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Mark Menzies (Fylde) (Con): The Prime Minister has set out the role that shale gas can play in UK and European energy security, but can he assure me and my constituents that we will not develop shale gas unless we are sure that it is safe, with safety enshrined in a robust regulatory framework?

The Prime Minister: I absolutely agree with my hon. Friend. I am convinced that we can develop shale gas in a way that is safe, and in a way that provides useful supplies of gas and can benefit local communities. I think we should look carefully at what has happened in the United States. The overwhelming lesson from the United States is that this can be done, and it can be a real bonus for local communities and for our country.

Jim Shannon (Strangford) (DUP): I thank the Prime Minister for his statement. Will he tell the House what progress has been made to address human rights and war crimes in Sri Lanka, including accountability for those who have committed murder and rape, and the issue of the disappeared? What discussions did he have with the Sri Lankan Government about the persecution of the Christian Church there, which is a big issue?

The Prime Minister: I have not had any recent discussions with the Sri Lankan Government about that issue because they were not present at the conference at The Hague. I raised Sri Lanka in the House today simply because the European Council briefly discussed it and reached conclusions that mean that every member of the Human Rights Council will vote for our motion. I raised the issue at The Hague because there were other undecided countries there that I was able to lobby, hopefully moving one or two of them into the right camp. If this happens, it will be a much better way of investigating the human rights abuses that have taken place.

Jason McCartney (Colne Valley) (Con): As a proud Yorkshireman, I, too, welcome the huge investment by Siemens and Associated British Ports in east Yorkshire and our renewables sector. Will the Prime Minister confirm that we are talking about offshore wind investment, and that my constituents in beautiful places such as Slaithwaite do not have to worry too much about huge industrial turbines blocking their beautiful views of the Pennine landscape?

The Prime Minister: I can confirm that. Yesterday I went to see the Siemens investment, and the extraordinary scale of development, for myself. An entire port area is being cleared out and extended to take two enormous factories, including one that will make the turbine blades. The development is at a port because it is not just for the offshore wind market in the UK; there will be a real opportunity for export as well. That is what the investment is all about. It will provide 1,000 jobs, but much more than that, it will bring a whole new industry to Humberside and Hull because of the massive opportunity for the supply and component part of the industry to locate in that area.

Mr Speaker: I thank the Prime Minister and colleagues.

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Illegal Importation of Dogs (Fixed Penalty)

Motion for leave to bring in a Bill (Standing Order No. 23)

1.44 pm

Jim Fitzpatrick (Poplar and Limehouse) (Lab): I beg to move,

That leave be given to bring in a Bill to provide for a fixed penalty charge for those caught smuggling dogs into the United Kingdom; and for connected purposes.

I am grateful for this opportunity and wish to thank Clarissa Baldwin and Laura Vallance of the Dogs Trust, and David Bowles from the Royal Society for the Prevention of Cruelty to Animals, for their help in preparing for today. I also thank my researcher, Tom Evans, and the Table Office and Public Bill Office for their assistance. Members from both sides of the House have indicated their support for this Bill. I stress that this motion is not a criticism of the officers and staff who do so much to protect us; this is about policy. I am grateful to see the Minister and the shadow Minister in their places, and I hope that after today we might be able to follow up the issues I will raise over the next few minutes.

I wish not only to outline the problem that the Bill seeks to address, but explain why the present arrangements do not appear to be working and make some suggestions that could be pursued. The problem is threefold: the risk of rabies and other diseases; the criminal smuggling for profit in breach of regulations; and the animal welfare issues of puppies being transported with minimum food and water to prevent or reduce any mess they might make in the vehicles transporting them.

The problem is partly caused by the harmonisation of European Union rules and the relaxation of our quarantine controls, because—perversely—of the successful management of the risks. It is now easier to import dogs into the United Kingdom if they are microchipped, vaccinated and—most importantly—not for commercial sale. Here is my first interesting statistic: before the relaxation of our rules in 2010, 26,000 dogs were imported for non-commercial purposes; in 2013, 53,000 dogs were imported for non-commercial purposes. From 26,000 to 53,000 is quite a significant leap in a short period.

I hope I am not regarded in this place as a cynic, or—usually—as a sceptic, but I find some things difficult to believe: Elvis lives, West Ham United will win the premiership, and 53,000 dogs were imported into the United Kingdom in 2013 and none was for sale—not a single one. No doubt there are thousands of legitimate pets travelling, but it is a stretch of the imagination, to say the least, to believe that that includes all those dogs—I see a smile on the Minister’s face and I suspect there might be an element of understanding and agreement.

Here are a few more statistics that will add to the doubt that exists. Between 2011 and 2012 there was a 400% increase in illegal entries. Trading standards seized 127 dogs in 2011, but 417 in 2012. Some 2,800 dogs were refused entry in 2011, and 3,700 in 2012—another 40% increase. My final statistic is that in 2011 the number of puppies from eastern Europe—for example from Poland, Romania, Hungary and other countries—was 2,000, but it was 12,000 in 2013. That is a sixfold increase in two years, yet none of them—not one—was

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for commercial sale. Really? Those are the declared dogs, and it is believed that a lot more is going on under the radar than the data suggest.

Current penalties are severe: prison, and/or a fine of up to £5,000 for smugglers. However, I have no information about any prosecutions, and the suggestion is that the deterrent is simply not working. This Bill, which highlights the issues and offers another way to tackle the problem, will, I hope, make a difference. The fixed penalty provides another tool in the box, and could be introduced flexibly with higher penalties for more puppies smuggled, in the same way that smugglers of cigarettes can be fined more, the greater the number of cigarettes they carry.

There are other suggestions. We could increase spot checks at Dover and Holyhead; transfer the pet travel scheme monitoring responsibility from ferry operators to the UK Border Agency; and monitor internet sales to help target offenders. We could have better liaison with the European Commission and eastern European veterinary authorities to reduce the use of fraudulent passports and certificates. We could have better liaison with the Irish authorities—the Republic supplies so many dogs to the UK. We could have new risk modelling to scope the depth of the problem, create a new central database and have more quarantine spaces. The Minister answered a parliamentary question from my hon. Friend the Member for Ogmore (Huw Irranca-Davies)—the shadow Minister—this morning on the number of dogs licensed into quarantine in Great Britain in the past four years. In 2010, 89 dogs were licensed into quarantine. In 2013, 376 dogs were licensed. That is another 400% increase—there are repeated 40% and 400% increases.

Rabies and diseases such as Echinococcus, Leishmaniasis and parvovirus must be stopped because they are a risk to domestic and well animals, especially in the light of rabies reports in western France and Holland last year in which the disease was suspected to have come from eastern European imports.

In conclusion, we are a nation of animal lovers, whether through rescuing abandoned animals or paying between £500 and £750 for rare-breed pups. However, there are unscrupulous individuals and organisations out there, prepared to take advantage and make money at whatever cost to humans or animals. They also undermine legitimate businesses that play by the rules. Not only are the regulations open to abuse, but the monitoring appears to be too light touch. We need a review to assess the size of the problem.

The Bill will not solve all the problems and it might not resolve any of the them—hon. Members know that it will not go anywhere after today—but I hope that raising the matter today might improve the protection we need to ensure against the spread of disease, raise animal welfare standards, and act as an additional deterrent to criminals. I therefore commend the Bill to the House.

Question put and agreed to.


That Jim Fitzpatrick, Robert Flello, Andrew Rosindell, Mr Adrian Sanders, Mark Pritchard, Sheryll Murray, Angela Smith, Sir Peter Bottomley, Mrs Mary Glindon, Miss Anne McIntosh and Sir Roger Gale present the Bill.

Jim Fitzpatrick accordingly presented the Bill.

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Bill read the First time; to be read a Second time on Friday 4 April and to be printed (Bill 189).

Jim Fitzpatrick: That is my birthday, Mr Deputy Speaker.

Mr Deputy Speaker (Mr Lindsay Hoyle): The hon. Gentleman is claiming he is 21, but we are not quite that convinced.

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Charter for Budget Responsibility

1.53 pm

The Chancellor of the Exchequer (Mr George Osborne): I beg to move,

That the modified Charter for Budget Responsibility, which was laid before this House on 19 March, be approved.

I am putting before the House today a charter for budget responsibility updated to include a new cap on welfare spending. I am conscious that this is a time-limited debate and will keep my remarks brief so that others can speak. The welfare cap marks an important moment in the development of the British welfare state. I believe the public back a welfare system that provides fair support for those genuinely in need and that supports those who have a disability and cannot work; those caring for others; those on maternity or paternity leave; and those who have lost a job and are trying hard to find work. The public, through their taxes on that hard work, are willing to pay for that support. It is a level of support that a country such as ours—we now have a growing economy—can afford to give.

However, that is not the welfare state we inherited in 2010. That welfare state was not fair and not affordable. It was not fair that some received £50,000, £60,000 or up to £100,000 in housing benefit, paid for by taxpayers who could never dream of affording homes with rents that big, so we capped housing benefit payments at just over £20,000 a year.

Sheila Gilmore (Edinburgh East) (Lab): Will the Chancellor give way?

Mr Osborne: I will give way in a moment.

It was not fair that many out-of-work families received more as an income in welfare than the average family got from going out to work, so we capped the total benefits that one family can receive at £26,000. Thirty-six thousand households are now subject to the cap.

Mr David Nuttall (Bury North) (Con) rose

Sheila Gilmore rose

Mr Osborne: I will give way to the hon. Lady, then to my hon. Friend.

Sheila Gilmore: How many families received housing benefit at the level he first mentioned—the £50,000-plus mark? Is he aware that, of the families covered by the benefit cap, nearly half are in temporary accommodation provided by councils because they owe them the statutory duty?

Mr Osborne: First of all, 21,000 people have been affected by the housing benefit cap, so 21,000 people were receiving housing benefit more than that. Secondly, the hon. Lady seems to be suggesting that she is against the cap on benefits. That points to a wider truth that we will discover today about the welfare cap, and specifically whether the Labour party is committed to the cap we are setting out today, with the list of benefits in it. We will discover whether Labour is committed to the cap at the level we have set—not just the principle of a welfare cap, but the practical application of it.

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Robert Halfon (Harlow) (Con): Will my right hon. Friend give way?

Mr Osborne: We will explore that point later, but let me take my hon. Friend’s intervention.

Robert Halfon: Is my right hon. Friend aware that a person on average wages pays roughly £1,200 a year in taxation just to pay the welfare bill, not including pensions? Does he agree that the welfare cap is fair on lower earners?

Mr Osborne: It is absolutely fair. That is what the cap is about—building a welfare system that is fair to those who need it and fair to those who pay for it.

Chris Bryant (Rhondda) (Lab) rose

Steve McCabe (Birmingham, Selly Oak) (Lab) rose

Mr Osborne: I will take a couple of interventions in a while. I have only 15 minutes for my opening remarks because we want lots of contributions later in the debate.

It was not fair that benefits were unlimited. We have introduced a cap. It was not fair that those looking for work faced marginal tax rates as high as 96%, sapping the incentives to find a job. We are addressing that through universal credit. It was not fair that benefits were rising much faster than wages; not fair that people who could never afford a place with a spare room subsidised the spare rooms of others; not fair that people who did not speak English could receive out-of-work benefits without even trying to learn it; and not fair that the long-term unemployed were cycled and recycled through the new deal. That was not fair, but it was the welfare system we inherited. It was unfair to those trapped in poverty and to the millions of people who paid for it. It was a perverse distortion of what William Beveridge had conceived. In the face of opposition to each and every measure we have introduced, we are removing those distortions, restoring the work incentives and creating a fair welfare state.

Several hon. Members rose

Mr Osborne: I will take an intervention from the hon. Member for Rhondda (Chris Bryant).

Chris Bryant: Will the Chancellor confirm that, since his initial spending review, he has had to spend £13 billion more on welfare than he predicted? He has had to put it up by £1 billion this year and another £1 billion next year, so if the cap he envisages had been in place during this Parliament, he would have had to come to the House and apologise on four occasions?

