The hon. Lady should reflect on the fact that the Office for National Statistics, which began its series on public sector productivity in 1997, has shown that during
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the years of the Labour Government, up to 2010, productivity in that sector remained flat, while productivity in the nearest analogue, the private services sector, rose by nearly 30%. She should reflect on the difference that could have been made to the deficit of historic proportions that her party bequeathed to the coalition.
The hon. Lady talked about the future, and about the contribution that could be made by what she described as back-office efficiencies. We are talking about much more than back-office efficiencies; we are talking about the introduction of very different and improved ways of delivering public services. That can be done, and we have shown that it can be done. The public’s expectations in terms of the quality of public services are, properly, rising; the demand in terms of the quantity of public services is also rising as people—happily—live longer; and the amount of money that is available to support those public services is less, thanks to the deficit that we inherited.
We therefore must do more, and do it better, with less money. We have shown over the last five years that that can be done, and we have also shown that it needs to be done again. There should never be an end to efficiencies. The most efficient organisations in the world always look for further efficiency savings every year, and that is what this Government, under a Conservative leadership, will do in the next Parliament.
Sir Alan Beith (Berwick-upon-Tweed) (LD): Why has the rigorous challenge that the coalition Government have had to make to the way in which money is spent in many Departments not been applied to the criminal justice system? Having a larger prison population than nearly all the other European countries is not necessarily the most cost-effective way of keeping people safe. Will the Minister look at the American states that are trying to reverse that trend in order to spend the taxpayer’s dollar in the way that is most likely to keep the taxpayer safe?
Mr Maude: Let me say to my right hon. Friend, as we both enter our last week in the House of Commons, that, as he knows, the reason our prison population is so large is the rate of reoffending. I know that he will support, as I do, the rehabilitation revolution, led by our right hon. Friend the Lord Chancellor, which is committed to a radical reduction in the rate of reoffending that is the sole reason why our prison population is so much higher than those of comparable countries.
Kelvin Hopkins (Luton North) (Lab): The Treasury’s problems are, above all, about income, not expenditure. There is a gap of £120 billion a year between the tax that should be paid and the tax that is actually paid. However, the Government have presided over tens of thousands of job cuts in Her Majesty’s Revenue and Customs, where senior staff collect 20 times their own salaries and junior staff 10 times theirs. Are the Government not shooting themselves in the foot?
Mr Maude:
The hon. Gentleman is completely mistaken if he believes that there is a direct linear relationship between the number of HMRC officials and the amount of tax that is being collected. There is absolutely no evidence of that. The size of HMRC, in terms of headcount, was falling before the 2010 election, and the
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amount of tax being collected has risen. We can do things differently and we can do things better—we have already shown that that is the case—but if the hon. Gentleman thinks that the only problem with the public finances is that we are not taxing enough and not raising enough taxes, I am afraid that he and I differ. I think that we must cut our costs first, which is what we are doing and will continue to do.
Nick Herbert (Arundel and South Downs) (Con): May I congratulate my right hon. Friend and parliamentary neighbour, who has done a superb job in driving these savings and thereby ensuring front-line services can be protected? He has done a fine job behind the scenes and will be much missed from this place, but I hope he will be able to continue in some way in this important public service. Does he agree that the key part of his statement was that these savings have been achieved as a result of a strong corporate centre—a central drive for efficiency—and is it not the case that that centre will have to be strengthened further if significant additional savings are to be achieved?
Mr Maude: I am grateful for my right hon. Friend’s kind comments, and I also hugely appreciate what he and the right hon. Member for Wentworth and Dearne (John Healey) have done in leading the work of GovernUp, which has made the case very powerfully, as indeed has the Public Accounts Committee, for a strong corporate centre in Government that can drive these sorts of changes. When we examined this, we found that, in almost all cross-government functions, the historical position of the British Government is to have an extraordinarily weak centre. That is part of the reason why it has been proved in the past to be so difficult to drive these sorts of efficiency savings, but we are changing that.
John Healey (Wentworth and Dearne) (Lab): This was a swansong statement, if I may say so, which largely looked backwards rather than forwards. Nevertheless, what the Minister has announced today about stronger central leadership within Whitehall, clearer professional standards right across the Departments and more power to the elbow of the new chief executive of the civil service are welcome on all sides. The right hon. Gentleman over five years has made something of a start in ensuring we get better and more for less, but his statement this afternoon is clearly passing the baton for the next five years to this side of the House and my hon. Friend the Member for Manchester Central (Lucy Powell) on our Front Bench.
Mr Maude: I agree with every part of what the right hon. Gentleman says except the last part, but I am grateful for what he says and the work he has done on this issue. He is a very experienced former Minister himself and he has seen very vividly how we can do these things better. We have made a start but there is much, much more to be done.
Andrew Bridgen (North West Leicestershire) (Con): As my right hon. Friend has stated, public sector productivity flatlined between 1997 and 2010, but what assessment has he made of improvements in civil service productivity since 2010?
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Mr Maude: Productivity has improved dramatically. Like for like, the civil service is 21% smaller, yet I do not think anyone would say the civil service is doing less. It is not; if anything, in some places it is doing more. Productivity has markedly improved and I pay a very warm and genuine tribute to those hundreds of thousands of civil servants who do a fantastic job, often in very difficult circumstances. All of us in this House should be warm in our tribute to them.
Wayne David (Caerphilly) (Lab): I agree with what the Minister has said about extending digitisation in government, but what is he doing to ensure millions of people are not excluded from the process of digitisation?
Mr Maude: That is a very good point. When the now Baroness Lane-Fox reported to me at the very beginning of this Parliament when she introduced the concept, which we warmly adopted, of digital by default—if a service can be delivered online, it should be delivered only online—she made the point, which again we strongly supported, that there must always be an assisted digital option, which ideally can be used to help people who are currently digitally excluded to become full participants in the online world, so, for example, older people can more easily communicate with distant family members. There is a big programme here that we are strongly promoting.
Mrs Anne Main (St Albans) (Con): I am so pleased to hear that we are protecting public services while cutting down the cost of government, but does my right hon. Friend share my concern that we have been prevented from delivering one of the bigger cuts—namely, cutting the number of Members of Parliament by delivering our proposed boundary changes? Does he agree that although the Opposition refer to fairer cuts, they give no indication of what those cuts would be, and that the public therefore cannot trust anything they have to say?
Mr Maude: Aneurin Bevan once said:
“Why look into the crystal ball when you can read the book?”
The last Government did nothing to drive the sort of efficiency savings that we have achieved, so when it comes to making cuts in public spending, we can only fear that they would cut the services, whereas we are cutting the costs, which is the better way to go.
Paul Flynn (Newport West) (Lab): Why has there been no reform of the continuing parliamentary scandals of cash for access to politicians and cash to buy peerages? Why has there been no brake on the revolving door that allows retiring Ministers to prostitute their insider knowledge to the highest bidder, and why are there no controls over lobbyists who are still free to buy influence and privilege in this House? Is not the Minister ashamed that, after his Government have been in office for five years, the reputation of politics remains firmly in the gutter?
Mr Maude:
I cannot imagine a greater contribution to that reputation than the hon. Gentleman going on about it all the time. As he above all people ought to know, most people come into this particular form of public service, known as politics, for high reasons and with high motivation, and they do their job in an
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honourable way. He might just occasionally shrug off that carapace of cynicism and give due credit to the public servants in this House as well as to those outside it.
Richard Benyon (Newbury) (Con): My right hon. Friend can leave the House knowing that he has done an outstanding job in reforming our public services, and it would have been nice to hear a little more humble pie from the hon. Member for Manchester Central (Lucy Powell). On the question of getting better digital coverage across our country, does he agree that the public estate should be made more available for things such as mobile phone masts if we are to have a 21st-century digital economy? What more can be done to encourage the public sector estate to make up for the absence of support from the private sector estate in getting greater digital coverage?
Mr Maude: My hon. Friend makes a really good point, and there is much more that we can do. For example, we will make available public sector Government-owned land and buildings for the siting of mobile phone masts, which will be beneficial in lots of ways. It will provide locations for the masts as well as income for the Government. We have now also published the second iteration of our map of the publicly funded digital infrastructure. This includes the many thousands of miles of fibre that have been paid for by the taxpayer but which are massively underused and under-exploited. If that network can be mobilised to support the roll-out of mobile coverage and rural broadband, it could accelerate the programme to which my hon. Friend and I are both deeply committed.
Duncan Hames (Chippenham) (LD): It is three years to the day since the Minister took up my invitation to visit Ark Data Centres in Corsham with me, and I am delighted to hear that the taxpayer stands to benefit to the tune of £100 million from the Crown hosting joint venture with the company. Does he agree, however, that the benefits of digital services extend much further than that, in that they allow a total redesign of the processes that underpin our public services?
Mr Maude: My hon. Friend is completely right. The digitisation of services is sometimes seen as just a pretty front end on a website, but this goes much deeper. It is about a fundamental redesign of the way in which services are delivered, with the processes being designed and built around the needs of the citizen instead of around the convenience of the Government, which has far too often been the case in the past.
Andrew Stephenson (Pendle) (Con): As this is probably my right hon. Friend’s last statement in the House, may I thank him for the numerous visits he has made to Pendle over the past few years and for recently meeting Training 2000 in the Cabinet Office to discuss its plans to set up a cyber-security institute in my constituency? Will he say more about public service mutuals, the increase in their number under this Government and how they can benefit productivity?
Mr Maude:
I am grateful to my hon. Friend. The public service mutuals programme is important. There are now more than 100 of them, whereas there were
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fewer than 10 when the coalition Government were formed. More than 35,000 members of staff have joined public service mutuals, which are delivering public services to the value of more than £1.5 billion. Most of them choose to be not-for-profit, and have seen an extraordinary improvement in productivity by bringing together: entrepreneurial leadership, of which there is much more in the public sector than is generally thought; staff who are liberated from bureaucratic constraints; hard-edged commercial discipline; and the public service ethos. Those four factors, brought together, are an extraordinarily powerful driver of improved productivity and value.
Mr Andrew Robathan (South Leicestershire) (Con): In my right hon. Friend’s swansong—I commend him for it and for his five years’ work, saving money for the public purse—I wonder whether I might pick up on one specific issue of government efficiency reform, which is the trade unions training fund. It was set up a dozen or so years ago by the previous Government; some £10 million to £12 million was given to trade unions’ training and, lo and behold, £12 million came back as a bung to the Labour party. Will he update the House on what has happened to that?
Mr Maude:
My right hon. Friend should not assume that this is my swansong. Although it is my last week in the House of Commons, I am answering oral questions on Wednesday and I am looking forward to that—[Interruption.] I am looking forward to engaging with the hon. Member for Manchester Central (Lucy Powell) on that occasion. It is very nice to see my right hon. Friend the Chief Secretary to the Treasury here, as he has been my comrade in arms as we have driven forward these efficiency savings over that period. My right hon. Friend the Member for South Leicestershire (Mr Robathan) will know that I made a statement, either last week or the week before, about the reform of trade unions
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within central Government. We have cut the cost of the subsidies to trade unions significantly over that time, bringing into these things a proper sense of proportion.
Mr David Nuttall (Bury North) (Con): I thank my right hon. Friend for his statement and for the work he has done, saving taxpayers billions of pounds. Does he agree that by merging Departments even greater efficiencies and savings could be made?
Mr Maude: I understand what my hon. Friend says. The studies that have been done on machinery of government changes do not always indicate that they pay for themselves, but there are undoubtedly ways in which we can organise government to yield—in addition to what we have already done—significant improvements.
Dr Matthew Offord (Hendon) (Con): I congratulate my right hon. Friend on his statement. Many of us recall my hon. Friend the Member for Cannock Chase (Mr Burley) making his suggestions to the House at the beginning of this Parliament and being vilified by some Opposition Members. May I say how resolutely and quietly the Minister has gone about this work? Not only has he made the savings, but he has taken the civil service with him to improve the public services of this country.
Mr Maude: I am grateful to my hon. Friend. This has been a long process and it is fair to say that the further we have gone, we have discovered a deep appetite for reform and change within the civil service, particularly among its younger members, who often get frustrated. They are the people who complain most about bureaucracy, and they have welcomed the fact that Ministers have taken a real interest in driving out bureaucracy and speeding things up.
