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House of Commons
Friday 20 March 2015
The House met at half-past Nine o’clock
Prayers
The Chairman of Ways and Means took the Chair as Deputy Speaker (Order 4 July, and Standing Order No. 3).
Ways and Means
Budget Resolutions and Economic Situation
Amendment of the Law
Debate resumed (Order, 19 March).
(1) That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide–
(a) for zero-rating or exempting a supply, acquisition or importation;
(b) for refunding an amount of tax;
(c) for any relief, other than a relief that–
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.
9.34 am
The Secretary of State for Communities and Local Government (Mr Eric Pickles): This Government have put Britain on the road to economic recovery. In 2010, our country was on the cliff edge, staring into an abyss of financial oblivion. The economy was stalling, unemployment was rising and the national debt was spiralling out of control. From day one, pulling the country back on to safer, more secure ground was our top priority.
Jim Fitzpatrick (Poplar and Limehouse) (Lab): Will the right hon. Gentleman give way?
Mr Pickles: In a few moments I will. It would be rather nice if I was able to start the speech, because I am sure that the hon. Gentleman would like something to critique.
Five years later, it is a different story: we have stepped back from the cliff edge, our growth rate is faster than that of anywhere in the G7, and our job creation is the envy of the developed world. It all confirms the old Yorkshire proverb, “Where there’s muck, there’s brass” and, boy, did Labour leave us a lot of muck. We have managed to start cleaning up the mess only because we stuck to our long-term economic plan. We stood our ground when ferocious economic headwinds blew in from the eurozone. We did not listen to those who said that the only solution was more borrowing and more spending beyond our means. Nobody now talks about
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plan B. We stood firm, and as a result today the deficit has been brought down by a half. Living standards are rising and a record number of people have found jobs. With our council tax freeze, there is more money in people’s pockets. The Budget is built on economic success. It will make our economy more resilient and protect taxpayers’ money. It will bring down the deficit and ensure that Britain pays its way in the world, so much so that the shadow Chancellor said that there is nothing in the Budget that Labour would vote against. Now the hon. Member for Blaydon (Mr Anderson) will tell me why the shadow Chancellor was wrong.
Mr David Anderson (Blaydon) (Lab): I will tell the right hon. Gentleman what I want to tell him. He cited a Yorkshire phrase, but what we have seen over the past five years is closer to another Yorkshire phrase: “What’s thine’s mine, what’s mine’s my own.” That is how they operate in the right hon. Gentleman’s party, and they always have.
Mr Pickles: I kind of regret giving way to the hon. Gentleman. That sort of bellicose description is not worth considering. After all, Yorkshire is at the very heart of our economic growth, but naysayers like him—
Mr Pickles: I shall give way to my dear friend.
Jim Fitzpatrick: I thank the Secretary of State for giving way. I apologise for interrupting him prematurely at the beginning of his speech. I was just very curious to know whether, in outlining the economic recovery, he was going to refer to the report from the Institute for Fiscal Studies, which was covered by yesterday’s Telegraph and today’s Guardian and says that the 300,000 immigrants have fuelled the recovery. What does that do to the UK Independence party’s fox and some of the Members on the Government Benches who have been raising immigration as a scare story?
Mr Pickles: Of course if we create more jobs in the UK than in the rest of the European Union combined, it is not surprising that we are doing well, and that people are leaving our great friends in France to come here to increase our prosperity. I am surprised that the hon. Gentleman, who has such a distinguished record of supporting the firefighters, did not wish to congratulate the Government on changing the rules to ensure that spouses of firefighters who die in action will be able to remarry, should they desire to do so, and not lose their pension.
Mike Gapes (Ilford South) (Lab/Co-op): The Secretary of State has referred to halving the deficit. Will he remind us of the policies his party was advocating in 2010, which should have eliminated the deficit by now? Will he admit that this Government are a total failure in respect of their own aims?
Mr Pickles:
Essentially, what the hon. Gentleman has said is that his party created an almighty mess and we have not been quick enough on the broom. He thinks we should have cut deeper, kicked harder and been tougher, but we are a compassionate coalition Government and we had to take those things into consideration. Had
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we gone any faster, there would have been social consequences. We have gone about the process without causing the problems that the hon. Gentleman would have been so difficult about.
Gregory Barker (Bexhill and Battle) (Con): Does my right hon. Friend agree that these interventions show that Labour Members not only do not have a long economic plan—[Laughter.] I mean long-term economic plan. Not only do they not have a long-term economic plan, but they do not have a clue.
Mr Pickles: My right hon. Friend is prescient in all things, and his Freudian slip is absolutely right: Labour has a non-economic plan and it is not going to work. I do not think that they will get a chance to use it.
The Budget will also ensure that our economic recovery continues to benefit every area of the country. Some claim, as we have heard this morning, that London and the south-east are reaping all the rewards, but that is nonsense. Nowhere is generating jobs faster than the north-west, and Yorkshire is creating more jobs than the whole of France. Our French friends may have given us liberté, fraternité and égalité, but my old home county is providing creativity, industry and Yorkshire Tea.
Our economy is growing because this Government understand what makes the economy tick. We believe that all growth is local and that local people are best placed to make decisions about their area. That is especially true where we have improved planning and increased house building. Labour’s top-down housing targets trampled on the democratic wishes of local communities and built nothing but resentment. Majestic promises of eco-towns never got beyond the paper they were written on. We have taken a more practical approach: rather than relying on the long arm of Whitehall, we are trusting councils and communities to make their own decisions about planning and housing and to steer new developments towards the right location. The result is growing public support for new housing, which has almost doubled over the past four years. More than 700,000 new homes have been delivered since the beginning of 2010 and house building is now at its highest level since 2007. Last year, locally led planning systems gave permission for 253,000 homes across England.
There is always more to do. We want to increase significantly the number of homes we build, to sustain economic growth and support the aspirations of hard-working families. Instead of dictating change, we are helping local areas that want to build more homes and boost growth. That will include supporting the development of locally led garden towns in communities such as Bicester, Basingstoke and Northamptonshire. Together, they will deliver nearly 40,000 new homes.
We have appointed board members to oversee Ebbsfleet’s urban development corporation, and marketing will begin on the key Northfleet embankment site. The new garden city on the Thames estuary will provide up to 15,000 new homes, create opportunities for businesses and generate thousands of jobs. We have also given the green light to 20 housing zones across the country and will continue to work with eight other bids. Together with 20 planned zones in London, these will support the delivery of nearly 100,000 homes all on brownfield
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land. That is exactly where the public want to see new housing so that we can protect our precious green belt and our beautiful countryside.
Emily Thornberry (Islington South and Finsbury) (Lab): On the subject of producing housing where the public need it, I am sure the Secretary of State knows that there are 19,000 families on the waiting list for housing in Islington, that the average price of a home in Islington is £630,000, and that 40% of my constituents live in social housing. Is he able to provide housing for Islington people? What is his plan for affordable housing in central London?
Mr Pickles: I have just explained that to the hon. Lady. Members on the Government Benches do not look down their noses at people who have white vans outside their houses. Those of us on this side of the House understand the importance of this. That is why it is we who will be working on brownfield sites so that the hon. Lady can occasionally visit the poor in her constituency.
Emily Thornberry: Rather than making cheap and rather silly points, which demeans the right hon. Gentleman, would he like to answer my question? Where is the Government help for building affordable housing in central London?
Mr Pickles: We are talking about something in the region of £400 million in London. The hon. Lady needs to understand that she is the queen of the cheap point. None of us will forget the tweet she sent out—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Just to help everybody, it should be the Chair who everybody speaks to and addresses.
Mr Pickles: Thank God you’re here, Mr Deputy Speaker. I was very happy to address the hon. Lady, but you were absolutely right to pull me up on that point of etiquette.
The plans are there; they are published. If the hon. Lady cannot be bothered to look at the plans and work with her local council, that is hardly our fault.
Emily Thornberry: Nonsense. Tell that to Mount Pleasant.
Mr Pickles: I think the hon. Lady should address her constituents directly rather than doing so through the Chair.
Our large sites programme has already unlocked the construction of more than 100,000 houses. We have now extended support for a site at Northstowe near Cambridge, which will benefit from 10,000 new homes on Government-owned land. We are supporting house building in the capital with a £97 million grant and a ring-fenced 50% share of local business rates to support the regeneration of Brent Cross and unlock 7,500 new homes. The London Land Commission will produce a database of public sector and brownfield sites, so that the Mayor can identify potential sites for new homes. These commitments to build more homes will be matched with support for hard-working people in the housing market, whether they are buying or renting.
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Robert Neill (Bromley and Chislehurst) (Con): Would my right hon. Friend care to note that the London Land Commission, which he has delivered with the current Mayor, reflects the need to assemble and deliver building on brownfield land in London, which the Labour Mayor of London was talking about years ago but never delivered while he or a Labour Government were in charge of London?
Mr Pickles: I do not really understand why that was. Labour’s solution to this brings to mind their solution of garden cities. They promised five but could not deliver five, so they promised 10 and never delivered 10. The London Land Commission is indeed a good thing.
The resale of shared ownership properties will be streamlined, and will make it easier for tenants in the private rented sector to sublet or share space. We will also extend our support for home ownership, which has already helped more than 200,000 households to buy or reserve a home. Buying our first home appeals to the very British sense of aspiration and self-reliance. It is a reward for hard work and an investment in the future—a place to settle down and to raise a family. A new Help to Buy ISA will give a much needed boost to people saving to get on the housing ladder. The Government will contribute an additional 25% of their savings up to a total of £3,000. In other words, if someone saves £12,000, the Government will give them an extra £3,000, making £15,000 in total.
We will also help those who want to rent an affordable home. By 2010, the net loss of affordable rented housing under Labour had reached the astonishing figure of 420,000 homes. By contrast, this Government will be the first since the 1980s—[Interruption.] Opposition Members should listen to this, because it is important. This Government will be the first since the 1980s to end their term with a larger stock of affordable housing, and I think that is a remarkable achievement. Our affordable housing programme will achieve the fastest rate of affordable house building for 20 years and will deliver more than 500,000 new affordable homes by 2020.
Sir Andrew Stunell (Hazel Grove) (LD): Will the Minister give way?
Mr Pickles: I just want to finish a couple of points, but then I will gladly give way to my old friend.
During the last five years, councils have built more homes than in the previous 13. Council house building is now at a 23-year high. We shall now start working with Keith House, Natalie Elphicke and the Local Government Association to implement the new housing finance institute, which will help build even more.
Sir Andrew Stunell: The Secretary of State and I are not always exactly on the same page, but we absolutely are on this. May I draw to his and the House’s attention the fact that we have indeed increased the number of social and affordable homes in this Parliament and that the 4 millionth was opened in my constituency just 18 months ago?
Mr Pickles:
I am always happier when I am on the same page as my right hon. Friend, who was an immensely distinguished Minister in the Department for Communities
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and Local Government. He should take considerable credit for keeping us focused on affordable houses, and he should share in the triumph.
We are considering ways to deliver private rented accommodation for homeless families, so that councils can help those who are in most need, while reducing the reliance on expensive temporary and bed-and-breakfast accommodation.
This Government have put councils and communities back in charge of housing and planning. We have adopted the same approach to boosting economic growth. Local areas now have the breathing space and support they need to find their own economic solutions. We have ended the failed attempt by Labour to run the economy through regional quangos and have devolved powers and funding to enterprise zones and local enterprise partnerships. We have trusted local people, and they are now delivering jobs and growth in their communities.
Twenty-four enterprise zones across England have created a whopping 15,500 jobs, attracted more than 430 businesses, secured more than £2 billion of private sector investment and built world-class business facilities and transport links. These enterprise zones are gaining momentum as local centres of excellence—whether with biotechnology in Nottingham, advanced engineering in Lancashire, creative industries in Bristol or aerospace in Torquay.
We will now create two new enterprise zones at Plymouth and Blackpool, subject, of course, to business cases, and extend up to eight existing zones, so that more communities can benefit from these local engines for growth. We will also support the creation of a Croydon growth zone to create 4,000 homes and 10,000 jobs.