Mr Osborne: For a start, welfare spending is £3.7 billion lower than I set out in my first Budget. It is also £10 billion less than the Labour party proposed. Labour Members cannot have it both ways. They keep claiming that we are cutting the welfare system and then complain that the cost is too high. That is one thing that we will explore in the debate—what exactly is the Labour policy.

Several hon. Members rose

Mr Osborne: I will give way to my hon. Friend the Member for Rochford and Southend East (James Duddridge) and then make progress.

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James Duddridge (Rochford and Southend East) (Con): If we had followed the policies of the Labour party, we would not have created 1.3 million jobs and those people would have been on benefits.

Mr Osborne: My hon. Friend is absolutely right. We have also created the right incentives so that work pays. Alongside supporting business—by the way, extraordinarily, the Labour party last night voted to increase taxes on business—we are creating an environment in which jobs are being created.

We are creating a fairer welfare state.

Andrew Gwynne (Denton and Reddish) (Lab) Will the right hon. Gentleman give way?

Mr Osborne: I will give way in a little moment, but let me make some more progress.

We are creating a welfare state that the country—

Ed Balls (Morley and Outwood) (Lab/Co-op): Will the right hon. Gentleman give way?

Mr Osborne: Of course I will give way, but will the shadow Chancellor confirm, so that we know the terms of this debate, whether he is committed to the specific welfare cap, the list of the benefits included and the level to which the Government have committed? The shadow Work and Pensions Secretary, the hon. Member for Leeds West (Rachel Reeves), said on the radio that Labour would do things differently. Perhaps he could confirm that.

Ed Balls: I will make my speech on the welfare cap in a moment. I want to go back to the remark the Chancellor just made about last night’s vote. We have said that we do not think we should go ahead with the next cut in corporation tax and instead use all the money for a freeze in business rates for small businesses. Is the Chancellor really saying that large companies are business, but small businesses do not count? [Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Just to remind everybody, shorter interventions would be helpful. We have 11 speakers to follow and I know the Front Benchers are desperate to hear the Back Benchers.

Mr Osborne: We are particularly keen to hear the Labour Back Benchers.

Chris Ruane (Vale of Clwyd) (Lab): Both the Chancellor and the Prime Minister have used the line that people on benefits are getting £60,000, £70,000, £80,000 and £90,000 a year. I have tabled parliamentary questions and freedom of information requests on this point. Will the Chancellor tell me how many people are receiving more than £100,000 a year?

Mr Osborne: None, because we have capped housing benefit payments. [Interruption.] Just to clear up the previous point, Labour is going to say to the country, “Elect a Labour Government and business tax will be higher and corporation tax will be higher.” That is a terrible message to send to the rest of the world. [Interruption.]

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Mr Deputy Speaker: Order. I want to hear the Chancellor. All the howling behind the Chancellor is not helping me, or other people who want to listen to him. I want to hear the Chancellor as, I am sure, do those on his own side.

Ed Balls: rose—

Mr Deputy Speaker: It is up to the Chancellor to give way.

Mr Osborne: If the right hon. Gentleman has something useful to say, let us hear it.

Ed Balls: The Chancellor will not misrepresent Labour policy. All the money—[Interruption.]

Mr Deputy Speaker: Seriously, I could not hear the Chancellor and I want to hear the shadow Chancellor. I want a little bit more respect to both sides.

Ed Balls: We are proposing that all the money from deferring the cut in corporation tax goes to small business in a business rates freeze. That is not a rise in the taxes on business, unless the Chancellor thinks that somehow small businesses are second class and do not count. Is that really what the Chancellor is saying?

Mr Osborne: We have cut the corporation tax rate for small businesses. We have capped rates for small businesses. We are giving a £1,000 discount to high street stores. Those are the measures we are taking for small businesses, and we are also cutting the corporation tax rate. The truth is that Labour is now committed to higher business taxes in Britain with a high corporation tax rate.

Ed Balls rose

Mr Osborne: May I just say to the shadow Chancellor that he does not need to talk to me? He needs to talk to the business community of Britain, which knows that he is anti-business. His party is anti-business, anti-job creation and, as I am about to explain, it is the welfare party, too. If he waits a little, he can intervene and answer the question that we need answered.

Ed Balls: Will the right hon. Gentleman give way?

Mr Osborne: I will give way in a moment. Let me make progress with my speech. [Interruption.] All right, I will give way if the right hon. Gentleman answers this question in his intervention: is Labour committed to a higher rate of corporation tax? Yes or no?

Ed Balls: We will raise the corporation tax rate to cut taxes—[Interruption.]

Mr Deputy Speaker: Order. I think we have heard enough noise. I want to hear the question that has been posed to the Chancellor of the Exchequer and I want to hear the reply. If people do not want to hear, I can explain where the door is. Somebody will be going through it if we do not have calm.

Ed Balls: The Chancellor must not mislead and misrepresent on the welfare state or on business taxes. Labour is not committed to an increase in business tax.

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He has said that three times. Every time he has said that, he has misled this House. I am saying that all the money from the corporation tax rate will go back to small business. That is the right position. Every time he misleads this House I will correct him, Mr Deputy Speaker.

Mr Osborne: This is desperate stuff from the shadow Chancellor. If Labour had had its way in the vote last night, business taxes would be higher—yes or no?

Ed Balls indicated dissent.

Mr Osborne: Yes, they would be, because corporation tax would be higher and businesses would be paying more. No wonder Labour does not have a clue about how to fix the economy or how to deal with the welfare system. That is evident from its period in office, when welfare spending, which will be contained by the cap, went up 42% in real terms. Housing benefit went up by £7.6 billion alone, as a real increase—bigger than the entire police budget. Every single one of the pounds the Labour Government spent on working age welfare was not earned, but borrowed—borrowed because Britain could not pay its way in the world. Rather than using valuable public resources to pay for apprenticeships, science, roads and railways, money was spent on an unaffordable, unfair and out-of-control benefits bill. That economic insecurity is being addressed and control is being re-established. We insist that welfare is affordable and we insist that it is fair: fair to those who need it and fair to those who pay for it.

Several hon. Members rose—

Mr Osborne: I will make a bit of progress and then take some interventions.

Today, we take another important step towards the goal. We seek the support of Parliament not just for the principle of this welfare cap—important as that is—but its practical application: the list of benefits in it and the cash limit we set out today. I have noticed, in the past 24 hours, a change in the language being used by those on the Labour Front Bench. A day or two ago it was, “We are going to vote for the Government’s welfare cap.” Clearly, Labour MPs did not like that, so this morning the shadow Work and Pensions Secretary, said that Labour will sign up to something called a welfare cap, but that

“We would do it in different ways”.

What different ways? Does that mean different benefits would be included? [Interruption.] Will the shadow Chief Secretary, the hon. Member for Nottingham East (Chris Leslie), explain Labour’s welfare cap? Does that mean different levels of benefits? Does it mean a different level of spending? Every time the Opposition are faced with a difficult decision and asked to prove their fiscal credibility, they buckle because they are weak. We know what has happened. They have read the polls and seen the focus groups. They are being told not to vote against the welfare cap, but everyone knows what their instincts are. Everyone knows what gets them a cheer at the Labour conference: more spending on welfare paid for by more borrowing. Indeed, their only welfare policy is a £500,000 increase in housing benefit. The shadow

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Work and Pensions Secretary gave it away last week, in a private left-wing meeting. She said this, in private:

“it will be much better if we can say that all of the changes the Government have introduced we can reverse and all benefits can be universal.”

At least those Labour MPs voting against the welfare cap today are being true to what they believe in. No one thinks that of the shadow Chancellor and the Labour leadership today.

Time is short, so let me set out briefly how the cap will operate, first by enforcing public expenditure control where there was none previously. Welfare spending was called annual managed expenditure by the previous Government—no doubt a term dreamt up by the shadow Chancellor when he was running things so badly—but it was expenditure that was neither managed nor set annually. Now it will be. The Budget document sets out the 26 different benefits that will sit under the cap. They include almost all transfer payments from tax credits, housing benefit and employment and support allowance to statutory maternity pay, carer’s allowance and disability living allowance.

Some of those benefits, such as statutory maternity pay, have relatively stable and predictable costs, while others, such as housing benefit, have consistently grown much faster than forecast; but each one involves many hundreds of millions, often billions, of pounds of spending, and deserves the same careful management and scrutiny as items in the defence budget or the education budget. Some of those benefits, such as disability living allowance, help some of the most vulnerable citizens, but that is not an excuse for failure to manage their budgets. After all, our national health service also cares for the most vulnerable, but that does not prevent us from giving it an annual budget.

Mr Nigel Dodds (Belfast North) (DUP): Will the Chancellor spell out the implications for devolved regions such as Northern Ireland, where welfare spending is devolved? What is the implication for the block grant if there is a rise in welfare expenditure through no fault of the Northern Ireland Executive?

Mr Osborne: Many benefits apply universally throughout the United Kingdom, but some areas of welfare spending are devolved. I know that there are specific arrangements with Northern Ireland, and we have been having discussions with the Northern Ireland Executive. I am well aware that the right hon. Gentleman represents only one party in the power-sharing arrangement, but we are keen to see the Executive make progress on welfare reforms and help to control the bills, and, as he knows, we are discussing that with him and his colleagues. However, I shall be happy to sit down and work out with him how some of the principles of the welfare cap here can be used to control welfare spending in Northern Ireland.

Andrew Gwynne: Will the Chancellor give way?

Mr Osborne: Let me make a few more points first. I will give way in a second—or a minute, perhaps.

The only benefits that we are excluding from the cap are the most cyclical ones which track the performance of the economy directly, such as jobseeker’s allowance and the housing benefit that is passported with it. They

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are the basic automatic stabilisers. By excluding only those benefits, we ensure that the economic cycle does not drive permanently higher spending on, for instance, sickness and disability benefits. We have also excluded the state pension and the additional pension. I know that the shadow Chancellor wanted to include them, but I would think it pretty unfair if a Chancellor who, for example, lost control of tax credit spending responded by cutting the basic state pension. That would not be sensible, and it would certainly not be fair. I think that adjusting the pension age is the best way to control expenditure on pensions over the long term as life expectancy rises.

In the Budget, we set the cash limit for the benefit cap at £119.5 billion in 2015-16—

Andrew Gwynne rose—

Mr Osborne: I shall now ask the hon. Member for Denton and Reddish (Andrew Gwynne) whether he supports that cash limit.

Andrew Gwynne: In one breath, the Chancellor talks of fairness to taxpayers and the need to impose budgetary control on welfare spending. Can he perhaps explain to the House why setting up universal credit has cost taxpayers about £161,000 per claimant?

Mr Osborne: This is a huge system that will apply to millions and millions of people. Let me tell the House what we are going to do. I know that this will come as a complete shock to the Labour party, but we are going to take our time, get it right, and make sure that we do not put everyone on to a new credit with which the system cannot cope, which is exactly what the Labour party did with tax credits. All of us who were Members of Parliament at that time remember people coming to our surgeries who had been treated shockingly by a Labour Administration who had not got their administration right.

As I was saying, we will set the cash limit for the welfare cap at £119 billion. If inflation is higher than forecast, the Government cannot wash their hands of that either. Public services such as the police and transport have to absorb higher inflation, so why should welfare budgets be different? [Interruption.] I am sorry, Mr Deputy Speaker; there is a private conversation going on. My right hon. Friend the Secretary of State for Work and Pensions has done more to reform the welfare state than any of that lot.

The charter makes clear what will happen if the welfare cap is breached. The Chancellor must come to Parliament, account for the failure of public expenditure control, and set out the action that will be taken to address the breach. Then the House of Commons—the ultimate guardian of the people’s money—

Steve McCabe: Will the Chancellor give way?

Helen Jones (Warrington North) (Lab): Will the Chancellor give way?

