the Chancellor did not mention VAT at 20%, the granny tax, the cuts to child benefit and to tax credits, or the 2 million working people who have been drawn into the 40p tax band since the Government came to office. He also did not mention the very generous tax cut for millionaires, or the deal he struck with the big banks to water down the bank levy even further—a secret tax cut for the banks that we will be voting against tonight.
There is a crisis out there in the country. The Prime Minister once said:
“Helping with the cost of living. That is what matters most of all.”
Whatever happened to that promise? Britain needed a Budget for big changes, but the Chancellor was busy dealing with the small change, the new £1 coin modelled on the threepenny bit. Of course, as the right hon. Gentleman is the heir to the Osborne baronetcy, perhaps it is no surprise that he has such an emotional attachment to old money.
Back in the real world, changing GDP statistics are not yet felt by those on lower or middle incomes, who do not share the Chancellor’s rosy view. They are concerned about job insecurity, zero-hours contracts, escalating rents and bills and frozen incomes, while food banks are increasingly the last resort for those with nowhere left to turn. That is the real Britain that his short-termism is creating.
As my hon. Friend the Member for Clwyd South (Susan Elan Jones) said, young people who want to get ahead are sensing that the odds are stacked against them. They belong to “Generation rent”, ripped off by letting agencies, with the housing market out of reach because Help to Buy has not been matched with the help to build that we need. But because the Chancellor is so focused on showing off his new £1 coin, so focused on his short-term ambitions—[Interruption.] It does not matter if he changes its shape; its value is still shrinking day by day under him. He is failing to take the long-term steps we need to improve this country.
The flexibilities on annuities are welcome in principle, and we look forward to scrutinising the detail in due course. Annuities have failed too many pensioners. We also hope, however, that the Chancellor will address the need for comprehensive advice for those nearing retirement and for reform to go further by capping pension fund charges to stop rip-off fees and improve consumer trust.
Did the Chancellor make that change on annuities for a long-term reason or a short-term one? Is it pure coincidence that the reform will grab hundreds of millions in tax from pensioners years earlier than it would otherwise have come into the Exchequer? Did he really have the long term in mind, or was it a “manoeuvre”, as the IFS calls his tricks, from a Chancellor who will borrow £190 billion more than he said he would?
25 Mar 2014 : Column 253
Although the annuity changes are welcome, it is difficult to escape the feeling that they are being used to distract from the inadequacy of the rest of the Budget. They provide a veneer of long-term reform to an otherwise short-term Budget. The Chancellor dangles the annuities issue as a device to divert attention from his inaction on the cost of living and the reforms we need to build a lasting recovery that is felt by all.
The Chancellor is absolutely desperate for people not to notice the broken promise to balance the books by next year. It turns out that the past three years of economic stagnation will leave the next Government inheriting a budget deficit of £75 billion. It is staggering that the Chancellor had the nerve to claim in his Budget statement that
“as a nation we are getting on top of our debts”.—[Official Report, 19 March 2014; Vol. 577, c. 781.]
The Chancellor’s neglect of economic growth has added a third to the national debt, which is now over £1.2 trillion. He promised to stop adding to the debt, but he has borrowed more in four years than the previous Government did in 13 years.
That is why my right hon. Friend the Leader of the Opposition called for a cap on structural welfare reform in June last year. Yes, we need to be tough on welfare inflation, but we also have to be tough on the causes of welfare inflation, tackling low wages and rising rents and helping to get the long-term unemployed off benefits and back into work. That is the way to ensure that we get the current budget back into surplus as soon as possible.