The message is clear: where cities grow their economies through local initiatives, we will support and reward them. Starting next month local authorities in Cambridgeshire and Greater Manchester will be able to retain 100% of any growth in business rates, so that they can support businesses and reap the benefits. Unlike what the Labour party is proposing, we are not raiding the budgets of local authorities to pay for this.
Robert Neill: May I particularly congratulate my right hon. Friend, because I honestly believe that this is one of the most significant steps towards devolution for local government that we have seen in 50 years? Will he confirm that the principle of 100% new business rate retention and the opportunity to pool health care funding will be available to other parts of the country if local authorities produce appropriate collaborative arrangements?
Mr Pickles:
Absolutely. My hon. Friend was a distinguished Minister in my Department. Right from the very beginning, all this was envisaged under the Localism Act 2011. Rather than trying to move all local government at the same speed, we will of course devolve this power to those councils that are capable of managing larger budgets and delivering a deal. I envisage that within the next five years most local authorities will use such a system. For those that do not, the Prime Minister made it clear in a speech a couple of weeks ago that it will be our intention to get the retention up to 66%. I shall be disappointed if we cannot exceed that, but for most local authorities self-sufficiency and being able to raise their own finance locally and to spend Government money sensibly, and so on, is the future. I have great
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hopes for what is happening in Greater Manchester, and it shows that people of good will right across the political spectrum can work together.
Chi Onwurah (Newcastle upon Tyne Central) (Lab): Can the Secretary of State clarify whether all new business rates will be retained, or whether it will be all incremental business rates in addition to those currently predicted?
Mr Pickles: It is very straightforward; it is the same scheme that has existed since the retention scheme was introduced. It is the growth in the business rates. If a council goes out of its way to bring in new investment, it is only right that it should not be penalised for doing so, as it would have been under Labour. It should reap the benefits. I know that Opposition Members have difficulty with the idea that people should be rewarded for creating wealth and working for the common good, but that is how it is going to be. The Government are helping to expand local economies, and we also want to expand powers for local areas. As I have said, we have already devolved significant powers to the Greater Manchester combined authority.
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab): Will the Secretary of State give way?
Mr Pickles: I will in a moment.
Mr Brown: Will he give way on that point?
Mr Pickles: In a moment. The right hon. Gentleman is a very distinguished Member, but he should wait for his turn like the rest of us.
That devolution of powers to Greater Manchester is the most historic development in civic leadership for a generation, and it will enable Manchester to support business growth, skills and better health and social care. A new devolution deal for West Yorkshire will give local councils greater responsibility for developing local skills, transport and employment opportunities. Across the country local areas are benefiting from new powers and resources to help their local economies flourish. I will now give way to the very distinguished right hon. Gentleman.
Mr Brown: The Secretary of State has not mentioned local authorities in the north-east of England—inadvertently, I am sure. He also failed to answer the question put to him by my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah), and he has failed to make the case for the balkanisation of the business rate. Mrs Thatcher’s legacy was to have the business rate raised on the ability to pay and distributed on the basis of need—I am sure that I can remember her saying that to the House. Why is he allowing it to be balkanised?
Mr Pickles:
The right hon. Gentleman is a very distinguished Member of this House and no doubt has many things on his mind, so perhaps he has temporarily forgotten that we created a combined authority for Newcastle last year, which I understand is flourishing. Indeed, I anticipate that it will be the beneficiary of
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more devolution in the not-too-distant future. He talks about the balkanisation of the business rate, but it seems to me that if we are offering rewards to people who have worked hard in a local area, it would be grossly unfair to take money away from Newcastle just because it has done particularly well. He will also know that the Government are currently reviewing the business rate to ensure that fairness continues and that greater fairness is possible. I am sure that I speak on behalf of the whole Government when I say that we very much look forward to hearing the contribution that he will want to make on that.
The 2014 and 2015 growth deals are enabling 39 local enterprise partnerships to join up with councils and businesses to decide their own priorities. The funding can be used for investment in housing, roads, broadband or any other infrastructure. Some £12 billion will go towards local economies, and we have already agreed £7 billion of local projects. The result will be more new homes and infrastructure and greater support for local businesses to train young people, enhance skills and create jobs.
Britain has stepped back from the brink and started to recover from the deep failures of Labour’s great recession. Under our watch, the deficit has been cut and businesses are growing. Confidence is returning and house building is increasing. The number of first-time buyers is at a seven-year high and lenders are offering the most competitive range of mortgages ever. Local economies are growing and using their new powers to support businesses. That has happened under our watch only because this Government have provided the right economic leadership and because our long-term economic plan is working. The Budget will keep us on the road to economic recovery and prevent Britain from returning to the chaos of the past.
9.59 am
Hilary Benn (Leeds Central) (Lab): May I apologise to you, Mr Deputy Speaker, and to the Secretary of State for the fact that I will not be able to be present for the close of the debate owing to a long-standing constituency commitment?
It is a pleasure to respond to the right hon. Gentleman—probably, I suspect, for the last time in this Parliament. If I may say so, his speech had more than a touch of a valedictory air about it. I join him in his congratulations tweeted yesterday to Lord Kerslake on his elevation to the other place. Lord Kerslake marked that occasion by telling the Local Government Chronicle that the current state of local government finance
“shouldn’t be confused with saying that therefore there’s another round of savings of equivalent size that can simply be taken out...I don’t believe that.”
I hope that someone is keeping score of the number of times we are going to have to hear the words “long-term economic plan” during the whole of this Budget debate. [Interruption.] Well, we did not hear it from the right hon. Member for Bexhill and Battle (Gregory Barker). By my reckoning, it took the Secretary of State 59 seconds to refer to it in his speech. I suspect that the repetition is a comfort blanket for Government Members who, given this wonderful success that we have heard about today, cannot understand why, so close to the general election,
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they are neck and neck in the opinion polls. The reason is that people know they are not better off under this Government and the Government have failed.
Let me say something about the attempt to rewrite economic history, because it is important to place this on the record. I have heard more than enough times from Government Members the charge that somehow the previous Labour Government brought about the global economic recession. It is not true: fact. Prior to the global economic crash, debt and borrowing were lower. Investment in public services was backed by the pledge of the then Leader of the Opposition, now the Prime Minister, to match Labour’s spending plans pound for pound. The action that we rightly took, against the advice of the then Opposition, kept people in their homes and kept them in their jobs, and not a single person lost a penny of their savings. I am still waiting, all these years after the event, for someone to explain to the House how the decisions taken by the previous Labour Government caused Lehman Brothers to collapse in New York. If anyone has an answer, I will readily give way. The truth is that the British economy was growing and unemployment was falling, and it does no credit to the Government to try to rewrite the past.
In 2010, the Chancellor of the Exchequer said:
“we are on track to have…a balanced structural current budget by the end of this Parliament.”—[Official Report, 22 June 2010; Vol. 512, c. 168.]
As we know, that has not happened, and people have paid the price. They are worse off, they have seen their living standards squeezed, many of the services they rely on have been cut, and the poorest people and the poorest communities have been hardest hit. In the words of the Institute for Fiscal Studies, UK households have experienced
“the slowest recovery in incomes in modern history”.
That is quite some record. Despite the Chancellor’s excuses, we now know that it will take twice as long to balance the books as he said it would, and his plans for the next five years will involve extreme cuts to public spending. Do not take my word for it—listen to what Paul Johnson at the IFS says:
“The cuts of more than 5% implied in each of 2016-17 and 2017-18 are twice the size of any year’s cuts in this parliament.”
No wonder the Liberal Democrats tried to distance themselves from all this in their rather unsuccessful yellow Budget yesterday, but the whole nation knows that they are up to their necks in it because they have been supporting the Tories over the past five years.
It is not only on the deficit that the Government have failed. What about housing, which the Secretary of State mentioned? Having enough homes is of course absolutely fundamental to the economic growth that Members in all parts of the House want to see. If businesses are looking to expand, they need workers to fill those jobs and those workers need somewhere to live. Yet homes are being built at half the rate we need, house prices are rising out of reach, one in four young people in their 20s and early 30s are still living with their parents, and more and more people are having to rent privately, with all the insecurity that that can bring.
Back in 2010, at least two of the Ministers who are present today sat behind their new desks and made a lot of promises about what was going to happen to housing.
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Appearing before the Communities and Local Government Committee, the then Housing Minister was asked by the Chair:
“do we take it that success for this Government, when you are eventually judged on your record, will be building more homes per year than were being built prior to the recession, and that failure will be building less?”
“Yes. Building more homes is the gold standard upon which we shall be judged.”
That was a pretty unequivocal answer.
We must make some allowance for the fact that the then Housing Minister—now the chairman of the Conservative party—does not always get things right, but what have the Government actually achieved? Fact: they have achieved a lower level of peacetime house building than any Government since the 1920s, and a failure to build, in any single year, more homes than the Labour Government built in every single year in which they were in office. The number of new homes for social rent is at its lowest level for 20 years. [Interruption.] Ministers can chunter as much as they like, but those are the facts.
Starts and completions of social homes have collapsed, which makes the Chief Secretary’s claim to the House last week all the more extraordinary. He said then:
“we have the highest annual rate of social house building than under the previous Government or for the past 20 years”.—[Official Report, 10 March 2015; Vol. 594, c. 145.]
If one of the first acts of a Government is to cut the affordable homes budget by 60%, they should not be entirely surprised if there is a collapse.
The Secretary of State talked about affordable homes. He made great play of the subject. I have the figures in front of me—the figures from his own Department, headed
“National trends in additional affordable housing… Trends in gross supply”.
In 2009-10, the supply of “All affordable housing” was 57,980. In 2013-14, the figure was 42,710. During the last full year for which figures are available, affordable house building under the present Government was at its lowest level for nine years. Those are the facts. Ministers have not even returned house building to its level before the global recession. They set a gold standard on which they said they wanted to be judged, and they have comprehensively failed to meet it.
One of the other consequences of the collapse in social house building is the rise in the housing benefit bill over the current Parliament. This year, it reached £24 billion. Half a million more people now rely on help from the Government to pay their rent than relied on it when the coalition came to power—many of them work, but do not earn enough money to pay their rent and other bills and look after their families—and 2.5 million more people live in the private rented sector. There are now 11 million people who rent privately, including a growing number of families with children, but nothing has been done to help generation rent.
Gavin Shuker (Luton South) (Lab/Co-op):
My right hon. Friend has made an excellent point. There are people who are working—working in many of the jobs that have been trumpeted by the Conservatives—but are not
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earning enough to put food on their tables and a roof over their heads. That is one reason why the Conservatives are failing so shockingly on issues such as housing benefit while claiming to be trying to lower the welfare bill.
Hilary Benn: I entirely agree. That is one of the consequences of the cost of living crisis, which is why we want a higher minimum wage.
A Labour Government will do something for generation rent. We will scrap the charging of tenants for letting agents’ fees, we will legislate for three-year tenancies—the Government say that they are in favour of three-year tenancies, but they will not actually make them happen—and we will put a ceiling on rent increases during the second and third years of those tenancies.
As for those who dream of owning their own homes, the Conservative manifesto could not have been clearer, stating:
“We want to create a property-owning democracy where everyone has the chance to own their own home.”
I give credit to the Secretary of State and the Government for the steps that they have taken to try to help first-time buyers, including Help to Buy and the measures in the Budget. We support those moves, especially the help for first-time buyers. However, let me say gently to the Secretary of State that Ministers must know—they must have been advised by their officials, and by plenty of other people—that if demand is increased without an increase in supply, all that will happen is that house prices will rise even further out of reach of people who dream of owning their own homes, the very people whom the House wants to help.
Mr Steve Reed (Croydon North) (Lab): Does my right hon. Friend share my concern that under this Government thousands of homes in London have been sold to overseas investors who leave them empty, while throughout this city there is a growing housing crisis and people cannot find a home? How frustrating it is for them to see those homes kept empty when they have nowhere to live.