Mr Osborne: No; I am going to end my speech now. [Interruption.] Well, I want to make sure that all these Labour Members have a chance to stand up and say exactly what they think of the welfare cap, and tell us that they support it, and that they should have introduced it when they were in office. They look such a cheery

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bunch. I want to make sure that they have a chance to explain what they are voting for this afternoon—or perhaps some of them will not.

I could set out more of the details, but much of that has already been done in the Red Book. This is the key point that I want to make to Labour Members. The welfare cap brings responsibility, accountability and fairness. Those who want to undo our welfare reforms will now have to tell us about the other cuts that they will make, or else come clean and admit to the public that what they really want are higher welfare bills. The phoney argument that welfare can be magically cut by a Government’s spending more and borrowing more will run into the brick wall of the OBR’s independent assessment. The phoney argument that a Government can spend half a billion pounds of taxpayers’ money on a spare room subsidy and pay for it with a cut in winter fuel payments worth a fifth of that will be exposed by an inevitable breach of the welfare cap. The “welfare party” will have to make its case for more welfare spending in the plain sight of the British people.

Our welfare cap ensures that never again can the costs spiral out of control and the incentives become so distorted that it pays not to work. From now on, any Government who want to spend more on welfare will have to be honest with the public—honest about the costs—and secure the approval of Parliament in order to breach the cap. Twenty-six benefits will be controlled by the welfare cap as part of our long-term economic plan to restore sanity to the public finances. This is a system that is affordable and fair, and I commend it to the House.

2.17 pm

Ed Balls (Morley and Outwood) (Lab/Co-op): Labour Members support the capping of social security spending, a policy advocated by the Leader of the Opposition last year. With welfare spending now £13 billion higher than the Government planned in their spending review, Labour will make different and fairer choices to get the social security bill under control and tackle the root causes of rising spending. On that basis, we will support the motion.

I shall come to the welfare cap in a moment, but let us first be clear about the background to the motion and the charter for budget responsibility. In the charter, the Government have set out their fiscal targets and reforms, and have also included the welfare cap details. Four years ago, the Chancellor promised to balance the budget in 2015. The Prime Minister said:

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

But because they choked off the recovery and flatlined the economy, they are not going to balance the budget at all.

Several hon. Members rose

Ed Balls: I am going to speak first about what is in the charter, and then about the welfare cap. I will give way in a moment.

Last week, the Budget revealed that the Government were not balancing the books. The deficit is set to be £75 billion. In this Parliament, partly owing to rising welfare costs, it will be £190 billion more than they planned.

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Several hon. Members rose

Ed Balls: I will give way in a moment. I want the House to know what is in this document first.

The Chancellor pledged to get the national debt falling. Page 7 of the charter says that

“the Treasury’s mandate for fiscal policy is supplemented by: a target for public sector net debt as a percentage of GDP to be falling at a fixed date of 2015-16”.

So the charter says that the national debt should be falling in 2015-16, but the OBR said in respect of last week’s Budget that it expects the national debt to be rising next year. The national debt is not falling according to this charter, and it is rising according to the OBR. I want the House to understand what is before us. I have to ask the Chancellor this: how on earth did he end up putting before the House a week after his Budget a motion that puts up in lights the fact that he is failing his own target to reduce the national debt? What an own goal! Is he going to blame the chair of the Conservative party for that one, too?

It gets worse for the Chancellor. The charter goes on to say—[Interruption.] Government Members should listen—[Interruption.]They should listen to this:

“The Treasury’s mandate for fiscal policy lapses at the dissolution of this Parliament.”

Lapses! It has already collapsed. It has expired; it has ceased to be; it is an ex-mandate. The charter goes on to say:

“The duty to set out a fiscal mandate will require the Treasury to set out a revised mandate for fiscal policy as soon as possible in the life of the new Parliament”.

That is what we will do: we will balance the current budget and deliver a surplus in the next Parliament. We will get the national debt falling. We will do those things as soon as we can in the next Parliament, but we will do so in a different way, starting by reversing the Chancellor’s £3 billion tax cut for people earning more than £150,000. That is what we mean by doing things in a different and fairer way.

Julian Smith (Skipton and Ripon) (Con): Will the right hon. Gentleman confirm his announcement earlier that Labour will be raising taxes on British business?

Ed Balls: I have said to the Chancellor that that statement is a direct misleading of the House and, Mr Deputy Speaker, I would ask the hon. Gentleman to withdraw that statement now.

Mr Deputy Speaker (Mr Lindsay Hoyle): It was not aimed at an individual; it was aimed at the speech, I presume.

Ed Balls: We have said, Mr Deputy Speaker, that all the money from not proceeding with a further cut in corporation tax will go to small business with a business rates—[Interruption.] When the hon. Member for Skipton and Ripon (Julian Smith) and the Chancellor say that is a tax rise for business, that is only true if they do not think small businesses are proper businesses, which is a bit like saying, “If you didn’t go to Eton, you didn’t go to a proper public school.”

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Mark Pritchard (The Wrekin) (Con): I know the shadow Chancellor always wants to be accurate. Not everybody on the Government Benches went to private or public school, unlike many on the Opposition Benches, including him.

On the specific point, I believe the shadow Chancellor is a fair and reasonable man, so will he join me in welcoming the fact that in the last 12 months 4,000 jobs have been created in Shropshire? Surely that is good news for everybody to celebrate, whatever our party affiliation.

Ed Balls: First, I went to an even lesser private school than the Chancellor of the Exchequer. [Interruption.] Neither of us went to Eton, unfortunately. [Interruption.] I agree with the hon. Member for The Wrekin (Mark Pritchard) that the rise in employment is good news, but I am concerned that in his—[Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Mr Shelbrooke, we missed you on Budget day, but I am not missing you today, am I?

Ed Balls: The thing I am concerned about—this relates directly to the welfare cap—is that in the constituency of the hon. Member for The Wrekin long-term youth unemployment has gone up by 129% since 2010. I presume the hon. Gentleman would agree that that rise, based on the jobseeker’s allowance claimant count, is a real concern. I think he should be backing our welfare reforms. The fact is—[Interruption.] If the deputy Chief Whip, the right hon. Member for Chelsea and Fulham (Greg Hands), is saying that because the hon. Member for The Wrekin has got a large majority, he does not have to worry about youth unemployment, that would be rather revealing. I hope he was not saying that.

Let me get on to the subject of the welfare cap. The Chancellor has failed to balance the books, he is contradicting his own charter by increasing national debt when it says he should be reducing it in 2015, and he has failed to control welfare spending. We have had plenty of tough talk and divisive rhetoric from the Chancellor, but his failure to tackle low wages, to deal with the cost of living crisis and to get more homes built means that he is spending £13 billion more than he planned in the spending review of 2010, and in last week’s Budget that was revised up by £1 billion in social security spending next year and the year after.

I want to explain where we are. We support the welfare cap. We support what is in the welfare cap. We agree that long-term bearing down on the costs of ageing is a good idea, but it should not be in the welfare cap in the next Parliament; we have agreed with that all along. We have also said we would match the Government’s spending in 2015-16, and the welfare cap over these five years, which we support, would rise on that basis. Although we support that, however, we will make different—

Mark Pritchard: On a point of order, Mr Deputy Speaker. I said that the shadow Chancellor is a fair and reasonable man, and I know he would not want, even unintentionally, to mislead the House. He has got a lot of figures before him, so I have a great deal of sympathy

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for him, but the fact is that in my constituency of The Wrekin there has been a fall of more than 27% in youth unemployment over the past 12 months.

Mr Deputy Speaker (Mr Lindsay Hoyle): That is a point of correction, rather than of order.

Ed Balls: I will repeat exactly what I said a moment ago, because unlike the Chancellor I am not going to mislead the House on any matter in my speech.

Mr Simon Burns (Chelmsford) (Con): Withdraw!

Mr Deputy Speaker (Mr Lindsay Hoyle): Mr Burns, I think you need to relax as well. No hon. Member will mislead this House, and I am sure that is not what the shadow Chancellor intended to say and I am sure he will be happy to withdraw it.

Ed Balls: The Chancellor said three times that Labour was proposing a rise in business taxes and that is untrue, Mr Deputy Speaker.

Charlie Elphicke (Dover) (Con): Will the shadow Chancellor give way?

Ed Balls: Let me answer the hon. Member for The Wrekin and then I will come to the soon to be ex-hon. Member for Dover. [Interruption.] If hon. Members quieten down, I will answer the point. Since 2010 there has been a 129% rise in long-term youth unemployment: that is young people on the claimant count who have been out of work for more than 12 months. That figure has gone up by 129%. That is the truth. It is a fact, and I will place the information in the House of Commons Library. There has been a 129% rise since 2010 and I think the hon. Member for The Wrekin should support what I am about to say.

Charlie Elphicke: Will the shadow Chancellor give way?

Ed Balls: No.

Ben Gummer (Ipswich) (Con) rose

Ed Balls: I will give way to the hon. Gentleman.

Ben Gummer: I thank the right hon. Gentleman for giving way. He chooses his words carefully, but he should know that youth unemployment is lower than it was in 2010, and not only that: it is lower than it was before the crisis partly caused by his Government.

Ed Balls: In the constituency of Ipswich there has been a 140% rise in long-term youth unemployment over 12 months, and long-term youth unemployment is a real problem. I am glad the hon. Gentleman intervened because I was reading his Hansard remarks from 2012 when he said that asking the Office for Budget Responsibility to audit the parties’ manifestos at the next election was the right thing to do. He said there was no reason why that could not be done. I will come back to him in a moment on that one.

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We support the welfare cap. We will make different and fairer choices to keep the social security bill down and tackle the root causes of higher welfare spending. Let me explain—

Charlie Elphicke: Will the shadow Chancellor give way?

Mr David Burrowes (Enfield, Southgate) (Con): Will the shadow Chancellor give way?

Ed Balls: No, I am not going to give way until I have made these points. I will give way to both hon. Gentlemen, but if they shout “Give way, give way” at me in the middle of a sentence, I am not going to do so.

We will do things in a different way. We will introduce a compulsory jobs guarantee to get young people who have been out of work for more than 12 months—up by over 129% in The Wrekin and 140% in Ipswich—and the long-term unemployed all back to work, and we will sort out the shambles of the universal credit. As for the idea that the Chancellor should say to the Work and Pensions Secretary, “Take your time to get universal credit right. Have as much money as you want,” how irresponsible is that?

We will stop paying the winter fuel allowance for the richest 5% of pensioners; we will scrap the bedroom tax, which is not only unfair, but may end up costing more money than it saves; we will get more houses built; we will restore the value of the national minimum wage; and we will tackle the low wages which the OBR has said have pushed up the bill for housing benefit. We will make different and fairer choices to keep the social security bill under control and tackle the root causes of higher welfare spending.

Mr Burrowes: Now that the shadow Chancellor has explained that he is going to support the welfare cap, will he also clarify whether he will increase housing benefit? If so, where will he make the welfare savings to keep within the welfare cap? When he finds the statistics on Enfield, he will be able to get confirmation that the youth unemployment claimant count is at its lowest since 1997.

Ed Balls: As we and many others have pointed out, including the National Housing Federation, the Government’s bedroom tax is pushing people on to housing benefit in the private sector—on higher rents—so there is a grave risk that it is going to cost money, rather than save money. We will abolish the bedroom tax, within the welfare cap set out on page 87 of the Red Book. That is our very clear position. I have to say to the hon. Gentleman that in Enfield, Southgate there has been a 500% rise in long-term youth unemployment, and he should be backing our compulsory jobs guarantee.

John Woodcock (Barrow and Furness) (Lab/Co-op): Will the Chancellor take this opportunity to confirm that he will never follow the shameful record of the Conservative party, which in the 1990s took people off jobseeker’s allowance and actively put them on the sick? We still bear the scars of that policy today.

