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Asked how all this would be paid for, I turn to pages 28, 29 and 30 of the Red Book, where we see all the public assets that are to be offered up, totalling £30 billion in this financial year—the largest ever sale of public assets in the history of this country, and almost double what Margaret Thatcher achieved at the height of her privatisation mania. [Interruption.] Conservative Members say, “More.” Of course they do, because the only economics they can think of is getting rid of public assets to fund tax cuts for corporations and to pay for the inheritance tax cut that will largely benefit the wealthiest in our society.

Richard Fuller (Bedford) (Con): Will the hon. Gentleman give way?

Jeremy Corbyn: No. I am conscious of the time and want others to be able to contribute.

The BBC has been persuaded, willingly or unwillingly, to pay £150 million for the over-75s licence fee concession. There will be a £40 billion sale of shares in Lloyds Banking Group and £20 billion in fees from Lloyds, RBS and UK Asset Resolution. There is the sale of Eurostar, Royal Mail and remaining shares in Lloyds bank, and the sale of the Green Investment Bank, which I mentioned. There is even, for goodness’ sake, the sale of the King’s Cross property development, which did such a great job of developing King’s Cross into a wonderful place. And, of course, there is the sale of the remaining RBS shares—at a loss.

This Budget is a trick—a trick of smoke and mirrors. It hits the poorest, it does nothing to solve the housing problem, it creates greater inequality in our society, and it is paid for by the sale of public assets from which we should all be able to benefit. I hope that one day there will be a Government in this country that set as their priority a commitment to reduce inequality, to get rid of destitution and poverty in our society, and to bring about a society that is more at ease with itself. Inequality is the only message the Chancellor seemed able to offer today.

4.34 pm

Mrs Maria Miller (Basingstoke) (Con): It is a great pleasure to follow the hon. Member for Islington North (Jeremy Corbyn). Perhaps that was one of the many leadership speeches that he is going to make in the next few weeks. He spoke powerfully about the importance of young people. If the young people of this country had the opportunity to speak to the young people of Greece and of Spain, they would be very reassured that we have in this country a Government who take seriously the level of debt that we hand on to the next generation.

It is a great pleasure to speak in this part of the debate, having heard such brilliant maiden speeches from my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) and from the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell). Both were accomplished speakers who, I am sure, will make a tremendous contribution to the House in the coming years.

We cannot overestimate the importance of this Budget speech. It represents a new settlement for Britain. It is about a country living within its means, moving from a culture of welfare dependency that was propagated too much under the last Labour Government to what I felt

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many people were speaking about at the last general election—an aspiration nation, with a Government who do not give with one hand to take back with the other, but who believe in the prosperity of this country for the long term.

Many families who I talk to in my constituency, Basingstoke, see that now there are more jobs on offer. We hear in the Budget today that when somebody works hard they can keep more of that money for themselves and their family, because of the increases in the tax thresholds, and that it is not just a dream for people to have a home of their own, because Right to Buy, which will potentially support up to 13,000 people in my constituency, and Help to Buy are practical ways of helping families get the start in life and the security that they want for the long term.

This Budget is built on authentic Conservative principles: lower taxation and making sure that people can get the sort of wages that they can live on. A new national living wage is a great example of that. Because we have a stronger economy, we have seen stronger support for and investment in the NHS and education. I want to pick up one of the smaller elements of the Budget today—the expansion of the number of cadet units in state schools to 500 by 2020. I am fortunate in my constituency to be able to pay tribute to the Vyne school, which is a trailblazer in this area, being one of the very few state schools that already have a cadet unit in place. I know how much that means to the young people who are able to take part in the unit, and I am sure this extra investment and support will spread that good practice elsewhere. I am sure many of my constituents will be reassured to hear the Chancellor’s commitment to the 2% pledge in respect of defence budgets.

There was much talk today about welfare reforms. There will be some reassurance after some of the headlines that we read in the newspapers over the weekend. I think particularly of assurances that disability benefits will not be means-tested. It is important that we make sure that disabled people receive the support they need, and I was reassured by the comments of my right hon. Friend the Chancellor earlier.

This Budget sets out a clear objective for our nation: that we want to be the most prosperous major economy; that we have sustainable welfare plans in place to make that work for the entire nation; and that we tackle and boost productivity. That will resonate in my constituency, which is one of the top 10 centres of employment in the south-east. We have one of the best local enterprise partnerships in the country, and businesses in my constituency will welcome the cut in corporation tax, the increase in employment allowances and the setting of the annual investment allowance at a new permanent level. All these things will help create certainty, because we need more jobs not just in the south-east but throughout the country. If we are to see that productivity boost, it is vital that we have the right conditions for helping businesses to grow.

I was interested to read in the Red Book a little more detail about the transport proposals that the Chancellor outlined today. I know that the Government are committed to spending around £56 billion on transport in this Parliament. The creation of a new road fund and a new investment strategy for roads is vital for constituencies

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such as mine, as we have endured massive underinvestment, despite the very high house building targets set by the previous Labour Government. Funding the new road fund through the changes in excise duty that the Chancellor outlined will help to ensure that we have a sustainable way of investing in that vital infrastructure for the future.

I note that my hon. Friend the Exchequer Secretary, whose constituency neighbours mine, is sitting on the Front Bench. He and I have had conversations about the importance of trains in our transport strategy. I was delighted to hear earlier this week that the refranchising of the south western routes will be brought forward to 2017. That is an important part of improving the trains offer to my constituents. I hope that my hon. Friend will also be mindful of the need to continue to invest in the hardware, particularly the investment that Network Rail needs to increase the capacity on the Wessex line, which runs through my constituency, by 60% over the next two decades. That will require considerable investment, either by the Government or by other means. It is important investment that needs to happen.

The Chancellor set out an exciting new opportunity to increase skills in our country through the apprenticeship levy on large firms, which will provide the opportunity to upskill even more of our young people. I know how important this Government’s commitment to apprenticeships has been for young people in my constituency, and also for older employees. With many employees going through a number of career changes, the ability to upskill or reskill through an apprenticeship is not appropriate only for young people. I once again in the House applaud the work of Basingstoke College of Technology, which will now offer graduate-level apprenticeships as a result of some very innovative work with local businesses.

The Chancellor talks eloquently about the northern powerhouse, but I always want to remind him gently about the southern engine room. Having been born and bred in the midlands, I am glad that a significant part of the Red Book is devoted to the importance of growing the midlands, but we must ensure that the south-east remains competitive. Part of that is by investing in infrastructure of the sort I have been talking about—trains and roads—and, I hope, through continued interest in the importance of city deals for southern towns and cities. There is a great deal of talk in my county about the importance of devolution to the shire counties. Hampshire County Council, which is one of the best run county councils in the country—[Hon. Members: “Hear, hear.”] A number of hon. Members clearly support that. I know that the county council would be very interested in talking about the devolution of further powers so that we can maximise efficiency in the south-east engine room, which is so important to the future of our country.

I will close by focusing on one final point: the importance of maximising the contribution of all members of society and all people in this country, particularly women. Many women listening to this debate will applaud the increase in the threshold for the personal allowance and the national living wage. They will welcome the 30 hours of free childcare for parents with young children. They will welcome the work that this Government have already done to modernise the workplace. They will note that the gender pay gap for the under-35s has all but disappeared for people in full-time work.

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Alison Thewliss (Glasgow Central) (SNP): Does the right hon. Lady really think that women will applaud paragraph 2.103, at the top of page 88 of the Red Book, which reads:

“The Department for Work and Pensions and HMRC will develop protections for women who have a third child as the result of rape, or other exceptional circumstances”

when calculating their eligibility for child benefit? That is appalling.

Mrs Miller: The hon. Lady is picking up on a very small detail that I have not yet had a chance to go through. It is important that we ensure that support is there for people who have suffered the trauma of rape or domestic violence. I also draw attention to the additional support that the Government have pledged in the Red Book for victims of domestic violence to ensure that they get the support they need.

I realise that I have only a minute or so left, so let me return to my point about the importance of maximising the role of women in the workplace. Lord Davies showed what could be done by focusing on tackling the question of the importance of getting more women into non-executive directorships. We still have an unacceptable situation in this country as fewer than 9% of women take executive jobs in our top companies. By having so few women involved in the management of our companies, we cannot deal with some of the practice and culture problems we still have in firms in our country. It is important that we have in place support for those who need more flexible part-time working, particularly older workers, and that we ensure we have support for those who have caring responsibilities at all points in life, not just when they have young children. By tackling some of these problems, we can help encourage more women to take more of a long-term role in the workplace at the highest levels. The Budget will build the foundations on which we can have the sort of successful companies in which they can work.