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Tobacco Manufacturers’ Producer Responsibility
Motion for leave to bring in a Bill (Standing Order No. 23)
4.59 pm
Paul Burstow (Sutton and Cheam) (LD): I beg to move,
That leave be given to bring in a Bill to require the Secretary of State to undertake a programme of research into the costs and benefits of introducing an annual levy on sales to be paid by tobacco manufacturers, with the proceeds to be used to support tobacco control measures, to discourage young people from starting to smoke tobacco, to help existing tobacco smokers to stop smoking; and for connected purposes.
This Bill is about establishing the principle that the tobacco industry, which has done so much to harm our society, should pay more than it does now to help reduce the harm that it might do in the future. Like the majority of Members in this House, I warmly welcomed the announcement by the Chancellor last autumn—it was in the autumn statement—that he would consider a levy on tobacco manufacturers and importers. I strongly agreed with him that:
“Smoking imposes costs on society and the Government believe that it is therefore fair to ask the tobacco industry to make a greater contribution.”
I welcomed the announcement by the Leader of the Opposition that his party was also committed to such a levy. It is right in principle that the tobacco industry should pay for the damage that its addictive and lethal products cause. The industry is one of the most profitable on earth. The two largest tobacco firms in the UK market, Imperial and Japan Tobacco International, hold around four fifths of the UK market and achieve joint profits of about £1 billion a year. Charging those firms to help clean up the damage their products cause is a rational and justified extension of the “polluter pays” principle to public health policy.
In the United States, the tobacco industry is required, under the Family Smoking Prevention and Tobacco Control Act 2009, to pay an annual “user fee” to the Food and Drug Administration to fund tobacco regulation and wider tobacco control activity. In effect, that fee is independent of the wider US fiscal regime, and the proceeds are controlled directly by the FDA.
As of 31 March 2014, the US Food and Drug Administration had collected $1.88 billion in manufacturer user fees, of which it spent $1.48 billion. About half a billion dollars went on public education, and another half billion went on scientific research projects to support additional FDA regulations on tobacco products.
In the UK, there is a policy parallel in the energy companies obligation, which places a legal requirement on the energy industry to invest in energy efficiency and related measures, especially for poor and vulnerable households. That leads us to a key problem with both the Chancellor’s and the official Opposition’s approach to the levy. The Treasury consultation on the levy, which was announced in the Budget but is still ongoing, does not include any commitments on how the money raised should be spent. Instead, it seems that the levy will be used simply to go to the Exchequer.
If a tobacco levy is introduced, the tobacco industry will have to decide whether to pass on to consumers some, or all, of the cost in higher prices. That would of
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course have some public health benefits, as price increases are known to be the single most effective policy lever in reducing smoking prevalence. However, the potential benefits to public health can be fully realised only if the levy is used to fund tobacco control action, which is designed to increase the rate of quitting tobacco use over and above what might otherwise be expected as a result of price rises.
I strongly believe that at least some of the funds raised should be directed towards actions to reduce the harm caused by tobacco consumption. A research paper by the economist Mr Howard Reed suggests that £500 million could be raised without much difficulty every year from a levy based on sales data. If the programme of research proposed in this Bill were carried out, it would show that the recurring cost of tobacco control activity at every level—local, regional and national—could be met from the proceeds of the levy. Indeed, it is likely to generate a fund sufficient to support these activities as well as assisting deficit reduction.
That would include national action through Public Health England and regional strategy through regional offices and any future regional governance structures, and tobacco control work by local authorities and in the third sector. The funding would cover: stop smoking services, mass media and public education campaigns and research, and efforts to tackle illicit trade at local and regional level. It could also fund new initiatives such as a positive retail licensing scheme to help ensure that retailers do not face any new costs. I also note with interest that the Communities and Local Government Committee has recommended that some levy proceeds be used to help clear up the litter and environmental problems caused by discarded cigarettes.
Local stop smoking services play an essential role in helping people to quit. However, following the transfer of the public health function to local authorities, which I support, those services are vulnerable, because of the financial strains placed on local authorities and the difficult choices that they have to make.
There are already grounds for concern about how many people are being reached by stop smoking services. Indeed, the Health and Social Care Information Centre reported in 2013-14 that the number of people quitting had fallen relative to the previous year. Although stop smoking services are demonstrably highly cost-effective and greatly benefit the whole of society, the direct savings they deliver go mainly to the NHS and not to the local authorities that pay for them. That applies also to local action by trading standards officers and others, for example when it comes to reducing the scale of illicit tobacco trade. The Exchequer benefits financially from that action, not the local authorities.
I draw the House’s attention to NHS England’s “Five-Year Forward View”, published in October of last year. This includes a section entitled, “Getting serious about prevention”, which states:
“The future health of millions of children, the sustainability of the NHS, and the economic prosperity of Britain all now depend on a radical upgrade in prevention and public health.”
Those words will remain simply a pious hope if we do not find new ways of financing public health policy and that would in turn mean that the chances of bridging the £30 billion NHS funding gap identified in the forward view forecast will not be achieved.
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The Bill also proposes that research should be conducted into how the levy could be assessed and collected. I would favour basing it on sales data made public by manufacturers at a local and regional level as well as a national level. That would allow resources to be focused on the areas with the greatest sales and the greatest prevalence rates, better targeting tobacco control in the future.
Like most of us in this House, I was delighted when the former Health Secretary, the right hon. Member for South Cambridgeshire (Mr Lansley), said that he wanted the tobacco industry to have no business in this country. Smoking still causes hundreds of thousands of premature deaths across the UK every year and for every death caused by smoking, 20 smokers suffer from smoking-related disability. That is a terrible toll of death, disease and disability. It is why we must carry on seeking ways to improve public health measures to tackle smoking. A tobacco levy could provide vital funds for that purpose and I am confident that the programme of research proposed in the Bill would show just that. I therefore commend the Bill to the House and hope that Members will support it.
5.6 pm
Philip Davies (Shipley) (Con): I shall speak only briefly. I should say at the start that I do not intend to divide the House, as I know that many people wish to speak in the forthcoming debate, but I could not allow this Bill to stand without any opposition whatsoever. It takes the typical Lib Dem populist approach, trying to attack the tobacco industry without any evidence whatsoever, probably just because the right hon. Member for Sutton and Cheam (Paul Burstow) thinks that he might be able to extract four extra votes from it in his constituency at the general election.
The right hon. Gentleman made big play of wanting the tobacco industry to pay its fair share. I have never met anyone who would disagree with that sentiment, but he failed to mention one thing. I received a briefing note from Action on Smoking and Health—I see that the right hon. Gentleman is putting himself up as the spokesman for ASH, as it is its campaign that he is advocating—and it estimates that the cost of smoking to the NHS is about £2.7 billion a year. That figure comes from ASH, the deadliest opponent of the tobacco industry, yet tobacco excise and VAT already raise about £12 billion a year in revenue according to Her Majesty’s Revenue and Customs. How on earth the right hon. Gentleman has come to the conclusion that the fair share is not being raised from the tobacco industry is beyond me. The industry is clearly paying well above the cost of smoking to the NHS and even if he wants to add on the cost of cleaning up cigarette butts, fires and all the other things that ASH tries to add on, it comes nowhere near £12 billion.
I particularly wanted to oppose the Bill because the right hon. Gentleman has done us all a great service. He has let the cat out of the bag. Of course, the Government have already accepted ASH’s campaigning on banning smoking in cars where there are children, which is completely unenforceable. They have also accepted the plain packaging of tobacco, which is completely idiotic. Of course, the Government accepted those policies because ASH told them that if they did so the amount of smoking in the country would plummet. We were told that if we introduced plain packaging it would be
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absolutely fantastic because all of a sudden cigarettes would not appeal to young people and children and that would close the gateway into tobacco use. The whole policy was based on that premise.
That policy has not even been implemented and already the right hon. Gentleman is saying, “Actually, that was all a load of tripe. It won’t make any difference whatsoever. What we need now is a levy on the tobacco industry so that we can do some research to find out why young people smoke and then try to stop them smoking.” Well, what on earth was the plain packaging campaign about, if not that? I am grateful to him for letting the cat out of the bag by telling us that the whole premise behind plain packaging was a complete load of old codswallop. Unfortunately, the Government idiotically accepted that codswallop in a mindless fashion without even thinking it through, because they, too, are in the pocket of ASH and, rather than making up their own policies based on evidence, just want gleefully to accept anything ASH tells them.
If we want to raise more money from the tobacco industry, there is one great way of doing so: by clamping down on the illicit trade in tobacco, which would raise far more than the right hon. Gentleman’s levy ever would. Yet the Government are pursuing policies, such as plain packaging, that will reduce the amount of revenue from the industry and increase the illicit trade. Why he says that he wants to raise more funds from the tobacco industry but supports measures that will do exactly the reverse is absolutely beyond me.
The point is that this is just the latest campaign from ASH. Every time it advocates the introduction of another measure, it tells us that that is what the Government need to do to tackle tobacco, but as soon as it is implemented we are told that actually it was a load of old cobblers and now we need something else. It is like those companies that tell us their washing powder is absolutely magnificent, only to bring out a new one a couple of years later and tell us that the previous one was actually terrible and that really we need to buy the new one. ASH cannot now hand over the keys to the company car; it has to keep going and justifying its role. It will keep coming up with new, innovative solutions to try to keep its jobs, which no doubt the Government will accept, because they do not have a mind of their own and just have to do what ASH tells them to do.
I just hope that we can start thinking these things through, rather than simply accepting all the nonsense that comes from ASH, the Liberal Democrats and other hon. Members on these subjects. The right hon. Gentleman wants the tobacco industry to pay its fair share. I want the tobacco industry to pay its fair share. It is already raising far more in taxes and duties than it ever cost the NHS, according to ASH’s own figures. If we want to get more money, let us stop the illicit trade, and the best way to do that is not by having a levy, but by getting rid of the ridiculous plain packaging policy.
Question put (Standing Order No. 23) and agreed to.
That Paul Burstow, Kevin Barron, Bob Blackman, Dr Julian Huppert, Alex Cunningham, Martin Horwood, Nick Smith, Sheila Gilmore, Sir Alan Beith, John Robertson and Dr Sarah Wollaston present the Bill.
Paul Burstow accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 27 March, and to be printed (Bill 192).
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Ways and Means
Budget Resolutions and Economic Situation
Amendment of the Law
Debate resumed (Order, 20 March).
That,—
(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide–
(a) for zero-rating or exempting a supply, acquisition or importation;
(b) for refunding an amount of tax;
(c) for any relief, other than a relief that–
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.
5.14 pm
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): It is a pleasure to open the debate, possibly for the last time, and to welcome this final Budget—[Hon. Members: “Hear, hear.”] I knew that I would draw support from different parts of the House, and I am pleased to hear that I draw it from the Opposition Front Bench as well. Last week the Chancellor reiterated the Government’s commitment to our long-term economic plan—even the previous Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), slightly smiled at that one—restoring the public finances and supporting businesses while providing security and stability for Britain’s families.
At the start of this Parliament we inherited an economy that had suffered a greater collapse than almost any other country, with £112 billion wiped off our GDP and 750,000 people losing their jobs, contributing to a welfare bill that had risen by 60% in real terms under the previous Government. Over the past year, however, Britain has grown faster than any other major advanced economy, with the Office for Budget Responsibility’s future growth forecast revised up. Britain has had the best performing labour market in the G7, with employment forecasts revised up too, and unemployment revised down. We are on the path, therefore, from austerity to prosperity. The deficit has been cut in half. The fiscal mandate has been met in the target year. National debt is set to fall in the coming year. A surplus of £7 billion is forecast by the end of the next Parliament. Welfare spending is down in real terms for the first time in 16 years and is below its 2010 level as a share of GDP.