Hilary Benn: I agree that that is a particular feature of the housing market in London. The Government could do two things: the first is to say that homes in this country cannot be advertised for sale in other parts of the world before they are advertised in the United Kingdom, so that people in this country have an equal chance to buy them; and the second is to give local authorities greater power to disincentivise those who leave their homes empty, or who put in a stick of furniture and claim that they are occupied.
Mr Pickles: As far as I understand it, that is a new policy. Quite a lot of estate agents’ businesses are on the web these days, so how would that policy be possible? If adverts are on the web locally, they are on the web internationally. Will the right hon. Gentleman explain how it will operate?
Hilary Benn:
There is indeed the web, but the right hon. Gentleman will be well aware, having studied the market, that some companies make a special effort to market properties elsewhere and do not make a similar effort to market them in this country. He surely does not
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agree with that. Everyone in Britain should have the same right and opportunity, and companies should not make a deliberate effort to try to sell to people from other countries before those in London have a chance to access such properties.
Robert Neill: Given that this is a completely new policy that, as far as we can see, is being made up as we go along—
Robert Neill: And it is being changed, so will the right hon. Gentleman tell us exactly what the policy is? What will the policy cost, how many bureaucrats will be needed to enforce it and what will be the impact on London as an international financial centre?
Hilary Benn: The hon. Gentleman should have listened to what I said. There is no cost. The principle is very simple, and I would have thought that it would command support right across the House. The advertising and marketing of properties should be done in the capital at the same time as it is done elsewhere, so that people in this country have the same opportunity to buy. I would have thought that he would support that policy.
Robert Neill Will the right hon. Gentleman give way?
Hilary Benn: No, I will not. I have answered the hon. Gentleman’s question.
There is another policy that the Government—actually, the Conservative party—have said that they will put in place if they are re-elected, which is to sell homes at 20% off. To go back to the chairman of the Conservative party, he was recently asked several times on Sky News how exactly that would be funded. He was not able to reply, but others have said that it will be done by exempting such sites, first, from the requirement to build social housing, and secondly, from the zero-carbon homes standard. I would tell the Secretary of State that the consequence will be that other people have less of a chance of getting a home they can afford, and people who move into houses built to a lower energy standard will end up paying higher bills than they otherwise would.
I have another question for Ministers. In talking about that plan, the Prime Minister said the homes
“can’t be bought by foreigners”.
I would be grateful if the Minister who responds clarified what exactly the Prime Minister meant.
Barry Gardiner (Brent North) (Lab): They’ve gone very quiet.
Hilary Benn: Indeed. Suddenly silence falls on the Chamber.
Does that mean that EU citizens will be barred from buying one of these homes at 20% off? I think we should get an answer. The truth is that home ownership—[Interruption.] Well, I would give way if someone could give me an answer, but I do not suppose that I am going to get one. Home ownership is now at its lowest level for 30 years, and there are those with no home at all. Since 2010, homelessness is up by a quarter and rough sleeping is up 50%.
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Mr Pickles: Because we count them.
Hilary Benn: That really takes the biscuit—trying to allege that somehow the Government are counting properly. The fact is that before the last election, the Prime Minister said that it is
“a disgrace that in the fifth biggest economy in the world…we have people homeless, people sleeping on the streets”.
I agree with him. It is a disgrace and people should hold him to account for his shocking record.
We shall deal with the housing crisis only if we have a comprehensive plan. We have one—the most comprehensive in a generation—in the form of the Lyons review, which we will implement from day one of a Labour Government. We will make housing a national priority for capital investment. We will work with housing associations and councils to make it easier to build council houses, building on the changes we made to the housing revenue account.
We need more firms to be building. Thirty to 40 years ago, two thirds of the homes in this country were built by small and medium-sized builders; that proportion is now less than a third. Ask small builders what the problem is and they say, “I can’t get access to land and I can’t get access to finance.” We will introduce a help to build scheme, which will allow small and medium-sized builders to get lower-cost bank lending, supported by Treasury guarantees. We will encourage local authorities and others to make more innovative use of public sector land, investing in it as equity instead of selling it to the highest bidder, because that will also help us to deliver more affordable homes.
We will use Treasury guarantees and financial incentives to support the building of garden cities, and we will ensure that every council has a local plan. The Minister of State, the hon. Member for Great Yarmouth (Brandon Lewis), said that it is not necessary for every council to have a plan, but I think it is the responsibility of every local authority in England to have a local plan. Why would someone seek to be elected to an authority, or to be its leader, if they were not going to draw up a plan for the future of their community that included how they will meet the housing needs of the people who elected them?
The Minister of State, Department for Communities and Local Government (Brandon Lewis): Has the right hon. Gentleman looked through the details of the builders finance fund, which deals with this issue? Why does he not trust local councils to represent local people with a local plan driven by local people, for local people, instead of the top-down approach that failed for 13 years?
Hilary Benn: It is very simple: the Minister and I have a different view. I think every local authority should have a local plan. To be perfectly honest, I cannot understand why a local authority would not want a local plan, given the structure of the national planning policy framework. I think that is an obligation. The Minister and I disagree. He is entitled to his view and I am entitled to mine.
Sir Andrew Stunell:
Does the right hon. Gentleman acknowledge that when the NPPF was introduced, it was discovered that only about a quarter of local authorities actually had a statutory plan, despite the requirement
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to have one? What did the Labour Government do in 13 years to ensure that local authorities complied with what he now asserts to be vital and necessary?
Hilary Benn: With respect to the right hon. Gentleman, the coalition cannot have it both ways. The Minister says we took a top-down approach and told people what to do, but the right hon. Gentleman says the very opposite. The fact is—
Hilary Benn: The right hon. Gentleman should bear with me. The NPPF has changed things. I support its basic structure, but the changes I would make would be, first, to ensure that local authorities calculate their housing need on a similar basis and, secondly, to strengthen the brownfield policy, which, whether the right hon. Gentleman wants to argue about it or not, was weakened in the final version of the NPPF. That is the difference. I will give way to the right hon. Gentleman again, but why does he think that any local authority should not have a local plan? Does he agree with what I am arguing?
Sir Andrew Stunell: I am asking the right hon. Gentleman whether the criticism he is levelling at the coalition Government for failing to achieve what he sets out also applies to him and his Government, who failed to achieve it in 13 years. This Government believed—my right hon. Friend the Secretary of State and I certainly did—that it was right for local authorities to proceed at their own pace. We provided a carrot, not a stick.
Hilary Benn: No one is arguing about the pace, because the time it will take local authorities to come up with a local plan will differ. I think most of us agree—although clearly not everyone does—that every local authority ought to have a plan. If they do not, are they taking responsibility for their local community? On that, we have a different view.
We will give new powers to local authorities to create housing growth areas and new homes corporations, so that they can assemble land and work with builders—small and large—construction firms and self-builders to get more homes built.
Rushanara Ali (Bethnal Green and Bow) (Lab): Does my right hon. Friend agree that the Mayor of London is undermining the social housing target by watering it down and making it an aspiration? In contrast, our policy is to set private developers a target on social housing and intermediate development of between 25% and 40%. Surely the Mayor of London is undermining any attempt to deal with the housing shortage, leading, frankly, to the social cleansing of people who cannot afford to buy houses that are worth hundreds of thousands of pounds.
Hilary Benn: My hon. Friend is absolutely right. As we have heard in this debate, the problem is most acute in London. The consequences of not building sufficient affordable homes are being felt in many ways, such as in the number of people who are privately renting, in higher rents that people cannot afford and in the housing benefit bill. Ultimately, it is a self-defeating approach.
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One problem is that the process of house building has been far too passive for local authorities in many parts of the country. They identify the land and then hope that someone will come along with a proposal. The Lyons review is about creating the means—the tools—for local authorities. I bet Ministers wish that they had applied their minds and come up with a report like the Lyons review.
Brandon Lewis: Will the right hon. Gentleman at least acknowledge that as a result of trusting local people with local and neighbourhood plans, a record number of some 250,000 homes were given planning approval last year, which is way beyond what Labour was achieving? Why does he not just trust local people like we do?
Hilary Benn: As the hon. Gentleman is well aware, I am a strong supporter of neighbourhood planning, and I have said so from this Dispatch Box on many occasions. He will just have to wait until his Government manage to complete more homes in one year than we managed in any one of our 13 years before he stands up and says, “Our record is better than yours”, because his record is much worse than ours.
Brandon Lewis: I appreciate the right hon. Gentleman being so generous with his time. To be fair, Labour finished off with 85,000 homes in its last year—the lowest level since 1923—and we have delivered some 500,000 homes in the last few years, so he really should think again.
Hilary Benn: The hon. Gentleman is, of course, referring to the consequences of a global recession. [Hon. Members: “Ah!”] Well, it was a global recession. The Secretary of State made specific promises about what the Government were going to do and they have comprehensively failed.
The Lyons review says to communities, “In return for taking responsibility for building the homes that you need, we will give you the powers that you need when you identify sites.” I have listened to debates in this House in which Members, particularly Government Members, have said, “We don’t understand it. We’ve identified sites, but the developers come along and say, ‘I don’t fancy building there. It’s not viable for me. I’m going to put in a planning application for that greenfield site over there.’” Up and down the country, that is happening. It is a great frustration for local authorities and citizens, because if they identify sites, the deal in return has to be that that is where the development will take place. If we are just dependent on the big house builders, we will never get to the figures that we need and it will undermine the public consent that, we all agree, is fundamental to making progress on house building.
We must say to local authorities, “Here’s a range of tools that you can use to ensure that the kind of homes you want get built in the places you have identified and go to the people who need them.” That is why the one other thing that we will do is to give local authorities a planning power to say that in housing growth areas a percentage of the new homes that are built for sale should, in the first instance, be reserved for local first-time buyers. If we do that, we will turn quite a few nimbys into yimbys, because they will realise that their son or
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daughter, or their neighbour’s son or daughter, will have the chance to get one of those houses.
If we are to get to the target that we have set of 200,000 homes a year by 2020—I say to Ministers that surely their experience over the past four years has taught them that we will not do it by trying to put a bit more petrol into the old house building engine and cranking it up—there has to be a fundamental change in the way the house building market works.
Let me turn to economic evolution and growth. I acknowledge what the Secretary of State has done with deals for some cities—it would be churlish not to—but there is an unanswered question: if he and the Government are so committed to devolution, why has progress been so slow, patchy and piecemeal? Manchester aside, why have such limited powers been offered to a small number of large cities. Why, as the Local Government Chronicle put it yesterday, has DCLG
“almost seemed peripheral, a bystander to the devolution debate”?
Why has Lord Kerslake, now free from the responsibilities of office, said—again in the Local Government Chronicle—that
“it was only well into its fourth year that the government woke up to the benefits of devolution”?
I suspect there is plenty more where that came from. Why has the right hon. Gentleman stepped aside while the Chancellor and Deputy Prime Minister have had a row about whether powers can be devolved and whether we need a metro mayor? Perhaps he is not actually in charge of the policy.
What about the great counties of England? Until the Chancellor got up on Wednesday and finally adopted Labour’s policy on 100% retention of business rate income growth, which he said he would apply to Cambridge and Greater Manchester, the counties of England had frankly been ignored. The Secretary of State will be only too well aware of how angry his colleagues in the counties have been at his failure to stand up for them. It was noticeable last year that at the meeting of the County Councils Network—the great annual gathering of county councils—not a single DCLG Commons Minister could manage to clear their diaries to turn up to address what was mainly their party colleagues.
It is not a very long journey to Marlow—about an hour in the ministerial car—and I think the real reason is what happened to the Secretary of State the previous year at the 2013 conference. LocalGov.co.uk reported it thus:
“Mr Pickles received a hostile reception at the conference…During questions, the Tory leader of Leicestershire, CC Nick Rushton, asked the secretary of state: ‘Why are you always so rude to us?—
I am sure the Secretary of State remembers that well—
“It’s about time you spoke up for us in Government.’”