4.46 pm

Tom Brake (Carshalton and Wallington) (LD): I enjoyed the speech from the hon. Member for Islington North (Jeremy Corbyn). I am not making a leadership speech myself tonight, because nominations for the Liberal Democrat leader closed some days ago, but I agree with much of what he said about housing. Before the general election, there was an agreement from all political parties that something very substantial had to be done about that. Figures of 200,000 or 300,000 new homes were proposed, but I am afraid that what we have before us today will achieve nothing on that scale. The sort of people who come and see me, the hon. Gentleman and other Members who have problems with overcrowding or having to stay at home, often with three generations in the same house, will remain with us.

In May 2012, the Prime Minister gave an interview to the Daily Mail in which he complained that he would have governed like a true Conservative had it not been for the Liberal Democrats in coalition. Today, his Chancellor has set out what that means: attacking opportunity and entrenching the divide between the young and the old. This is the first real test of what happens to the Budget when the Liberal Democrat stabilisers are off; it lurches very heavily to the right. The Chancellor said today that the British people trusted his party to finish the job,

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but let us be clear that this Budget does not live up to the trust that the public placed in him. It does not continue on the path set out by the coalition Government but instead pursues an ideological approach that requires young people and the disabled to pick up the tab.

If we are to be a society of opportunity for everyone, surely we can all agree that investing in future generations is fundamental. That means supporting parents to meet the costs of their children, helping the poorest students get to and succeed at university and, when they look for a job, ensuring that they receive the same support as others. The message from the Chancellor is clear: those who are looking to get ahead and make a start in life are on their own. The Budget seeks at every turn to make it harder for the next generation to succeed, to get into work, to get a good education and to get back on their feet when things go wrong.

Let us consider a child’s path through life under the Government’s proposals. The Conservative party has made a great play of its increase in support to cope with the costs of childcare, enabling working parents to get 30 hours a week of free childcare. The Liberal Democrats support that, yet the decision to reduce the starting point for working tax credit and universal credit withdrawal will all but wipe out the benefits of this policy for those on the lowest incomes with children. What assessment has been made of the impact of those changes on the benefits accrued by low-income working parents from childcare support?

Of all the difficult decisions the Liberal Democrats took in government, it is fair to say that the decision to reform tuition fees was one of the hardest. Yet our decision was based on ensuring that young people wanting to go to university would have clarity about what they would pay back, and that those who earned the lowest incomes would pay back less. The Chancellor’s announcement today on a consultation on freezing the loan repayment threshold for five years would undermine the protections that the Liberal Democrats fought to put into the system.

Martin Lewis, who was asked by the coalition to head the independent taskforce on student finance information, undertook that work based on the principle that the £21,000 threshold would increase with inflation and he has publicly said he was promised that that would be the case. Why are the Government even considering such a change? Can Ministers assure us that, if experts who acted in good faith for the coalition Government are clear in their opposition, any consultation will take that into account?

It is clear that, for children and young people, this Budget is a bust, but it gets even worse when they enter the world of work. We welcome the decision on the living wage. It is right that people should receive through their pay packet the money to support themselves and their families, but we are astonished that that only applies from the age of 25. Why do our young people not deserve the same support? This decision opens the gulf between the minimum wage for younger people and the wages of others. What encouragement is that for those who really want to “work hard and get on in life”?

Even where young people are not deterred, this Budget introduces measures that will make it harder for those in areas of low employment to seek out jobs. The decision to abolish housing benefit for young people will mean that people cannot move to find work. What message

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does that send out to young jobseekers? The attack on housing benefit will hurt opportunity and young people’s employment prospects. It is not fiscally tough; it is simply wrong. What assessment have the Government made of the impact of these changes on the ability of young people to take up the chance of employment, and what assessment have they made of the risk of a serious increase in homelessness among young people?

The most worrying changes are for those who fall on hard times who do not have the same advantages as many of us. The majority of employment and support allowance claimants in the work-related activity group have mental health conditions. The decision to slash support for that group—who, let us be clear, have been medically assessed as currently unable to work—will destroy their chances of looking for work in the future. It means an annual cut of £1,500 for sick and disabled people who are trying to get their lives back on track. People with conditions that have affected their ability to work, such as depression and bipolar disorder, need support. They face additional costs in order to get their lives back on track. That they are being abandoned shows clearly where the Chancellor’s priorities lie.

This Budget not only hurts young people and the disabled; it also means four more years of pain for public sector workers. They have clearly been very hard hit in the past five years as a result of pay restraint—which the Liberal Democrats supported in coalition—but in the next couple of years the budget deficit will have been addressed and the debt will start to fall, so why are those public sector workers going to suffer the same restraint over the next five years as they have suffered for the previous five years?

If this Budget abandons our young people’s future, it also abandons our planet’s future. In government, Liberal Democrats fought hard to protect our environment, and today the Chancellor has shown just how little the Conservatives care about the future of our planet. By stopping the coalition proposals increasing the proportion of revenue from environmental taxation, the Chancellor has, indeed, got rid of the green crap. He talks about a security budget, but the greatest threat to our national and global security—climate change—is clearly not of concern to a Government who have abandoned the coalition goal of being the greenest Government ever.

Conservative Members may feel that I have been too churlish in what I have said so far. Clearly, we agree with some areas, such as the £8 billion funding commitment for the NHS. We are fully behind that, and I hope that it will help to fund the redevelopment of St Helier hospital in my constituency. We are fully behind the proposal to increase the tax allowance—it was of course Liberal Democrat policy, but before the last general election the Prime Minister said it was unachievable—and I hope that it will indeed hit £12,500 by the end of this Parliament. We also fully support getting another £5 billion through tackling tax avoidance. Finally, 2% for defence was delivered under the previous Government, and I welcome the fact that it will be delivered by this Government as well. I did not want to conclude my remarks without at least stating that there are areas in which we are supportive of what the Conservative Government are proposing.

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This Budget is supposed to be for working people—a “We are all in it together” Budget—but instead it is a “You’re on your own” Budget that abandons young people who want to get into work and start a family, but who fall on hard times. That shows just how clearly millions of people will miss the Liberal Democrats.

4.56 pm

Craig Mackinlay (South Thanet) (Con): I want to declare an interest. I have one very small buy-to-let mortgage that ought to be brought to the House’s attention.

I pay tribute to the two Members who have made their maiden speeches, my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) and the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell), whose constituency name is very long.

Many of my comments will be on the tax and tax credits side of the debate, but I want to start with the budget deficit. I am very pleased to see from the Red Book that Government spending is currently 39.6% of GDP, which will fall to 36% by 2020, when we will have a surplus. A surplus is what we need, and we were elected as the responsible party to deliver it. I am proud that we will have a fiscal responsibility charter so that the disaster, frankly, that we inherited in 2010 will not happen again.

I have always agreed with having a degree of hypothecation in our tax code, so I am very pleased that the road fund licence will be used for road funding, as it was always designed to be used. I certainly hope that it will generate a larger fund. I already have my eye on the dualling of the A256 so that we can have a proper east Kent highway from Ramsgate to Dover. It is to the credit of car manufacturers, which now make such low CO2 vehicles, that we have got to the stage of needing to look again at the road fund licence.

The freezing of fuel duty is a particularly pleasing facet of the Budget. Many thought that the duty might be subject to an increase. I am glad that it has been frozen once more. It now represents up to £10 per tank-fill compared with what might have been the case had we continued with the fuel tax escalator imposed by the Labour party some years ago. That is particularly relevant for those on low pay. In my constituency, we suffer from lower rates of pay than in the rest of the south-east. It is mostly the low-paid who suffer from higher fuel taxes, as fuel represents a high proportion of their disposable income.

Another hypothecation of tax is the apprenticeship levy on large employers. There has been a similar form of levy in the construction industry for some years, the construction industry training levy, and I am very happy that it will be extended so that all youngsters can have a proper opportunity to get a real apprenticeship, which will give them a really great future. I am very pleased to see that the number of proper apprenticeships in South Thanet increased from 300 to 720 in the past five years, and I certainly hope that the new fund will enable that number to more than double again.