The Chancellor should be confronting the causes of falling revenues and rising costs for taxpayers, but he has form when it comes to bending the rules to make it appear that progress is being made. In this Budget, again, there are some extremely dodgy accounting tricks used by this master of prestidigitation: treating a forecast of worsening public sector pension costs as an opportunity to spend more money; banking future tax revenues on the basis of what the OBR called “particularly uncertain” behavioural assumptions; committing to spending billions extra on the basis of cuts to services while refusing to say where the axe will fall; and inventing revenues from tackling avoidance even though the Swiss tax deal has delivered only a quarter of what he originally promised. The IFS calls these the Chancellor’s “manoeuvres” which he will keep on repeating—a few give-aways inadequately funded by unspecified funding cuts.
We are beginning to hear that the Chancellor and his outriders are on manoeuvres in other ways too. He and the Chief Secretary to the Treasury have an eye on their personal advance to the top of their parties—believe it or not. In fact, the Chief Secretary is on odds of 14:1 to take over the Liberal Democrats after the next general election. There they sit, right there: one a zealous champion of right-wing Conservatism and the other the Chancellor of the Exchequer. No wonder the public are not getting a look-in. We needed a Budget to lock in the recovery, but all we got was a Budget designed to lock out the Chancellor’s rivals for the leadership of the Conservative party.
The Government are not ensuring that we have a sustainable recovery. The reason the Chancellor is being forced to address a growing savings crisis is that, as the
25 Mar 2014 : Column 254
OBR says, growth might slow down again when consumer savings run dry—and it predicts that savings will be depleted even more quickly after the Budget measures are factored in. Exports will not contribute a thing to growth for the next five years, according to the OBR. A Conservative Government will certainly not invest in a pro-growth approach; they do not even acknowledge that productivity is a problem that has been emerging in recent years. Why are they not helping small and medium-sized businesses with a cut in business rates rather than making yet another cut in corporation tax that benefits only 2% of British businesses? Their short-term chopping and changing on renewables, on investment allowances and on the carbon price floor are all symptoms of a fickle and inconsistent Treasury governed by political impulse. We finally have some growth not because of this Chancellor, but despite this Chancellor.
Britain needed a Budget for the long term—long-term recovery, long-term stability, and long-term growth—but Britain got a Budget for the short term from a part-time Chancellor more preoccupied with his party’s recovery than with building Britain’s recovery. Britain deserves better.
6.47 pm
The Chief Secretary to the Treasury (Danny Alexander): It is a pleasure to close this excellent Budget debate. We have heard some very good speeches today. I particularly commend my hon. Friend the Member for Forest of Dean (Mr Harper), who gave strong support to the Budget. I pay tribute to his work as a Minister, not least as Minister responsible for constitutional reform when he worked so closely with the Deputy Prime Minister on those matters.
I particularly note the speech by the right hon. Member for Edinburgh South West (Mr Darling), who rightly highlighted the importance of securing this country’s long-term competitiveness. I would also highlight the work we are doing on infrastructure, on skills, and on making this country more attractive for investment. In that context, I find his party’s decision to vote against the corporation tax cut utterly extraordinary. If we want this country to become more welcoming to investment, that is precisely the sort of measure we should be supporting.
The right hon. Member for Salford and Eccles (Hazel Blears) spoke particularly about social investment. I welcome her support for the tax relief on social investment that we confirmed in the Budget. The hon. Member for Aberdeen South (Dame Anne Begg) gave an important speech about her concerns about pensions and annuities. I am sure that those issues can be addressed as the Finance Bill goes through the House. My hon. Friends the Members for Bedford (Richard Fuller) and for Daventry (Chris Heaton-Harris) made particularly strong speeches. I commend the hon. Member for Paisley and Renfrewshire North (Jim Sheridan) for his speech, particularly the attention he paid to the warm welcome in the Scotch whisky industry for the measures we have taken on spirits duties—just one of a number of ways in which this was a Budget for Scotland. He is right to have welcomed that.