Underpinning this recovery is the remarkable performance of our labour market, with the highest employment rate that Britain has ever seen, at 73.3%. The rise in youth employment in the UK over the year is larger than the rest of Europe combined, and there are now more people in private sector jobs than ever before, more women in work than ever before, more lone parents in work than ever before, more older workers than ever before, more disabled entrepreneurs than ever before,
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and perhaps most importantly, the most households in social housing in work since records began. That is arguably the most important of all the figures.
Wayne David (Caerphilly) (Lab): Will the right hon. Gentleman give way?
Importantly, and contrary to the myths that the Opposition promulgate, of this rise in employment since 2010—I want to make this clear, as I suspect the hon. Gentleman may ask about this—80% is full-time work and 80% is permanent. Three fifths has come from managerial, professional and associate professional jobs, 70% of private sector jobs have been outside London, and two thirds of jobs have gone to UK nationals, reversing the damaging trend under the previous Government when more than half went to foreign nationals.
Wayne David: Will the Secretary of State kindly tell the House how many of those new jobs were on low pay?
Mr Duncan Smith: I think I have just told the House. It is always good to ask another question when I have just answered it. The jobs that we are providing are paid well. We have seen a rise of 2.1% in private sector pay against inflation of 0.3% now, and a rise in public sector pay of 0.7%—somewhat over and above inflation.
So we have seen unemployment fall to pre-recession levels. The number of out of work benefits has fallen to its lowest for a generation, and the number of workless households has fallen to the lowest on record.
Mr Geoffrey Robinson (Coventry North West) (Lab): Precisely on employment at record levels and the other boasts that the right hon. Gentleman has made, why then are national insurance and tax receipts way below budget and employment above budget? Does that not reflect the quality and level of the employment that is being offered—1.8 million zero-hours contracts, for example?
Mr Duncan Smith: I respect the hon. Gentleman and I am glad he asked me that, because it allows me to point out something that I was going to come to later. We have raised the thresholds on taxation. It is not surprising, therefore, that some of the insurance levels are low. I am proud of that. I am proud that my right hon. Friend the Chief Secretary is also proud of the fact that we are raising the point at which people pay tax for the first time. The real reason behind all these facts and any other issues that the hon. Gentleman raises in this regard is the fact that the previous Government saw the economy go over the edge of a cliff, and we have been picking it up ever since. If the question is why it is not perfect yet, the answer is that we still have some way to go, but we are making progress and going in the right direction.
Through this Government’s employment programme we are ensuring a jobs recovery for all. I want to point out some of the figures: 2 million apprenticeship starts since the beginning of this Government; over 1 million claimant commitments signed—as people go in to sign on to jobseeker’s allowance, setting out and reinforcing
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people’s obligations; work experience for 250,000 young people; 60,000 start-up businesses through the new enterprise allowance; and the Work programme helping more long-term unemployed people back into work than any other programme before.
Mr Jim Cunningham (Coventry South) (Lab) rose—
Mr Duncan Smith: I will come back to the hon. Gentleman. I want to make a little progress, as I know that others want to speak.
The Work programme is continually improving. Nearly 1.1 million people have spent time off benefits, 680,000 have got a job, 400,000 have found lasting work, and job outcomes after 12 months are nearly twice as high as with the early cohorts, including the new employment and support allowance claimants. Compared with the previous back-to-work programmes—the flexible new deal, for example—the Work programme has helped more than twice as many people into work in the first two years as the flexible new deal, with nearly three times as many people in jobs for six months. This is not just getting people into work but ensuring that they stay there—that is the critical element.
I will give way to the hon. Member for Coventry South (Mr Cunningham) and then make some progress.
Mr Cunningham: The Secretary of State said that when the present Government took over, the economy was on a knife edge. I remember the previous Conservative Chancellor claiming credit when we were in power for the handling of the economy. More importantly, the Secretary of State has not mentioned the fact that recently the purchasing power of wages has dropped by 6%. Wages might have gone up by 2% in the private sector, but their overall purchasing power has dropped by 6%.
Mr Duncan Smith: I am a little bit lost. I am not sure whether the hon. Gentleman is saying that the previous Prime Minister was claiming credit when he was Chancellor in the previous—[Interruption.] If he is referring to my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), it is difficult for the previous Labour Government to claim credit when their Chief Secretary left a letter on the desk saying, “There’s no money left.” If the hon. Gentleman wants to claim credit for that, I will certainly allow him to intervene.
While the Budget proposed new measures to boost growth and support private sector job creation, in turn increasing employment, the Opposition’s only alternative, the jobs guarantee, it now turns out, is more like a no-jobs guarantee—a make-work scheme that the Institute of Directors has said is
“not the source of sustainable jobs”.
It is the kind of scheme that, for the past 20 years, the OECD has demonstrated is expensive and counter-productive in the long term. It says that large deadweight losses, displacement and substitution effects are of little success in helping unemployed people to get permanent jobs in the open labour market. We got rid of the Opposition’s last scheme, which did not work, and this one will fare no better. Labour’s flagship programme is just a rehash of the failed make-work schemes that seem to be its solution almost every time.
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The hon. Member for Leeds West (Rachel Reeves) made this comment about Jobs Growth Wales:
“I went to see a scheme very similar to this in Wales last week and...that’s what we would aim to do across the UK”.
If that is what she thinks she is going to do, let us deal with what Jobs Growth Wales actually produces. It has been revealed to be an expensive exercise in cherry-picking the best-quality people who want to go back to work. Far from being a guarantee for all, which I understood was her policy, the hardest to help are not eligible for the programme, and only one in three applicants has got a place on it. A success rate of 80%, at a cost of £6,000 per place, is trumpeted, yet that compares with the 90% success rate of all—not some of—the eligible people in Wales who apply, who move off jobseeker’s allowance within nine months anyway. The reality is that this programme, on top of already successful programmes getting people into work, is less successful than the programme that it seeks to replace. Apparently, this is the programme that the Opposition want to copy and turn into a national programme in government, and it is all a rehash of the future jobs fund.
In the public sector, this Government have achieved the same success as the future jobs fund achieved through work experience in the private sector, but—here is the key—at a twentieth of the cost of what it cost Labour to provide jobs in the public sector. That is the problem with this make-work scheme.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op): While the right hon. Gentleman goes on mudslinging about party policies, he is skimming over the fact that what is wrong with our economy and the jobs being created is that over the past five years we have had a terrible deficiency of highly skilled workers. We are still churning out apprentices from short-term apprenticeships of a year, on average. That is not meeting the real need. When is he going to address that? If he does not do so, he will never solve the problem of low productivity.
Mr Duncan Smith: I agree with the hon. Gentleman that that was the situation we inherited. As I said earlier, under this Government there have been 2 million new apprenticeships aimed at getting people the necessary skills. There are also more people going to university and studying science. The reality is that it is not possible to turn around in a few years the problem mentioned by the hon. Gentleman, which followed 13 years of Labour government. We have set in train all of the right measures for the medium and long term to get more skilled people back into work. Before the hon. Gentleman sneers a little too much about people going back to work, I want to say that they are far better off in work and working towards full-time pay than sitting on benefits being depressed and worried.
Mr Duncan Smith: The hon. Gentleman agrees with me. The key point is that we want to get people into work, including skilled work, and for them to develop skills not only while they are in work, but as they come through apprenticeships and university.
I want to return to the make-work scheme, because I have a feeling in my bones that the Opposition are beginning to slide away from it. They have failed to
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answer a number of questions. We have asked them time and again how many private businesses have signed up to the jobs guarantee, but we have never had an answer. We have been told endlessly that there is a lot of interest, but we have never heard any examples.
I heard the shadow Chancellor on, I think, a Radio 4 programme and he seemed rather scared and unusually unable to be coherent. [Interruption.] All right, I will drop the “unusually”. He was unable to list the vast number of private sector companies taking part. When asked how many there were, he seemed to lose his nerve and said:
“But if not, you can do it through the voluntary sector. If not, you have to have a final backstop: a public work scheme.”
The shadow Chancellor has pretty much made it clear that the scheme is going to be about jobs created not in the private sector, but in the public sector. [Interruption.] Oh no, it will not: the right hon. Member for East Ham (Stephen Timms) knows that to be the case. In other words, the Opposition would repeat the mistakes of the past.
I hope that the hon. Member for Leeds West will answer another question we have asked the Opposition time and again: how long will the guarantee last? Back in 2011, we heard about a 12-month guarantee for young people unemployed for one year. By 2013, the proposal had morphed into a six-month guarantee—half the time previously advertised—for those unemployed for two years. Even that is not enough, for as Labour begins to see what a disaster the policy is and the shadow Chancellor begins to wind away from it—there is no interest in it from private sector firms and it has no traction with business—they seem to be beginning to realise that it is not worth all the money they are talking about spending.
I had a look at the Labour website when it launched its tuition fee policy. Interestingly, buried in the relevant document—I would like to say it was in the small print, although the print was pretty small anyway—I found that the scope of the flagship jobs guarantee had been halved again. This announcement was made without fanfare and without anyone taking to the airwaves to tell everybody what a wonderful scheme it was going to be. Labour now proposes “a six-month job”—remember it was for a year originally—
“for any more 18-24 year olds who find themselves claiming Jobseeker’s Allowance for a year”.
It also proposes “a three-month job”—it used to be for six months—
“for the over 25s out of work for two years”,
not one year. In other words, Labour is edging back, killing off its policy bit by bit, and I suspect that eventually it will let it go altogether.
Following a Budget in which the Chancellor once again pledged that no spending commitments would be unfunded, the final and most significant unanswered question—I hope the hon. Lady will answer it, because this is her last opportunity to do so—is: how will the jobs guarantee be paid for? That is a legitimate question, for the Budget punched a hole in Labour’s two proposals with two new measures: the first to levy funding from the banks and the second to restrict pensions tax relief.
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Given that the shadow Work and Pensions Secretary has herself declared that
“we need to make sure that the sums add up”,
it is right that we do the maths, starting with the cost of the jobs guarantee, an estimation of which was done by Treasury officials in January. The cost of the jobs guarantee for 2015-16 is forecast to be £1.54 billion for over-25s and £540 million for under-25s. That is £2 billion in total in one year alone, which is far more than the Labour estimate. Taking the small print of the document we found, even if the figure in it is halved, as the Labour U-turn seems to make clear that it will be, it is more than three times the £300 million a year that Labour says it will cost, at close on £1 billion a year.
When the hon. Lady gets up to speak, I hope that she will explain how Labour will fund the jobs guarantee. If she is going to use the bankers’ bonus tax again, I must tell her that it has been spent 11 times over. Here are the things on which it has been spent: reversing the VAT increase—£12.75 billion; reversing the tax credit savings—£5.8 billion; more housing—£1.2 billion; reversing the child benefit savings—£3.1 billion; more capital spending—£5.8 billion; child care—£800 million; and there are more. The last Chancellor, the right hon. Member for Edinburgh South West, said that he did not think it would be feasible to repeat the one-off bankers’ bonus tax, but the reality is that Labour will repeat it to pay again and again for other things.
Another announcement in the Budget was the excellent decision to reduce the tax-free lifetime allowance. It had already been reduced from the £1.8 million inherited from Labour to £1.25 million, and it will now fall to £1 million. The latest change will save about £600 million a year. Importantly, it will affect only 4% of those approaching retirement. That is in stark contrast to Labour’s proposal to reduce the tax-free annual allowance, which would plunder the pension pots of moderately paid, long-serving public servants such as police officers, teachers, nurses and others. With the Government already taking effective steps to curb the size of the very largest pension pots—my right hon. Friend the Minister for Pensions has been involved in that—Labour’s proposed pension tax relief changes will be left null and void. Despite the fact that Labour has committed the money for the purpose of increasing working and child tax credits and, very recently, to pay for the £3.1 billion cost of lower tuition fees, it will apparently be used only to fund the jobs guarantee. As for Labour’s final funding proposal, restricting pension tax relief for those with incomes of more than £150,000, it would not come in for a further three years.
Barbara Keeley (Worsley and Eccles South) (Lab): Will the Secretary of State give way?
Mr Duncan Smith: Not yet. I will finish this particular point before I move on to the rest of the stuff in the Budget.