Ed Balls: It started in 1986 under a Conservative Prime Minister and social security Secretary, it was called “restart” and it actively moved people from JSA—

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unemployment benefit—on to long-term sickness and invalidity benefits. It meant that very many people then spent many years out of work. It was a shameful policy.

Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op) rose

Ed Balls: The hon. Member for Dover (Charlie Elphicke) has given up, so I will give way to my hon. Friend.

Stephen Doughty: I am glad that my right hon. Friend has mentioned the compulsory jobs guarantee, because is it not an absolute contrast with the manifest failures of the Work programme? Does he agree that the Government ought to be learning from, rather than smearing, the Welsh Labour Government and the success of the jobs growth Wales programme?

Ed Balls: All the evidence shows that action to get young people back to work, especially the long-term unemployed, pays real dividends. It is what we mean by tackling the root causes, and it is the right way to implement a tough welfare cap. That is the approach we will take.

Charlie Elphicke rose

Ed Balls: Oh, he is back again. Go on then, have your go.

Charlie Elphicke: Is the shadow Chancellor committed to a welfare cap on the same benefits and of the same numbers as this Budget—yes or no?

Ed Balls: Yes.

Let me end by discussing the role of the OBR, because that is also set out in this charter. Page 5 states:

“The Coalition Government’s major reform to the fiscal framework has been the creation of the Office for Budget Responsibility”.

We agree with that, which is why we have proposed a reform to enhance the OBR’s role and allow it, as the hon. Member for Ipswich has advocated, independently to audit the tax and spending commitments in the manifestos of the main political parties. Why has the Chancellor not used the opportunity of this updated budget responsibility charter to make that reform? If he were to think again, he would be joining not only me, but the Chair of the Treasury Committee and the Chief Secretary to the Treasury, who have both supported this reform. We need legislation in the Finance Bill to make that happen.

Andrew Selous (South West Bedfordshire) (Con) rose

Ed Balls: I will not give way. We know from the head of the OBR that if an agreement is reached by this summer, this reform independently to audit all tax and spending commitments, including all issues referring to social security spending, can be done in time for next year’s general election. It is a matter of political will. The Chancellor seems to be happy to spend his time, and that of the House, trying to set political traps—traps that keep backfiring on him—but he does not seem happy, and neither do other Government Members, to join the hon. Member for Ipswich and allow the OBR to audit the Conservative party manifesto or our manifesto,

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so that we can have a proper, open and transparent debate at the next election. Why does the Chancellor not join this cross-party consensus and let the OBR play that role? What has he got to hide? This is really not a trap—it is just the right thing to do.

Mr Deputy Speaker (Mr Lindsay Hoyle): May I just announce that we will start with a five-minute limit and see how we go from there?

2.35 pm

Ben Gummer (Ipswich) (Con): This is an important moment in the way that we run Budgets in this country, it is an important moment for the accountability of politics and it is an important moment for the way we deal with the welfare crisis we were left by the previous Government. It is an important moment in the way we run the Budget in this country because most people would be astounded by the notion that we do not already have a managed expenditure limit on welfare. What most people, even in this Chamber, will not be aware of is that last year, for the first time in the history of setting Budgets in this country, unmanaged expenditure rose above managed expenditure—51% of Government spending came within annually managed expenditure, or AME, and not within departmental limits. So for the first time we are, in effect, writing a larger portion of the Budget on a blank cheque, rather than on the basis of the limits set by the Chancellor at his Budget every year. That, in itself, is astounding, but in five and 10 years’ time people will look back and wonder why on earth we had not come to this point earlier.

The reason, as we have heard so often from Opposition Members—they prefer to pretend that it is not their position now, because the shadow Work and Pensions Secretary said in private a few days ago that they would prefer all the Government’s reforms on welfare to have been reversed—[Interruption.] It is down there in the transcript. She would prefer all the Government’s reforms to be reversed—not only that, she would prefer all existing benefits to be made universal. She is very welcome to intervene on me to deny in the House that she made those comments. I am open to have that discussion with her. She has been given that opportunity before, she is not doing it and the House will draw its own conclusions. The fact is that what the Opposition say in private is very different from what they say in public.

Mr Burrowes: Nothing to hide!

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Mr Burrowes, you have nothing to hide, and I certainly do not want to hear you shout again—I want to hear Mr Gummer. You may not. If you do, you know where to go. Mr Gummer, you have the Floor.

Ben Gummer: Thank you, Mr Deputy Speaker. To return to the core of the matter, this is important because it will hold both Governments and Oppositions to account. The shadow Chancellor might have wished to misconstrue the purpose of my private Member’s Bill. It is a pity he does that when he claims he is trying to forge a cross-party consensus, because it is wrong—

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Ed Balls rose

Ben Gummer: I will give way, but does the right hon. Gentleman want to let me finish my point before he intervenes? [Interruption.] I will say merely that I was proposing a fiscal rule on the Swedish model in which, as the Swedes have, there would be an opportunity for all parties’ budgets to be judged. That clearly is not possible under the existing settlement, not least because the head of the OBR said it would not be.

Ed Balls: I most certainly would not want to misrepresent the hon. Gentleman, so let me read out the quote from Hansard. He said:

“I…further suggest that the Office for Budget Responsibility be required to assess the major parties’ manifestos at election time, at the request of those parties…A similar role is performed by the Congressional Budget Office in the United States, and there is no reason why it cannot be so here.”—[Official Report, 25 January 2012; Vol. 539, c. 305.]

I agree, and so does the head of the OBR, and this can be done before the next election. In no way have I misrepresented the hon. Gentleman—the problem is that he disagrees with the Chancellor.

Ben Gummer: Actually, I do not. If the shadow Chancellor reads further, he will find the key point. There is an entire portion beforehand suggesting something, which his colleague, the hon. Member for Leeds West (Rachel Reeves), said that the Opposition disagreed with. Here we come to the crux of the matter. The fact is that people will not believe the Chancellor when he talks about sticking to a cap—[Interruption.] I mean the shadow Chancellor—[Interruption.] Yes, it is as close as he will get. He was the author of the golden rule, which claimed that there would be no excess debt over the economic cycle of his Government. None the less from 2002, the Government were running a deficit—[Interruption.] Will he deny that the Government were running a deficit from 2002?

Ed Balls: We said that we would balance the current Budget over the cycle, which is exactly what is in the mandate before us. It says that there will be

“a forward-looking target to achieve cyclically-adjusted current balance by the end of the rolling, five-year forecast period.”

That is the golden rule. If the hon. Gentleman is attacking the golden rule, it is the second thing on which he is attacking the Chancellor today.

Ben Gummer: The shadow Chancellor is again digging himself into a hole. He wrote a golden rule that claimed that there were would be no deficit over the cycle. He ran a deficit and he is now proposing that there should be a cap on welfare spending. I wish to pin him precisely on the terms of his agreement with the Government. What he has told his Back Benchers in private seems to be rather different from what he is saying in public. [Hon. Members: “Ah.”] Let me list what we have within the frame of the welfare cap proposed by my right hon. Friend. If the shadow Chancellor disagrees with any one of these items, he should stand up and intervene, and his own Back Benchers can draw their own inferences. We have the attendance allowance, bereavement benefits, carer’s allowance, Christmas bonus, disability living allowance, employment and support allowance, financial assistance scheme, housing benefit, incapacity benefit,

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income support, industrial injuries benefit, in-work credit, maternity allowance, pension credit, personal independence payment, return to work credit, severe disablement allowance, social fund, cold weather payments, statutory adoption pay and statutory maternity pay, statutory paternity pay, universal credit, winter fuel payments, personal tax credits, child benefit and tax-free child care. Is there any single element of that that he would change in the next five years?

Ed Balls indicated dissent.

Ben Gummer: Not at all. Now his Back Benchers may wish to draw their own inference from that. In private, the shadow Chancellor has been going round saying that he would change it. He would put one in and take one out. [Hon. Members: “Ah.”] Even in the House, he will say that he will supplement one benefit—withdrawing the winter fuel allowance from richer pensioners will raise £100 million and he would use it to pay for the reversal of the under-occupancy charge, which will cost £500 million. How does he make up that £400 million difference? He has been forced to come to this House to explain his maths. That is precisely why this cap is important. It forces a degree of accountability on the shadow Chancellor in making him explain to the British public how his sums add up, when it is clear that they do not. How does he account for the £400 million difference between the two? [Interruption.] I wish to know the answer as does the British public. [Interruption.]

Mr Deputy Speaker: Order. The hon. Gentleman has only 30 seconds remaining. Stop shouting him down. I want to hear him.

Ben Gummer: The cap is good for Government finances and it is good for accountability because it forces the Opposition to be honest, even though they are seemingly unwilling to be so. It is also important in terms of how we deal with this welfare crisis. It will force Governments to deal with the underlying causes of welfare dependency rather than just jacking up the bill every time they are faced with a difficult problem.

2.44 pm

Ms Diane Abbott (Hackney North and Stoke Newington) (Lab): Any member of the public watching this debate this afternoon and listening to people jeer, laugh, smirk and joke might imagine that some Members of this House were playing a game. Well, I am rising to say to the House that this is not a game; this is about people’s lives. Whether they be elderly people who are dependent on some of the age-related benefits that will fall under the cap, the disabled or people in low-paid work who depend on the system of tax credits, this is not a game; this is people’s lives. If it is really the position of Government Members that poor people should be made to live on even less, they should at least have the grace to be dignified about it, and not turn it into a game. I put it to Government Members and to those on my own Front Bench that social security and people’s lives should not be made a matter of short-term political positioning.

Everyone in the House wants to bring down welfare spending, because welfare spending is the price of Government and social failure. The Chancellor talked as if he were some brave warrior wreaking vengeance

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on an army of “Benefits Street” layabouts. The reality for British people is very different. Just this week, we saw 1,500 people queuing for three hours for a low-paid job at Aldi. The picture Government Members like to paint of the British people and what is happening in the benefit system is false, misleading and derogatory, yet it is feeding through to public attitudes. The public thinks that 41% of the benefits bill goes to the unemployed. In fact, it is only 3% of the benefits bill. The public thinks that 27% of benefits are claimed fraudulently. In fact, only 0.7% is so claimed. The truth is that 80% of the people who claim jobseeker’s allowance—those so-called “Benefits Street” layabouts—only claim it for less than a year. There is no credit to MPs if they constantly talk in a derogatory way about people who claim benefits when, at any given point in our lives, we may be dependent on social security—be it child benefit, benefits for the elderly or in-work benefits.

This benefits cap is arbitrary and bears no relationship to need, as our benefits system should. It does not allow for changing circumstances—rents going up and population rising—and will make inequality harder to tackle. There are ways to cut welfare. We could put people back to work, introduce a national living wage, build affordable homes and have our compulsory jobs guarantee. An arbitrary cap is the wrong way in which to go and sends out the wrong message. The Chancellor does not say many things that I think are correct, but he is correct to say that voting for this cap locks us into the coalition’s cuts. I say to the House that the issue of social security should not be about political positioning. As the months turn into years, people will be coming to our advice surgeries wanting explanations for totally arbitrary and counter-productive cuts. Will we say that it was a game we were playing with the Chancellor one afternoon in March? Our welfare system should be based on the facts and on need. Whatever short-term political advantage people think is gained by voting for this cap, it is far outweighed by what is problematic, so, no, I will not be voting for this cap in the Lobby tonight.

Several hon. Members rose

Mr Deputy Speaker: Order. The time limit is now down to four minutes.

2.49 pm

Mark Reckless (Rochester and Strood) (Con): We have to make these cuts because the expenditure has been unmanaged. As my hon. Friend the Member for Ipswich (Ben Gummer) says, for the first time there will be more within the supposed “annually managed” category than the amount that is subject to departmental expenditure limits. The measure that the Chancellor has brought before us today will mean that for the first time this £120 billion of public spending will be properly managed annually by the Treasury and will be subject annually to a vote of this House.