However, we heard at the end the most extraordinary speech by the shadow Chief Secretary to the Treasury. I gather that his party is intending to vote against the
25 Mar 2014 : Column 255
whole Budget tonight. That is surprising—or perhaps not that surprising in the context of Labour’s changing position on annuities and pension reform. Last week’s announcements on annuities complete the most progressive and important reforms to our pension system since Lloyd George was the Liberal Minister in the Treasury. The reforms are founded on the decisions we have made and are being ably led by the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), who has responsibility for pensions. They include the creation of a single-tier pension—a firm foundation on which everyone can save—and the triple lock, which ensures finally that we will not have the kinds of derisory pension increases that we saw when Labour was in office.
People often wonder whether there will be a rabbit-out-of-the-hat moment in a Budget and I am sure the whole House will agree that our annuities announcement has been successful in rabbit production—a whole Labour Front Bench of them. They are rabbits caught in headlights. It has gone on for days. As my hon. Friend the Member for Daventry memorably said in his speech, Labour’s economic policy is like a chameleon that has fallen into a bag of Smarties. You can ponder for yourself what that means, Mr Deputy Speaker, but I think he was drawing attention to the fact that we have not had a sensible reaction from the Opposition. [Interruption.] I am not sure: I think ginger rodents play a very important role in our democracy, to answer the shadow Chancellor’s remarks.
On Wednesday the Leader of the Opposition said absolutely nothing. On Thursday the hon. Member for West Bromwich East (Mr Watson), presumably frustrated by the continued silence of his Front Benchers, took it on himself to tell his party that it should oppose our plans on annuities and pensions. Friday saw the hon. Member for Leeds West (Rachel Reeves) getting around almost at least to welcoming the move. To think that Labour Members used to say that we in my party wore sandals; they are surely now the flip-flop party. They now say—this is a serious point—that they will vote against the Budget as a whole and, therefore, against all of the reforms contained in it. They did not know what to say about the reforms, then they were against them, then in favour of them, then sort of in favour of them and now in just a few minutes’ time they are going to vote against them. The truth is that our great liberalisation of the pensions market has hit Labour Members like a missile. It has cracked open one of the great dividing lines between their values and our values. We on this side of the House know that the best people to trust with money are the people who earn that money in the first place. Labour Members do not seem to agree with that.
I draw the House’s attention to the following quote:
“You cannot trust people to spend their own money sensibly”.
Who said that? It was a former Labour adviser in No. 10 under the previous Government. That says it all. Having been in opposition to that Government for so long, I understand John McTernan’s concerns. After all, when the Labour party was given access to the public purse, it went on a giant spending spree. It splurged on all sorts of unsuccessful projects. It is a party that wastes money and expects someone else to clean up after it. We are the party—the Government, the coalition—that it has left with the cleaning up. [Interruption.] Yes,
25 Mar 2014 : Column 256
the Liberal Democrats are clearing up the mess that the Labour party made of this country’s economy. I think that the people of this country know not only about the mess the Labour party made of our economy, but that people who have spent their lives saving for their retirement can be trusted to make sensible, long-term choices. It is just the Labour party that cannot be trusted to do that.
This was, in the end, a Budget for freedom. It was a Budget for the freedom of pensioners to choose to use their own savings in the way that best suits them; a Budget for working people to be free to keep more of the money they earn for themselves; and a Budget to support businesses that want to invest. The only way we can deliver the rise in living standards that has been discussed by some Labour Members is by making sure that our policies are as fair as possible.
Chris Leslie: Now that the Chief Secretary has finally come to the question of living standards, will he do what he failed to do four times when asked on the “PM” programme on the day of the Budget and admit that living standards will be lower at the time of the next election than they were at the last election—yes or no?
Danny Alexander: I rather agree with the analysis that my right hon. Friend the Secretary of State for Work and Pensions set out on that question. In his opening remarks—[Interruption.] The Opposition might not like it, but no matter how much the shadow chunterer makes his noises from the Front Bench, I will make the point that the recession that they helped to cause when they were in office cost every household in this country £3,000. That is the mess that they made. It is no wonder that we are having to work so hard to repair the British economy and to ensure that there are jobs for people.
Chris Leslie: Will the Chief Secretary give way?