Alison Thewliss: Does the hon. Gentleman accept that the apprenticeship rate is currently set at £2.73, as part of the minimum wage regulations? How does he expect young people to live on that while serving their apprenticeship?

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Craig Mackinlay: I think the hon. Lady will find that good apprenticeships become very good jobs. I always said, as an employer in my former life, that I was keen to see people with something on their CV, because they had the best chance of having a job into the future.

For far too long, there has been fiscal drag in the inheritance tax system. The £325,000 threshold, which is doubled for a couple, has been in place since 6 April 2009. One reason for that drag is the increased value of the family home. I am therefore pleased that the family home has a place in the proposals. There will be a £100,000 rate from 2017-18, which will rise by 2020-21 to the full £175,000 that has been proposed.

I had concerns before the Budget about how the downsizing relief would work. I thought that it might just cover people moving to a smaller home, but I am pleased to see that it will be available to those who simply cease to own, perhaps because health problems mean that they have to go into long-term care. There is nothing in the Red Book about how long the relief will be in place. It may be perpetual, which would be good, but many of us are familiar with the seven-year rule that applies to many inheritance tax proposals

I am very much in favour of the simplification of the UK tax code. It is out of control and now runs to some 17,000 pages. When I was a councillor on a unitary authority, we managed to create 265 pages of local council legislation merely for the localisation of council tax, whereas the entire tax code of Hong Kong runs to only 235 pages.

The need for simplification leads me to ask why we do not just raise the threshold in general, rather than apply it to a house. There may be people who have chosen, for whatever reason, never to own a home. They may have decided that renting is for them, that it suits their lifestyle and that they can save money in their own way. Under the proposals, the home must pass down to children or grandchildren. There is a degree of discrimination against the childless in that. Such people may have family members who fulfil many of the functions of love and care that other people expect from their children.

Whenever I think about inheritance tax, I go back to the Burden sisters, who took their case to the European Court of Human Rights back in 2008. They were spinsters who faced being unable to pass assets between each other upon the death of one of them. They lived in the family home and, on the death of one of them, the other would have faced an inheritance tax bill that there was no money to pay.

I have come across other people who live in the family home that they received from their mothers and fathers, who have never married and who lead a prudent lifestyle. One man in particular has assets of approaching £500,000, but will face an inheritance tax bill because he has no spouse and no children or grandchildren. I have always maintained that it would be simpler for every person to have a nominated inheritance tax recipient, rather than it having to be a spouse or civil partner.

I welcome the increase in the employment allowance that is available to every employer to £3,000. The £2,000 level has been very welcome, and has encouraged and enabled many smaller employers to take the first step towards putting people on the payroll. The anti-avoidance measure that means that sole directors will not benefit from that is well made, because there has been use of that—dare I say it—loophole.

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I will move on to the proposals on buy-to-let landlords. Obviously, the Conservative party has a strategy to ensure that as many people as possible in this country have the opportunity to own their own home. That is a fundamental part of what we stand for. People who have a stake in their home have a stake in society. We have Help to Buy, the right to buy, a mortgage market that often helps first-time buyers, and many housing providers have numerous shared-equity arrangements. It is clear that the buy-to-let market has had a distorting effect, and those with good credit have been able to get on to what seems to be a one-way bet. That bet continues while we have housing shortages and a growing population, and it is right to address that.

I have no fundamental objection to the restriction of tax relief, which will be phased down to basic rate relief only over four years from 2017. I am, however, concerned that we risk creating a new anomaly that goes against the concept of “wholly and exclusively” that underpins our whole tax system. If taxpayers enter into a transaction with no surplus cash arising at the other end, normally there would be no tax to pay. Under the proposals so far, however, a taxpayer could make no surplus or even a loss, and that would result in a tax bill. That seems to be an anomaly. I would rather address the problems of the buy-to-let market with an increased rate of rental tax for higher rate taxpayers, as a surplus to the current 40% rate, or even the 45% rate for what I call super-tax payers. We should either use that type of tax system to change and skew behaviour towards the public good, or we should implement greater regulation of buy-to-let mortgage providers. I worry about introducing a precedent of behavioural skewing into our tax system, and it is unusual to encourage behavioural change in that way through the restriction of a deductible expense.

The changes to dividend taxation are to be welcomed. We must look back to changes by Gordon Brown and the advance corporation tax system that caused the destruction of a proud and well-financed pensions system and turned it into one that today has extreme difficulties. I am sure we will get details of how that will work—perhaps I will work it through myself later today.

The corporation tax reduction is welcome. I am not sure that big or even smaller businesses were clamouring for it, but it is certainly simpler now we are down to 20% and do not have to change rates and amounts if there is a multitude of companies—a good simplification. The main driving force of the measure is that it offsets any additional cost to companies as they implement the welcome and increased national living wage.

We had a debate on tax credits yesterday—I would like to have taken part but I was elsewhere. It speaks volumes that the UK has 1% of the global population, 4% of its economic output, and 7% of global welfare spending. I have said this before on other platforms, and I will say it here in the House: we have created the most expensive system of keeping people in poverty that has ever been invented. We now have a tax credit bill that approaches £30 billion.

One feature I am grateful to see is the prior year income disregard going down to £2,500. Back in 2009, the income disregard on prior year income was £25,000. That meant that somebody’s income could be £6,420 in year 1, £31,420 in year 2, yet they would receive full and complete tax credits. That much-needed welfare was frankly going to the wrong place. There are other failures

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with the tax credit system that I am confident universal credit will solve and replace. For example, the system has had no capital element. I have known of instances where people have more than £1 million in various assets but no great income, yet they are still claiming tax credits of upwards of £18,000 per year. Far from the dire pronouncements we heard during the previous Parliament that our proposals would somehow create a disaster for those on lower pay, what we have created is common sense, greater hope and a desire to get on. We are seeing an increasing number of people getting back to work and fewer workless families.

I very much welcome the increases in personal allowances, which were manifesto commitments, and the increase in the national living wage. There is now a better chance than ever to get a good job or a first-class apprenticeship. There will be 29 million people in this country with lower tax bills and 4 million out of tax altogether. That amounts to £5,000 extra to the low-paid over the Parliament. This is what counts. This is what matters. This is what we intend to deliver for this country: a country of opportunity where everybody gets on.

5.10 pm

Clive Efford (Eltham) (Lab): I pay tribute to the hon. Members for Coatbridge, Chryston and Bellshill (Philip Boswell) and for Louth and Horncastle (Victoria Atkins), who made their maiden speeches earlier this afternoon. I hope that they enjoy their time here representing their constituents.

The Budget was heralded as the first blue Budget for 18 years, but it certainly was not worth waiting for. Like my hon. Friend the Member for Islington North (Jeremy Corbyn), I heard echoes of previous Tory Budgets under Margaret Thatcher and John Major, particularly in relation to housing and the social rented sector. There was a certain irony in the big crescendo being about the national minimum wage. Those of us who were here in the first Labour Parliament will remember that we had to sit all night to force through the national minimum wage. The Tories fought against it tooth and nail, yet here we are with the Tories claiming to be the guardians and supporters of the national minimum wage. How right can we be? We were told that it was going to cost jobs and wreck the economy. None of that came about and the Chancellor is now increasing it substantially, which I welcome. I will come back to that.

My concern about the Budget, and the reason I wanted to speak today, relates to the proposed changes to welfare, particularly in relation to housing and the benefit cap. They will have a major impact because of the cost of housing in London. Only a few days ago, it was announced that there should be a higher income cap for people in social housing, who would then be forced to pay a market rent. I am concerned that what we are seeing, much as the Chancellor tried to portray this as a one nation Budget, is a division opening up between those who have property and those who do not. That causes me a great deal of concern.

There was very little, in what the Chancellor said, for the next generation. I am living in a house that, in the past 14 years, has more than doubled in value. I have not earned any of that money. Housing costs are leaving the next generation behind. What chances are we creating

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for the next generation? My right hon. Friend the Member for Wentworth and Dearne (John Healey) spoke very early in the debate. He undertook an excellent piece of work, which I encouraged the Labour Front-Bench team to adopt before the general election, outlining the “benefits to bricks” argument. If we invest in social housing at 50% or lower of market rents, the taxpayer actually saves money. We can chart the ballooning of the housing benefit budget right back to Sir George Young. When he was Housing Minister he said let housing benefit take the strain. Since then, we have seen a mushrooming in the cost to the taxpayer of paying for people to live in private rented accommodation.