In this key area, the Opposition have absolutely no idea what they will do. They do not have the money, they are losing interest in the very policy that they said was at the heart of their policies and the rest has just become smoke and mirrors. It is as simple as that. There we have it: the cobbled-together nonsense of Labour’s jobs guarantee is destined to fail as wholly unfunded. Yet we should not be surprised by that from a party
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which built an entire economy on debt, with policies paid for by more borrowing and higher taxes. Under Labour, Britain accumulated personal debt of a record high, reaching some £1.5 trillion, while the level of household saving fell to a 50-year low.
Mr Ronnie Campbell (Blyth Valley) (Lab): Will the Secretary of State give way?
Barbara Keeley: Will the Secretary of State give way?
This Government are restoring stability in our economy, with no unfunded spending and no extra borrowing; instead, aspiration, responsibility and security will pave the way for a better future. The principle behind the Budget is to restore a Britain built on savings and investment, and that will be done with three new measures. There is a radical, more flexible individual savings account, with the complete freedom to withdraw money from a cash ISA and pay it back later in the year without losing any of the £15,000 tax-free entitlement. There is the brand-new Help to Buy ISA: we are working hand in hand with first-time buyers to help them to save for a home—£3,000 will be provided by the Government for every £12,000 saved—which is an excellent idea. There is a new personal savings allowance, with up to £1,000 interest-free. It will take 17 million taxpayers out of savings tax, not just cutting but abolishing that tax for 95% of people.
On pensions, the Government have already reversed the decade-long decline in pension saving, rolling out automatic enrolment to make saving the norm and introducing the new state pension, while reducing the means test and creating a solid foundation on which to save. We are returning to people who build up their pension pots the freedom to use that money as they see fit. In last year’s Budget, the Chancellor announced radical changes to abolish the prescriptive rules that dictated how and when people could use their pension savings. That means that from April, 320,000 people a year will be able to choose what to do with their pension savings on turning 55. In last week’s Budget, he went further still by allowing 5 million annuity holders to access their existing annuities. He has extended the freedom to give those people greater control over their finances, which is an excellent idea.
Barbara Keeley: One group of people who do not have much chance to accumulate pension pots is unpaid family carers, many of whom have to give up work in order to care. Will he say, at the end of this Parliament, whether he regrets forcing 60,000 unpaid family carers to pay the bedroom tax, meaning that not only can they not acquire pensions, but many of them are having to cut back on food and heating to pay it?
Mr Duncan Smith:
The spare room subsidy policy that we introduced has been assisted by some £380 million that we have given to local government to ensure that anybody in the local community is supported and aided, as necessary. I do not regret that policy. I think it will bring fairness to social housing. Why does the hon. Lady not get up one time and answer this question: does she not feel ashamed about leaving so many people—7 million people—on long waiting lists for
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accommodation? Why does she not apologise for leaving so many people, when Labour left office, in overcrowded—
Mr Duncan Smith: No, she has had her word. Why does she not apologise for leaving so many people in overcrowded accommodation? Labour Members do not apologise for that. The answer is that they have no policy on that. Social house building under the Labour Government fell to the lowest level since the 1920s. She should get up and apologise for that.
Barbara Keeley: I thank the Secretary of State for giving way, eventually. Perhaps he would like to look at the case of the couple in Sefton—the disabled person and her carer—who have fought their case through to the Supreme Court. The Prime Minister was unable to give an answer about that couple. It is not a question of such couples giving up their home or their spare room to anybody else. Carers find those rooms essential. That couple found their room essential. The Prime Minister could not answer. Will the Secretary of State answer?
Mr Duncan Smith: That is exactly the reason why we gave £380 million to local authorities to deal with individual cases. The courts have supported us in this. Again, the hon. Lady did not get up and apologise for the mess Labour left social housing in: overcrowded accommodation, people who could not find the right houses, people on huge waiting lists for accommodation and the lowest level of house building on record since the 1920s. That is the shame of the 13 years of the last Labour Government.
I spoke a moment ago about the pension freedoms that have been provided. The last pension freedom that has been provided by my right hon. Friend the Chancellor is to allow 5 million annuity holders to access their existing annuities. I pay tribute to my right hon. Friend the Minister for Pensions because that was originally his idea. It shows that the coalition is working at all levels.
It pays to save and, through our welfare changes, this Government have ensured that it pays to work. We have undertaken the most significant reforms in living memory, which span not only pensions but job-seeking benefits, disability benefits, child maintenance and more. They have been opposed at every turn by the Opposition. We are delivering a welfare state fit for the 21st century.
Universal credit is rolling out nationally. It is already in 150 areas and is set to be in every jobcentre by this time next year. The earliest claimants are spending more time looking for work, are moving into work quicker, are working more and are earning more than those on jobseeker’s allowance. It will bring economic benefits of up to £35 billion over 10 years, as the Public Accounts Committee agrees.
The benefit cap has ended the something-for-nothing culture. Capped households are 41% more likely to move into work and 12,500 have done so. Housing benefit is capped too. There has been the first real-terms fall in housing benefit spending in a decade and it is set to carry on falling in real terms up to 2020. Our reforms
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are restoring fairness and mean that we are making better use of Britain’s housing stock as we build more houses.
Over this Parliament, the increase in welfare spending has been the lowest since the creation of the welfare state at 0.5% a year compared with the 3.5% increase in Labour’s last Parliament in office. Total welfare spending is below what we inherited in 2010 as a proportion of GDP. In the coming year, out-of-work benefit spending will be back to pre-recession levels. Welfare reforms are set to have saved nearly £50 billion cumulatively, all while departmental baseline spending is down—I say this to the Chief Secretary to the Treasury—by some £2 billion a year. He can say “well done” if he likes. We are doing more, and we are doing more efficiently as a result.
As we come to the end of this Parliament, I am proud of the work we have done with my right hon. and hon. Friends in this House. I pay tribute to some of my previous Ministers, including my right hon. Friends the Members for Epsom and Ewell (Chris Grayling), for Basingstoke (Maria Miller) and for Hemel Hempstead (Mike Penning), and my hon. Friend the Member for Fareham (Mr Hoban), as well as to current Ministers, including the Minister for Employment, who has done brilliantly in her job, and the Minister for Disabled People, who is doing brilliantly in his. I pay particular tribute to an hon. Friend who is unsung and unfairly traduced by the Labour party: my good friend Lord Freud. He has worked tirelessly for two different Governments, determined only on one thing, which is to improve the quality of life for people in Britain. I am also proud of my working relationship and what has been achieved with the Minister for Pensions. We have worked well together and achieved good things, and we have also worked closely with the Chief Secretary to the Treasury on many subjects.
The last five years have often been hard and difficult, but always rewarding. We took a system that was bloated and unfair, and which under the previous Government seemed to penalise those who tried and rewarded those who did not. The last Government left us a system that measured only the amount put in and not the results obtained, and it trapped many in dependence. We took that system and changed it for the better, leaving a positive legacy: the deficit down, unemployment down, youth unemployment down, long-term unemployment down, employment up, private sector work up, working households up, growth up. That is a legacy of which any Government of any stripe should be proud. This Budget is key to that legacy, and I commend it to the House.
5.41 pm
Rachel Reeves (Leeds West) (Lab): I thank the Secretary of State for his valedictory address this afternoon, and I hope that this will be my last speech from the Opposition Benches.
The last five years have been a tragic and terrible waste for working people in this country, and a shocking record of Tory welfare waste at the Department for Work and Pensions. What a wasted opportunity this Budget was to put in place the better plan that we need. People in my constituency—and in every constituency around the country—have been let down yet again.
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People are putting in the hours at work but still falling behind with the rent and the bills; they are desperate to work and earn, but are not getting the support they need to find a job. People who cannot work because they are sick or disabled are forced to turn to food banks because the safety net is being pulled away from them.
The people of our country have been put through five years of hardship by this out-of-touch Government, and they are still waiting to feel the benefits of what has been the weakest recovery in more than 100 years. Five wasted years in which working people have put in the hours, day after day, year after year, only to find themselves £1,600 a year worse off than when the Government took office. Five wasted years in which families have been hit by tax and benefit changes that cost the average household more than £1,100 a year, only to find that the Government have borrowed £200 billion more than they said they would and have totally failed to deliver on their central promise to balance the books. Five wasted years in which people have been told “We are all in this together”, while the Government prioritised tax cuts for millionaires and came back time and again to take money from the poorest. Five wasted years in which a Secretary of State for Work and Pensions has waxed lyrical about his grand scheme for welfare reform, but all he has delivered is delays, backlogs, write-offs and overspends—a record of Tory welfare waste that we cannot stand for another five years.
Let us remind ourselves of the backdrop to this Budget and of the complacent and self-congratulatory speech we have just heard from the Secretary of State. The Chancellor promised in 2010,
“we will bring down the benefits bill.”
Since then we have had five years of cruel and unfair policies: taking money from the pockets of disabled people through the bedroom tax; taking money from working families with restrictions to tax credits; driving hundreds of thousands of people to food banks to feed their families; and increasing the number of children in absolute poverty by 500,000. And yet, at the beginning of this year, the Institute for Fiscal Studies confirmed that
“Real terms benefit spending…is forecast to be almost exactly the same in 2015–16 as it was in 2010–11”.
Why is that, we may ask, after the Government have inflicted so much hardship on so many people who have the least? It is because, the IFS explains, these harsh and unfair policies have been cancelled out by upward pressure on the benefits bill resulting from
“weak wage growth and rising private rents”.
Meanwhile, it says, most of the major structural changes, such as universal credit, have run into problems and are yet to be delivered. This is the reason why, in the past five years, the Government have spent £25 billion more on social security than they said they would in 2010. It is why, yet again, the small print of the Budget reveals another £600 million overspend this year against last year’s forecasts.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op):
My hon. Friend is making some incredibly strong points. On low wage growth, does she agree that we have seen particular challenges in very low paid sectors, such as care? Not only are carers struggling to
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get by on very low wages and struggling with the cost of living, we are seeing the minimum wage being undermined and some companies possibly not even paying it. Allegations have been made this week about MiHomeCare in Penarth in my constituency. The Government are failing to enforce the minimum wage.
Rachel Reeves: We know that still too many people are not even paid the minimum wage, and we know that the number of people paid less than the living wage has increased from 3.4 million to 4.9 million in the past few years. It is also true that we need to do more to ensure the minimum wage is always enforced, which is why we have said we would increase fines for non-payment to £50,000 and why we would give more powers to local authorities to ensure that the minimum wage is always paid.
Mr Robinson: Will my hon. Friend confirm what the Secretary of State failed to confirm? What she has clearly exposed this afternoon, supported by an earlier intervention, is that there have been 1.8 million zero-hours contracts in the past five years. As a consequence, tax and national insurance receipts are, cumulatively, £100 billion below the Government’s own projections. That is at the heart of the problem.
Rachel Reeves: My hon. Friend is right. Income tax and national insurance receipts have fallen short of forecasts by a staggering £97 billion in the life of this Parliament. As he makes clear, too many people are working on zero-hours contracts or in very low-paid jobs where they just cannot make ends meet.
Mr Sheerman: As a fellow Yorkshire Member of Parliament, does my hon. Friend share my anger that despite all this bland talk about the success of the economy and the success of the welfare system when it is actually being destroyed, in my town—and probably in hers—30% of people working are on low wages? It is women and families with children who are being particularly hard hit.
Rachel Reeves: My hon. Friend is right to talk about the experience of people in his Huddersfield constituency. People in Huddersfield, Yorkshire and around the country will, I think, be slightly shocked by the degree of complacency from the Secretary of State today and from the Chancellor last week, when for them and their families things are very often getting harder, not easier.
The Government have failed to control social security spending, as they promised they would, because they have failed to tackle the true causes of rising welfare spending, such as low pay and the lack of affordable housing, and because they have failed to deliver the flagship reforms the Secretary of State made such great claims for five years ago. What a tragic waste of time, talent and taxpayers’ money: wasting the precious time of sick and disabled people forced to wait for months on end for the support they so desperately need; wasting the talents of people who are not getting the help they need to get into work, or who are stuck in low-paid insecure jobs that my hon. Friends have spoken of that do not make the most of their potential; and wasting money on IT systems that do not work, assessment and appeals procedures that have descended into chaos, and
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soaring spending on in-work benefits because of this Government’s failure to build an economy that actually rewards hard work.