Danny Alexander: No, I will not give way any more—sit down. I will give the hon. Gentleman the treatment that he deserves.
In the Budget, we have sought to help those at the bottom of the earnings scale by taking them out of tax altogether. I am incredibly proud, as a Liberal Democrat, to stand at this Dispatch Box and say that, come next April, the rise in the personal allowance will mean that typical basic rate taxpayers will be £800 a year better off than they would have been under the previous Government’s plans.
Chris Leslie: Will the Chief Secretary give way?
Danny Alexander: No; I am going to make some progress.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The right hon. Gentleman is not giving way and persistence will not help.
Danny Alexander: I have quite a few more things to say, Mr Deputy Speaker, and I have less than three minutes in which to say them.
The rise in the personal allowance is not just a reward for hard work, but an incentive for hard work, as are the substantial changes that we have made on child care in
25 Mar 2014 : Column 257
the Budget. Those changes mean that we are getting more people into work and that people are keeping more of what they earn.
We have taken measures to incentivise businesses to invest, such as enhancing capital allowances. I pay tribute to my hon. Friend the Member for Burnley (Gordon Birtwistle), who pushed hard for those changes. They will make a serious difference to business investment in this country.
To conclude, this is a Government with a long-term economic plan, and they are an Opposition without any plan at all. For businesses, we have doubled the tax relief on new plant and equipment, while they are frightening off the investors whom we need to invest in the energy to power those machines. They will vote against the cut in corporation tax and confirm that the Labour party is the anti-business party in this House. For working people, we have lifted the personal tax allowance even further than we promised in our election manifesto. While they talk about a 10p rate, we have lifted the personal allowance to £10,500. For pensioners, we have delivered a triple lock, the largest cash rise in the basic state pension in a generation and the greatest pensions liberation in a century. In their time in office, they delivered a paltry 75p rise in the basic state pension.
Some people have referred to this as the Lamborghini Budget. That may well be so, because there is one person in this Chamber who has shown that he can out-accelerate a Lamborghini. That is the shadow Chancellor in retreating from his predictions on the economy, such as the 1 million jobs that were never lost and the triple dip that never came.
Ed Balls (Morley and Outwood) (Lab/Co-op): Is the right hon. Gentleman calling me a Lamborghini?
Danny Alexander: The shadow Chancellor might think that he is more of a Robin Reliant, but he is not for the purposes of this Budget.
This Budget is another landmark on our long road to repairing the economy that the Opposition wrecked. It gives more people more control over their own money. It cuts income tax for working people. It helps businesses to invest for growth. It is a Budget that helps put Britain and business back on their feet, and I commend it to the House.
The House divided:
Ayes 305, Noes 252.
Division No. 236]
[
6.58 pm
AYES
Adams, Nigel
Afriyie, Adam
Alexander, rh Danny
Amess, Mr David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, rh Sir Tony
Baldwin, Harriett
Barclay, Stephen
Barker, rh Gregory
Baron, Mr John
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Benyon, Richard
Bingham, Andrew
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, Crispin
Boles, Nick
Bone, Mr Peter
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Brooke, Annette
Browne, Mr Jeremy
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, rh Paul
Burt, rh Alistair
Burt, Lorely
Cable, rh Vince