At the time of the 2010 election, economic growth was 1.7%, owing largely to the action of the Labour Government to address the deficit and economic downturn that resulted from the international banking crisis—I wish they had had so much power that they could have created an international banking crisis, because then we might have changed much more, other than what we did do, such as introducing the national minimum wage.

When they came to power, however, the last Government removed all the stimulus from the economy, much of which involved housing. In spite of the depth of the downturn, we had managed to keep the number of repossessions resulting from the downturn lower than in the 1992 recession. We also created the home start scheme to support and keep going construction schemes that were faltering because the banks were not providing credit—we supported the supply of housing—but the last Government scrapped those schemes.

Incidentally, the last Government also scrapped the biggest council house building programme in 20 years. We can calculate the savings that that programme made to housing benefit. The Conservatives will claim credit for building more council housing than the last Labour Government—

Chris Philp rose—

Clive Efford: Oh God; it’ll be a good one, I know.

I admit that we did not build enough houses. I was here, firmly on the Back Benches, when we were in government, and the lack of house building, particularly social rented housing, was one of the big issues that I argued for, but right at the end we did invest a lot of money in building social housing, and the last Government scrapped it. The only social housing they have built and claimed credit for in the past five years was funded by my right hon. Friend the Member for Wentworth and Dearne when he was Housing Minister. I know that because I was his Parliamentary Private Secretary.

Ms Margaret Ritchie (South Down) (SDLP): Does my hon. Friend agree that investment in affordable housing, particularly social housing, has a multiplier effect on the economy because it boosts construction and creates jobs in that sector, as well as providing an important stimulus to people who for whatever reasons—mainly economic—cannot provide housing for themselves?

Clive Efford: That is absolutely right; it gets the supply side going as well.

The OBR figures in this booklet show that house prices are due to rise by 34.1% by 2021, so a considerable increase in house prices is still being predicted, but people’s ability

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to buy housing will only fall further behind. The Resolution Foundation states that 2.2 million households on medium incomes spend one third or more of their disposable income on housing, leaving an average of about £135 a week for other things. If they even attempt to buy their own home, they do not have enough income. The National Housing Federation’s report, “Broken Market, Broken Dreams”, states that the average first-time buyer needs a £30,000 deposit—10 times the amount needed in the 1980s—and to borrow 3.7 times their annual income now compared with just 1.7 times their income in 1979.

Two thirds of home buyers now use the bank of mum and dad. They are getting support from the baby boomer generation—I am one of them: those born between 1946 and 1964. Our generation are sitting on the best pensions any generation has had, the windfall from our house prices and the greatest ever increase in the quality of life—and what has the Budget done? It has protected pensions for that group, who are already wealthy, and allowed them even greater opportunities to pass on their housing to their children, further opening up the divide between those who have houses and those who do not. That is completely and utterly unfair.

Let me turn to the benefit cap. I do not support reducing the benefit cap from £26,000. I will look carefully at the impact assessment that the Government produce to show us that it is justifiable in London—we are going to see a proposal for a £23,000 benefit cap in London. I want to see how that will impact on people in central London, because we are seeing a combination of the cap and the highest-value social housing having to be sold off, as my hon. Friend the Member for Islington North (Jeremy Corbyn) said. We are seeing housing association properties forced to be sold off, and we know that for every 10 houses that are sold, we get only one house to replace them—that is the woefully inadequate record that we have seen in the past.

The expensive houses are going to be in central London. They are the ones that are going to be sold. Even in my constituency—which is an inner-London constituency, albeit towards the outer part of that area, so we do not have the sort of high-value properties we see in places such as Camden, Islington, Kensington and Chelsea, and Hammersmith and Fulham—there will still be high-value houses that must be sold. That will reduce the availability of affordable rented accommodation for people in London. What will happen to those communities? Where will those people go? Where are the opportunities for the next generation? What this Budget is doing is removing whole sections of our communities that perform lower-paid jobs and live in social rented accommodation in large parts of London. Those communities are just being wiped out, and this Budget has moved that forwards in ways that Margaret Thatcher could not even dream about.

I want to turn to the national minimum wage. Based on what I heard from the Chancellor, I think that he has redefined the living wage and claimed it for himself. He has put the minimum wage up to £9, when the living wage is actually £9.15 and £7.85 outside London, not £7.20. Therefore, he has rewritten the living wage to start with, but also the living wage is calculated by including the rate of tax credits, which have just been massively reduced, so if I am not wrong, it will not be a living wage and we have had a little con trick. It was the big end for the Chancellor—“We’ve got a new living

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wage”—but we have not got a new living wage; we have got a Tory living wage. Again, it will impact on those with high housing costs, particularly in London.

Chris Philp: Will the hon. Gentleman give way?

Clive Efford: Yes, I will; I cannot resist.

Chris Philp: The hon. Gentleman is very kind indeed. I find it slightly difficult to believe that he is complaining about such a massive increase in the minimum wage when it is set at 60% of median earnings, which is the level suggested by the Resolution Foundation.

Clive Efford: Other benefits such as tax credits are taken into consideration in calculating the minimum wage. That is how we arrive at the living wage, so we cannot cut tax credits and, using the previous living wage, say that it is the living wage. It has to be completely recalculated.

Back in 2012, the London School of Economics did a study of the impact of the £26,000 benefit cap and concluded that, after all other bills were paid, households with children in some of the less desirable parts of London would be left to bring them up on 62p a day. I read an article the other day about Ban Ki-moon launching the new millennium development goals. He said that expenditure of $1.25 a day is not enough and that the target should be increased. Sixty-two pence a day is about half that. What we are saying therefore is that families with children in a capital as wealthy as London should have that much income to provide for them and to live on.

This Budget is not fair; it is completely unfair. It is very divisive between those who have and those who have not, in terms of property. As for the increase in the minimum wage, welcome though it is, it is not a living wage, and we must continue to campaign for an improvement in that regard.

Several hon. Members rose—

Madam Deputy Speaker (Mrs Eleanor Laing): Order. Before I call the next speaker, I must draw attention to the rule that, for reasons of courtesy, it is essential for a Member who has just spoken to remain in the Chamber during the two speeches that follow his or her own speech. My criticism is obviously not aimed at any Member who is sitting in the Chamber now, as, by definition, the Members who are present are courteously sitting through the debate. However, I have observed that several Members have spoken and then left the Chamber before the end of the two speeches following theirs. I hope that those to whom I am addressing this criticism will pick it up by some means or other. They may think that it has not been noticed and that there will be no price to pay, but I can assure them that any discourtesy to the House is observed by the Chair, and will be noted and acted upon. As I have said, though, I have no criticism whatsoever of any colleagues who are currently in the Chamber and who are behaving most courteously.

5.26 pm

Chris Philp (Croydon South) (Con): I join others in congratulating the Members who have made their maiden speeches today: the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell), and my hon. Friend the

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Member for Louth and Horncastle (Victoria Atkins). I believe that my hon. Friend’s predecessor served in the House for 55 years, and I wish her well in her possible attempt to emulate that phenomenal record of service.

I also pay tribute to my right hon. Friend the Chancellor of the Exchequer for an excellent Budget statement—all the more so when we cast our minds back and consider the very difficult circumstances that he inherited when he first came to the Dispatch Box in 2010.

Christian Matheson (City of Chester) (Lab): I thank the hon. Gentleman for giving way so early in his speech. Can he point to any measures in the Red Book that the Chancellor will be introducing to prevent a further crash in the American sub-prime mortgage market, which was, of course, the cause of the circumstances to which he has just referred?

Chris Philp: I thought that the former Prime Minister, Gordon Brown, had abolished boom and bust, but he had clearly failed to do so. Moreover, I note that the last Labour Government had been running a deficit since 2002. Had they not been so grossly irresponsible as to run a deficit during the good years, the country would have been better prepared when the bad times came, and we would have been able to weather the storm. The blame is entirely to be laid at the door of the last Labour Government.