Mr Duncan Smith: The hon. Lady talks about what she calls soaring benefit costs. Does she accept that under her Government not only did in-work benefits rise by more than 50%, but housing benefit for those out of work rose by 70%? In other words, both in-work and out-of-work housing benefit claims rose dramatically under her Government.
Rachel Reeves: Under the last two Conservative Governments, unemployment reached 2.5 million. There was a global financial crisis during the period of the last Labour Government, and as a result, unemployment rose, but it has risen even further under this Government, from 1.5 million, when Labour left office, to 1.7 million in February 2012. The OBR’s Budget forecast last week showed a £600 million increase in the forecast for social security spending in just one year, and since 2010, the Government have spent £25 billion more on social security than they set out to spend.
Under the Government, the number of people paid less than the living wage has soared by 44%, while house building has fallen to its lowest levels since the 1920s. It is for those reasons that housing benefit spending—the second-largest area of DWP spending, after pensions—was more than £2 billion higher in 2014-15 than in 2009-10. It was due largely to the rocketing numbers of working people not paid enough to cover their rent. In this Parliament, the Secretary of State has spent £1.8 billion more than he planned on housing benefit for working people and, on current Government forecasts, the cost of working people’s rising reliance on housing benefit to pay their rent will reach £14 billion by the end of the decade, if left unchecked—£488 for every household in the country.
Miss Anne McIntosh (Thirsk and Malton) (Con): I think there is some common ground between us, particularly on zero-hours contracts for women who choose to work part time, but could the hon. Lady not congratulate the Government on regulating part-time zero-hours contracts, especially given that the Office for National Statistics has knocked the figures Labour used? This is often something that working mothers choose.
Rachel Reeves: According to the ONS, the number of zero-hours contracts has increased from 1.4 million to 1.8 million in the last year. This is a huge challenge for working mothers and others. We want to ban the exploitative use of zero-hours contracts so that if someone does regular hours, they will be offered a regular contract and so that their hours cannot be cancelled at the last minute without compensation. If we make those changes, I hope we can stem the increase in the number of zero-hours contracts, giving more people the security of paid work they know will happen week after week.
Barbara Keeley:
I want to give an example from the social care sector to add to that given by my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty). I recently spoke to a constituent working in the care sector whose job decayed over the years after an agency took over the firm she worked for, to the point where, instead of working the 35 to 40 hours a
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week she wanted, she was lucky if she got 20 hours a week, and the agency constantly cancelled at short notice. She could not manage from week to week with that. Sadly that is the care industry these days.
Rachel Reeves: My hon. Friend speaks powerfully about something she knows a lot about. The number of zero-hours contracts in the social care sector, and more widely across the economy, has grown. It is incredibly difficult to plan from week to week if someone does not know how much money they will take home or whether they can afford to pay the rent and bills and put food on the table. That is why more people in work are having to rely on food banks to make ends meet.
I move now to key reforms that have spun out of control under the Government. Universal credit was supposed to cut fraud and make work pay, but after five wasted years of this Government and more than half a billion pounds of taxpayers’ money spent, it is being paid to just 41,000 of the 1 million people who were supposed to be receiving it last April. The National Audit Office has identified a fortress mentality and a “good news” reporting culture in the Department as key factors behind this fiasco. Last summer, the Secretary of State promised an accelerated roll-out plan, but we have yet to see much evidence of it—things could not be going much slower.
The Work programme—another failed programme—was the Government’s belated and inadequate replacement for the future jobs fund they scrapped, but it has failed to tackle long-term unemployment. Indeed, the number of long-term unemployed people has risen by a staggering 49% since 2010. It still sends more people back to sign on at the jobcentre after two years than it places in a job and has made no impact on the disadvantaged and high-risk unemployment faced by over-50s and disabled people. The introduction of personal independence payments has also been a complete and utter shambles, leaving sick and disabled people waiting months on end for support, while total spending has gone over budget by more than £2 billion. The roll-out of employment and support allowance was supposed to deliver big savings by helping more disabled people into work, but just 8% of people on ESA have been helped into work by the Work programme. Furthermore, analysis by the House of Commons Library shows that the Secretary of State has spent £8.6 billion more than he said he would on ESA. What a mess and what a waste—five years of Tory welfare waste we needed this Budget to put an end to.
The Budget was a wasted opportunity. We needed a better plan to make work pay and get social security spending under control, but instead the report of the independent OBR confirmed that all we could expect from the Government in the future was more of the same: more unplanned spending on social security and more failure to deliver promised savings on disability and sickness benefits, with the OBR noting on page 143 that
“projected spending on incapacity benefits, DLA and PIP is up by £0.2 billion a year on average between 2014-15 and 2019-20”;
more failure to deliver promised savings on fraud, with the OBR reporting on page 191 that it had
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“revised down the savings associated with tax credits operational measures. These increase spending by £0.2 billion a year between 2015-16 and 2019-20”;
and more of the “good news” culture on welfare reform, with the OBR noting on page 192 that
“we have noted a history of optimism bias relating to reforms to incapacity benefits, disability benefits and universal credit.”
“Optimism bias” is a polite way of saying that we cannot trust a word the Government say.
In a moment of optimism bias, the Secretary of State promised that 1 million people would be on universal credit by April 2014, but one year on, fewer than 41,000 people are claiming it. In another moment of optimism bias, he promised that universal credit would be on time and on budget, but with delay after delay and millions of pounds written off, everyone knows that it is neither on time nor on budget. In yet another case of the Government’s optimism bias, they promised to back carers but then forced 60,000 households with carers to pay the bedroom tax, as my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) mentioned. Was it not optimism bias that led the Chancellor to promise to reduce the benefit bill, only for the Government to spend £25 billion more on social security than they set out to spend? And perhaps optimism bias is why the Chancellor broke his promise to clear the deficit by the end of this Parliament.
Christopher Pincher (Tamworth) (Con): Is the hon. Lady’s muddled jobs guarantee an example of optimism bias?
Rachel Reeves: Labour’s jobs guarantee would help 150,000 people get into work in the first year of a Labour Government. I am optimistic that we can transform the lives of young people and the long-term unemployed, unlike this Government, who have left them on benefits. Funded by a repeat of the bank bonus tax they abolished and by restricting pensions tax relief to 20% for people earning more than £150,000 a year, our compulsory jobs guarantee will help young people who have been unemployed for a year and older people out of work for two years. Should that not be our priority, rather than tax cuts for bankers?
The Budget also reforms the rules governing pensions and annuities. The Opposition have long called on the Government to sort out the failing pensions and annuities markets, which result in too many hard-working savers finding their retirement pots eroded by excessive fees and poor-value products. So we welcome more freedom for savers to choose how to access their money and plan their retirement. Just as with last year’s announcement, we find the same failure to ensure that savers and pensioners have the support and protection they need to secure a decent and reliable income and to avoid the rip-offs that are already threatening to create another mis-selling crisis.
Just this weekend, we learned that with fewer than two weeks before the reforms announced in last year’s Budget come into effect, there is still no telephone number for the promised advice service, Pension Wise, leaving hundreds of thousands of savers exposed to scams that could have a devastating effect on their retirement plans. Instead, we have the ridiculous spectacle of the Pensions Minister trying to wash his hands of the
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responsibility by warning of the rip-offs that will result—without doing a single thing properly to protect people from those risks.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): Any decisions about annuities are extremely complex decisions to take. Failing to get the advice lines up and running is not just a fault on the part of this Government, it is negligent. It is negligent to allow people this freedom without providing them with any back-up to help them make the right decision. What is more, there is no thought given to the remedies if the decision they take is wrong.
Rachel Reeves: When the Chancellor spoke in the 2014 Budget he said that people would be given “advice”, which was then watered down to “guidance”. Now, with two weeks to go, we know that nobody has received this guidance, yet people will be making irreversible decisions about their retirement income.
This Budget has been more of the same from the same old Tories: more overspends, delays and missed targets on social security; and more big promises for savers and pensioners that are not backed up with the support and the protections we need to make these reforms work.
The Minister for Pensions (Steve Webb): The hon. Lady is concerned, as we are, to make sure that consumers get good value. She has proposed a cap on charges for these new pension products. Presumably, she thinks the cap should come in straight away. What should it be?
Rachel Reeves: We have said that there should be a cap on fees and charges—not just for the annuities products, but for the new drawdown products. We think it should be at the same level as the Government have set out, but then reduced over time. In that way, we will ensure that savers get value for money. Unless we do that, more people will be ripped off. Unfortunately, despite all the Government’s rhetoric, they have not taken action to protect people’s retirement incomes.
What we have heard from the Secretary of State today is the same complacency and self-congratulation. Yes, of course we welcome any fall in unemployment, but it was this Government who allowed unemployment to soar to record levels in the first place, peaking three years ago in February 2012 at 1.7 million. Under this Government, the number of long-term unemployed, abandoned to a life on the dole, has risen by 49%. That is why Labour will have a compulsory jobs guarantee.
Richard Graham (Gloucester) (Con): The hon. Lady made a number of comments about the prices and charges that should be levied on pensions. Will she confirm that the price cap that has been levied on auto- enrolment pensions is, in fact, half that of the amount levied on stakeholder pensions when her Government were in power?
Rachel Reeves:
We introduced a cap on charges for stakeholder pensions and the automatic enrolment brought in policies for which Labour had already legislated. We are proud of automatic enrolment, but we disagree with the changes that this Government introduced, which mean fewer people are benefiting from automatic enrolment
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—1.5 million fewer, two thirds of them women. That is a real lost opportunity to ensure that those people who should be saving are actually saving.
What this Secretary of State and the Government he speaks for simply do not understand is that their failure to make work pay and to deliver a recovery that raises living standards for all is the root cause of their failure to control social security spending and balance the books as they promised. They have spent £25 billion more than they planned and their receipts from income tax and national insurance have, as has been pointed out, fallen short of forecasts by a staggering £97 billion over the life of this Parliament.
It is because of that failure that, in order to deliver his objective of a large surplus in the next Parliament, the Chancellor has now committed to even deeper spending cuts over the next three years than we have seen over the past five years. The Office for Budget Responsibility confirms that these plans will mean
“a much sharper squeeze on real spending in 2016-17 and 2017-18 than anything seen over the past five years”,
“a sharp acceleration in the pace of implied real cuts to day-to-day spending on public services”.
My right hon. Friend the Member for Morley and Outwood (Ed Balls)and my hon. Friend the Member for Nottingham East (Chris Leslie) have highlighted the threat this poses to police, defence and social care. Is it not the truth that the Chancellor’s extreme fiscal plan can be delivered only by putting our NHS at risk or imposing yet another Tory rise in VAT? Although it is hard to see how this Government can make the extra £12 billion-worth of cuts to social security spending when they have failed to deliver any savings in social security so far, these cuts could not be delivered without inflicting unimaginable hardship on low-paid workers, children in poverty, disabled people or carers.
So for this Government, this empty Budget will be a fitting epitaph. What of this Secretary of State who wanted to take his place in history as the compassionate Conservative who reformed welfare? His time is up and his record is clear: major reforms undelivered or descending into costly chaos; food banks in every town and child poverty back on the rise; more and more spending on in-work benefits as more and more working people find their wages do not cover the rent. No wonder the OBR says that the Government are guilty of “optimism bias”.
Mr Jim Cunningham: One important factor in looking at low pay, child poverty and similar issues is that many people’s employment rights are eroded. We need only to look at City Link in Coventry to see that more than 1,000 people could not even get any redundancy pay because of the erosion of employment laws under this Government. That only adds to the poverty.
Rachel Reeves: I thank my hon. Friend for that intervention. Of course, this Government have made it harder for people to access justice, too, through the cuts they have made there.
We have had five years of Tory welfare waste—and it is high time we put it behind us. The Secretary of State wanted universal credit to be his legacy, but it is being paid to less than 4% of those who were supposed to be receiving it a year ago. Instead, this Secretary of State
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will be remembered for the hundreds of thousands of disabled people hit by the bedroom tax; for the 1 million people forced to resort to a food bank to feed their families last year; for the 3 million low-paid working families who have been hit by this Government’s cuts to tax credits. We cannot afford another five years of this Tory Government.