I sympathise with the Secretary of State because with friends like that who needs us on the Opposition Benches? It is the unfairness that makes people angry. The truth is that his Conservative colleagues in the counties know that they will get a better deal from a Labour Government than they have got from the Tory Government, and the same is true for the city regions.
Robert Neill:
In what ways does the right hon. Gentleman intend to alter the operation of the formula grant to address sparsity in rural areas? How will he deal with adult social care, which it seems his Government want
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to nationalise and which is one of the principal cost pressures on top-tier authorities such as councils? How will that help the county council?
Hilary Benn: I will come on to that very point in just a moment if the hon. Gentleman is willing to be patient. He will have seen what Councillors Keith Wakefield and Peter Box have said about the new Leeds city region deal. Peter Box described it as “disappointing”, which I would call one of the kinder comments. What has really got up the noses of the existing combined authorities is that Labour’s offer of 100% retention of business rate income growth has been made to Manchester and Cambridge but not to the other existing combined authorities. Why is that?
For all the Government’s rhetoric about the “northern powerhouse”—now running a close second to “long-term economic plan”—the truth is that the most deprived parts of the country have faced the biggest cuts in local authority funding. Yes, Labour will change the formula because what the Government have done is unjustifiable. There is nothing empowering about taking a load away and then giving a little less back.
Gregory Barker: The right hon. Gentleman says that Labour will change the formula. Will he spend more money, in which case where will that money come from, and if he is not going to spend more money, who will lose out?
Hilary Benn: We have made it clear that we will have a fairer allocation from within using funding that is there at the moment. The right hon. Gentleman’s problem is that he cannot justify what the Government have done, and therefore applying more fairness so that everybody has to make a contribution is the right thing to do.
The National Audit Office and others have said there is not much evidence that the new homes bonus encourages house building that would not have taken place anyway. It is top-sliced from revenue support grant and tends in the main to be taken from the more deprived communities with the greatest needs and to go to communities that are less deprived with fewer needs. We will phase that out and redistribute the money back to local authorities on a fairer basis. Government is about making choices. We will devolve £30 billion of economic powers from existing money for county and city regions.
Iain Stewart (Milton Keynes South) (Con): Will the right hon. Gentleman give way?
Hilary Benn: I have been very generous in giving way, but I am going to bring my remarks to a close.
We will devolve that money so that local authorities, coming together, have powers over skills, business and employment support, housing and bus regulation. We have talked about London today. If bus regulation, the ability to control routes and fares, is good enough for London—and it is—why is it not good enough for the whole of England? That is something we will do.
The truth is that the Secretary of State has devolved in one other respect: he has passed responsibility for taking difficult decisions down to the areas with the greatest needs. As we know, the 10 most deprived local authorities have seen their council spending reduced by 16 times more than the 10 least deprived. He has taken most from the communities that can least afford it.
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I asked the right hon. Gentleman at the beginning of this week about the real impact on social care for elderly people—I said I would come to this—of the decisions he has made, or, to be more precise, as a result of his failure to stand up for local government and social care. He tried to pretend that the fact that there are 220,000 fewer elderly people now getting a hot meal a day, which is what research demonstrates, had nothing to do with him. He even tried to blame the councils, but it is everything to do with the way he has unfairly applied the cuts to local government. If, as he claims, it has been fair to all, north and south, how can he explain cuts to social care being deepest in the councils he has hit the hardest as the result of the decisions he has made? That is what NAO analysis confirms. Everyone knows the answer to that question is that he has taken most from those who have least. Worse is to come. The Office for Budget Responsibility says we will see
“a much sharper squeeze on real spending in 2016-17 and 2017-18 than anything over the past five years.”
Those cuts would be extreme and irresponsible, and have a big impact, including on social care. The Health Secretary takes all the stick for the problems in the NHS, but the Communities Secretary is fanning the flames.
We need a different approach. Local communities and local government are crying out for a different approach. Times are tough, but there is no justification for applying the cuts to local government in such a fundamentally unfair way. There is no justification for taking decisions that mean elderly people in one part of the country are less likely to get social care or a hot meal a day because they live in an authority that has been penalised by the right hon. Gentleman. There is no reason why local communities and the people they elect should not be given the powers and the tools to build homes for their children and their grandchildren. There is no reason at all why all the city and county regions of England—all of them—should not get the economic powers to help them to build their own strong local economies, invest in skills, build homes and create jobs for the future. All those things are possible, but it will take a change of Government to make them happen.
Mr Deputy Speaker (Mr Lindsay Hoyle): I remind Members that speeches should be up to, or around, 10 minutes long.
10.33 am
Gregory Barker (Bexhill and Battle) (Con):
On Wednesday, the Chancellor delivered a Budget for a country on the rise: cutting income tax, helping savers, starting to reduce our debt and investing across the UK to secure a better future for all our constituents. Despite the Opposition being as much in denial about the growth now surging through our country as they were about the chaos and damage they wreaked in the economy while they were in government, Wednesday’s Budget shows that the Conservatives’ long-term economic plan is working. With the deficit down, growth up, jobs up, living standards rising at last and debt starting to fall as a share of the economy, we are seeing the success that people have worked very hard for in the past five years. Against the odds and the Opposition, Britain is walking tall again, meaning more financial security and peace of
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mind for our families. In less than 50 days, we face a choice between sticking to the economic plan that is delivering for Britain or returning to the chaos of the past. With this Budget, I am certain that, when it comes to it, Britain will choose the future, not the past.
It is particularly extraordinary that despite the difficult decisions the Government have had to take on spending over the past four years and the cuts we have had to make to fix Labour’s deficit, there has been genuine investment in infrastructure up and down the country, including in my constituency. Ironically, there was a pledge for investment in transport infrastructure for 13 years under Labour, but we did not see a penny of it. Having made that promise during the 2001 election campaign, immediately the election was over it scrapped the Hastings bypass and then spent 10 years failing to come up with any workable alternative, but now, in a matter of months, the Hastings and Bexhill link road will open in my constituency, thanks entirely to investment in our local economy under this coalition Government that will create jobs, relieve traffic congestion and create the 21st-century infrastructure that an area such as east Sussex needs. This is just a small example of how the Government are investing for the future while making the tough financial choices to get us back on the path to recovery.
The Bexhill link road is not the only example. The A21 to the north of my constituency is one of the worst roads in Britain, with very little dual carriageway, despite being the main link from Hastings—one of the most deprived towns on the south coast—up to the M25. Now we are seeing a long-term plan for road improvements, and we can already see the dualling taking place at Tonbridge and Pembury. Furthermore, it is not just the roads being improved; we now have the very real prospect of Bexhill gaining high-speed rail, potentially delivering a service to St Pancras in 78 minutes, allowing us to take advantage of High Speed 1 to Ashford. This is extraordinary.
It is a tribute to the Government that theirs has not been a knee-jerk reaction to the shameless funnelling of funding and investment to just one part of the country that we saw for 13 years under Labour. We are actually seeing a balanced recovery. We have seen genuine equity and fairness in the allocation of national resources to where they are needed, where there is genuine demand and where they can be best put to use. We are seeing a truly national investment plan, as part of the long-term economic plan, and a truly national recovery.
One of the things I am proudest of the Government for is the long-overdue vision for a northern powerhouse. For that, we have to pay tribute to the Chancellor, because he owns it more than anyone else and has done more than anyone to articulate it and make it a reality. Before being elected in Sussex, I fought a seat in Greater Manchester, in Eccles, Salford. I am a southerner and I do not claim to know the north well, but it gave me a glimpse, back in 1997, of just how far the north was lagging behind the rest of the country and of the urgent need not just for new infrastructure but for a new vision. It is ironic that it had to wait for a new Conservative Government, after 13 years of Labour, to come up with a compelling vision for the 21st century, to create not another pool of subsidy—not unsustainable subsidy-fuelled
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growth—but a vision for a new global powerhouse and city in the north, with equal weight to London. That is the other encouraging thing about the overall economic picture emerging from the rubble of Labour’s great recession. We are seeing a more balanced Britain and a more balanced economy, and one with increased confidence, not just in London.
Sir Andrew Stunell: Given that my right hon. Friend has mentioned the word “balance”, I thought I would point out that it was not an exclusively Conservative move to ensure that the north of England received the priority it needed.
Gregory Barker: I readily accept that and should have mentioned it; I think it is a success of this Liberal Democrat-Conservative coalition. When the history of the coalition and this Parliament is written, it will acknowledge that two parties, the Liberal Democrats and the Conservatives—with slightly different outlooks and with a different set of policies—came together in the national interest to fix the disaster they inherited from the Labour party. For all the squabbles we occasionally read about in the press, which are blown out of all proportion, history will judge this to have been a period of extremely stable, successful, grown-up government between two parties that have made a real success of coalition. That is to the credit of everyone who has served in and supported this Government.
Another statistic that came out of the Budget is equally remarkable. On Treasury forecasts, we now expect the UK to emerge as the largest economy in Europe and to overtake the manufacturing powerhouse of Germany within 15 years. It is extraordinary that we not only have that ambition, but are on a trajectory to achieve it if we stick with our long-term economic plan. What underpins this is not any single item of fiscal policy, but the overall package that is helping to unlock, encourage and drive forward our single greatest asset—the new and emerging sense of aspiration, enterprise and creativity, a sense of can-do and ambition.
In businesses up and down the country, I have seen many young people prepared to take a risk and try something new, and people being prepared to start their own business. That is why, having come through this difficult economic period, we are seeing record numbers of business start-ups. It is this spirit of enterprise that will drive us forward in the 21st century—not some old-style, return-to-the-70s economic centralisation that is the “back to the future” dogma of the most left-wing Opposition we have seen for 30 years.
It is no surprise that the expert taken from the City by the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) to help with rescuing the banks, who was hailed as being a sign of how in-touch Labour was with the markets and was seen as the architect of the banks’ rescue has actually resigned the Labour Whip. Lord Myners no longer sits on the Labour Benches in the House of Lords; he moved to the Cross Benches because of the left-wing surge on the Labour Front Bench. It would be a travesty and a danger if Labour were to be put back in control of the nation’s finances and our future. We need to stick to our long-term economic plan.
Another example of us investing for the future while taking difficult decisions on spending is that of science. Despite the cuts made, the Government have been able
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to ring-fence and support science because they recognise it as a core driver of economic growth. That is an indication of our confidence about Britain’s future in the world and a recognition of the UK’s ability to transform its leading science base into new products, services and markets. There is a genuine case for public sector and private sector collaboration there as in so many other sectors.
This plan is not ideological; it is pragmatic and based on the economic realities of the 21st century. I saw that in the energy sector and the creation of the world’s first green investment bank. I saw it give rise to a surge in investment in the world’s largest offshore wind programme. Across the board, we are seeing unprecedented investment in new sectors, new enterprise and new businesses. It leaves me thinking that although I am not standing for Parliament at the next election, if we can re-elect a Conservative Government, this country will indeed have a bright and prosperous future ahead of it.
10.44 am
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab): It is a pleasure to follow the right hon. Member for Bexhill and Battle (Gregory Barker), particularly since he referred to the most left-wing Opposition the country has seen for years. I am afraid that my remarks may not have as much credibility in that regard as he hopes. The one thing his speech has confirmed is that the subject under discussion is a Conservative pre-election Budget. When he made his tentative references to the northern powerhouse even the sun hid behind the moon, and we know that when it re-emerges the Liberal Democrats will take the credit for it and say that that is what they achieved for us, by working with others.
The Chancellor made it very clear—although he did not emphasise the point—that he is raising money in this year’s Budget and he is doing the same again next year. The substantial spending comes in 2018-19 and beyond—in the future. It is unreasonable to criticise a man for being lucky, but the Chancellor has enjoyed good fortune: inflation is falling; the oil price is coming down—no doubt the Liberal Democrats want to take credit for that as well, but such things are largely outside the control of individual Governments—and he is the beneficiary of the one-off receipts of the Northern Rock and Bradford & Bingley mortgages and the Lloyds bank share sell-off.