Imagine the Home Office or the Department for Transport letting it slip out that it was spending £1.5 billion more than previously planned. The first thing a Minister must do if a budget is exceeded is bear down on it, find out why, do something about it, and, if necessary, find another area of the departmental budget where savings can be made. If absolutely necessary, they must go to

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the Chancellor and see whether they can make a case for a proportion of the strictly limited contingency reserve.

Mr Mark Harper (Forest of Dean) (Con): I listened carefully to what the hon. Member for Hackney North and Stoke Newington (Ms Abbott) said and at no point during her speech did she think about the other side of the coin: the people who have to pay the bills. They were the people referred to by my hon. Friend the Member for Harlow (Robert Halfon) and the Chancellor. They have needs and requirements. Many low-paid people have to pay the bills, but she never mentioned them once.

Mark Reckless: As we learnt in the Budget, the amount we will spend on benefits for the disabled—as the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Wirral West (Esther McVey), will know well—is £1.5 billion more than was estimated in the autumn statement just three and a half months ago. In the past, we would have just ignored that and borrowed the extra money without even debating it in this House, but at least now we must have a debate.

The OBR expects that that money will be clawed back over the next couple of years—we will spend a similar amount extra next year, but not the following year. If that estimate is not right, however, surely we as MPs, representing the taxpayer and those who benefit from other benefits and from the NHS, must look into that and ask what we can do about it. Many people who are applying for the personal independence payment or employment and support allowance come to my surgeries and I see cases to which I am sympathetic and in which I think a misjudgment has been made in the assessment. The OBR might be right about what the spending will be—I am not saying that we should reduce eligibility for those benefits or that that is where the reductions must fall—but if it continues to increase we must either borrow the extra money, raise taxes, as the Opposition might wish, or find savings elsewhere.

Constituents of mine who, if they were lucky, were getting a 1% wage increase earlier in this Parliament were seeing people on benefits getting increases above 5%. In the five years since 2007, benefit payments increased by 10% relative to increases for those people who were in work. This year, for the first time, we have a 1% limit. Inflation has come down: it is now 1.7% rather than nearly 3%, as it was when we introduced this measure. I do not want to make further reductions to welfare benefits, but if payments to people who are disabled are £1.5 billion more than we thought they would be this year and if that continues to rise, we must make a decision about the priorities and where we want to make savings. Alternatively, should we just have more taxes and more borrowing, as the Opposition would like?

The other important principle of the measure before us is that the Chancellor is returning the control of spending to Parliament. Parliament used to debate the Government estimates in detail, but now the last thing that we debate on estimates day is anything to do with spending. Between the wars, Parliament lost that power

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and since then we have seen an explosion in state spending. We are spending £120 billion. It would be good news if spending came in below that, and the Treasury would not have to come to us for permission to spend more taxpayers’ money. But if spending is more than 2% above the projected figure there ought to be a debate and a vote in this House about whether to accept that.

George Freeman (Mid Norfolk) (Con): My hon. Friend is making an extremely elegant point. Is it not true that the Labour party’s positioning of itself as the welfare party has betrayed those who depend on the welfare system in two ways? First, it has meant that money required for those most in need is spent on those who are not most in need and, secondly, it has entrenched and locked hundreds of thousands of the most vulnerable families into dependency on welfare, which is the great tragedy of the welfare state that the Opposition have supported.

Mark Reckless: My hon. Friend is completely right. The Labour party used to be the workers’ party, but it has become the welfare party. It has become the defender of the public sector. When Parliament discussed these matters 90 years ago and before, the radicals were those who were trying to control Government spending and who were standing up for the taxpayers—the people in their constituencies—and trying to reduce the amount of money that Ministers were spending on their behalf. Today, all we see from the Labour party is a defence of welfare spending and of whatever is paid in the public sector while our constituents, who have to pay for all that and who are often on very low incomes, are ignored. For the first time, we are considering the comparison between what we are spending on welfare and what we need to do with that money elsewhere.

I wholeheartedly support this House’s having its say on spending. There is an excellent precedent for such a debate in Parliament. The Government came to the House with a motion saying that we should freeze spending within the European Union, but the House looked at the motion, decided that that was not good enough and that we wanted a cut. We voted for one, and the Government went out and delivered it. Parliament took control of spending.

Previously, spending in the welfare area covered by the £120 billion has gone up and up, and people have said, “Oh well, there is a problem and we will have to spend more on these disabled claimants, but we are sympathetic to them so that is fine. We will just borrow the extra money.” For the first time, we will be forced into making a decision about what we can do to get proper control of public spending, represent our constituents and stand up for the taxpayer. Not only has the Chancellor brought in the fiscal watchdog and reformed pensions, but, in this third area, he will be remembered for restoring control of spending to Parliament.

2.56 pm

Dr Eilidh Whiteford (Banff and Buchan) (SNP): This welfare cap is a reprehensible and regressive measure that once again puts the most disadvantaged people in our communities on the front line. The cap that has been proposed is a crude blunt instrument. It is arbitrary

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and it simply will not be flexible enough to respond if the economy or our changing democracy drive greater structural need.

The Government recognise implicitly that the drivers of welfare spending are largely structural and they have excluded the most obviously cyclical benefits from the cap, notably jobseeker’s allowance and pensions. Other benefits also have a cyclical component, however, and the Government persist instead in pursuing an agenda that victimises and stigmatises people on low incomes and punishes them for the shortcomings of Government economic policy.

In the short time we have to debate the motion today, I want to address the impact of the welfare cap on sections of our society that are likely to be affected. State pensions have been excluded from the cap, but it does not exclude pension and savings credits. The very poorest pensioners, those who have spent their working lives in low-paid private sector jobs or who have spent years caring for others, will potentially be hit. That could affect 300,000 pensioners in Scotland, most of them women.

The second group I want to mention is children. We already know that as a consequence of the UK Government’s welfare cuts 100,000 more children in Scotland will be growing up in poverty by 2020. We also know that the majority are the children of parents in low-paid work. The cuts to tax credits and the below-inflation uprating of child benefit, housing benefit and other forms of support for families are already expected to drive up child poverty, and the arbitrary welfare cap just puts a tin lid on it.

The Child Poverty Action Group points out that child poverty places a huge burden on our economy, not least through the £15 billion spent on addressing its consequences through social services and extra educational support. The group makes the point that in the medium to longer term, the Government’s approach will hinder deficit reduction and we will all pay for the costly long-term legacy of low skills and poor health associated with childhood deprivation.

Disabled people and their unpaid carers are also in the firing line, again. We need to understand the structural challenge as the baby boomer generation develop more health problems and disabilities associated with old age. We need to support family carers, who are the backbone of our community care system. It is a wholly false economy to subject the benefits paid to carers to the welfare cap.

Underpinning the circumstances of all those people is the UK’s pernicious combination of low pay, wide labour market inequality and high housing costs. Housing benefit remains one of the biggest ticket items in welfare expenditure. Increases are driven by chronic shortages of affordable homes, soaring private sector rents in areas of high demand—most notably in London and the south-east—and the failure of Governments to address that. The welfare cap will not address those underlying structural problems and the scandal is that people in good jobs cannot afford to pay rent.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): Will my hon. Friend give way?

Dr Whiteford: I will not, because other people need to speak.

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The best way to reduce and manage welfare spending is to restore the economy to a state of health and that is exactly what the Government are failing to do quickly enough. If the Government were serious about reducing welfare spending, they would be creating more job opportunities in sectors that pay a living wage, investing in child care to enable parents to work or increase their hours, and building more affordable homes and taking action on housing costs.

In Scotland, we spend a lower proportion of revenue and GDP on social protection than the UK as a whole. We have invested heavily in affordable housing and in child care and we have increased apprenticeships. That has enabled more people to work full time, which is why our child poverty rates have fallen more quickly. Those long-term efforts to address the drivers of welfare spending, not just the symptoms, stand in sharp contrast to the Government’s ill-conceived, punitive and counter-productive approach.

I intend to vote against this measure today and I hope that Scottish MPs from all parties will do so too. To acquiesce in this nasty Tory nonsense that piles yet more pain on our poorest pensioners, carers, disabled people and low-income families would be an abject failure of leadership and a betrayal of the people of Scotland who elected us and who, frankly, deserve better.

3 pm

John Hemming (Birmingham, Yardley) (LD): It is often said that a week is a long time in politics, but in one sense that is wrong. Dealing with Government finance and the economy takes multiple years, so the problem that we had in 2010 will take at least eight years to resolve. People who interview me every so often say, “Oh, we have more cuts this year,” but those decisions were made in 2010 and they were driven by Government policy in the previous years.

I shall quote a few comments about Government policy from 2005 to 2010 because they are relevant to this debate and the issue of budget responsibility in the long term. One person said in his memoirs:

“However, we should also accept that from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit.”

That was Tony Blair, who was Prime Minister at the time.

Lord Turnbull, who at one stage was the Cabinet Secretary, the chief civil servant, noted that excessive borrowing started to be a problem from 2005. He said:

“It kind of crept up on us in 2005, 2006 and 2007, and we were still expanding public spending at 4.5 percent a year”.

His argument, essentially, was that the Labour Government should have been aiming to put money aside in the good years. He cited examples of other places that began to accumulate surpluses for a rainy day—places such as Australia.

The Government were borrowing £2,500 on behalf of every person in the country so that, in effect, a baby would have borrowed £45,000 by the time it reached the age of 18. That had to be brought under control, but it cannot be done immediately. It is important that we properly manage Government finances. If anyone can be bothered to read the charter for budget responsibility

26 Mar 2014 : Column 395

March 2014 update, they will find on page 10 that if the welfare cap is found to be breached, there are three options, one of which is to

“explain why a breach of the welfare cap is considered justified.”

Members can vote against the motion only if they do not believe in the Government managing and knowing what they are doing. I would be worried if there was a scheme whereby somebody came and said, “I need benefits. I’ve got no money,” and the Government said, “We’ve run out of money. We have no money to give you jobseeker’s allowance.” People will still have entitlements, but if we spend more than we intend to spend, the Minister will, as an absolute minimum, have to explain why.

I worry still about how the Government manage finances. I have asked questions, for example, on tax credits, to try to work out how many effectively fraudulent self-employed schemes there are, often run by people who are recent migrants. People set up nonsense scrap metal businesses that exist not as businesses, but to qualify for tax credits, but the Government cannot give that information. That is bad. We should be able to analyse the figures.

We need a good benefits system that ensures that there is a solid and straightforward safety net so that if people end up in difficulty, there is a way of rescuing them and keeping them from destitution. However, to argue that we should not try to manage the total costs is nonsense. Hence, I am not surprised that the official Opposition are backing the motion. Anyone who believes in having the money available to look after people believes in managing the accounts and knowing what is happening, and if we spend more than we expect, as an absolute minimum the Minister should explain why.

3.3 pm

Jim Sheridan (Paisley and Renfrewshire North) (Lab): If my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott) did nothing else in her contribution, she exposed the behaviour of the Government during this debate, reminding us that this is about people. The experience today shows that the Tories are at their happiest and their loudest when they are attacking the poor and the vulnerable. I was reminded that the reason I came into politics was to take on such people.

Events shape our lives and our experiences. I say this as someone who was a recipient of benefits for three years, through no fault of my own. I was unemployed, and when I did get a job, it usually lasted a week before the Economic League, which funded the Tory party, caught up with me and I was blacklisted and out of a job again. I was not lying in my bed waiting for the next girocheque to come in; I was desperate for work.

The vast majority of people on benefits are desperate for work, but they are forced into low-pay zero-hours contracts and it is the fault of the employers. Not one single Tory MP today has mentioned the fact that employers are lucky if they are paying the minimum wage and that therefore people are dependent on taxpayers and their handouts. That is what we should be attacking — the employers who are paying the minimum wage and sometimes even below it and forcing people on to benefits.