This could have been a Budget to make work pay, with a plan to raise the national minimum wage to £8 an hour and measures to promote and incentivise the living wage. This could have been a Budget for mums and dads who want to work and earn more, with 25 hours a week of free child care for all working parents of three and four-year-olds and guaranteed wrap-around care for those with children at primary school. This could have been a Budget that gave relief to working families on low incomes, by scrapping the ill-conceived and unfair married couples tax allowance and using the money to introduce a 10p starting rate of income tax instead. This could have been a Budget to create more of the productive, well-paid jobs we need by backing entrepreneurs, small businesses and the growth industries of the future, with a cut to business rates, a proper British investment bank, and new powers devolved to every city and county region across the country.
This could have been a Budget to secure our NHS for the future, with a tax on properties worth more than £2 million to pay for the thousands more doctors, nurses, midwives and home care workers that our health service desperately needs. This could have been a Budget that began to right the wrongs of the past five years, by tackling the tax loopholes and reversing the tax giveaways that have benefited a few and by cancelling the cruel and unfair bedroom tax that is hitting disabled people so hard. All that is not just the Budget that this could have been; it is the Labour Budget that we can have and the Labour Budget that we will have if we elect a Labour Government in just 45 days’ time.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Due to the large number of right hon. and hon. Members who wish to speak, there will be a time-limit for all Back-Bench speeches. There will be 10 minutes for the first two Back Benchers and five minutes for each remaining speech thereafter.
6.9 pm
Mr Kenneth Clarke (Rushcliffe) (Con): I congratulate my right hon. Friend the Chancellor, the Chief Secretary and the rest of the Treasury team on the Budget. I also congratulate them, even more emphatically, on the extraordinary record of the last five years which enabled a Budget of this kind to be presented. I think it must be acknowledged that we took over a worse situation in 2010 than any Chancellor had taken over since the war. It was even worse than the winter of discontent in 1979. I have not looked up the debate on that first Budget, but I believe that our present position would then have been beyond the wildest dreams of most Members on either side of the House. That is why this Budget gives us such a firm foundation for making further progress.
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I also congratulate the Treasury team on the type of Budget that we have been given. I am relieved and delighted that it was not a gimmicky Budget, and that we did not see one of those foolish attempts to start buying votes with populist measures. Chancellors who are facing elections are always besieged with requests for them to do unbelievably silly things in the belief that the public will respond by voting for them, but the public are usually far more sensible than most of the journalists and most of the politicians, and have never responded to such measures in the past. Admittedly, both the right hon. Member for Edinburgh South West (Mr Darling) and I eschewed that type of Budget, because we were producing the last Budgets for Governments who on any sensible view were doomed to be defeated at the next election, but we did what has been done on this occasion. It is not a question of the electoral purpose; it is a question of the national interest. A sensible, competent, prudent Budget is in the national interest, and gives us the best opportunity to deliver what we hope to deliver over the next five years.
Sir Edward Leigh (Gainsborough) (Con): In her peroration, the hon. Member for Leeds West (Rachel Reeves) produced a great, long shopping list of things that could have been done in the Budget. “It could have been a Budget” for this, that and the other. Would not the best response to the hon. Lady be “It could have been a Budget to bankrupt Britain if Labour were in charge”?
Mr Clarke: I think that it would. Blatantly going around telling people that their pay will go up and that expenditure will be increased in a number of instantly popular ways, along with Labour’s earlier promises to start ordering companies to reduce the prices of sensitive products in highly volatile markets, is totally irresponsible. I hope that, were the population so foolish as to return a Labour Government in six weeks’ time, their policies would be hastily abandoned when they found themselves confronted with the realities of power.
In basic terms, this is a fiscally neutral Budget, which is plainly what was required. During Budget debates, we used to spend more time discussing the Budget judgment, and on this occasion that judgment was “fiscally neutral”, which I think has been widely applauded. That does not mean that the Budget is devoid of significant measures, including measures that will have a considerable impact on the rest of the human race—the ordinary men and women out there who have ordinary, moderate incomes. I am rather surprised that so little attention has been paid to the wider impact of another rise in personal allowances, which will not only have the welcome effect of taking the very low paid out of tax altogether, but will have a big impact on the great bulk of the population who are receiving perfectly ordinary pay. Some 27 million people will benefit, and average taxpayers will be better off by £900 million a year.
However, so that the Budget could remain fiscally neutral, that easing of the problems of the ordinary population has been balanced and financed by a rather eye-watering increase in the bank levy—which I think is a perfectly sensible way of raising money now that the banks are on their way to recovery—and a further reduction in tax relief on the pension contributions of not the very wealthy, but the better off. They can build up a pension pot of £1 million, which is not to be
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sneezed at; they have secure jobs, are making contributions, and have plans for their retirement. How that measure can be characterised—as the activities of this Government often are—as helping the rich at the expense of the poor and ignoring the demands of the ordinary man, I cannot imagine. It is the banks and the better off whose taxation has been raised, and the ordinary man and woman whose income tax has been lowered. That shows that free-market economics can be combined with a social conscience, which I have always believed is the best guiding principle for the Conservative party when it is running the macro-economic affairs of the country.
There are also further measures—which, again, will not create pleasure among all the rich—to deal with tax avoidance, of which a great deal has been made. On this occasion, they mostly involve corporate tax avoidance. My right hon. Friend the Chancellor has set a very ambitious target for the future—he is aiming to get another £5 billion out of tax avoidance—but he has already introduced a general tax avoidance measure in the Finance Act 2012, which has had an enormous impact on what we can do. We have agreements in the G20 and with Switzerland and Liechtenstein, and it is now impossible to hide money in the way that caused a scandal recently, when it was discovered that in 2007, under the last Government, thousands of British taxpayers were finding it easy to evade tax abroad. That is not favouring the rich. The present Government have done far more to tackle tax avoidance and evasion, and to make the raising of revenue more efficient, than any of their predecessors for 20 years or more, including the Government in which I served. Looking back, I have to concede that.
I do not have time to go into all the other measures that have been introduced, but ending the annuities racket and giving more flexibility to those who are saving for their retirement and their old age, so that they can make more use of their own resources, is a major social reform, on which I congratulate the Government and the Pensions Minister in particular. All that has been taken further in the Budget, together with our drive to help business. That is very important: we have to be pro-business. We are trying to revive the economy through lower corporate taxation and more extension of investment allowances, and by easing the tax burden on North sea oil. This Budget is an extremely responsible package, and it bodes well for the future if we are returned to office.
The debate has been dominated by extraordinary arguments about deficits: the size of deficits in the past, the size of deficits now, and where the deficit will go in future. Most of those arguments are based on strange interpretations of statistics or wild over-reliance on forecasts that are at least five years out, which has reduced the debate to a rather simplistic level. I agree—indeed, it is absolutely fundamental—that tackling the problems of debt and deficit is an essential pre-condition of putting the disasters of 10 years ago, and since, behind us, and paving the way for a modern, competitive economy in future.
Mr Jack Straw (Blackburn) (Ind): Will the right hon. and learned Gentleman give way?
Mr Clarke: No, I will not, because, with great respect to the right hon. Gentleman, it would not be fair to the 30-odd other Members who wish to speak.
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The hon. Member for Leeds West keeps criticising the Chancellor for not succeeding in eliminating the deficit entirely in the last five years. I am very glad that he did not do so. It is the same with all forecasts—[Interruption.] It is not possible to find a Chancellor who has produced forecasts that are three, four or five years out and which resemble what actually happened. It is necessary to take account of what is happening in the real world. Macro-economic policy has to be pragmatic.
I cannot tell what will happen over the next five years, and nor can any Opposition Member. Will China actually have a soft landing? What will happen to the oil market? Is the recovery in the United States really sustainable? Will the eurozone begin to achieve a bit more growth this year and beyond? What about difficult emerging markets like Brazil? The fact is that we are part of a globalised economy—quite apart from the impossibility of forecasting with exactitude what will happen here.
The Chancellor has cut the deficit substantially, and has moved nearer to getting it under control. Had he moved at a faster pace, heaven knows where we would be now, but we would be in a very difficult situation. Actually, I do not know whether the Labour party thinks that he should have moved faster or more slowly, but I am sure that it is not capable of maintaining progress. I hope that we can achieve a surplus in the next Parliament—and so, obviously, does the Chancellor—but that will depend, again, on whether circumstances permit us to do so. In five years’ time, we shall find out where we are.
Meanwhile, having that kind of responsibility is an essential precondition to raising our educational standards and continuing to tackle the skills shortages which always slow up the British economy—we are making great progress with apprenticeships, and we have much further to go. At last we are beginning to see business investment come through, with more confidence and, I hope, improved credit for businesses. That should pave the way for the productivity growth that we desperately require. We need infrastructure investment, which the Government are pressing on with. We need the EU reforms, which the Prime Minister was talking about earlier. If we can complete the single market—if we can extend it to services, if we can have a common energy market, if we can have a common market for the digital economy, if we can have an EU-US trade agreement—all that will reinforce the efforts of the Government to put this country in a much better position than any other to look optimistically to the future.
If we were in the world of traditional politics of 30 or 40 years ago, this Government would be on a walkover in this election, producing figures to die for after taking over a disaster. We still have to rise above the cynical comedy of today’s protest politics. This Budget shows that a competent Conservative Government can finish the job.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order.
6.21 pm
Mr Alistair Darling (Edinburgh South West) (Lab): I continue to admire the humour and chutzpah of the right hon. and learned Member for Rushcliffe (Mr Clarke) in delivering that speech.
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Thank you, Mr Deputy Speaker, for allowing me to make what I am pretty certain will be my last speech in this House; I am very grateful to you for that. I will not follow on from the comments of the right hon. and learned Gentleman, although I will return to some of the points he made, and nor will I follow on from what the Secretary of State for Work and Pensions said, except by saying this: I agree very much with what my hon. Friend the Member for Leeds West (Rachel Reeves) said in relation to annuities. Here we are, days away from people being able to choose what they do with their annuities, yet we hear that we are still to recruit the people who are going to be giving the advice—let alone training them and let alone members of the public being able to access that advice. The only thing the Secretary of State did was lay off some of the blame on to his Liberal Democrat colleague—so when the inevitable inquiry starts as to why these things were mis-sold, we know where the blame will be apportioned.
I draw the House’s attention to my entry in the Register of Members’ Financial Interests, but I want to focus on the Budget as a whole. The most notable thing in the report by the OBR—it has done a very good job over the last five years—is in the second paragraph, where it says that the Budget is not expected to have any material impact on the economy. Call me old-fashioned, but I thought that was what Budgets were for.
The economy was growing in 2010—and it was growing in 2010—because of the measures we put in place in 2008 and 2009 to stop a recession becoming a depression. The Chancellor last week and the Secretary of State today implied that nothing particular had happened at that time, but we came within hours of the banking system collapsing. That is why we were facing such a difficult set of economic circumstances by 2008-09, and it took a Government committed to doing something about it—our Government—to make sure our economy was growing again in 2010. Sadly, what happened after that was that the economy slowed down, to a large extent because of the rhetoric and the fact that the current Government chose to trash what was happening and mendaciously claim we were like Greece, and as a result the Chancellor’s public spending figures are now way off what he planned in 2010.
Mr Straw: Does my right hon. Friend agree that, contrary to the myths peddled on the Government Benches, up until the financial collapse the Conservatives backed our spending plan and our debt levels were significantly lower than those of most other countries, including the US?
Mr Darling: My right hon. Friend is right. Our debt levels were the second highest of the G7 group of economies in 1997, but 10 years later they were the second lowest. On public spending, last week the Chancellor blamed all our woes on our alleged overspending. How was it that the Conservatives were supporting our public spending plans right up until December 2008? As for the Liberal Democrats, they were in a different stratosphere from the rest of us when it came to calling for more public spending.