The Chancellor’s strategy, however, relies on achieving a further £25 billion-worth of public expenditure cuts. In fairness to the Secretary of State for Communities and Local Government, he has made the point that he cannot do the same thing over again in his Department. Three Departments have a measure of protection: Education, Health and International Development, leaving the burden to fall on the rest. Given the significance of what is proposed, we should have more detail before us. We know that at least £12 billion is to come out of the Department for Work and Pensions budget—and almost certainly out of the working-age component of the budget. Since much of this is demand-led, that seems to me to be quite a difficult thing to do, and the Chancellor should have set out to the House exactly how he intends to do it.
In his 2014 conference speech the Chancellor pledged a freeze in working-age benefits up to 2017, saving £3 billion. There is more to be found. He has indicated
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changes to jobseeker’s allowance and housing benefit and, in that context, the words “change” and “reform” must mean “less”. It is worth reflecting on what other proposals there might be as part of the £12 billion in working age benefit cuts. For example, there is the restriction of child benefit to the first two children. Of course the devil is in the detail. If that turns out to be unachievable, the alternative—if the Government are to have a chance to stick to their long-term plan—will be to look at indirect taxation or at the budgets of the three exempted Departments, such as Health.
The Conservatives have form on indirect taxation. Before the 1979 election they specifically denied they would double VAT. I remind the House, however, that they moved it from 8% to 15%—thus did they keep their pledge. Towards the end of John Major’s Government, the right hon. and learned Member for Rushcliffe (Mr Clarke) abolished zero-rating for fuel bills, bringing them permanently into the lower VAT band. Before the last general election the Conservatives had no plans to raise VAT, but managed to come up with some immediately after the election.
In earlier decades Conservative Chancellors would treat us to a Budget-day lecture on the money supply without mentioning quantitative easing or the over-optimistic use of leverage in the financial services sector, including the unregulated shadow banking sector. The Chancellor did not mention these things earlier, either. We, as a House—this ought not to be a party political point—need to focus on the work of the Governor of the Bank of England as regulator of the financial services sector and on the Governor’s work in foreseeing potential future shocks to the financial system.
The Chancellor did make one reference to this in the Budget speech, wedged between a section on inflation and a section on farmers’ tax returns. He confirmed the remits of the Monetary Policy Committee and the Financial Policy Committee. There is no new architecture between those committees and the House of Commons, but I think there should be. Accountability and transparency would be powerful weapons in ensuring that those serious issues are being taken seriously. The Chancellor made much of the employment figures, although the tightening of the labour market is not evenly spread throughout the United Kingdom. Unemployment is still an issue for the north-east of England.
I would like to have had some analysis from the Government Front Benchers about the mismatch between the employment figures and the productivity outcomes. The Office for Budget Responsibility described the UK’s “productivity puzzle” as the biggest risk to the United Kingdom’s economic health. The Chancellor is banking on increased tax revenues to help fulfil his Budget forecasts. Low productivity is holding down pay rises, and we are in the fifth year of public sector pay restraint. So there seems to be a contradiction, unless there is an as yet unspoken plan to increase indirect taxation. No doubt, if the Conservatives win and plough on with their long-term plan, they will think about that after the general election.
Unemployment remains an issue for the north-east of England. I welcome the Chancellor’s new-found interest in regional policy, but we in the north-east are not his northern powerhouse—that is Manchester and Leeds; we are his northern outhouse. It is not as if the Chancellor is averse to talking about far-away places in his Budget
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speeches—last year it was Mars; this year it was Agincourt, so perhaps next year it could be Tyne and Wear and Teesside.
I really would welcome the Chancellor’s taking an interest in the north-east of England. The tragedy is that the political parties do not really disagree about what we need to do. We need to grow, strengthen and deepen the private sector base of the region’s economy.
Mr Anderson: Does my right hon. Friend agree that one of the first things the Government did when they came in was to abolish the regional development agency, which had transformed the north-east after decades of deprivation and deindustrialisation? We were moving forward in a positive, united way, in partnership. It was a cynical, clinical move by the Government to get rid of the regional development agency, and it has been detrimental to the north-east.
Mr Brown: My hon. Friend is absolutely right. The abolition of the development agency was the largest single blow dealt to economic development in the north-east of England. The Government did it quickly. Governments make most of their mistakes in their first six months. Certainly, on economic development in the north-east of England, this Government did make most of their mistakes in their first six months.
As I said, the tragedy is that we do not disagree about what needs to be done. Resources need to be focused, and the work needs to be led in an authoritative, clear-sighted way. The coalition’s structural changes do not deliver for the north-east of England. Abolishing the RDA was a big step backwards, and the local enterprise partnership is not working for us—it has not even had a chief executive for the past year. If the North East local enterprise partnership had achieved anything, surely the Secretary of State would have told us about it, but he did not have anything to say about it. When I intervened to give him a chance to tell us about it, he still did not have anything to say, apart from generalisations. The money spent over the past five years on regional economic development in the north-east is less than it was for one year under the previous Labour Government’s arrangements.
There is a further regional danger: the unprotected budgets that are lined up for public expenditure cuts disproportionately hit local councils in the north-east. Separately, there have been at least two attempts to redistribute within the budgets that the Chancellor has protected. There are proposals to take £230 million out of the north-east’s health budget and redistribute the money to wealthier parts of the country.
The Chancellor said that we are all in it together. However, on the cost of living, job opportunities, local government budgets and a workable economic development strategy, it does not feel that way in the north-east of England.
10.54 am
Mr Tim Yeo (South Suffolk) (Con):
It is a particular pleasure to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown). I remember a happy period at the end of the previous century when I debated
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with him—he was Minister of Agriculture, Fisheries and Food for three years—probably more often than I have ever debated with anyone.
The right hon. Member for Leeds Central (Hilary Benn), who led for the Opposition, expressed concern about the frequency with which the long-term economic plan and the northern powerhouse have been mentioned, but I am going to disappoint him. I must declare an interest; I want to draw attention to my entry in the Register of Members’ Financial Interests, which includes a new role at the university of Sheffield, which is a key part of the northern powerhouse, and whose research will contribute greatly to the implementation of the long-term economic plan. I also draw attention to my interests in the energy and transport industries.
This is definitely the last time I will speak in this House, as we are only 10 days away from Dissolution. I trust, therefore, that if I make a speech that is extraordinarily supportive of the Government, no one can suggest that it is an attempt to get a job. The Whip may record the voluptuous praise that I heap on the Chancellor and his colleagues, but it is entirely disinterested. It is really what I believe—just as if the Pope got up and said that he did not believe in God any more.
The plaudits that have been showered on the Chancellor are fully deserved. Under his stewardship, the economy has moved from disaster to triumph. The long-term economic plan and the northern powerhouse are essential for our future success, just as they were essential to put right the ghastly mess we inherited in 2010.
One reason I got interested in politics many years ago was that, in the 1970s, Britain was going through an appalling economic period, and as a business person travelling abroad I was embarrassed to say where I came from because we had become a laughing stock. That was all reversed in the 11 years of Margaret Thatcher’s Government, but she and her Chancellors would have given their right arms for economic statistics like ours: the fastest growth, record employment, record low inflation, and a recovery that is balanced throughout the regions. Those goals were only partially attained under Margaret Thatcher’s Government. All credit goes to this Government and this Chancellor for sticking with the long-term economic plan when it was under fire, not just from the Opposition but from a great many other critics.
In the 21st century, there are three essential pillars for any economy that wants to play in the premier league: first, a world-class infrastructure; secondly, top-class education; and thirdly, a tax and regulation system that is supportive of business. Judged by those three criteria, the Budget is a big move in the right direction. Transport in particular is an essential component of a modern economy, and Britain has been let down for many years by an out-of-date, 20th-century transport system, with congested roads, a failing railway and inadequate airports. I am a terrific supporter of High Speed 2, which is essential for the development of the north. If people cannot get somewhere, they will not invest there, jobs will not be created and the area will suffer a relative decline, so we need High Speed 2.
I am particularly delighted by the northern transport strategy. It is a wholly welcome development and another potentially transformational policy. It will be terrific to be able to get from Sheffield to Manchester in half an hour. One only needs to consider China to see how far
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our rail system has fallen behind what can be achieved. Last time I was there, just before Christmas, I took a train from Beijing to Wuhan. I was standing up, drinking coffee, talking on my mobile without holding on to any support. I rang a constituent and said, “The indicator says 320 km per hour”—that is 200 mph. We have made improvements, but even on High Speed 1, which does not go quite as fast as the Chinese trains, people need to hold on as they ricochet from side to side. The future is available to us, but we have got to grasp it quickly. I urge the Government to press on as fast as possible with the northern transport strategy.
I want to make a plea about airports. We urgently need an early decision on Heathrow. Without more connections to the great cities of the Asian economies, which will be a key part of the 21st century, we are going to struggle to develop the opportunities in those markets, which are essential to the success of our long-term economic plan.
I have strong—perhaps impeccable—green credentials, and I advocate investment in transport because a modern transport system can help to reduce emissions from the transport sector. Less congested roads and skies are better for the environment, in that they can lead to lower emissions. A continued modal shift from road to rail is also very beneficial, and we need that for freight as well as for passengers.
Equally important is a modern IT infrastructure. Let me now enter a plea on behalf of my constituents, who have shown such wisdom over the past seven elections by returning me to this House with comfortable majorities—I have confidence that they will elect my excellent successor, James Cartlidge, with an equally comfortable majority. My plea is that, before the end of the next Parliament, high-speed broadband should finally reach those parts of Suffolk that are still denied access to this absolutely essential business tool.
The second pillar is education. I strongly welcome the extra support for universities, which has been announced several times by the Chancellor in recent statements. The UK’s higher education system is a jewel in our crown. I welcome the support announced in the autumn statement for the Henry Royce institute, of which the university of Sheffield is a beneficiary, and the further support announced on Wednesday for the midlands. In particular, I welcome the energy research accelerator, which will contribute to another very important area in which Britain has, potentially, a big lead. Perhaps that programme could include Sheffield, which is almost in the midlands.
The direct link between that support for universities and science, under the leadership of my right hon. Friend the Member for Havant (Mr Willetts) who is about to catch your eye, Mr Deputy Speaker, and the performance of the economy is clear. The resurgence of manufacturing in the UK is now well under way. We were a world leader in manufacturing in the 19th century. We could be a world leader in advanced manufacturing, with high value-added jobs, in the 21st century, and we are already on our way to that.
Education is also about schools. I hope that the next Parliament will ensure that the schools budget is protected. Of course I understand why we protect the budgets for health, international development and defence, all of which are important candidates, but none of them is central to the economy in the way that education is, and
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the education budget is the one that, above all, needs our protection. I am a particular fan of free schools, and the Stour Valley community college in my constituency is an outstanding first-wave example of a free school. I was pleased to have the opportunity to fight for its establishment, and I urge the Government to press on with the expansion of those schools.
I shall touch briefly on the third pillar. A sympathetic corporation tax regime does exist in this country and must be maintained. Regulations have also been improved, but the big issue that we have not yet tackled is the planning system, which inhibits all kinds of development. To achieve economic prosperity, we need to streamline our planning system. I urge my hon. Friends in the next Government to make that a top priority. The often hidden but enormous cost of planning delays handicaps British business: it makes us less competitive, raises consumer prices and obstructs enterprise. That problem is particularly acute for infrastructure projects and we really must tackle that obstacle.
Finally, let me touch briefly on energy policy. The Budget announced support for tidal lagoons. I warmly welcome Britain’s leadership in researching and encouraging a variety of low-carbon technologies, including several marine energy technologies in which we are world leaders. I pay tribute to the work that is being done and I celebrate the huge expansion of investment in low-carbon electricity generation that has been achieved under this Government.
Gregory Barker: Very quickly, on the point about green issues, may I point out to my hon. Friend in case he missed it—I am sure that he did not—something that was buried at the back of the Budget, which was the announcement of marine-protected areas in Pitcairn? This is the largest ever marine conservation programme embarked on by any Government—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The right hon. Gentleman has made one speech; I do not need another one. Interventions must be short, and I am sure that Mr Yeo is coming to the end of his speech, as he has just gone past the 10 minute-mark.