Sir Peter Bottomley (Worthing West) (Con): My hon. Friend may wish to remind the hon. Member for City of Chester (Christian Matheson) that the last Labour Government did pretty well on the economy between 1997 and 1999, because they stuck to the Conservatives’ spending plans. When they stopped doing that, things went wrong.

Chris Philp: My hon. Friend is right to draw attention to the success that the Labour Government enjoyed while sticking to the economic plans of my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke).

Let us return to the legacy with which the Chancellor came to office. GDP had contracted, employment had fallen, the number of housing starts had fallen dramatically —we have heard a lot about housing today—and the deficit had mushroomed to a gigantic 10% of GDP, partly because we were already running a deficit when the recession hit. All those matters were tremendously difficult to deal with.

Let us now look at what the Chancellor has achieved. Over the last five years, we have seen an impressive turnaround. Last year, GDP grew at a rate of 3%, the highest rate in any G7 country. Employment grew by a staggering 2 million over the last Parliament, a greater increase than was achieved in all the other European Union countries put together. As I mentioned in the House yesterday, the county of Yorkshire alone created more jobs than France. That is a record, and I note that the Under-Secretary of State for Transport, my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones), is particularly pleased to hear about it. The deficit came down from 10% to 5% of GDP, and even the cost of living issues experienced in the last Parliament have begun to ease. Wages are now rising at

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3% but inflation is zero, so there has been tremendous progress over the last five years, and I am delighted to have heard today that the Chancellor has resolved to finish the job.

Jim Shannon (Strangford) (DUP): I do not think anyone in the House would disagree with the hon. Gentleman’s interpretation of how the economy has boomed with job opportunities and with unemployment decreasing. We in Northern Ireland have seen the advantages of that as well. However, does he share my concerns about how the changes to welfare reform, tax credits and benefits will impact on economic growth over the next few years? Rushing forward too fast, as the Chancellor said today, would be detrimental to the economy of the whole of the United Kingdom of Great Britain and Northern Ireland.

Chris Philp: I thank the hon. Gentleman for raising that point. I am afraid I disagree with his concerns and I will address these matters in more detail shortly.

I was endorsing the Chancellor’s plan to continue deficit reduction and to eliminate the deficit by the end of this Parliament. If this country is to have a stable economic future, and if we are to be in a position where we can weather anything the future throws at us—there may well be further economic turbulence from overseas in the years ahead—it is essential that we have a balanced budget, and the Chancellor is right to aim to achieve that.

I note, however, that the Red Book tables C.3 and C.5 forecast significant increases in tax revenue over the next five years, which are essential if we are going to balance the books. Revenue over the next five years is forecast to increase by £168 billion, an increase of 26% from today. At the same time, expenditure is going to increase by £69 billion, an increase of 9% from today. If for any reason that 26% increase in revenue does not materialise, the Government will have to look again at their expenditure plans. I am sure Members will watch very carefully to make sure that those revenue assumptions do indeed come to pass over the coming five years.

I commend the Chancellor for his work on fairness over the past five years and in this Budget. He has taken action to make sure that the wealthiest in our society pay their fair share and the poorest are given the most help. The top 1% of earners pay as much into the system as the 9 million poorest people in our society. If any Member suggests that the richest are getting an easy ride, they are quite wrong; the richest are indeed paying their fair share. Measures were announced today to clamp down on corporate tax avoidance, which have been welcomed from all parts of this House, and to limit the scope of people using non-dom status to avoid paying their fair share of taxes. I am sure Members on both sides of the House will be quick to welcome that, too.

There has also been a continuation of measures designed to help the poorest in our society, such as further increases in tax allowances, which disproportionately benefit the poorest; and one of the heaviest taxes of all, the tax on fuel, which bears down proportionately most heavily on small businesses and people on low incomes, has once again been frozen. Had that freeze not started some years ago and been continued, each time we filled up our car the petrol tax would be about £10 to £11 higher.

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We should thank the Chancellor for alleviating that heavy burden that falls on the shoulders of those who can least afford it. This is therefore a Budget that has fairness at its heart, with the richest paying their fair share while those on lower incomes are protected, which is right.

I shall now turn to the issue raised in the last intervention: the reform of benefits, and in particular the reductions in tax credits. We had an Opposition day debate yesterday on tax credits, when many Conservative Members pointed out how staggeringly expensive tax credits are, at a cost of £30 billion a year, and how they often serve to— [Interruption.] Sorry, my voice is going a bit; I was cheering so loudly earlier that it is not as clear as normal—I hope the Chief Secretary’s Parliamentary Private Secretary takes note of that.

Tax credits reduce incentives to work, so it was right that the Chancellor today moved to reduce the cost of tax credits to the Exchequer, but it was equally important that that reduction was accompanied by such a significant increase in the minimum wage, introducing the new concept of a living wage—it will rise to £7.20 an hour next April and will continue up to £9 an hour by 2020.

Alison Thewliss: I shall help the hon. Gentleman out a little. Does he accept that the cuts to tax credits are going to have a disproportionate effect on women? The Fawcett Society says that the freeze in working-age benefits will disproportionately affect women, with one fifth of women’s incomes coming in benefits compared with one tenth of men’s.

Chris Philp: The benefits of people who are not working are unaffected, and people who are working will have the opportunity, via higher wages, to more than recoup the effects of the tax credit move that the hon. Lady just described. I strongly welcome the fact that the increase in the minimum wage will more than offset the effect of the tax credit reductions.

Jim Shannon: Again, the issue of tax credits worries me greatly, as my constituents have contacted me over the past few days intimating their concerns. In Northern Ireland, the figures from charities show that many children will be pushed into poverty as a result of the changes to tax credits. No matter what way the hon. Gentleman may put this forward, that is what the experts and the charities are saying. How can he answer that point?

Chris Philp: I thank the hon. Gentleman for his intervention. The number of children in relative poverty—this was before the definition was changed—was reduced by 300,000 over the course of the last Parliament. As I mentioned in response to the previous intervention, although families on low incomes will receive less in tax credits than they currently do, that will be more than made up for by the increase in the minimum wage, and it will, therefore, be fair to people on low incomes. I do not think that the issues the hon. Gentleman just raised will come to pass in the way he described, although I am sure that further analysis will be done on this topic.

Ultimately, tax credits are a subsidy paid to employers who underpay their staff, and Members on both sides of the House will deplore employers who pay their staff less than is required to live on. A combination of reducing tax credits while increasing the minimum wage

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will end this abuse by some employers who do not pay their staff properly. A reform such as this is long overdue. For far too long, the general taxpayer has been subsidising employers who underpay their staff, and I am delighted that today’s Budget has taken a step towards ending that.

We have heard a great deal from Opposition Members about productivity, and it is right to say that productivity in this country needs to improve. I am delighted that somebody as distinguished as Jim O’Neill will be leading on that. I say to Labour Members who have raised this issue that the biggest fall in productivity in recent history—2.6% in a single year—occurred in 2009, on the Labour Government’s watch. They should therefore be a little careful when they seek to lay the blame for the productivity level on Conservative Members.

One contributory factor to low productivity is low wages, which are fuelled by tax credits: if employers can pay their staff very low wages, there is very little incentive to invest in IT, training, equipment or machinery because they can simply hire very low-paid staff. One side-effect of today’s increase in the minimum wage may be to increase productivity, because companies will be paying higher wages and so will be further incentivised to make sure that their workers, who will be costing them more, really are productive.

A second reason behind the relatively flat productivity figures is the relative decline of the oil and gas sector and the financial services sector after the recession. Both sectors had very high productivity, so if their participation in the economy is reduced, there will naturally be a bit of a drag on productivity. I am sure that the productivity plan, which will be published shortly, will go a long way towards addressing many of the issues.

The Chancellor mentioned aggressive claims management companies, which I do not think anyone has picked up on so far. He said that those companies are targeting people who have been involved in accidents and inducing them to make fraudulent claims. I had that experience a year ago, when my wife and I—I do not wish to pin the blame on either of us—had a small bump on the motorway. [Hon. Members: “Ah!”] It was nothing too serious. But in the year after that, my wife and I were inundated with phone calls on an almost weekly basis. Goodness knows how these people got our phone numbers. The insurance company or the accident pick-up company must have given them to this ambulance-chasing law firm. The firm phoned us up on a weekly basis, trying to persuade us to pretend that we had some sort of injury, such as whiplash or backache. No matter how many times we told them that we had no injury of any sort, they continued to try to persuade us fraudulently and falsely to claim that we were injured, which we obviously did not do. Some people may be tempted, and that would be outright fraud. Anything the Chancellor can do to stop this outrageous abuse is very welcome. Personally, I advocate an outright ban on payment protection insurance—PPI—or personal injury cold calls because people are being induced to make fraudulent claims, which act as a drag on the entire economy. I welcome the fact that the Chancellor made reference to this in his Budget statement.