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, rh Mr Alistair
Carswell, Mr Douglas
Cash, Mr William
Chishti, Rehman
Chope, Mr Christopher
Clappison, Mr James
Clark, rh Greg
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Cox, Mr Geoffrey
Crabb, Stephen
Crockart, Mike
Crouch, Tracey
Davey, rh Mr Edward
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davies, Philip
Davis, rh Mr David
de Bois, Nick
Dinenage, Caroline
Djanogly, Mr Jonathan
Dorrell, rh Mr Stephen
Dorries, Nadine
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan Smith, rh Mr Iain
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Fallon, rh Michael
Featherstone, Lynne
Field, Mark
Foster, rh Mr Don
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fullbrook, Lorraine
Fuller, Richard
Gale, Sir Roger
Garnier, Sir Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Gillan, rh Mrs Cheryl
Glen, John
Goldsmith, Zac
Goodwill, Mr Robert
Gove, rh Michael
Graham, Richard
Grant, Mrs Helen
Gray, Mr James
Grayling, rh Chris
Green, rh Damian
Greening, rh Justine
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Hague, rh Mr William
Halfon, Robert
Hames, Duncan
Hammond, Stephen
Hancock, Matthew
Hands, rh Greg
Harper, Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Hayes, rh Mr John
Heald, Oliver
Heath, Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, Charles
Herbert, rh Nick
Hinds, Damian
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Holloway, Mr Adam
Hopkins, Kris
Howarth, Sir Gerald
Howell, John
Hughes, rh Simon
Huppert, Dr Julian
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Javid, Sajid
Jenkin, Mr Bernard
Johnson, Gareth
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kennedy, rh Mr Charles
Kirby, Simon
Knight, rh Sir Greg
Kwarteng, Kwasi
Lamb, Norman
Lancaster, Mark
Lansley, rh Mr Andrew
Laws, rh Mr David
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Leech, Mr John
Leigh, Sir Edward
Leslie, Charlotte
Lewis, Brandon
Lewis, Dr Julian
Liddell-Grainger, Mr Ian
Lilley, rh Mr Peter
Lopresti, Jack
Loughton, Tim
Macleod, Mary
Maude, rh Mr Francis
Maynard, Paul
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McLoughlin, rh Mr Patrick
McPartland, Stephen
McVey, rh Esther
Menzies, Mark
Mercer, Patrick
Metcalfe, Stephen
Mills, Nigel
Milton, Anne
Mitchell, rh Mr Andrew
Moore, rh Michael
Mordaunt, Penny
Morgan, Nicky
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Mundell, rh David
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Neill, Robert
Newmark, Mr Brooks
Newton, Sarah
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
O'Brien, rh Mr Stephen
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Osborne, rh Mr George
Ottaway, rh Sir Richard
Paice, rh Sir James
Parish, Neil
Patel, Priti
Paterson, rh Mr Owen
Pawsey, Mark
Penning, rh Mike
Penrose, John
Percy, Andrew
Perry, Claire
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Poulter, Dr Daniel
Prisk, Mr Mark
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Sir John
Reckless, Mark
Redwood, rh Mr John
Reevell, Simon
Reid, Mr Alan
Rifkind, rh Sir Malcolm
Robathan, rh Mr Andrew
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Shelbrooke, Alec
Shepherd, Sir Richard
Simmonds, Mark
Simpson, Mr Keith
Skidmore, Chris
Smith, Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Soubry, Anna
Spelman, rh Mrs Caroline
Spencer, Mr Mark
Stanley, rh Sir John
Stevenson, John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Streeter, Mr Gary
Stride, Mel
Stunell, rh Sir Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swire, rh Mr Hugo
Syms, Mr Robert
Tapsell, rh Sir Peter
Thurso, John
Timpson, Mr Edward
Tomlinson, Justin
Tredinnick, David
Truss, Elizabeth
Turner, Mr Andrew
Uppal, Paul
Vara, Mr Shailesh
Vickers, Martin
Walker, Mr Charles
Walker, Mr Robin
Wallace, Mr Ben
Walter, Mr Robert
Watkinson, Dame Angela
Weatherley, Mike
Wharton, James
Wheeler, Heather
Whittingdale, Mr John
Wiggin, Bill