Mr Yeo: I am indeed coming to the end of my speech. I am afraid that I had missed that detail in the Budget, so I am glad that my right hon. Friend mentioned it.
We must be mindful of the costs of low-carbon technologies. Some of them, such as solar, are within sight of needing no subsidy at all. Let us facilitate their expansion, and not obstruct it through the planning system.
Onshore wind potentially offers good value for money, and in some areas it is acceptable. I am concerned that we may turn our backs on a good value for money technology altogether. Onshore wind will always be cheaper than offshore wind. Although local concerns must always be respected, indeed paramount, we should not block its deployment in those places where it is acceptable. It is right to pilot lagoons, but we should persist in that process only if we are reasonably sure that the cost will fall, because the initial cost is undeniably extremely high.
While I am talking about energy, let me just mention nuclear power. I hope that, early in the next Parliament, we shall see a conclusion of the tortuous negotiation
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over Hinkley Point. I urge the Government to seek further ways of cutting the cost of new nuclear power stations—possibly by using their own fantastic and well deserved credit rating, which means that they are able to borrow more cheaply than any other borrower in the world—perhaps by funding the cost of construction, which is a great element of the ultimate cost of nuclear power, and then selling the power station on to a private operator for its operational lifetime. We should also consider how using tried and tested technology in nuclear power could help us to cut costs.
This was a magnificent Budget from an outstanding Chancellor and a terrific coalition Government. Anybody who believes that the quality of their lives and the prosperity of their families will be affected by the performance of the economy would be certifiably insane not to vote Conservative on 7 May. If the people of Britain do not recognise the merits of the long-term economic plan and the continuing need for it, then I will sadly conclude that the voters deserve their fate. I am confident that that will not happen, and that, seven weeks today, Britain will wake up to the joyous news that the country has returned a new Conservative Government by a landslide majority.
11.6 am
Mr Steve Reed (Croydon North) (Lab): It is a pleasure to follow the hon. Member for South Suffolk (Mr Yeo), especially as he says it was his valedictory speech. Perhaps I should start by paying tribute to him and his many years of service to this House, the country and his constituents in South Suffolk.
I am afraid that people in Croydon North feel very let down by the Budget because it does next to nothing to tackle any of their problems. On Wednesday, the Chancellor told people that they have never had it so good, but that is not what my constituents have been telling me. On average, working people are £1,600 a year worse off under this Government, and that includes people right across Croydon.
The independent Institute for Fiscal Studies confirms that tax and benefit changes—the huge increase in VAT, for example, which the Government brought in straight after the election, despite promising that they would not do so—have left most families worse off than in 2010. However, the super-wealthy have not felt the effects of such changes, because the Tories took time out from piling the pain on hard-working families to give their millionaire friends a tax cut while heaping up the tax misery on everyone else.
In Croydon North, we are desperately worried about our local NHS services. Croydon gets around 10% less health service funding per head of population than the average, and there is no urgent plan to correct that. As a result, we have a desperate shortage of GPs, which means that people can wait up to three weeks to see a doctor if they fall ill. It has also led to unacceptable waiting times at the local A and E department at Croydon University hospital. Our A and E was one of the many emergency departments across the country that recently declared a major internal crisis, with ambulances queuing up outside and sick patients being left on trolleys in corridors for hours. Quite simply, that is unacceptable, but under this Government the problem has got worse and worse. The
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petition that I launched calling for investment to improve our local health services gathered thousands of signatures within days, but the Budget has done nothing to put the problems right. Tragically, the Tories’ plans for ever more extreme spending cuts in future mean that things will get even worse if the Tories get the chance to continue after the general election.
Croydon has the biggest shortage of school places in the country, and parents were looking to this Budget to help resolve that, but we heard nothing. The Government have spent more than £240 million opening free schools in areas that have no shortage of places, but tell children in Croydon North that there is not enough money to provide the permanent school places that they need. This is simply a case of the Tories putting ideology before common sense, and it is letting down children in my constituency who deserve better.
That has been a big increase in the number of working people in Croydon forced by low pay to claim benefits as a result of this Government’s economic policies. Labour knows that Britain succeeds only when working families succeed, and that is why I support Labour’s plans to increase the minimum wage to £8 an hour, to incentivise employers to pay the living wage, to ban unfair zero-hours contracts, and to offer 25 hours of free child care for three and four-year-olds to help parents get back to work and earn a living. That is what people in Croydon need: a better plan that puts them first, not the Tory dogma of poverty wages and a grinding downward spiral of welfare dependency.
Croydon was hit hard by the riots in 2011. We saw the Prime Minister and the Mayor of London walking around in the days afterwards and promising that they would help to keep people safer, but instead they have closed every single police station in Croydon North and cut the number of police on our streets compared with the number when they were elected. Now, with the Chancellor’s new plans for more severe cuts in the future, police numbers will be cut even harder, putting people at even greater risk from criminals. This is unacceptable. Serious forms of violence in Croydon are rising: violent assault is up, domestic violence is up and rape is up. Surely this is no time to be taking more police off our streets.
The only thing we can say about this Budget is that it makes the choice in May much clearer. That choice is between a Tory plan that has failed working people in Croydon North and Labour’s plan, which will put working families first and save our national health service.
11.11 am
Mr David Willetts (Havant) (Con): It gives me great pleasure to contribute to this debate towards the very end of my time as the Member of Parliament for Havant. It is an opportunity for me to welcome the Budget and to salute the Government’s record in managing the economy, with 2.5% growth this year. It is that record that leads Government Members to feel compelled to describe our long-term economic plan, and I should like to turn to that part of the long-term economic plan that the shadow Secretary of State failed to acknowledge.
Emily Thornberry: I am so disappointed in the right hon. Gentleman for using such a empty phrase. Of all the Members who are leaving, we will regret his loss as he is an intelligent man and can explain himself much better than in these rather silly Tory buzz phrases.
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Mr Willetts: I am touched by the hon. Lady’s intervention. Let me try to explain to her the part of the long-term economic plan that I think is relevant to the comments made by the shadow Secretary of State. When the original fiscal strategy was set out, which included the forecast for economic growth set out by the OBR, the Chancellor made it clear that if growth was not as great as forecast by the OBR, he would accept that tax revenues would regrettably be less and the fall in public spending might not be as great—because of what are called the automatic stabilisers. Those automatic stabilisers were explicitly part of the plan from the beginning and, because of them, we have ended up borrowing rather more than was forecast initially. In other words, what the Opposition criticise as somehow a failure of the plan was always part of the plan. There was always a recognition that it would need that flexibility and if they are really saying that we should have cut even more or raised taxes even more as a result of the economy performing less well in the early years than had been forecast by the OBR because of the crisis in the eurozone, that would have been bad for the economy. I am grateful for this opportunity to explain a key feature of the plan.
I draw the House’s attention to my entry in the Register of Members’ Financial Interests, and I want to focus on two or three aspects of the Budget. I particularly welcome the imaginative package on savings. The Help to Buy ISA is an excellent innovation. I like the new flexibilities through which savers can put money into an ISA and temporarily withdraw it. It reminds me of the work that I did in the long days of opposition on what we called a lifetime savings account. It was intended to have the flexibility of people being able to put money in and take it out because it recognised the paradox that if people know that they can take their savings out of a savings instrument, they might be willing to save more in the first place. It is like the paradox that the device in the car that enables us to drive faster is the brake—when we know that we can brake we are willing to drive faster and when we know that we can take money out we might be willing to put more in.
Alongside those measures is the extra revenue generated by restricting the lifetime allowance for pension savings to £1 million. That presents the Opposition with a dilemma, because of course it was one of the measures that they announced would help fund their policy on higher education. I would be very interested to hear from the Opposition spokesman, the hon. Member for Liverpool, Wavertree (Luciana Berger), when she winds up what the Labour party envisages as the future of that much-derided commitment on university finance. Let us be clear what we are talking about. If Labour reduces fees to £6,000, that must be financed by an increase in the public expenditure going to universities. That is of no direct benefit to students, and the most that universities might hope for is some compensation for the loss of the income from fees. The beneficiaries are solely affluent graduates in middle age who will find themselves completing the process of paying loans back rather earlier.
When I heard the shadow Secretary of State speaking so passionately about housing and the importance of investing in it, I wondered what it said about Labour’s priorities. If Labour had £5 billion or £10 billion to spend, why on earth did it decide that its priority was affluent middle-aged graduates rather than, for example,
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a further package on housing? Many members of the shadow Cabinet must be frustrated by the bizarre priorities reflected in that judgment.
Gavin Shuker: The right hon. Gentleman makes his case clearly and in a statesmanlike manner, but I was in this House when he was taking through the legislation on fees. There were 91 speakers over those two days. I did not have the opportunity to speak but I was one of only about 10 Members of Parliament who knew what it was like to graduate with a large amount of student debt. I can tell him that it is paralysing and that it puts people off going to university.
Mr Willetts: Fortunately, the evidence is that the number of people applying for university is at a record level and that the proportion of people from disadvantaged backgrounds applying for university under the excellent stewardship of my successor, my right hon. Friend the Minister for Universities, Science and Cities, who I see on the Front Bench, has just hit another record. It looks as though those anxieties were misplaced, thank heavens.
Investment in higher education is part of a wider theme in the Budget. I welcome the proposals to invest in our young people in other ways. We have a fantastic record of falling youth unemployment and we have yet further investment in infrastructure. One of the best ways in which we can protect the interests of future generations is by leaving them with better kit and capital investment than we found.
As the debate was opened by the Secretary of State for Communities and Local Government, I must say that one of my long-standing Whitehall battles was a belief that the fragmented structure of local authority pension schemes in this country is an obstacle to long-term investment in infrastructure and in venture capital. It is frustrating that we have such a substantial amount of money going into funded pension schemes but, as they are in a multiplicity of small schemes, they cannot aggregate their investment and take the risks that would allow them to invest in substantial venture capital or long-term infrastructure. That is work in progress and more needs to be done.
While I am refighting old battles, let me also say how much I welcome the reference in the Budget Red Book to investment in rural broadband including via satellite. The current situation has never ceased to baffle me. I went to see the launch of a satellite as part of a European Space Agency project from Guiana that was going to deliver broadband services to areas of Africa that could not necessarily get conventional mobile phone coverage. It would be perfectly possible for us to guarantee 100% broadband cover for all parts of Great Britain if we were willing to use satellites to supplement conventional delivery of those services.
Let me end with praise for the Chancellor’s innovations in science and technology. We have established a happy tradition of bold new announcements on science and technology in Budgets and autumn statements. I welcome the ingenuity that has enabled a further £30 million to be invested in the excellent Crick institute.
I particularly welcome the new freedoms for research institutes, which is a response to a real competitive challenge. My hon. Friend the Member for South Suffolk (Mr Yeo) mentioned that. Let us be clear what form the competition takes. If a Nobel prize is awarded to a
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scientist in the UK, the Singaporeans will be absolutely clear that he or she will be able to earn a multiple of their current salary if they go to Singapore, and other competitors will make the same offer. An offer will be made to build a completely new facility of whatever sort they want. Their entire research team will be offered double their salary if they move lock, stock and barrel. It is very important that we are able to compete with such offers.
I think of our record of nuclear R and D. When major American universities recruit for expertise in nuclear R and D, they come calling in the UK. We need to be able to respond to that, and the current regime of salary and other constraints makes that harder. The new freedoms represent an excellent opportunity for us to compete globally in science.
Finally, I welcome the bold measures to support 5G communication. We had a great lead on mobile phone technologies. We lost it, I have to tell Opposition Members, because Labour’s auction of 3G licences was too successful. It extracted too much money from the industry. We have managed to catch up to some extent in 4G. We have a real opportunity to be world leaders in 5G. I support that, and it will in turn make other technological advances, such as the internet of things, possible.
All in all, this is a Budget for the future, a Budget for future generations, and it is a great pleasure for me, in one of my last speeches in this House, to be able to support it.