Finally, I wish to touch briefly on housing. The timing is appropriate as the Minister of State for Housing and Planning is now in his place. I congratulate the

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Government and him on the national planning policy framework, which was launched in the previous Parliament, under which housing starts have significantly increased. In fact, the number of housing starts per year is around 50% higher than it was in 2009 and 2010. The Government can be very proud of the action they have taken so far to encourage house building. In my borough of Croydon, the number of housing starts increased fourfold in 2014 compared with 2013—they went up from 500 a year to about 2,000 a year. The Government have a good track record of making progress in this area. I have every confidence that the housing Bill, to be introduced in Parliament in October by the Minister of State, will put in place further measures that will increase house building even further. As we increase supply, affordability will improve as well.

On the subject of council housing, to which a previous speaker referred, we should note that over five years the coalition Government started more council houses than Labour did in the previous 13 years put together. That is a record of which the Government can be proud.

Clive Efford rose

Chris Philp: As the hon. Gentleman gave way to me, I shall do the same for him.

Clive Efford: The hon. Gentleman just cannot get away with what he said. That money was left over from the Labour Government. The house building programme that we started was scrapped by the Conservative Government when they took office. More houses could have been built if they had not done that.

Chris Philp: As Labour’s outgoing Chief Secretary to the Treasury pointed out in his very helpful note, there really was not much money left when the Labour Government quit office. Council house building continues to this day. Even the hon. Gentleman cannot claim that council house starts today can in any way be attributed to a Government who left office five years ago. This Government have a very fine record on house building, and I know that they will continue with it in the future.

At its heart, this Budget does something profound and important: it shifts the balance in this country’s economy from welfare to work. The only real way to fight poverty and to create prosperity is through hard work and earning a living, not through state handouts. This Budget tips the balance back in favour of hard work and away from state handouts, and I heartily support it.

5.44 pm

Barry Gardiner (Brent North) (Lab): I start by welcoming the announcement about the living wage. I would feel a good deal happier about doing that if I had not noticed the guilty, sideways glance that the Chancellor gave immediately after he had made his announcement. It reminded me too much of Draco Malfoy. It set me thinking: what is the living wage in London at the moment? It is £9.15. The Chancellor said that it would be £9.35 by 2020. I thought, “Hang on. Is it really going to increase by only 20p in the next five years?” Then I realised what is really going on: one calls the thing by the same name, but changes what it is.

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We have been there before. We know very well that the practice exists. We remember the Chancellor’s colleague used it when we were given academies. Of course, those academies were not academies. What we called academies were those schools in difficulty, which were not doing well by the children that they were serving, and we put extra money into those schools and allowed them the freedom to try to do better. What the Conservatives called academies were excellent schools doing tremendously well, which were allowed to have that freedom and leave the system, taking with them money that was in the pot for those needing special educational assistance or free school meals. It is the opposite of rebadging: something different is called by the same name as something else. It does not fool people for long.

The Chancellor hit the wrong people, and he did so because of a genuine political problem that faces all modern Chancellors. Public demand for better services requires increased revenue, but international market competition for capital and labour drives down the ability of any country to raise either corporate or personal income tax. For any political leader, the issue of tax rates has become a straitjacket. The obvious answer has to be to raise revenue some other way. What is needed is a commodity that cannot be concealed or moved offshore. If it could help to establish a political narrative around fairness and equality, so much the better. Instead of hitting the working poor by removing working tax credits, perhaps the Chancellor should have considered taking a leaf out of the SNP’s book and taxing land, the possession of which is one of the defining indicators in our country of the divide between rich and poor, and between powerful and powerless.

Land is a very odd commodity. Take an unattractive piece of agricultural land worth about £5,000 an acre and give it planning permission. Suddenly one has an asset that is worth more than a hundred times that amount. An acre of development land can fetch between £500,000 and £l million. Of course, we all know that land is scarce on this crowded little island of ours—only we are wrong, and it is not. In fact, of the UK’s 60 million acres, only about 4 million are actually used to house our 61 million-strong population. It is true that about 15 million acres could not be used—not everybody wants to live on top of Cadair Idris—so we have to exclude the forests, lakes, rivers and mountains, but that still leaves 41 million acres of good land.

Most people are surprised to find out that the myth of the crowded little island is just that—a myth—but not as surprised as when they find out that the people who currently pay land tax, some £35 billion of council tax and stamp duty, are the 99.4% of us crowded on to the 4 million acres, while the 160,000 families who own the remaining 41 million acres receive from the public purse a subsidy of about £3.5 billion every year. That is about £83 an acre every year from us, their fellow citizens. Yet these fellow citizens are the very ones that my hon. Friend the Member for Eltham (Clive Efford) was talking about, who cannot afford to buy a home of their own because land is released slowly and selectively on to the market precisely to restrict supply and artificially inflate prices. The landowner benefits twice over. The current system subsidises a tiny elite, precisely encouraging them not to make their land available for housing until public demand has ramped up its price. Breaking that perverse cycle is a key way of resolving the problems of

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“generation rent”—the housing problems my hon. Friend was speaking about—but it is also a way of raising significant revenue.

A land valuation tax is a levy on the value of the land unimproved by buildings or other enhancements. The principle is simple: that because the value of the land has been created by its proximity to the infrastructure paid for by the community—the schools and hospitals, the roads and railway stations—that value should be captured by the community to be reinvested in public good, rather than appropriated for private profit. And if that sounds like a Labour policy, then so much the better!

George Kerevan (East Lothian) (SNP): The hon. Gentleman may know that, under the original planning Acts introduced by the Labour Government in the 1940s, the uplift in land value did accrue to the public sector and the taxpayer. That changed when the incoming Conservative Government under Winston Churchill changed the law.

Barry Gardiner: I am so glad I took that intervention, because the hon. Gentleman makes an extremely important point—one that I totally agree with.

The amount of tax raised could be substantial: an annual tax of just £200 per acre could raise £9 billion—more than by putting an extra penny on income tax. The unpopularity of raising corporate or personal income tax has been a straitjacket. If the Chancellor feels comfortable wearing it, he may be madder than I think.

For 10 years, I ran my own business in the City of London. I focused on two things: first, manage your assets; secondly, manage your risks. The same is true for Government. One would not—should not—have any confidence in a management team that did not know the value of its asset base, and one would not have any confidence in a management team that either failed to properly quantify its strategic risks, or that, having quantified them, failed to take appropriate action to mitigate them. Yet we have a Government who have no proper account of their natural capital asset base, and although they have identified the risk of climate change and the linear economy as a real threat to growth, they are failing to take the necessary steps to mitigate those risks adequately.

Dr Richard Spencer of the Institute of Chartered Accountants in England and Wales has put the case for valuing our natural asset base most succinctly:

“The argument for natural capital accounting is that measuring nature makes its contribution to the economy and our wellbeing visible and allows for effective decision making.”

Global businesses extract an estimated $7 trillion from the environment each year. That $7 trillion does not appear on balance sheets; it consists of free goods—externalities as classical economics prefers to call them. No Government account exists that charts their contribution to the national wealth. Globally, they represent the annual income from a gigantic asset base that is, quite simply, the precondition of all other economic activity. What sort of economic managers do we have who fail to quantify an asset base of such magnitude and such importance?

The IMF has calculated the cost of the financial crisis at $11.9 trillion. Each year, the degradation of natural capital around the globe erodes our natural asset base

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by more than that. Our natural environment as represented in our natural capital stocks and flows faces a bigger crisis every single year than the world faced in the 2008 global financial crisis, yet the crisis of the environment is invisible. We were prepared almost to bankrupt ourselves to save our economic system. Our natural capital debt is, arguably, a much more urgent issue than our financial debt, yet this Budget does nothing—nothing—to reverse the decline of that asset base. Natural capital valuation is a powerful tool for policy making and policy delivery, and it is entirely absent from this Budget. So much for managing the assets.