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Williamson, Gavin
Wilson, Mr Rob
Wright, Jeremy
Wright, Simon
Yeo, Mr Tim
Young, rh Sir George
Zahawi, Nadhim
Tellers for the Ayes:
Mark Hunter
and
Gavin Barwell
NOES
Abbott, Ms Diane
Ainsworth, rh Mr Bob
Alexander, rh Mr Douglas
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Ashworth, Jonathan
Austin, Ian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Kevin
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blears, rh Hazel
Blenkinsop, Tom
Blomfield, Paul
Blunkett, rh Mr David
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnham, rh Andy
Byrne, rh Mr Liam
Campbell, rh Mr Alan
Campbell, Mr Ronnie
Caton, Martin
Champion, Sarah
Chapman, Jenny
Clark, Katy
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Crausby, Mr David
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Mr Jim
Curran, Margaret
Dakin, Nic
Danczuk, Simon
Darling, rh Mr Alistair
David, Wayne
Davidson, Mr Ian
Davies, Geraint
De Piero, Gloria
Denham, rh Mr John
Dobbin, Jim
Dobson, rh Frank
Docherty, Thomas
Dodds, rh Mr Nigel
Doran, Mr Frank
Dowd, Jim
Doyle, Gemma
Dromey, Jack
Dugher, Michael
Durkan, Mark
Eagle, Ms Angela
Eagle, Maria
Edwards, Jonathan
Efford, Clive
Elliott, Julie
Ellman, Mrs Louise
Engel, Natascha
Esterson, Bill
Evans, Chris
Farrelly, Paul
Field, rh Mr Frank
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Flynn, Paul
Fovargue, Yvonne
Francis, Dr Hywel
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Godsiff, Mr Roger
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Griffith, Nia
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hanson, rh Mr David
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hendrick, Mark
Hermon, Lady
Heyes, David
Hillier, Meg
Hilling, Julie
Hodge, rh Margaret
Hodgson, Mrs Sharon
Hoey, Kate
Hood, Mr Jim
Hopkins, Kelvin
Howarth, rh Mr George
Hunt, Tristram
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs Siân C.
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Helen
Jones, Mr Kevan
Jones, Susan Elan
Jowell, rh Dame Tessa
Kane, Mike
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Khan, rh Sadiq
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewell-Buck, Mrs Emma
Llwyd, rh Mr Elfyn
Long, Naomi
Love, Mr Andrew
Lucas, Caroline
Lucas, Ian
MacNeil, Mr Angus Brendan
Mactaggart, Fiona
Mahmood, Mr Khalid
Mahmood, Shabana
Malhotra, Seema
Mann, John
Marsden, Mr Gordon
McCabe, Steve
McCarthy, Kerry
McClymont, Gregg
McCrea, Dr William
McDonagh, Siobhain
McDonald, Andy
McDonnell, Dr Alasdair
McDonnell, John
McFadden, rh Mr Pat
McGovern, Alison
McGovern, Jim
McGuire, rh Mrs Anne
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Meale, Sir Alan
Miliband, rh Edward
Miller, Andrew
Mitchell, Austin
Moon, Mrs Madeleine
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murphy, rh Mr Jim
Murphy, rh Paul
Murray, Ian
Nandy, Lisa
Nash, Pamela
Onwurah, Chi
Osborne, Sandra
Owen, Albert
Pearce, Teresa
Perkins, Toby
Pound, Stephen
Powell, Lucy
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reed, Mr Steve
Reeves, Rachel
Reynolds, Emma
Reynolds, Jonathan
Riordan, Mrs Linda
Ritchie, Ms Margaret
Robertson, Angus
Robertson, John
Robinson, Mr Geoffrey
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Sarwar, Anas
Sawford, Andy
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Sheridan, Jim
Shuker, Gavin
Simpson, David
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
Smith, Angela
Smith, Nick
Smith, Owen
Spellar, rh Mr John
Straw, rh Mr Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Twigg, Derek
Twigg, Stephen
Umunna, Mr Chuka
Vaz, rh Keith
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Watts, Mr Dave
Weir, Mr Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Williams, Hywel
Wilson, Phil
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Wood, Mike
Woodcock, John
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Noes:
Stephen Doughty
and
Bridget Phillipson
Question accordingly agreed to.