11.22 am
Gavin Shuker (Luton South) (Lab/Co-op): I do not know whether the right hon. Member for Havant (Mr Willetts) is taking the opportunity of making a valedictory speech next Thursday.
Gavin Shuker: He is. Good. In that case, I need not offer any further praise other than that which many Government Members expressed when he sat down.
Mr Deputy Speaker, as you know, for the rest of us, life goes on. I am a diligent young man, as you know, so I have done my due diligence in tidying up my office and preparing for disillusionment. [Laugher.] Not so Freudian. I very much hope and expect to return after the enforced recess, which I am sure will give lots of people lots of pleasure.
However, in the process of clearing out my office I came across an incredibly rare document—something which I suspect many people do not have in their office any more—a copy of the 2010 Budget Red Book. That sound of shredding that you heard across Whitehall in recent years has been a series of Red Books being firmly thrown away. I raise the subject with reference to this Budget debate because that volume contains hugely interesting analysis.
In the Budget 2010 Red Book, on the page marked “Responsibility: deficit reduction”, the OBR set out what would happen
“without further action to tackle the deficit”.
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It predicted what would happen if the Tory-Lib Dem austerity Budget was not implemented. It predicted that in five years’ time—in other words, in the financial year that we are just coming into—public sector net borrowing would remain at 4% of gross domestic product, having been at or above 5% in six consecutive years. It predicted that the structural deficit today would be at 2.8% of GDP, with the structural current deficit at 1.6%, and that debt would be rising, in the year that we are currently in, to 74.4% of GDP, with annual debt repayments of £67 billion.
We are forced to ask ourselves a question: at the end of this Parliament, after five years of Tories and Lib Dems in control, what happened next? Well, the stark analysis is that the Chancellor’s actions were worse than doing nothing. They talked down the economy for political ends and then threw what was at that point a growing economy into neutral for three years. Our public finances have performed worse than if the emergency Tory-Lib Dem Budget of 2010 had never happened.
This year’s Budget was meant to be the reward. It was meant to be the election-setting Budget. After four years of Tory pain, this was meant to be the sunny uplands—the debt starting to be paid off, the deficit ended. But the Government failed—by their own standards, not mine but those that they laid out in this book. It is the slowest recovery for 200 years. And it is to be followed after the election, should the Tories be back in power, with a slashing twice as big as that of any previous year, or any year in this Parliament.
So where are we? Public sector net borrowing is forecast to be 5%—not 4%—in 2014-15 and 4% next year. In fact, that is the same level forecast by the OBR if no action had been taken in that emergency Budget. The structural deficit is forecast to be 4.2%—not 2.8%—in 2014-15. The structural current budget deficit is running at 2.5%—not the 1.6% predicted. That is not just the same as inaction; it is worse. The public debt is still rising this year. It is claimed that it will drop in the next year, as we know, but we know that is because of some cleverly timed asset sales. We will see what happens next year. The public debt is forecast to hit 80.4% this year—five whole percentage points higher than it would have been if no action had been taken.
On all these measures—on borrowing, on the structural deficit, on the structural current deficit, on the debt—this Tory-Lib Dem austerity programme has undermined their own plans and our public finances. While we are talking about the debt, let us not forget that this Government have borrowed more than every previous Labour Administration put together. They have doubled the debt and it is still rising today. The Government have borrowed more in just over three years than the last Labour Government borrowed in 13 years, so we will take no lectures from them on the public debt and deficit.
Let me tackle this head-on. The Secretary of State for Communities and Local Government and the right hon. Member for Havant made a case for what should be done. The Secretary of State’s response was deeply telling when he was challenged on the fact that the Government had only halved the deficit rather than eradicated it, as was their original plan. He said that Labour Members were conflicted or confused—that our saying that the deficit should be lower was a sign that we were pushing for deeper, further and harder
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cuts. That is so telling because it points to the fact that to this Administration, everything is a nail and all they have is a hammer. But growth is a three-legged stool as are the public finances, despite the Government’s ideology. It is not just cuts but growth. There were three lost years before the inevitable rebound—admittedly aided by lower borrowing costs owing to a lack of demand in the eurozone and aided by a low oil price, which the Chancellor, by the way, has had nothing to do with despite the fact that he has tried to claim the credit for it—and the slowest recovery in 200 years.
Living standards matter. The Government failed, at the start of this Parliament, to see living standards as a central issue, with effects on tax receipts, job security and in-work benefits. The Chancellor spent an hour on Wednesday telling us that we have never had it so good. That does not reflect real people’s experiences of this economy, of their job security, of their children’s future, and the additional prices that they are paying for this Government’s failure.
There you have it, Mr Deputy Speaker. All this pain, all this hardship, paid for not on the backs of those with the broadest shoulders, who have received significant tax cuts, but on the backs of the poor. Families hammered; debt doubled and debt rising; growth years behind; and the deficit only halfway there, with deep pain to come. We are still borrowing £90 billion a year. For all the noise, for all the bluster and for all the words exchanged over the Dispatch Boxes in five Budget statements and five autumn statements, ordinary people are taking the pain. Unbelievably, this has been worse than doing nothing. That is the great Tory tragedy, not their triumph. Wednesday’s speech should be known for the hubris that it displayed.
11.29 am
Mr David Heath (Somerton and Frome) (LD): I think that I can confidently predict that this will be the last Friday morning sitting to which I will contribute. It is a great pleasure to follow the hon. Member for Luton South (Gavin Shuker), who is proving the exception to the unhappy feeling that this is a special Budget debate, organised for elderly Members of Parliament not seeking re-election.
With any Budget, there is almost a parallel with the Hippocratic oath, which I swore so many years ago, or particularly the gloss to it, which is “primum non nocere”—“first, do no harm.” The first principle of any Budget is that it should not actually make things worse. By common consensus—I include the shadow Chancellor—this Budget certainly does no harm, but I would say that it actually does an awful lot of good. I shall refer to some of the things that leapt out of the pages of the statement that I believe to be substantial contributions to the benefit of the country.
On the continuing changes to the pension system, I think that history will suggest that my right hon. Friend the Minister for Pensions is one of the highest-achieving Ministers in this Government, because he has transformed public policy on pensions and done so to the good. I am particularly pleased to see the finance for mental health—so often the forgotten service—advocated by my right hon. Friend the Minister of State, Department of Health, and others, because that is a missing component of the national health service.
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I am pleased to see the investment in science, so ably advocated by the right hon. Member for Havant (Mr Willetts), when he was in office, continuing through the election and, I hope, into the next Government. I share his pleasure at the announcement of additional investment in broadband, although I have to say that, in Witham Friary in Somerset, I will believe it when I see it, because we have been waiting a long time for broadband to arrive in any meaningful sense of the word. [Interruption.] And here is the Minister for Culture and the Digital Economy—the man himself—who will deliver that commitment in the next few days.
I am pleased from a parochial point of view to see the additional announcement of infrastructure development in the south-west. We have been a long time waiting for major projects to be done in the west country. Now they are being delivered after many, many years, and I feel that I can retire from the House at least having achieved something happening on the A303, as that has been one of my most devout intentions over the years. I am pleased to see an additional freeze on fuel duty. That has a huge effect on people in rural areas who depend on their cars not for pleasure but because cars are the only way to get about. I am pleased to see something I advocated when I was farming Minister: the averaging of farming profits over five years, which will make a big difference and help a lot of farmers who suffer from inevitable fluctuations in their fortunes year by year.
Of course I welcome the reduction in cider duty. I am rather a cliché, I am afraid: if no one else will speak up for cider drinkers and cider makers in my constituency, it has to be me. The 2% reduction in duty is, of course, enormously welcome, but I am still worried about the EU ruling on the exemption of small producers. I hope that the Treasury is taking that very seriously indeed and will find a way around it.
Of all the measures in the Budget, the increase in the tax threshold to £11,000 is beyond even what my colleagues and I promised at the last election. This is a serious change in tax policy, delivered over five years, reducing the rate of tax for 27 million of our fellow citizens and taking nearly 4 million people out of tax altogether. What a superb achievement from a coalition Government.
When I look at the overall background to the past five years, I believe that the measures taken have been crucial in taking us back from the brink of potential economic disaster, which we faced in 2010. I echo what the right hon. Member for Havant said: we have imposed rigour. Goodness, we have imposed rigour! Anyone who has sat through Cabinet Sub-Committees where they have been quizzed on their departmental spending knows the rigour that has been applied to Government spending, but it has been tempered by pragmatism constantly. When the eurozone collapsed, yes, the Chancellor recognised that this would affect the country’s revenue and trade and adapted the plans accordingly. Even last year’s autumn statement has been revised in this Budget to take account of reality. Even as late as yesterday, we discovered that orchestras now include brass bands, and as a former flugelhorn player for the Burnham-on-Sea and Highbridge town band, I am very happy about that.
The result of all this is a transformation in the country’s economic circumstances. It is all very well for people to say, “Well, it’s not quite as fast as we would have wished.” No, it is not, but I remember the 1980s when I had 17% unemployment in Frome. I now have a
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constituency that has statistically full employment: there is less than 1% unemployment in my constituency. That is a fantastic achievement, and it is down to the common sense and hard work of the Government in which I was privileged to play a small part.
I have three concerns, which I want to express briefly, as I have the opportunity to do so. First, I very much welcome what the Chief Secretary said yesterday about further measures to deal with tax avoidance. All Governments say that they will deal with tax avoidance. All Governments try to factor in substantial receipts from dealing with avoidance and evasion. Very few of them actually achieve the results that they say they will achieve, so I hope that the next Government will redouble even the substantial effort that has been made. One of the things that I want the Government to look at is the role of the accountancy profession and auditors. It beggar’s belief in my view that the big accountancy firms, which are paid an enormous amount of money to provide audited accounts, never seem to notice what the individuals and companies that they are auditing are doing with their money to prevent themselves from paying tax. So how about holding the accountants to account in the execution of their professional duties?
Secondly, our difficulty in achieving the £30 billion fiscal consolidation, which all parties in the House are signed up to, is that by protecting 50% of departmental spending the entire load is put on the remaining 50%. I know how difficult it was in the Department in which I was a Minister to achieve that. My concern here is that we are getting to the point where the resilience of Departments, particularly those that have to respond to emergencies and even those where the baseline may be fine, will be stretched beyond breaking point. That must be reflected in the measures that are taken.
The last point that I want to make is that we often talk about inequality. Some people suggest that inequality is increasing, whereas the statistics actually show that it is not. The inequality between rich and poor has marginally decreased. It has moved in the right direction, not fast enough in my view, but it has moved. There is a different inequality: the inequality between generations; the inequality between young people growing up now and finding their way into the job market and the elderly and the baby boomers who have had a pretty good time of it. That needs to be addressed by the next Government. That inequality is just as corrosive as that between the rich and the poor or anyone else. I hope that future Budgets will address that issue.
It has been a great privilege to have had the opportunity to speak in this debate and so many others over previous years, and I look forward to doing so for at least another four days yet.
11.39 am
Nick Smith (Blaenau Gwent) (Lab): It is a pleasure to follow the right hon. Member for Somerton and Frome (Mr Heath), with whom I once spent an interesting and good week in a minibus in Nigeria, where we were supporting democracy with the Westminster Foundation for Democracy.
The Chancellor thinks we have never had it so good, but we in Blaenau Gwent know that is a long way from the truth. The only local growth we have seen under the
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Tories has been in food banks, payday loans and charity shops. More than 900,000 people used food banks last year nationwide. In my constituency, the payday loan company Wonga loaned more than £l million in my borough in just one year. Our valley towns have become run down, and there is no sign yet of that trend reversing. My constituents do not need empty claims that things are getting better; Blaenau Gwent needs jobs.
In recent years there have been some fantastic examples of good projects in the borough to boost our local economy, but the Chancellor does not deserve a shred of credit for the improvements that have occurred where the Tories have failed. Our housing association, Tai Calon, has invested over £100 million after negotiating with local banks to improve the quality of its social housing. Thousands of residents now have better kitchens and improved insulation.