But what about managing the risks? This Government have identified the risk of climate change. With considerably less clarity they have identified the risk of a linear economy. However, as Peter Young, the chair of the Aldersgate Group, said only a few weeks ago:

“The UK is a world leader in environmental science and in writing policy; it is not a world leader in taking subsequent action.”

Just over a week ago the Government’s independent advisers on these matters, the Committee on Climate Change, set out the key actions that Government needed to take if they were to respond appropriately in managing and mitigating the risks. The committee criticised the fact that many low-carbon policies have no investment certainty beyond the next few years. That, it says, is preventing efficient investment in low-carbon technologies and their supply chains, which often have long lead times. To bring those investments on stream the Government should give policy certainty and clarify ongoing funding commitments beyond the cliff edge that is currently 2020.

What did the Chancellor announce? He removed the exemption for renewables from having to pay the climate change levy. Instead of incentivising investment and stabilising the low-carbon industries, the Chancellor put a £3.9 billion tax on renewables. It was very softly spoken in the Budget, but at a stroke he killed off our chances of developing this growing green economy. The jobs, the growth and the international exports that could have come from it have just been thrown away to raise £3.9 billion for the Exchequer. It is a dereliction of duty as a manager of risk.

The Committee on Climate Change says that the Government must do much more to support private innovation to develop the future technologies that still need research, development and demonstration. These are technologies such as electric vehicles, carbon capture and storage, and offshore wind turbine technology, that can help us meet our 2050 targets. They are also the new green industries that can bring growth and high-skilled jobs.

Specifically, the committee’s report called upon the Government to

“ensure the power sector can invest with a 10-year lead time”.

To do this, they need to set a clear carbon target for the power sector by the end of the next decade, and extend the funding under the levy control framework to match project timelines out to 2025 with annual rolling updates. In his Budget speech today the Chancellor steadfastly refused to do so, against his own independent advisers.

In the built environment the report calls on the Government to

“develop plans and policies that deliver low-carbon heat and energy efficiency”.

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Nothing! A strong Budget would have strengthened and implemented a zero carbon homes standard. It would have driven investment in low-carbon heating. A strong Budget would have provided increased support for electric vehicles, as well as pushing for stronger 2030 EU CO2 targets for cars and vans. The Economic Affairs Cabinet Committee, which the Chancellor chairs, received a report over a year ago saying that the cost to our economy of air pollution from existing vehicles from the 29,000 premature deaths it causes, was between £9 billion and £20 billion lost to our economy each year. A strong Budget would have mitigated those costs by tackling the problem at source.

The Chancellor talks about hypothecating vehicle excise duty to a road building programme, but he does nothing to put any money behind the electrification of those same vehicles to deal with particulate matter and nitrogen dioxide, which the committee says is costing so much every year. In this Budget the Chancellor failed to manage the natural asset base and failed to manage the environmental risks.

Several hon. Members rose

Madam Deputy Speaker (Mrs Eleanor Laing): Order. There is one hour left for this debate and I notice that there are six Members trying to catch my eye, which makes my arithmetic very easy indeed. I do not believe there is anyone here who cannot calculate that if everybody takes approximately 10 minutes out of courtesy to their fellow Members, everyone who wishes to speak will have an opportunity to do so, without the need for a formal time limit.

5.59 pm

Tom Tugendhat (Tonbridge and Malling) (Con): Thank you, Madam Deputy Speaker; I will stick as closely as I can to your request. I would first like to congratulate my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) on her maiden speech. Her fantastic tour de force as the champion of her constituents was quite something. I was also grateful to hear—sadly by television, rather than in the Chamber—the maiden speech of the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell).

This is the first Budget that I have had the honour of hearing in this House. It is a delight to be able to support my right hon. Friend the Chancellor, because he has done some fantastic things for our country. The three that I will focus on are not exactly the same as those that have been extrapolated by so many of my right hon. and hon. Friends, which I will allow to stand on their own.

The first measure is the drop in corporation tax, which is linked, brilliantly, to the rise in the national living wage. That is an absolutely essential part of any Conservative manifesto, and it is absolutely right that my right hon. Friend has made it such a priority. Tying the amount that a company pays in taxation to the amount that a worker can earn is essential if we are to break the moment at which the state puts its hands in their pockets and, in so doing, merely adds grit to the engine of the economy. That is important because when taxes are taken the state charges for the privilege, and when it hands out benefits it does so again. By removing the state, all that happens is that both sides benefit.

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The reduction in corporation tax will have a further effect: it will spur industry and help to spur international competition. The United Kingdom already has one of the lowest rates of corporation tax in the European Union. I welcome it falling down that list. As it falls and moves towards the rate that Ireland has adopted, we will have a greater ability to compete with others, and we will do better because of the industry of our people, not because of the intervention of our state. I am confident that that, in turn, will lead to an increase in revenue. That increase in revenue is absolutely essential for the things that we need as a nation.

We need one of those things very much. I am very glad to welcome my right hon. Friend the Chancellor’s decision to link defence spending to the UK’s GDP. By making that 2% commitment, he has effectively guaranteed an extra £6 billion of defence spending a year by the end of this Parliament in 2020. That is a very important sum not only because of what it will contribute to immediate defence, by which I mean the purchase of ships and aircraft and the hiring and training of soldiers, but because of the message it sends to our friends and allies. By tying ourselves to NATO’s 2% target, we are stating very clearly that we are a committed member of NATO, that we will face the aggressions we see around the world, and that we will face them squarely. We will stand with our allies and face our enemies. I am very proud that this Government have made that commitment.

Bob Stewart (Beckenham) (Con): I thank my hon. and gallant Friend for allowing me to intervene. The commitment also sends to our armed forces the incredibly important message that this Government will be steadfast in their support, which will be very good for morale.

Tom Tugendhat: I welcome my hon. and gallant Friend’s comment. In fact, he pre-empts the next part of my speech. The amount we spend also points to our priorities as a nation, and he is right that this is vital for our future. It points to the importance of readiness. The amateurs always talk about numbers; about kit and money. The professionals talk about readiness, and they do so because that is what we get with those numbers. It is the morale that he talks about. It is the training and preparation that mean a group of young men are not a rabble, but an army; that a bunch of steel is not simply a welding exercise, but what my gallant friends in Her Majesty’s Royal Navy often refer to as Her Majesty’s sleek grey messengers of death. I am very pleased that the things I have described are what our soldiers, sailors, airmen and marines will be getting. This welcome increase comes as we are reconsidering our priorities as a nation at the time of the strategic defence and security review. I must declare a slight interest as my wife is working on it on behalf of the Foreign Office.

As the decisions are being made, I urge her and the Ministry of Defence to think hard about where they allocate this money. It could go to various areas. It could go, rightly, into a lot of the ship purchasing being done, whether that means the two carriers that are being built in Scotland, the submarines being built in Barrow or the equipment programme for the Army. But I would I urge that they put this money into the things that are so often overlooked: training and ensuring that our soldiers, sailors, airmen and marines are properly housed and that their families are cared for.

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I also welcome the joint security fund, which is a fantastic development that puts into the defence budget the flexibility that has so often been lacking. Those of us who have worked in defence know that very often the size of the budget is a fiction, not in the sense that it does not exist but in the sense that it is unusable in any flexible sense. It is so committed to a carrier or a submarine programme that when we suddenly need money for something else we do not have it. The joint security fund is a brilliant development that will inject that flexibility.

For example, today it could be used to fund GCHQ, the Royal Navy or our Border Force to deal with the scourge of people traffickers and that vile crime, which exploits the poorest and most vulnerable across the world. In a few years’ time, perhaps it could be used to hire cyber-experts to address the threats that are already coming from China and Russia, attacking our NATO allies and our own businesses. In the future, who knows what it could be used for? It could be used to develop technologies to put spy cameras into the small brooches that some people wear, Madam Deputy Speaker. All those things are possible, as the fund is entirely flexible.

George Kerevan: One of the problems in our reconnaissance capability, particularly our maritime reconnaissance and drone capability, is that we have to import the equipment. When there is recognisably a gap, we will have to import it and that will add to our budget deficit. The OBR report accompanying the Budget statement shows a deterioration in the current account deficit to record levels. All that the hon. Gentleman is showing is the weakness in our manufacturing capability, and that has not been resolved in all the years of his Government.