At the last election five years ago the essential argument between us was whether we could halve the deficit in a five-year period, which was my judgment of what we
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could safely and realistically do. The Chancellor—the shadow Chancellor at that time—said that that was woefully inadequate. But what was woefully inadequate five years ago was announced as a personal triumph last week. He has managed to do what I said we could do, but he somehow says it is a great triumph on his part and something we should be grateful to him for.
Let us look at what the Chancellor has actually done in relation to borrowing. He announced last week that at long last borrowing was on a downward curve. Every Budget he has ever presented shows borrowing on a downward curve. The difference between this Budget in 2015 and the Budget in 2010 is that it is on a downward curve all right, but he is borrowing three times more than he expected to borrow in 2010 because the economy slowed down so badly in 2011-12.
As for debt, we all expected that it would be shown that we were not going to hit the Chancellor’s original target of debt reducing as a share of national income by 2015, and that was what was expected from his autumn statement in December, yet, lo and behold, last week suddenly he was meeting his target, by a minuscule amount—coming from 80.4% to 80.2% of GDP. Why was that? It was not because of some economic miracle. It was because he looked around the Treasury cellars and found assets he could sell, one of them being a thing called Granite, which is an absolute monster of financial alchemy. Northern Rock produced it, into which it fed sub-prime mortgages, and the more sub-prime they became, the more mortgages had to be fed into this thing to keep it going. After five years it is, of course, possible to manage these things and get them to come right, and that is why the debt is coming down—because he is selling off this asset—yet even the OBR says it is highly uncertain whether or not this target will actually be met. So when we look at what the Chancellor said on the causes of where we are now and what he has done over the last five years, I have to say his credibility and track record are not as great as he would have us believe.
On the public expenditure figures of last week, the OBR has described the Chancellor’s spending profile as a rollercoaster. If we want to go on a rollercoaster, we go to Disneyland, not the British economy. Anybody else whose plans had been described as a rollercoaster would have hung their head in shame. What sort of planning can people put in place when they have no idea what is going to be spent? We have the absurd situation where the Ministry of Defence may have to lay off armed services personnel in 2016-17 because of the steep decline in public spending, only to say, “It’s all right. We’ll be able to re-engage you in two years’ time.” How can universities plan for research and development when we have such a steep decrease in public spending now, with the promise of perhaps something in the next few years?
The former Chancellor the right hon. and learned Member for Rushcliffe knows as well as I do that when we look at spending profiles for four or five years, the last two years are pretty doubtful.
Mr Kenneth Clarke indicated assent.
Mr Darling:
The right hon. and learned Gentleman nods. They are pretty doubtful for one of two reasons: one is that a lot can change in that time, and the other is that the person presenting them has every intention of
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changing them as and when we get to that time. I do not believe for one moment that the Chancellor has changed his philosophy or beliefs from when he told the House last year that he wanted to reduce public spending to the lowest share in modern times—certainly since the welfare state and the national health service were introduced. All that has changed is that that was a political embarrassment last year, so he has simply shoved up the numbers at the end of the spending profile to be able to say, “Look, I’m not going to cause you any difficulties; public spending is going to rise, not decrease.” That is nonsense; the Tory view of public spending has not changed one jot.
Where I part company with many Government Members is that I do not think public spending is almost de facto a bad thing. It is extremely helpful to an economy in education and research and development, never mind the things an advanced economy demands in relation to the welfare state and pensions. So when we look at that profile, it is not credible, and I think it also conceals what the Conservatives would really like to do.
I want to say one thing about oil. I welcome what has been proposed. It is very sensible, because the oil taxation regime had to change, but I just remark in passing—and I am sorry only one nationalist has turned up to the debate—that the OBR forecasts are 47% below what it proposed just a year ago. North sea oil revenues are a 10th of what the nationalists told us they would have if they had an independent Scotland. This is another example of where pooling and sharing resources across the United Kingdom makes a massive difference. If Scotland had been independent today, it would have been faced with cuts that would make the austerity that is now being visited on the economy look like a Sunday afternoon tea party. They would have been substantial and damaging to the people of Scotland. That is why the nationalists have nothing to say about this; they have no one to blame for this problem but themselves.
Dr Eilidh Whiteford (Banff and Buchan) (SNP): Will the right hon. Gentleman give way?
Mr Darling: I have never actually met the hon. Lady, but I will certainly give way to her.
Dr Whiteford: I am grateful to the right hon. Gentleman for giving way. Would he accept that, over the past 30 years, oil revenues have contributed billions of pounds that have consistently bailed out Westminster’s bad economic management? Would he also accept that oil prices go up as well as down, and that the long-term trajectory of oil revenues is an upward one?
Mr Darling: I agree that oil prices go up and down, but when I said that last year during the referendum campaign, I was told that I was scaremongering, that I was talking Scotland down and that that could not possibly happen. The hon. Lady should listen to her former leader. He told us that the oil price would never drop below $113 a barrel, but look what happened a few months later.
In relation to the oil price, I would like to say in passing that whoever is Chancellor in the future will increasingly face a structural problem in the economy. North sea oil revenues are not going to return to where they have been for the past 30 years, income tax revenues
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are decreasing, corporation tax is proving more and more difficult to get, and the Government’s ability to collect money through fuel duties is steadily diminishing. This is all going to put more pressure on measures such as VAT. All Governments are going to have to face these facts, and the fall in oil prices brings them into sharp focus.
The current low levels of productivity are a matter of great concern. The Chancellor had a lot of fun comparing Yorkshire and France, but French workers are in fact more productive. That is not because our workers are lazy, or anything like that; it is simply because French firms have invested more. That is why certainty in public spending is important. It is also important that the Government should do those things that the private sector is not going to do. For example, I have increasing doubts about the ability of the private sector to provide us single handed with the energy generation that we are going to need. I am in favour of replacing our nuclear power plants, but the proposals for the next nuclear power station are heavily dependent on the French and Chinese Governments, and I worry about that. I speak as an advocate of the mixed economy, but I believe that we now need to ask ourselves whether we have reached a stage at which it might be cheaper and more effective for the Government to be doing more in that regard, rather than leaving it to the private sector.
On transport infrastructure, it will, I hope, be for the next Government finally to make a decision on additional expansion, whether at Heathrow or elsewhere in the south-east. Actually, none of those arguments has changed in the 10 years since the last White Paper was published on the subject. I also hope that the next Government will take advantage of the present ability to borrow very cheaply by borrowing to invest. I personally would spend more time on HS3 than on HS2, but I recognise that I might be in a minority in holding that view, on my own side and in the House as a whole. To be honest, there would be much more benefit, particularly to the northern part of England, in spending more money on the transport links there than in building a fast link between Birmingham and London. However, that is something that the next Government are going to have to deal with. I speak as a former Secretary of State for Transport. The Department for Transport’s record on announcing such plans is pretty good, but it is not quite so good when it comes to delivering. Indeed, many announcements were made last week, but I distinctly remember announcing the same things myself 10 years ago. Perhaps that illustrates the problem that all Governments face.
One of the profound issues that needs to be discussed as we go into the next election is what people expect the Government to do in regard to the provision of services such as education, health and pensions and what sort of society we want to live in. However, this Budget does not begin to address those questions, which is why I shall have no hesitation in supporting my hon. and right hon. Friends in the Division Lobby tonight.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I suggest that we now move to a time limit of six minutes, as we have had a few withdrawals.
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6.33 pm
Sir Nicholas Soames (Mid Sussex) (Con): I congratulate the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), on his speech. I always admired his Olympian calm when he was under great pressure in the past few years. I know that the House will miss him very much indeed. [Hon. Members: “Hear, hear!”]
I warmly welcome the Budget, and I congratulate my right hon. Friend the Chancellor on a truly formidable achievement in accomplishing a huge turnaround in the financial fortunes of our country and our people after the catastrophic failures of the last Labour Government left our economy in such a very bad place. The United Kingdom now has one of the fastest-growing economies in the world. The extraordinary rate of the growth in new jobs is truly exceptional. In my constituency of Mid Sussex, we have the fourth lowest unemployment of any constituency in the land. In Yorkshire, business and enterprise have created more jobs in a year than were created in the whole of France. That is indeed a superb record.
Mid Sussex has a vibrant economy with many small and medium-sized businesses, all of which will warmly welcome the Chancellor’s review of business rates, which are clearly in need of far-reaching reform. It would be good, for example, to see increased help for the independent shops in East Grinstead, Burgess Hill and Haywards Heath and in the villages so that they can compete with the enormous challenge of online business.
Many of my constituents will welcome the new arrangement for ISAs that will enable first-time buyers to have a tax-free way of saving for their first homes. This is a hugely significant and very welcome step. There is also a warm welcome for the Chancellor’s help for hard-working people and their families by raising tax allowances and increasing the amount that people can earn without paying income tax. As my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) said, an enormous number of people will feel significant advantages as a result of this Budget, with 27 million people having their taxes cut and another 4 million people on low wages being taken out of the income tax system altogether—and so they should be. The freezing of fuel duty has made an enormous difference to people’s disposable income. All these steps are most welcome in the south-east of England and particularly in my constituency.
I note that my hon. Friend the Financial Secretary to the Treasury has now left the Chamber, but there are still Treasury Ministers on the Front Bench. May I enter a special plea to them? The rail services on the Brighton line and to East Grinstead are of immeasurable importance to commuters in my constituency, but they have been truly appalling since the works at London Bridge started. Given the extraordinarily high price of tickets, these inconveniences are wholly unacceptable and have gone on for too long. The Under-Secretary of State for Transport, my hon. Friend the Member for Devizes (Claire Perry) has been very helpful in working with Network Rail and with Southern, for both of which the concept of a rail passenger service appears still to be in a formative state. I ask my right hon. Friends on the Treasury Bench urgently to consider the question of compensation for my constituents, who have been terribly
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mucked about over the last few months as they have struggled to get to work and to get back on time to see their families.
May I enter one more piece of special pleading, which endorses a point made by the former Chancellor, the right hon. Member for Edinburgh South West? My constituency is part of the powerhouse of the south-east but I must tell my right hon. Friends on the Treasury Bench that it is constantly held back by the lack of good infrastructure. I am of course pleased with the plans for the A27, but the pressure of housing and growth is leaving towns such as East Grinstead and Haywards Heath without the proper infrastructure to enable them to cope. As the right hon. Gentleman said, money is cheap at the moment, and this is the time for the Government to borrow and to spread some largesse among the towns that never see any infrastructure spending. The housing situation in my constituency cannot improve without better infrastructure, and of course, if Gatwick were to get a second runway, the position locally would be truly catastrophic.
Thanks to the determination of the Chancellor and the Government to stick with their long-term economic plan, our businesses can invest and our people can benefit from the extraordinary global flow of ideas, innovation and new market opportunities. I hope that these improvements will lead to major increases in productivity, which is increasingly the fundamental key to growth and, above all, to a higher-wage economy.
I continue to remain anxious about the level of skills required as our economy responds to changes in technology and globalisation. I am disappointed to see that we are not producing nearly enough engineers, and I welcome the steps the Government are taking to support vital skills training. I share the Chancellor’s view about the huge potential for our country and about the opportunities that exist for our young people, but it remains the case that, in this astonishingly networked world in which our country now has to make her way, we continue to be unprepared for these challenges. I applaud the Government’s determination to put that right.
6.39 pm
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab): First, I congratulate my right hon. Friend the Member for Edinburgh South West (Mr Darling) on not just an excellent speech, but the tremendous work he did in those difficult three years alongside the then Prime Minister. When the world gathered in April 2009, applauding the then Prime Minister and then Chancellor for the work they had done on pulling people together, no one could have thought that the absurdity would exist where the last Labour Government were blamed for the sub-prime mortgage collapse in the United States and the collapse of the financial institutions across the world.
For 30 seconds, I just want to pay tribute to those who have been instrumental in anything that I have been able to do in my public life and in this House, starting with my wonderful family and my closest friends. They were somewhere in the Gallery when I made my maiden speech, and two are here from Canada in the Gallery tonight. Without our family and friends we could never do what we achieve, and so often they take the brunt of the rough and not the smooth in politics. I, of course, want to thank the workers, who are often
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forgotten in our democracy but who make it possible for us to be here in our political parties, for their dedicated work. I thank the voters and the people of Brightside, of Hillsborough and of Sheffield. I also wish to pay tribute to my colleagues in the House, including my right hon. Friends the Members for Edinburgh South West and for Blackburn (Mr Straw), who served in Cabinet with me. My right hon. Friend gave 36 years of dedicated service in and out of this House, and he deserves a great deal of credit for it.