The Welsh Labour Government, backed by European money, have improved, and continue to improve, our transport links. Road and rail are the arteries of any healthy economy. The Heads of the Valleys road improvements will allow commuters to get to the jobs they need and businesses to bring their jobs to Blaenau Gwent. That will also allow access to the Circuit of Wales project. Pleas to get the Conservative Government to back the project have so far fallen on deaf ears. In contrast, the Welsh Labour Government have provided important seedcorn money. Let us hope that the developers can now raise the £300 million needed to bring that venture to Blaenau Gwent.
Although we have not been cash-rich, with the Tories ensuring that their economic recovery passes us by, we are a borough that is rich in culture. Our brass bands and choirs have produced great talents that are still picking up national awards and acclaim to this day. The right hon. Member for Somerton and Frome nods—he knows the brass band world. It is obvious that, when we give our youngsters a culture of success, they produce time and again. The future of Blaenau Gwent is about not only celebrating our beautiful landscape—and we have plenty of that—but ensuring that those young talents are realised. The Circuit of Wales could bring thousands of jobs to the area, which is why we need to produce the work force to match.
The Labour-led council has improved the bricks and mortar of our schools, so now it is up to the professionals to deliver. That is why I am proud of Labour policies such as the jobs guarantee scheme, which will see 18 to 24-year-olds who have been out of a job for a year offered a paid role for six months. That is a massive deal for young people trying to get on to the employment ladder and will make a big difference in places such as Blaenau Gwent, where 16.2% of youngsters are still out of work. The Chancellor’s policies, however, have passed Blaenau Gwent by.
We were the birthplace of the NHS, but the Chancellor found no time to discuss the extreme budget cuts that could put it at risk. Tory tax changes such as the VAT rise have left families poorer than they were when the Government came to power. Working families are worse off while millionaires enjoy tax cuts. The coming election remains a choice between a Tory plan that is failing working families and Labour’s better plan, which will put working families first and save our NHS. We need a Labour Government for a better future.
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11.44 am
Sir John Randall (Uxbridge and South Ruislip) (Con): It is a pleasure to see you in the Chair, Mr Deputy Speaker, and to follow some of my right hon. and hon. Friends, particularly my right hon. Friend the Member for Somerton and Frome (Mr Heath). It is a shame to see another bearded gentleman and rugby fan leave the House—I hope that we will see some more bearded people returned in the next Parliament.
However, I hope that this will not be my final contribution in this House, because I have changed my mind and have an important announcement to make: I have now decided to try to speak in some debates next week. There are a couple of other contributions that I would like to make before taking that Metropolitan line train back to Uxbridge for one last time as an MP. In the words of Betjeman:
“Out into the outskirts’ edges
Where a few surviving hedges
Keep alive our lost Elysium—rural Middlesex again.”
Some of my earliest memories of politics revolve around Budgets and Budget day. I remember the bitter disappointment I felt as a young boy when children’s TV was taken off so that the Budget could be discussed by elderly gentlemen talking about things I did not understand. Well, nothing much changes, except that most of the people discussing the things that I do not really understand are now a lot younger than me. I probably understand the facts a little more, but not much.
I have a particularly long-lasting memory of one Budget. I remember that we were sitting in the family car on a wind-blown, rain-spattered promenade somewhere in north Wales for our spring holiday. My brother Philip was keeping very quiet because my father was getting more and more agitated as he heard the Budget announcements. It was from a Labour Government, of course, and I think they were introducing the selective employment tax. I do not know exactly what it was designed to do, but I should explain for those younger Members that basically it taxed businesses on the number of people they employed. It did not seem to me to be a particularly good way of getting people back into employment. However, I am sure they had a reason.
I think that the fundamental principle behind all these things was best expressed by Mr Micawber in Charles Dickens’s “David Copperfield”: “Annual income twenty pounds, annual expenditure nineteen pounds, nineteen shillings and sixpence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds, ought and six, result misery.”
I am lucky enough to live in the London borough of Hillingdon. It has many delights, but one of the reasons we are so fortunate is that over the past four years we have been run by an excellent, Conservative-led local authority, under the guidance of Councillor Ray Puddifoot. It inherited a dire financial situation. Indeed, I remember that the headline on the Uxbridge Gazette simply read, “Bankrupt”, which the council effectively was. It has managed to turn the situation around, with prudent financial sense, because Ray Puddifoot is an accountant by background—despite what my right hon. Friend the Member for Somerton and Frome said, I think that good accountants have a lot to offer.
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Our council tax has been frozen for the past seven years, or the past nine years for pensioners—obviously that interests me greatly. We have had 17 libraries refurbished, and they now have longer opening hours, three new youth centres and brand new sports facilities, including the first Olympic-sized swimming pool since the war, and all that while having to endure tough settlements from central Government, both Labour and Conservative. I mention that in order to demonstrate that once we balance the books we can really start to provide exactly what our residents, constituents and the people of this country want. That is why I applaud the efforts of my right hon. Friend the Chancellor.
Every Budget has a mass of detail hidden away in the Red Book, which is only provided after the statement. I was interested to read the details about the money that is to be provided to monitor seagulls and the disruption they cause in Bath. I do not know whether that will provide any job opportunities, but if it does I would like to get my application in, as I take a keen interest in gulls.
I also want to mention something that I think is very important—I think that it has been mentioned already—the designation of the Pitcairn marine reserve. It will be the world’s largest marine reserve, encompassing over 830,000 sq km, which is about three times the size of the UK. That is a tribute to many non-governmental organisations and right hon. and hon. Friends, particularly my hon. Friends the Members for Richmond Park (Zac Goldsmith), for Ruislip, Northwood and Pinner (Mr Hurd) and for Newbury (Richard Benyon) and my right hon. Friend the Member for Bexhill and Battle (Gregory Barker), who have worked tirelessly to ensure that the various Departments got that together so that it could be included in the Red Book. I just hope that similar reserves for Ascension Island and the South Sandwich Islands will follow.
I noticed in the Red Book £7.4 million for getting wi-fi into public libraries. These things are not mentioned while we talk about the big issues. There is £3.5 million for protecting vulnerable people from nuisance calls. That will probably not be in time for the telephone canvassing for the coming election, but I hope that at some stage it will save people a lot of inconvenience.
On “talking buses”, I saw that:
“The government will continue to work with the Transport Systems Catapult and industry to develop a solution to ensure bus travel remains accessible to blind and deaf users.”
Disability issues on transport must be tackled. The hon. Member for Hayes and Harlington (John McDonnell) and I have been discussing step-free access into various of our stations and so forth in the London borough of Hillingdon, but also in London. The Government should look at that. If I were a curmudgeonly old soul, which thank goodness I am not, I would say that perhaps some of the money going into HS2 could have gone there instead. But I will not go down that line, as I think there is an opportunity to discuss it in Westminster Hall next week.
If we can get the economy into good shape—and we are going the right way—we can achieve so much as a country. There can be only one solution in the coming weeks, and that is to make sure that the current economic policy is continued. I do not think I need to spell out what is the best way to achieve that.
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11.51 am
Chi Onwurah (Newcastle upon Tyne Central) (Lab): It is an honour to follow the right hon. Member for Uxbridge and South Ruislip (Sir John Randall). I hope that he has many more contributions to make.
Yesterday we were treated to the spectacle of the Chief Secretary to the Treasury delivering an alternative Budget less than 24 hours after the actual Budget, and then promoting it with a yellow Budget box outside the Treasury. Given that in the next Parliament there are likely to be more MPs from the north-east than Liberal Democrats from the entire country, perhaps I should ask your permission, Mr Deputy Speaker, to present a north-east Budget, and then I could parade up and down Whitehall with a black and white Budget box in the colours of the Northumbrian tartan, and of Newcastle United. My hon. Friends from Sunderland and Middlesbrough might object, so it is just as well that I am not seriously considering such a stunt. The Labour party is a one-nation Opposition and will be a one-nation Government for everybody, not just for the few. A Labour Government will recognise how essential it is that all our regions prosper.
The north-east has many economic successes to shout about. We are the only region outside London that has a positive trade balance. Our export surplus is now £2.5 billion a year. One in three cars made in the UK comes out of Nissan in Sunderland, making the north-east the country’s No. 1 car producing region. The Tees valley is home to the UK’s largest integrated chemicals complex, which is the second largest in the European Union. Over 1,400 companies operate in the sector, exporting more than £12 billion of goods a year. More than 70% of the oil and gas platforms operating in the North sea were built in the north-east. We have world-class businesses and world-class institutions, such as our universities. Newcastle university’s achievements in mitochondrial DNA were debated only recently in this Chamber. Of course, we have fantastic people, not to mention our outstanding countryside and culture, and what is perhaps beyond price—a collective identity.
I grew up in Newcastle in the 1960s and ’70s. It was a city and a region that valued engineering and was proud of making and building things. We still lead the way in exports, and we are increasingly becoming a centre for hi-tech and digital businesses. There are few better places to live, work or innovate. However, I am not under any illusion as to the scale of the challenges we face. Unfortunately, we heard little this week in the Budget about how we might face those challenges. As the headline in our excellent local newspaper, The Journal, put it: “What about the North East, George?” The region has suffered a disproportionate level of cuts, and, as a result, has seen its economy shrink by 10% in recent years. The north-east has the highest rate of unemployment in the UK.
It is therefore not surprising that few of my constituents will recognise the unbridled good news that the Chancellor was trying to spin this week. Under this Government, everyday working people in my constituency and across the region are feeling the pain of the longest cost of living crisis in a century. They are £1,800 per year less well-off. Too many people are trapped in low-wage, insecure jobs where they work hard but do not see the benefits of that work. Inequality is continuing to rise. It
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is not good for the north-east or the country as a whole to have a deep and growing divide. A one-nation economy needs an innovative and dynamic north-east.
I know that the region is up for this challenge. In the decade between 1998 and 2008, with the support of the regional development agency, One North East, the region added 67,000 new jobs, many of these in the private sector, and saw growth of 10%. The new combined authority and the local enterprise partnership, working with their partners across the region, can play a crucial part in building a more innovative economy. Since the regional development agency was abolished by this Government, as my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) said earlier, the north-east, unlike London and the devolved nations, has had no collective voice to shout about its strengths and focus on its weaknesses. That is why I was pleased when the combined authority proposals came to fruition last year. However, the authority and local councils need real powers if they are to be able to make a difference.
This week the combined authority told us what some of those powers might be. They include a north-east investment fund made up of a range of current short-term funds combined into one and allocated by the authority as part of a long-term investment plan. We need more regional involvement in how European Union funding is invested. It is a scandal that this Government have allowed much needed EU funding to be lost. We also need the devolution of skills funding, the Work programme, and tourism and culture powers. We heard nothing about that in the Budget, and we heard very little about the future of our regional infrastructure. The combined authority has called for investment in transport networks and the creation of a new body to work on integrated transport delivery across the region for passengers and for freight.
The Chancellor seems to have managed to recognise the existence of the north in as much as he often talks of a northern powerhouse. It does not seem to spread as far as the north-east, but I guess it is a step forward that he can at least say the word “northern” on a regular basis. A real northern powerhouse that included the north-east would have had many of the powers announced in the Budget, or at least a movement in the right direction.
The Government talk about a northern powerhouse at the same time as imposing crippling council funding cuts. Councils are currently being forced to make almost impossible cuts, to a point at which some are questioning whether they can do anything other than deliver the services that they are obliged to deliver by law. Furthermore, the cuts imposed on the northern metropolitan councils have been much greater per head than those imposed on councils in other parts of the country which are, in many instances, represented by Tory Members.
My hon. Friends and I believe that, rather than being simply local delivery vehicles, councils and local and regional structures should have real power: power to bring about the positive changes that our constituents deserve, and power to bring about those changes in areas where they know the need exists. That is why we have said that we will pass an English devolution Act to reverse a century of centralisation. The Act will secure devolution to the people of England’s cities and county regions and transfer £30 billion of funding over five years, thus giving local communities more power to address local priorities and grow their local economies.