26 Mar 2014 : Column 396

I was horrified to see the performance of Members on the Government Benches, none more so than our own Mrs Brown, epitomised by the hon. Member for Elmet and Rothwell (Alec Shelbrooke), whose behaviour was somewhat disappointing, shall we say. The Government will argue that a welfare cap is needed to keep social security under control, but they do not understand the root causes of that spending. I have great difficulty even with the position of my own Front Bench on the welfare cap.

Yesterday I spoke about tax avoidance. I draw a parallel. If I were to call the tax office and report Mrs Brown down the road for not paying her tax or wrongly receiving welfare benefits, an official would probably be at her door the next day. Yesterday I highlighted the disgraceful behaviour of Alliance Boots and its tax evasion, and not one single Member on the Government Benches or on the Government Front Bench has asked what Boots was up to. That is a sad reflection of where our priorities lie.

The welfare cap is portrayed by the Tories and the Lib Dems as a fiscal policy. It is a trap laid by the Conservatives to suck in the Labour Front Bench, and I am extremely uneasy about the position we are taking. I recognise a bear trap when I see it and I hope I will not be seduced into falling into the trap set by the Tories. It is a campaigning slogan which seems to demonise the poor and those on benefits.

As I said at the outset, I am probably one of the few people in the House who has been a recipient of benefits. There certainly are none on the Government Benches, and very few on the Opposition Benches. I was proud to get a job and proud of the company that gave me a job and got me back into work. I was not a benefits cheat, as some would have us believe.

3.7 pm

Stephen Phillips (Sleaford and North Hykeham) (Con): When this Government came to office in 2010, they faced immediate and terrifying problems. Listening to some of the contributions from Opposition Members, that seems to have been forgotten. The prudence of the policies that have been pursued by the Government over the past four years has done much to make us forget what we knew at the time—that this country had been brought to the brink of bankruptcy by a Labour Government who, in their 13 years in office, borrowed more money than all their predecessors put together since the foundation of the Bank of England.

If we are never again to repeat the mistakes of the past, we must not forget where this country found itself in 2010, as we should not forget that the authors of the crisis that this country faced are now sitting on the Opposition Front Bench and who would again be king, notwithstanding their clear demonstration in their handling of the British economy in their time in office, that they are unfit to hold it.

Guy Opperman (Hexham) (Con): Given that the Opposition have opposed every budgetary and welfare cut throughout this Parliament thus far, why should we ask the public to believe them now, particularly given what the shadow team say in private?

Stephen Phillips: I do not know what the shadow Chancellor and his Treasury shadow team say in private.

26 Mar 2014 : Column 397

I do know that when I talk to people in my constituency, they have not forgotten that the authors of the troubles that we found ourselves in and that we are still recovering from and will be for a considerable time are those who again want to hold the reins of power.

Mrs Anne McGuire (Stirling) (Lab): In the hon. and learned Gentleman’s historical and economic analysis, when is he going to factor in a little thing such as an international financial crisis that did not start in Britain?

Stephen Phillips: He is going to factor it in right now, and he is going to tell the right hon. Lady the truth. The truth is that this country was in a much worse place to weather that financial crisis because of the fact that we had borrowed more money than any other developed economy. Indeed, we had borrowed just about as far as we could possibly go. The truth of the matter is that we would have weathered the financial crisis, which I quite accept was an international crisis, if the last Government had done their job properly, fixed the roof while the sun was shining and had not over-borrowed—if they had not done all the things that led to the difficulties that this coalition Government have had to pick up.

It is quite apparent that the hubris of Opposition Members knows no bounds. There is no plan. They have no plan for the British economy other than the plan that they had during their time in office: spend, spend, spend. That is one reason why it is important that this measure comes before the House today.

Let us recall precisely what we are talking about. This is a prudent measure from this Government, and it updates the charter that was previously laid before the House, and which the House approved. When history comes to look at the record of this Government and the things that they have done, it will see not just that the Government have taken steps to cure the British economy of the malaise from which it was suffering in 2010; they have in addition taken the necessary measures to address the structural changes that were required so that we can go forward. The establishment of the Office for Budget Responsibility—obviously, four years ago—means that we can never again see economic and fiscal forecasts of the type that enabled the previous Government to spend so foolishly the money that we simply did not have.

The charter comes before us again today, and in part it does so because of the announcement, quite correctly, by my right hon. Friend the Chancellor of the Exchequer that we need to take action. We need to take action to stop benefits running out of control as they ran out of control under the previous Government. The figures have been quite startling, and they have been given in this debate. The simple fact of the matter is that this charter, with its cap on benefits, is something that the House should support. I am pleased that the Opposition are going to support it; they should all be supporting it, because it is the right thing to do.

3.12 pm

Chris Leslie (Nottingham East) (Lab/Co-op): The debate has been all too short, so let me briefly reiterate to the House that the Opposition support capping social security spending—an approach that my right hon. Friend the Leader of the Opposition first proposed in June 2013. Welfare expenditure is the largest part of total Government spending and it is now £13 billion

26 Mar 2014 : Column 398

higher than the Chancellor planned in his first spending review in 2010. We must get a grip of these rising costs but do so in a fair way—tough on welfare inflation but tough on the causes of welfare inflation as well.

The Government might not realise it, but low wages and job insecurity are pushing the welfare bill higher and higher. The collapse in earnings during this cost of living crisis has hit the taxpayer too. Rising rents and the lack of housing supply push up the housing benefit bill. We need action on house building and a help to build scheme far more urgently than ever before. And long-term youth unemployment has doubled under these Ministers, costing the taxpayer more in benefits but also losing revenue to the Exchequer.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): Will the hon. Gentleman give way?

Chris Leslie: I am afraid I will not give way because we have very little time. I have to give the Chief Secretary some time to try to make some sense of his proposals.

It is no wonder, I say to the Ministers, that in just the four months since the December autumn statement, they have had to revise their projections for welfare spending. In the Budget on Wednesday, they had to revise up predicted social security spending for next year by a further £1 billion and revise up the expected bill for the year after that, 2015-16, by another £1 billion. Controlling welfare inflation will mean tough decisions, such as ending the winter allowance for the richest 5% of pensioners, but we cannot afford the waste and ineptitude of the current Secretary of State for Work and Pensions, who cannot even be bothered to come back into the Chamber for the end of this debate. That Secretary of State has squandered £34 million by scrapping the Department for Work and Pensions inquiry service, in an astonishing waste of taxpayers’ money. He has written off millions of pounds of universal credit IT spending at an alarming rate. He has failed to tackle fraud and tackle the error and overpayments made by his Department of £700 million last year. The country and the taxpayer need protecting from the failures and the incompetence of this Chancellor and this Tory-led Government.

On the modified charter before us, why have the Government not taken the opportunity to revise the OBR’s mandate to allow the independent audit of policy costings and commitments in the manifestos of the main political parties? Perhaps the Chief Secretary can explain why the Government withdrew their first version of the motion last week, which could have allowed an amendment on that matter, and then hastily retabled a fresh version, which was not amendable. I wonder why they did that.

On the wider set of fiscal targets, will the Chief Secretary explain why the Treasury want to reiterate, in their charter today, the particular points on which they fail? If they want to restate the promise that they originally made to get the national debt falling by next year, be our guest. The motion before us today serves to remind the world of their failure to get the national debt down in 2015-16, and as the OBR said last week,

“We expect public sector net debt”

still to be rising in that year.

26 Mar 2014 : Column 399

So the fiscal mandate is already in tatters. It had expired even before today’s debate. Is the Chancellor even aware of what he is doing? In his Budget speech on Wednesday he used the phrase,

“as a nation, we are getting on top of our debts”.—[Official Report, 19 March 2014; Vol. 577, c. 781.]

Does he not even realise that he has increased the national debt by a third—£1.2 trillion?

A new fiscal mandate will be needed in the new Parliament and we will obtain just that. We will balance the books and get the current budget into surplus as soon as possible in the next Parliament—a fairer approach to deficit reduction and tough on the causes of welfare inflation. We need long-term recovery and long-term growth, not the same old short-term politicking from the Chancellor. Sound management and stronger control are necessary to prove to taxpayers that the important safety net of social security for the vulnerable and those in need is sustainable for the longer term, so we will support the motion, should the House divide.

3.17 pm

The Chief Secretary to the Treasury (Danny Alexander): I am grateful to the shadow Chief Secretary for his support for this measure, albeit that from him and the Chancellor we heard another two flatlining speeches from a flatlining political party.

Ed Balls: Shadow Chancellor.

Danny Alexander: Shadow Chancellor. I am glad he agrees that he is flatlining.

This has been an important debate, and I agreed with the hon. Member for Hackney North and Stoke Newington (Ms Abbott) in one respect. She was right to say that this was an important debate on an important subject and should be treated as such. However, it is for precisely those reasons that I support the cap that we are debating, as does my party. Let me explain why. During the debate a few myths have grown up about the cap, which I want to tackle. Fundamentally, as my hon. Friend the Member for Birmingham, Yardley (John Hemming) made clear, the motion is about accountability to Parliament and about the transparency of public expenditure decisions.

Mark Durkan (Foyle) (SDLP): Will the right hon. Gentleman give way?

Danny Alexander: I do not have much time; I intend to make some progress.

Fundamentally, the motion is about ensuring that we have greater control over public expenditure in this country, and that where a Government wish to deviate from the plans they set out to this House, they must return to the House to explain why they want to make a change, or what action they will take to deal with the pressures that have emerged.

One of my priorities when I came into office as Chief Secretary was to increase the amount of public expenditure that is under the direct control of Government, and indeed under the direct control and accountability of this House.

26 Mar 2014 : Column 400

Mr MacNeil: Will the right hon. Gentleman give way?

Danny Alexander: I will not give way.

When we came into office, only 53.8% of public expenditure was under a direct mechanism of control—departmental expenditure limits. That means that nearly half of public expenditure was simply beyond control—it was so-called annually managed expenditure, which in practice meant annually unmanaged expenditure. Progressively, over the course of this Parliament, we have put in place additional mechanisms to control an ever-rising amount of public expenditure. The pension reforms, which mean that in future the state pension age will be linked to life expectancy, bring greater control over the costs of the basic state pension. The reforms of public service pensions, which include a cap on the costs within public sector pension schemes, bring that source of expenditure, which had ballooned out of control under Labour, much more directly under the control of Government.

In total, when the measures in the welfare cap are included, we will have increased the amount of expenditure under direct control and directly accountable and transparent to this House from around 50% at the start of the Parliament to 77% at the end of it. From the perspective of every Member in the House, that ought to be a welcome change, because it means that this House has more say and more ability to scrutinise and hold accountable the Government for changes in public expenditure that take place on their watch.

A number of hon. Members mentioned unemployment benefits and jobseeker’s allowance. The hon. Member for Paisley and Renfrewshire North (Jim Sheridan) referred to his experience in receipt of unemployment benefits. He is right that most people in that situation are not there through any fault of their own. That is precisely why jobseeker’s allowance is excluded from the scope of the cap. The benefits that are the so-called automatic stabilisers that fluctuate with the state of the economy—jobseeker’s allowance and the benefits that are passported from it and, in due course, those elements of universal credit, too—will not be in the scope of the cap, precisely for the reasons that he described in his speech. That perhaps ought to reassure him and encourage him to vote for the measure.

Fundamentally in the end, I think those people who are speaking against the cap betray their own lack of confidence in their ability, should they wish to, to come to the House transparently and accountably and persuade the House—

Mr MacNeil rose—

Danny Alexander: I have one minute left. No, I am not going to take any interventions; I am going to make progress.

Those people who speak against the cap betray an enormous lack of confidence in the ability of those who think that, in response to circumstances, welfare spending should be increased above the cap, to come here and persuade the House that that increase in expenditure would be necessary. The truth, over many years, has been that where there have been changes in forecasts, and where decisions have been made that have led to

26 Mar 2014 : Column 401

increased costs, they have been sneaked in through the back door, through the forecast, without any direct accountability to this House.