My first Budget was Nigel Lawson’s of March 1988 and it was seminal in my life because my dog, Ted, was violently sick halfway through. My hon. Friend the Member for Bolsover (Mr Skinner), in a very loud voice, in only the way he could, pronounced, “Someone should clear up this dog’s breakfast.” I was not sure whether he was referring to what the dog or the Chancellor had delivered. That Budget certainly had a detrimental impact which I hope this Budget will not achieve.
I wish to make three quick points. I have already commended my right hon. Friend the Member for Edinburgh South West for what he said about what happened through those difficult times. We do not just have to believe him; we can believe what Mark Carney, the Governor of the Bank of England, said in a speech made on 28 January in Dublin. In his second point about why our economy had managed to come through and bounce back, he said that we had a fiscal system that allowed budget deficits to rise during a downturn. It is self-evident that that is the case and it needs to be done, but it is not self-evident, in all the rhetoric we have heard over the past five years, that anyone on the Government Benches has fully understood what saved us from complete calamity—it certainly was not austerity. It has not been austerity in Greece, Spain, France or Italy that has saved those countries; what has been instrumental has been what was implemented by the Federal Reserve in the United States and by the Bank of England here: quantitative easing—printing money, as my mother called it. It eased the unfortunate—in the long term—bubble in house prices, rather than the investment in business for which it was intended, but it did make a significant difference in terms of allowing us to return to growth and to have sufficient money in the economy.
Paradoxically, the payment protection insurance mis-selling scheme also did that. The PPI repayments have amounted to £20 billion of money going into families and into local economies that people have spent. If a political party had announced that it was going to give, in a Budget, just before an election, £20 billion to selected families across the country, people would have had a fit. Yet that has made a significant impact on what has happened.
We will not and cannot allow a doubling of the pain in the next Parliament to take us backwards, with the unthinkable becoming the unachievable. That is clearly what would happen if the unfair changes and the unfair further additional austerity measures were to be implemented—and, of course, we do not know about many of them. Should the Conservatives be the lead or majority party, they will be implementing further cuts, on top of the 50%-plus of austerity measures that the coalition has already signed up to. We know about the 10% cut in the budgets in schools, because the Prime Minister has announced it. We know about the enormous
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cuts already in the pipeline in further education, with a 24% cut in adult skills funding. We know about the proposed budget changes already for welfare. We know what is happening in local government, with the most deprived areas taking the biggest hit. We know that if these austerity measures go any further, there will be a massive hit on those least able to take it. This is a crucial moment, when we decide whether we go backwards or forwards to a Britain we are proud of.
6.45 pm
Miss Anne McIntosh (Thirsk and Malton) (Con): It is a privilege to be called in this debate, Mr Deputy Speaker, and, in particular, to follow the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett). I pay tribute to his lengthy service in the House and his major achievements. He will be greatly missed, not just in the House, but in Yorkshire.
I welcome this Budget, which is good for individuals, families, businesses, pensioners and farmers. Obviously, the best news is that more jobs are being created in Yorkshire than in France, as the Chancellor mentioned. I wish to make a special plea on behalf of one category: older women who are too young to retire but who may see too few opportunities to work. I recognise the help being given in this Budget to farmers and make a plea that the particularly welcome rule enabling self-employed farmers to spread their average earnings over five years be introduced this month, before Dissolution. Farming and fisheries are the two most dangerous industries, so may I also make a plea that we need better mobile phone coverage in rural areas, to reduce the risk of accidents on farms away from the house?
Let me dwell for a moment on the reform of the common agricultural policy fiasco in 2005, which led to huge fines and penalties in the European Union for late payments. I welcome the fact that common sense has broken out and that in this month we will revert to paper applications, with only initial registration online. I ask that digital by default be laid to rest this year and that we press forward to make sure that the mapping is easier in future years.
I ask that the vouchers the Government are going to make available in urban areas for upgrading to superfast broadband also be made available in rural areas. Too few farms and rural businesses yet have the benefits of a decent speed and a stable connection for broadband. It is not acceptable that farms and rural businesses have only the basic legal entitlement of 5 megabits and subsidised satellite services, and that the promise of 100 megabits will not reach the farms. Will we therefore see the vouchers extended to rural areas?
I ask the Minister who is summing up to address the issue of the costly failure— £155 million—of the Rural Payments Agency computer. It raises a wider issue relating to contracts under successive Governments: why do we see failures in areas such as the Child Support Agency and, more recently, the RPA? When Governments can supply that big a contract, what are we doing wrong? Can we also make sure that the spectacle of disallowance and EU fines will become a thing of the past? Will the Government confirm tonight that the additional extension of one month offered by the European Commission for basic farm payments will
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be accepted and agreed? Will we ensure that payments are made on time? The extension to 15 June is welcomed by the farmers.
I welcome the fact that this Budget is good news for savers. The individual savings accounts—ISAs—will encourage savings and investments, and the review of capital investment allowance will be welcome. This is a prudent and responsible Budget, setting a steady course to cut our debt, reduce the deficit and, in the words of my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), achieve a surplus by 2017-18.
This is probably the last contribution that I will make to any formal debate in this House. It has been an enormous privilege to have served 18 years here. I have spent five years as MP for Thirsk, Malton and Filey; 13 years as the MP for the Vale of York, for which I was the first and last Member; and for 10 years before that I was a Member of the European Parliament.
The icing on the cake was being elected by colleagues, from across the House, to chair the Environment, Food and Rural Affairs Committee, which so perfectly reflects the interests and concerns of those living in Thirsk, Malton and Filey—food, farming, fisheries, the environment, the countryside and rural communities. We have been wonderfully served by exceptionally dedicated and extremely effective staff led by the Clerks, with superb special advisers, assistants and others. I have also been blessed with parliamentary colleagues on the Committee, some of whom are in the Chamber today. Together we have formed a dedicated team, really pressing for proper scrutiny of an extremely important Department, which I hope will survive and grow bigger in the next Government.
As I face early release, I pay tribute to my predecessors, including my right hon. Friend the Leader of the House who is also leaving. I wish my successor the very best of luck. I pay personal thanks to my husband for allowing me to do this job, to my supporters for standing by me, and to my electors locally for returning me at successive elections.
6.51 pm
Wayne David (Caerphilly) (Lab): I pay tribute to Members on both sides of the House, especially those who are stepping down, for the contribution they have made to politics; I am sure that we all appreciate their work.
My constituents regard this Budget as a monumental irrelevance. I say that because this Budget has done so little for so many people. Over the past few years, people’s standard of living has been eroded and their quality of life has declined, and this Budget has done nothing to reverse that trend.
In Wales, we have seen the publication of the Welsh Index of Multiple Deprivation and the work of Professor Steve Fothergill of Sheffield Hallam university. Both works have underlined just how bad things are in many south Wales valley communities. Professor Steve Fothergill, for example, has focused on the impact that welfare reform has had on many former mining communities. He has estimated that, in some 36 wards in the south Wales valleys, at least £800 per adult has been lost. The communities as a whole have suffered from that substantial loss of capital.
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The situation has been getting progressively worse in the top end of the valleys. Lower down the valleys, there are also pockets of deprivation. Lansbury Park in the centre of Caerphilly is now the worst off ward in any part of Wales. It was tipped over the edge by the introduction of the bedroom tax. In my constituency, more than 1,000 households have been hit hard by that tax. In the past, I have referred to specific cases as examples, one of which I will refer to again. Mr and Mrs Goodwin live in the Caerphilly borough in Blackwood. Both of them are registered blind. After living in their council house for 30 years, they now have to pay a massive surcharge because two of their rooms are deemed to be surplus rooms. That has hit their quality of life and standard of living extremely hard. What is true of them is true of so many other people the length and breadth of this country. Some 57% of those people who have been hit by the bedroom tax have disabilities. What can people like Mr and Mrs Goodwin look forward to? Let us be clear about what will happen if the Conservatives win the election. The Office for Budget Responsibility has said that it anticipates a rollercoaster profile for implied public services spending, with
“a much sharper squeeze on real spending in 2016-17 and 2017-18”.
In other words, the cuts, bad though they have been, are nothing to what they are likely to be over the next few years if the Conservatives win the election. People must not worry though because there will be a massive boost in public expenditure as we approach the election after this one.
Things will get much, much worse before there is any chance of improvement, which is why it is so important that we take this opportunity, on the eve of our general election campaign, to recognise that a Labour Government would offer real hope for people. They would scrap the bedroom tax, introduce a sensible protection plan, increase the minimum wage, end exploitative zero-hours contracts and, above all else, bring in a different set of values that put people first, and that put the many before the few.
6.56 pm
Chris White (Warwick and Leamington) (Con): Although I am pleased to follow the hon. Member for Caerphilly (Wayne David), I have to say that I offer a more optimistic approach. I am happy to say that, in Warwick and Leamington, the signs of economic growth are strong, not least with the number of jobseeker’s allowance claimants falling by 70% since 2010, and the number of claimants aged between 18 and 24 falling by 79% over the same period. We have also seen a growth in the number of businesses that have taken on new employees, with more than 2,700 apprenticeships being created since 2010.
The Budget contained several welcome measures for Warwick and Leamington, the first of which was the support for the creative sector that contributes so much to our local economy. Leamington Spa is now increasingly referred to as “Silicon Spa” due to the growth in our technology and creative industries. As the Budget emphasises, the creative industries deliver both cultural and economic benefits to the UK.
The tax relief for the video games sector, for which colleagues and I on the all-party group for video games have campaigned, has already significantly benefited
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the video games industry in Leamington. The tax relief has created confidence in the sector with the local industry supporting some 1,200 jobs.
I am also delighted that the Chancellor announced an extension of the skills investment fund, which will provide £4 million to ensure that support for training and development in the creative industries continues for a further two years. Renewed focus and support for a more traditional, but similarly creative industry, was also announced in the Budget. The west midlands has long been a hub for manufacturing, but it is now a resurgent sector of our economy. I was delighted to note that, according to the most recent figures, the manufacturing sector grew by more than 2.5% in 2014 alone.
Since 2010, the Government have invested a great deal in the manufacturing sector, including through innovation catapults. High-value manufacturing is growing in significance in our region. I was particularly pleased to see the one millionth cooker roll off the production line at Aga Rangemaster, just outside my constituency office.
Innovation is key to unlocking further potential in the manufacturing sector and I am delighted that the Government have extended the research and development tax credits, particularly for small and medium-sized enterprises. That measure is estimated to benefit some 15,000 businesses.
As co-chair of the all-party group on manufacturing and chair of the all-party group on video games, I have been privileged to watch the regeneration of manufacturing and the exciting development of the creative industries as a whole. I would like to take this opportunity, however, to make the point that there is still more to be done to achieve the potential in these parts of the economy. We need more support for innovation, more apprenticeships, not least through the excellent Warwickshire college, a continued focus on research and development and support and encouragement for small businesses wishing to grow and expand. I believe that we must do all we can to support these vital industries, rebalance our economy and create additional jobs, but overall the Budget provides assurance that the economic plan is working and that our economy is back on track.
7 pm
Mr Ronnie Campbell (Blyth Valley) (Lab): All Members look at the Budget and see what is in it for their constituents. I did the same last week, for the whole north-east of England. When I got a look at it, I thought that there was one little chink of hope: I might get the Blyth and Tyne rail link reinstated in my constituency. I might be lucky, and I know that the county council has put some money aside, but I am not sure what will come from the Budget. We hope that the money might be there, but as for everything else, all my constituency is getting are a few crumbs. Some might be getting their pension, which is their own money, of course, but otherwise a few crumbs have fallen off the table that my people have managed to gather and I am sure that everybody else is thinking the same. As far as I am concerned, all we are getting in the north-east of England is the usual pie in the sky.