The people who say that the cap involves expenditure cuts are also wrong. The cap starts at around £120 billion and rises over five years to £127 billion, in line with inflation, so we have set it at a reasonable level. In this House, we should never again go back to the situation we had under the previous Government, where public expenditure was uncontrolled, and where debt and the deficit were allowed to balloon uncontrollably. This is part of clearing up the mess that was made of the public finances, and I commend the motion to the House.

Question put.

The House divided:

Ayes 520, Noes 22.

Division No. 240]


3.23 pm


Adams, Nigel

Afriyie, Adam

Ainsworth, rh Mr Bob

Aldous, Peter

Alexander, rh Danny

Alexander, rh Mr Douglas

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Amess, Mr David

Andrew, Stuart

Arbuthnot, rh Mr James

Ashworth, Jonathan

Austin, Ian

Bacon, Mr Richard

Bailey, Mr Adrian

Bain, Mr William

Baker, Steve

Baldry, rh Sir Tony

Baldwin, Harriett

Balls, rh Ed

Banks, Gordon

Barclay, Stephen

Barker, rh Gregory

Baron, Mr John

Barwell, Gavin

Bebb, Guto

Beckett, rh Margaret

Begg, Dame Anne

Beith, rh Sir Alan

Bellingham, Mr Henry

Benn, rh Hilary

Benton, Mr Joe

Benyon, Richard

Beresford, Sir Paul

Berger, Luciana

Berry, Jake

Betts, Mr Clive

Bingham, Andrew

Binley, Mr Brian

Blackman, Bob

Blackman-Woods, Roberta

Blackwood, Nicola

Blears, rh Hazel

Blenkinsop, Tom

Blomfield, Paul

Blunkett, rh Mr David

Blunt, Crispin

Boles, Nick

Bottomley, Sir Peter

Bradley, Karen

Bradshaw, rh Mr Ben

Brady, Mr Graham

Brake, rh Tom

Bray, Angie

Brazier, Mr Julian

Brennan, Kevin

Bridgen, Andrew

Brine, Steve

Brokenshire, James

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Browne, Mr Jeremy

Bryant, Chris

Buck, Ms Karen

Buckland, Mr Robert

Burden, Richard

Burley, Mr Aidan

Burnham, rh Andy

Burns, Conor

Burns, rh Mr Simon

Burrowes, Mr David

Burstow, rh Paul

Burt, rh Alistair

Burt, Lorely

Cable, rh Vince

Cairns, Alun

Cameron, rh Mr David

Campbell, rh Mr Alan

Campbell, Mr Gregory

Campbell, rh Sir Menzies

Carmichael, Neil

Carswell, Mr Douglas

Cash, Mr William

Caton, Martin

Champion, Sarah

Chapman, Jenny

Chishti, Rehman

Chope, Mr Christopher

Clappison, Mr James

Clark, rh Greg

Clarke, rh Mr Tom

Clifton-Brown, Geoffrey

Clwyd, rh Ann

Coaker, Vernon

Coffey, Ann

Coffey, Dr Thérèse

Collins, Damian

Cooper, Rosie

Cooper, rh Yvette

Crabb, Stephen

Crausby, Mr David

Creagh, Mary

Creasy, Stella

Crockart, Mike

Crouch, Tracey

Cruddas, Jon

Cunningham, Mr Jim

Curran, Margaret

Dakin, Nic

Danczuk, Simon

Darling, rh Mr Alistair

Davey, rh Mr Edward

David, Wayne

Davidson, Mr Ian

Davies, David T. C.


Davies, Geraint

Davies, Glyn

Davies, Philip

Davis, rh Mr David

de Bois, Nick

De Piero, Gloria

Denham, rh Mr John

Dinenage, Caroline

Djanogly, Mr Jonathan

Dobbin, Jim

Dobson, rh Frank

Docherty, Thomas

Dodds, rh Mr Nigel

Doran, Mr Frank

Dorries, Nadine

Doughty, Stephen

Dowd, Jim

Doyle, Gemma

Doyle-Price, Jackie

Drax, Richard

Dromey, Jack

Duddridge, James

Dugher, Michael

Duncan, rh Mr Alan

Duncan Smith, rh Mr Iain

Dunne, Mr Philip

Eagle, Ms Angela

Eagle, Maria

Efford, Clive

Elliott, Julie

Ellis, Michael

Ellison, Jane

Ellman, Mrs Louise

Ellwood, Mr Tobias

Elphicke, Charlie

Engel, Natascha

Esterson, Bill

Eustice, George

Evans, Chris

Evans, Graham

Evennett, Mr David

Fabricant, Michael

Fallon, rh Michael

Farrelly, Paul

Farron, Tim

Featherstone, Lynne

Field, rh Mr Frank

Field, Mark

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Flynn, Paul

Foster, rh Mr Don

Fovargue, Yvonne

Fox, rh Dr Liam

Francis, Dr Hywel

Francois, rh Mr Mark

Freeman, George

Freer, Mike

Fuller, Richard

Gale, Sir Roger

Gapes, Mike

Gardiner, Barry

Garnier, Sir Edward

Garnier, Mark

Gauke, Mr David

George, Andrew

Gibb, Mr Nick

Gillan, rh Mrs Cheryl

Gilmore, Sheila

Glen, John

Glindon, Mrs Mary

Goldsmith, Zac

Goodman, Helen

Goodwill, Mr Robert

Gove, rh Michael

Grant, Mrs Helen

Gray, Mr James

Grayling, rh Chris

Greatrex, Tom

Green, rh Damian

Green, Kate

Greening, rh Justine

Grieve, rh Mr Dominic

Griffith, Nia

Griffiths, Andrew

Gummer, Ben

Gwynne, Andrew

Gyimah, Mr Sam

Hague, rh Mr William

Hain, rh Mr Peter

Halfon, Robert

Hamilton, Mr David

Hammond, Stephen

Hancock, Matthew

Hands, rh Greg

Hanson, rh Mr David

Harman, rh Ms Harriet

Harper, Mr Mark

Harris, Rebecca

Harris, Mr Tom

Hart, Simon

Harvey, Sir Nick

Haselhurst, rh Sir Alan

Havard, Mr Dai

Hayes, rh Mr John

Heald, Oliver

Healey, rh John

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Hendrick, Mark

Hendry, Charles

Herbert, rh Nick

Hermon, Lady

Hillier, Meg

Hilling, Julie

Hinds, Damian

Hoban, Mr Mark

Hodge, rh Margaret

Hodgson, Mrs Sharon

Hoey, Kate

Hollingbery, George

Hollobone, Mr Philip

Holloway, Mr Adam

Hood, Mr Jim

Hopkins, Kris

Horwood, Martin

Howarth, rh Mr George

Howarth, Sir Gerald

Howell, John

Hughes, rh Simon

Huppert, Dr Julian

Hurd, Mr Nick

Irranca-Davies, Huw

Jackson, Mr Stewart

James, Margot

James, Mrs Siân C.

Jamieson, Cathy

Jarvis, Dan

Javid, Sajid

Jenkin, Mr Bernard

Johnson, rh Alan

Johnson, Diana

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, rh Mr David

Jones, Graham

Jones, Helen

Jones, Mr Kevan

Jones, Mr Marcus

Jones, Susan Elan

Jowell, rh Dame Tessa

Kane, Mike

Kawczynski, Daniel

Keeley, Barbara

Kelly, Chris

Kendall, Liz

Kennedy, rh Mr Charles

Khan, rh Sadiq

Kirby, Simon

Knight, rh Sir Greg

Kwarteng, Kwasi

Lammy, rh Mr David

Lancaster, Mark

Lansley, rh Mr Andrew

Laws, rh Mr David

Lazarowicz, Mark

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Leigh, Sir Edward

Leslie, Charlotte

Leslie, Chris

Lewell-Buck, Mrs Emma

Lewis, Brandon

Lewis, Mr Ivan

Lewis, Dr Julian

Liddell-Grainger, Mr Ian

Lidington, rh Mr David

Lilley, rh Mr Peter

Lloyd, Stephen

Long, Naomi

Lopresti, Jack

Loughton, Tim

Love, Mr Andrew

Lucas, Ian

Lumley, Karen

Macleod, Mary

Mactaggart, Fiona

Mahmood, Shabana

Malhotra, Seema

Mann, John

Marsden, Mr Gordon

Maude, rh Mr Francis

May, rh Mrs Theresa

Maynard, Paul

McCabe, Steve

McCarthy, Kerry

McCartney, Jason

McCartney, Karl

McClymont, Gregg

McCrea, Dr William

McDonagh, Siobhain

McDonald, Andy

McFadden, rh Mr Pat

McGuire, rh Mrs Anne

McIntosh, Miss Anne

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

McPartland, Stephen

McVey, rh Esther

Menzies, Mark

Mercer, Patrick

Metcalfe, Stephen

Miliband, rh Edward

Miller, Andrew

Miller, rh Maria

Mills, Nigel

Milton, Anne

Mitchell, rh Mr Andrew

Moon, Mrs Madeleine

Moore, rh Michael

Mordaunt, Penny

Morden, Jessica

Morgan, Nicky

Morrice, Graeme


Morris, David

Morris, James

Mosley, Stephen

Mowat, David

Mulholland, Greg

Munn, Meg

Munt, Tessa

Murphy, rh Mr Jim

Murphy, rh Paul

Murray, Ian

Murray, Sheryll

Murrison, Dr Andrew

Nandy, Lisa

Nash, Pamela

Neill, Robert

Newmark, Mr Brooks

Newton, Sarah

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

O'Brien, rh Mr Stephen

Offord, Dr Matthew

Ollerenshaw, Eric

Onwurah, Chi

Opperman, Guy

Osborne, rh Mr George

Osborne, Sandra

Ottaway, rh Sir Richard

Paice, rh Sir James

Paisley, Ian

Parish, Neil

Patel, Priti

Paterson, rh Mr Owen

Pawsey, Mark

Penning, rh Mike

Penrose, John

Percy, Andrew

Perkins, Toby

Phillips, Stephen

Pickles, rh Mr Eric

Pincher, Christopher

Poulter, Dr Daniel

Pound, Stephen

Powell, Lucy

Prisk, Mr Mark

Pritchard, Mark

Pugh, John

Qureshi, Yasmin

Randall, rh Sir John

Raynsford, rh Mr Nick

Reckless, Mark

Redwood, rh Mr John

Reed, Mr Jamie

Reed, Mr Steve

Rees-Mogg, Jacob

Reevell, Simon

Reeves, Rachel

Reid, Mr Alan

Reynolds, Emma

Reynolds, Jonathan

Rifkind, rh Sir Malcolm

Robathan, rh Mr Andrew

Robertson, John

Robertson, Mr Laurence

Robinson, Mr Geoffrey

Rogerson, Dan

Rosindell, Andrew

Rotheram, Steve

Roy, Mr Frank

Roy, Lindsay

Ruane, Chris

Rudd, Amber

Ruddock, rh Dame Joan

Ruffley, Mr David

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Sarwar, Anas

Sawford, Andy

Scott, Mr Lee

Selous, Andrew

Shannon, Jim

Shapps, rh Grant

Sharma, Alok

Sharma, Mr Virendra

Sheerman, Mr Barry

Shelbrooke, Alec

Shuker, Gavin

Simmonds, Mark

Simpson, David

Simpson, Mr Keith

Skidmore, Chris

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Angela

Smith, Chloe

Smith, Henry

Smith, Julian

Smith, Nick

Smith, Owen

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

Straw, rh Mr Jack

Streeter, Mr Gary

Stride, Mel

Stringer, Graham

Stuart, Ms Gisela

Stunell, rh Sir Andrew

Sturdy, Julian

Sutcliffe, Mr Gerry

Swales, Ian

Swayne, rh Mr Desmond

Syms, Mr Robert

Tami, Mark

Tapsell, rh Sir Peter

Thornberry, Emily

Thornton, Mike

Thurso, John

Timms, rh Stephen

Timpson, Mr Edward

Tomlinson, Justin

Trickett, Jon

Truss, Elizabeth

Turner, Mr Andrew

Turner, Karl

Twigg, Derek

Twigg, Stephen

Tyrie, Mr Andrew

Umunna, Mr Chuka

Uppal, Paul

Vaizey, Mr Edward

Vara, Mr Shailesh

Vaz, Valerie

Vickers, Martin

Villiers, rh Mrs Theresa

Walker, Mr Charles

Walker, Mr Robin

Wallace, Mr Ben

Walley, Joan

Walter, Mr Robert

Watkinson, Dame Angela

Watts, Mr Dave

Weatherley, Mike

Wharton, James

Wheeler, Heather

Whitehead, Dr Alan

Whittingdale, Mr John

Wiggin, Bill

Williams, Mr Mark

Williams, Roger

Williams, Stephen

Williamson, Gavin

Willott, Jenny

Wilson, Mr Rob

Winterton, rh Ms Rosie

Wollaston, Dr Sarah

Woodcock, John

Woodward, rh Mr Shaun

Wright, David

Wright, Mr Iain

Wright, Jeremy

Wright, Simon

Yeo, Mr Tim

Young, rh Sir George

Zahawi, Nadhim

Tellers for the Ayes:

Claire Perry


Mark Hunter


Abbott, Ms Diane

Campbell, Mr Ronnie

Connarty, Michael

Durkan, Mark

Edwards, Jonathan

Galloway, George

Hopkins, Kelvin

Jackson, Glenda

Llwyd, rh Mr Elfyn

MacNeil, Mr Angus Brendan

McDonnell, Dr Alasdair

McDonnell, John

Mudie, Mr George

Riordan, Mrs Linda

Ritchie, Ms Margaret

Robertson, Angus

Skinner, Mr Dennis

Watson, Mr Tom

Weir, Mr Mike

Whiteford, Dr Eilidh

Williams, Hywel

Wishart, Pete

Wood, Mike

Tellers for the Noes:

Katy Clark


Jeremy Corbyn

Question accordingly agreed to.

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26 Mar 2014 : Column 403

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That the modified Charter for Budget Responsibility, which was laid before this House on 19 March, be approved.

Gambling (Licensing and Advertising) Bill (Programme) (No. 3)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Gambling (Licensing and Advertising) Bill for the purpose of supplementing the orders of 5 November 2013 (Gambling (Licensing and Advertising) Bill (Programme)) and 6 November 2013 (Gambling (Licensing and Advertising) Bill (Programme) (No. 2)):

Consideration of Lords Amendment

(1) Proceedings on consideration of the Lords Amendment shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement at today’s sitting.

Subsequent stages

(2) Any further Message from the Lords may be considered forthwith without any Question being put.

(3) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Anne Milton.)

Question agreed to.

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Gambling (Licensing and Advertising) Bill

Consideration of Lords amendment.

After Clause 1

Payment of Horserace Betting Levy by holders of remote operating licences

3.39 pm

The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant): I beg to move, That this House agrees with Lords amendment 1.

The Lords amendment gives the Secretary of State reserve powers to extend the horserace betting levy to all bookmakers holding a remote operating licence from the Gambling Commission after the remote gambling Bill has been enacted. The amendment is fully in keeping with the context and purpose of the Bill, which is about levelling the playing field for bookmakers engaging with British punters.

Subsections (1) and (2) are broadly drafted to ensure that the Secretary of State can make all the changes necessary to secure extension compatible with the UK’s obligations under European Union law. Members may recall that we resisted previous levy amendments because we believed they failed to offer that necessary scope.

Subsection (3) provides that secondary legislation introduced under this amendment will be subject to affirmative procedure in both Houses of Parliament. Subsection (4) makes it clear that existing provisions to abolish the levy once a suitable replacement has been found are unaffected by the amendment.

We have tabled our own amendment because we are persuaded that a statutory levy should be applied fairly, but we remain firmly of the view that the need for genuine levy reform cannot be satisfied through extension to offshore remote bookmakers alone. That is why this amendment is part of a wider levy reform package, which was announced by the Chancellor a week ago in the Budget. We will now move forward very quickly on two concurrent pieces of work.

On extending the levy, we will seek to complete all of the necessary work in time for the 2015 negotiations on the 55th levy scheme, which will apply from April 2016. The timing will, of course, be subject to the outcome of discussions with the European Commission, which began last Friday. We hope to launch a consultation in May on the mechanics of extension.

Guy Opperman (Hexham) (Con): Does my hon. Friend agree that this announcement and today’s developments are very good news for racing, which provides tremendous support for jobs and local tourism, and that it is good that the Government are now beginning to work properly with British racing?

Mrs Grant: I know that my hon. Friend, as a former jockey, has a deep and intimate knowledge of the industry. He makes an excellent point and that is precisely why we are making these reforms.

Ian Swales (Redcar) (LD): Following on from the intervention of the hon. Member for Hexham (Guy Opperman), is the Minister aware of the damage that

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has been done to racing by bookmakers moving offshore and not paying the levy, and will she join me and Redcar race course in welcoming the fact that racing will be more healthy as a result of these measures?

Mrs Grant: My hon. Friend makes a very important point. We have to look after racing. It is an important industry that provides many jobs. This is a sensible move, making a level playing field for all operators.

At the same time, we will develop wider levy reform options and publish a consultation in the summer. The consultation will seek views on a range of options, which are likely to include commercial arrangements, modernising the existing levy and a horse race betting right. The amendment is about collecting the horserace betting levy in a fair and consistent way.

Mr David Nuttall (Bury North) (Con): Will the Minister confirm that it would not be possible to extend the levy to offshore bookmakers without the approval of the EU and that we are totally dependent on receiving that approval in order to be able to do it legally?

Mrs Grant: My hon. Friend makes a fair point. Certainly, the levy scheme amounts to state aid and, because of the terms, we need to let the EU know if there is any substantial change in state aid and get permission for it.

The amendment is reasonable and I believe it commands widespread support. It signals the Government’s commitment to modernising the levy and it is, of course, part of, but not a substitute for, a wider reform programme.

3.45 pm

Clive Efford (Eltham) (Lab): We welcome the Government amendment and their change of heart on the alteration that we proposed both in Committee and on Report.

We pay tribute to the Members of the House of Lords who took up several of the issues that we raised during the Bill’s passage through this House. They have been very successful in gaining Government support for our amendments, notably in relation to sport spread betting, pre-watershed gambling advertising and its impact on children, a one-stop shop for problem gamblers and financial blocking. On all those areas, the Government said that change was not necessary or desirable, but it is very welcome that they have now changed their mind.

We welcome the Lords amendment on the horserace betting levy. There are two key issues: the application of the existing levy to online gamblers, and a consultation on the levy’s replacement in the long term. It is worth putting in context why the levy is necessary to support the horse racing industry.

British horse racing is a major sport. It is the country’s second most popular sport, with 5.68 million attendees, according to the British Horseracing Authority. It is also the second largest sporting employer. British racing supports a predominantly rural industry that makes a significant contribution to the British economy. It generates £3.45 billion in annual expenditure, provides direct and associated employment for 85,000 people and assists in leveraging billions of pounds of inward investment.

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Horse racing is inextricably linked with gambling like no other sport, with the exception of greyhound racing. As online gambling has grown, betting operators have moved offshore, which has contributed to a fall in revenue from the levy from an average of about £106 million between 2003-04 and 2008-09 to £66.7 million now. The industry says that that has led the number of horses in training to go down by 14.2% between 2008 and 2013, and foal production to go down by 25.3% during the same period. The Lords amendment is therefore very important. We welcome the Government’s about-turn and their support for our position on the levy.

The Minister has accepted our position, but a review may take a very long time. What does she think is the time scale for the review? When will the end date be for a major review of the betting levy?

In Committee, I warned the Minister that she might face more tenacious support for the horse racing industry than comes from most Members of the House of Commons. After I had told her that she might face more fanatical opposition in the House of Lords, she said:

“I am not sure that I understand quite what the hon. Member means by the horse racing fanatics in the other place, but I look forward to finding out.”––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 19 November 2013; c. 141.]

She well and truly found out when the Bill arrived in the Lords.

When I moved the amendment on Report, the Minister said:

“First, I do not believe that we should assume that genuine levy reform lies in merely extending the existing levy scheme… Secondly, as I have said previously, any extension of the levy to offshore bookmakers as a result of the new clauses”—

the ones I had tabled—

“would require EU Commission approval because the levy is a state aid scheme. I will not implement the proposals, for which we do not have EU approval in respect of state aid.”—[Official Report, 26 November 2013; Vol. 571, c. 195.]

When the Bill reached the Lords—following some to-ing and fro-ing between the Opposition, Cross Benchers and the Government—Lord Gardiner of Kimble moved an amendment, and said:

“We agree with the view that while we still have a statutory levy, it should be fairly applied. Furthermore, we are persuaded that including a clause about extending the levy to offshore remote operators is fully in keeping with the context and purpose of the Bill.”—[Official Report, House of Lords, 4 March 2014; Vol. 752, c. 1301.]

Will the Minister explain to the House—I will allow her to intervene—exactly what changed between our discussions in the House of Commons and those in the House of Lords? There has been a complete about-turn in the Government’s position on this issue.

It is important that there are no delays. The Minister said that she hoped that the consultation would start in May. Will she clarify whether it will conclude before the annual review of the levy terms, which will take place in October?

I know that there is concern about the horserace betting levy. My noble Friend Lord Lipsey spoke of his opposition to it in the other place. I share some of his concerns. If we go ahead with extending the levy and it generates an additional £20 million for the horse racing industry, what exactly will the Minister do to ensure

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that it benefits the wider horse racing industry and not just the haves at the expense of the have-nots? That investment should benefit the low-paid workers in the industry, generate economic activity in rural areas, and perhaps even support struggling race courses to become viable and keep people in their jobs.

The amendment will provide a great deal of support to the industry and could mean £20 million of investment. The industry must use it wisely. If it is used not to provide those wider benefits, but to inflate prizes at the expense of lower-paid workers in the industry, the support for the levy in the House might dissipate and the industry might lose important income. We all have a duty to pay close attention to what the money is used for when it finally reaches the industry.

I pay tribute to the Members of the House of Lords who supported the amendments that we tabled, not least the amendment before us. I pay particular tribute to Lord Stevenson of Balmacara, Baroness Jones of Whitchurch and Lord Collins of Highbury. I would not go so far as to suggest that someone should name a racehorse or even a stakes race after each of them. However, I received an e-mail of gratitude from the British Horseracing Authority, expressing its appreciation for my support, which said:

“I hope that we can get you along to a race meeting in the near future, potentially for the inaugural running of the ‘Clive Efford Cup’”.

I am sure that that was said in jest, but I will not stand in anyone’s way if that is what they want to do.

This is a welcome about-turn from the Government. We certainly support the amendment. I hope that the Minister will give an assurance about the time scales, because we do not want there to be any delay that could be avoided in implementing the levy on online gambling because, in the meantime, the industry will be missing out on significant income that could be put to good use, as I have set out today. I hope that the House will support the amendment.

Mr Nuttall: I want to raise two matters. Both have been touched on, but I want to expand on them.

First, as the hon. Member for Eltham (Clive Efford) rightly said, a new clause very similar to the Lords amendment was tabled on Report. I, along with other Government Members, voted against it. Of course, it was not the same clause, but it was very similar to the amendment we are being asked to support today, and if I am anything, I like to be constant and consistent in my position.

Clive Efford: May I point out to the hon. Gentleman that the outcome is the same? We will apply the existing levy—assuming we get European Commission approval—to online gamblers, and the Government will consult on a future levy for the longer term. The outcome is the same whether the amendment has been mildly adjusted or not.

Mr Nuttall: I appreciate that the aim might be the same, but as I understand it, the Lords amendment creates a reserved power straight away—

Clive Efford indicated dissent.