Tom Tugendhat: The hon. Gentleman’s point is interesting, but I would argue that the manufacturing capability in our country for the defence technology we are talking about is largely there. The problem is that we are not bringing it together in a suitable manner. I urge the hon. Members from the Scottish nationalist party to support the development we need in the maritime patrol aircraft field and I would agree entirely with some of the comments made by the SNP that we must fill this gap with some urgency. I urge the Ministry of Defence to look hard at the money it will be getting and to use some of it to fill that gap.

Sadly, as there is a gap, I would urge the MOD to fill it with something that is more off-the-shelf than bespoke because of the urgency of the requirement, but if we look at the manufacturing capability across our islands, we will see that the technology required for the type of sea-penetrating radar and other such elements is completely available in the United Kingdom. We have a great series of businesses from the north of Scotland to the south of Cornwall, and some in west Kent, that can totally satisfy that requirement. I urge them to support us in ensuring that this capability comes about.

Alison Thewliss: Given the budget constraints the hon. Gentleman is talking about, does he consider Trident renewal to be a good priority in the defence budget?

Tom Tugendhat: Yes, I do, and on the same basis that I believe that insurance is not something that should be cut in good times.

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The final element of my right hon. Friend the Chancellor’s speech that I welcome is the extension of the scope of the investigation into the Lewes-Uckfield line. I realise that this is a local priority, but, for those of us in west Kent, the ability to develop a rail link to the south coast will make the coastal powerhouse just as important as the northern powerhouse.

This Budget does many things to help the people of the United Kingdom and those of Tonbridge, Edenbridge and Malling. In my own constituency, 839 people have been lifted out of tax and nearly 50,000 will benefit from the increase in the personal allowance. Along with the fuel price freeze, this is going to be one of the most important and welcome Budgets in west Kent. I welcome the Chancellor’s commitment to fairness and to the principle that he has made very clear today, namely that work will always pay and that the state will stop creaming off the labour of the people only to give them their own money back.

6.10 pm

Rob Marris (Wolverhampton South West) (Lab): I welcome parts of this Budget, including the announcement on vehicle excise duty; the reduction of buy-to-let mortgage interest relief to the basic rate; the restriction on higher-rate tax relief on pension contributions, which will pay for the changes to inheritance tax; the increase in the employment allowance from £2,000 to £3,000; and the apprenticeship levy.

I also welcome, if the Government can get it right—it is a big “if”—the changes to what the Chancellor is now pleased to call the national living wage. However, as has been pointed out, there is a sleight of hand—in terms of incorporating tax credits into it—with regard to how what Labour has always called the living wage will be calculated.

I welcome the increase in employment in the past two years, although too much of it is low paid, and I welcome the return to some growth in our economy, which was blown off course when this Chancellor sucked money out of it in 2011 and 2012 before he returned to classic Keynesianism, with counter-cyclical deficit spending at a huge level. That is what he has been doing for the past five years—more of that later.

Conservative Members and the Chancellor himself keep talking about the long-term economic plan, but I am a whole lot more worried about this Government’s short and medium-term economic plan, because this is an over-optimistic dash-for-growth Budget. Those of us who listened to several of Gordon Brown’s Budgets when he was Chancellor of the Exchequer will remember how over-optimistic they could be, and some of what he did did not exactly end well.

This Chancellor has taken steps to increase Government income with some of his policies, such as the restriction on non-dom status; the increase in the insurance premium tax; the increase in the cost of buy to let as a result of the restriction on relief; the restriction on tax relief on pension contributions; the abolition of the climate change levy exemption, which I am not wild about, but it will increase Government revenue; and the selling of some more family silver and assets.

There is also some revenue-neutral stuff in the Budget, such as the proposal on vehicle excise duty. However, I caution those Conservative Members who were jumping up and down about how wonderful that is, because if

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they read the policy, they will see that the proposal to spend VED on roads—which is hypothecated—will not kick in until 2020. That is the long-term economic plan we should be worried about, because we should be doing more of that now.

The dividend changes will, as far as one can tell, be tax-neutral. The apprentice levy is very welcome, but it will be tax-neutral in the sense that the money will come in from the levy and then be spent on apprenticeships. That is great, but it will not raise any more money for the Government. We have heard the usual stuff about tax evasion and tax avoidance that has been trotted out by every Chancellor back to Gordon Brown and beyond: sometimes it produces a bit of money and sometimes it does not.

We have also had the Chancellor tying his hands on other sources of revenue, with no increase in VAT, income tax or national insurance contributions, and a cut in inheritance tax, corporation tax and income tax through personal allowances going up and the thresholds to the higher rates going up. There will be a cut in the bank levy, because I do not think that that will be offset by the surcharge on bank profits; it may be, but I cannot see the figures. The annual investment allowance changes will cut revenue. A cut that was not highlighted by the Chancellor—unsurprisingly, because it was in his Budget earlier this year—is the cut in the tax on North Sea oil and gas. The Chancellor is tying his hands on Government revenue, so I caution Conservative Members that quite a lot of this stuff is about a dash for growth that I suspect will end in tears.

Then we have what Labour Members see as the nasty stuff. It has not been much remarked upon in this debate, but for four years there will be a further cut, effectively, in public sector pay—pay restraint of 1% for another four years—as if public sector workers have not had their pay restricted enough. If inflation is higher than that, they will have a pay cut. We also have the slashing of tax credits. I understand the theory of that, but it is putting the cart before the horse, because incomes have not yet gone up enough to counterbalance the cut in tax credits. Tax credits will be frozen, as will other benefits, and that has also not been remarked on in this debate. There will be a freeze on working-age benefits, including tax credits and local housing allowances for four years, from 2016 to 2020, to save £4 billion a year. That will hurt some of the most vulnerable in our society.

I have said this in this House before, but it bears repeating: the Government are trying to cut the deficit because of their fear about the intergenerational transfer of debt and, as is reinforced by this Budget, they are privatising that debt. We have had private borrowing at very high levels during the past five years. We have had the privatisation of debt through rising house prices, because of the restriction in supply. The Government introduced Help to Buy on the demand side of the equation, which has driven up prices but it has not increased supply by anything like the amount that we all know is needed.

We have had further privatising of debt through the abolition of the student maintenance grant. There was a significant privatisation of debt when the coalition Government said that the state would not take on debt for post-secondary education in England, but would get

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students to take it on with fees of £9,000. This Budget pushes that further by saying that students from the poorest backgrounds will no longer even get maintenance grants; they will have to take on debts. The irony about the privatisation of debt, as every Member of this House and his or her dog knows, is that the majority of that debt—I use the word “majority” advisedly—will never be paid back. Rates of applications to universities in England have not gone down, despite the tripling of tuition fees, because 17 and 18-year-olds are smart and know that they will never have to pay it back. Does it matter whether the debt is of £20,000 or of £50,000 or £60,000? No, because they will never have to pay it back. Who will pay it back? The state, so it is even a failed privatisation of debt.

The economy has not been rosy during the past five years, as the Chancellor and Conservative Members like to believe. There have been some good things, to which I have pointed, but we have also had a huge problem with productivity. There were jokes earlier about the socialists in France, but if we look at the Red Book, we find—surprise, surprise—that output per hour is 27% better in France, which means productivity is a whole lot better there. GDP per capita has stagnated, and half of our anaemic growth has been driven by immigration. We have a continuing problem, which has become a structural one, with the balance of trade being way out of kilter. We have had a lack of infrastructure spending. This week, we have already seen the Government cutting back on rail investment, and in the vehicle excise duty proposals in this Budget—with none of that recycled, hypothecated money until 2020—we see a cutting back in road investment.

During the past five years, the national debt has gone up by 55%. So much for getting the deficit down. Yes, it is almost down to 5% of GDP, but that is still enormous. It is actually far higher than Greece’s deficit. The Greek Government do not have a day-to-day deficit; they have accumulated debt, but no deficit. We are still running a deficit of 5% of GDP, and the national debt is up 55%, which is a terrible economic performance. As with the stock market, let us be careful, because this Chancellor’s past performance might well be a good indicator of the future performance of his long-term economic plan.

6.19 pm

Huw Merriman (Bexhill and Battle) (Con): I warmly support the Budget that the Chancellor delivered today. I hope that the House will permit me to consider how the Budget will impact on my constituents in Bexhill and Battle. Indeed, I contend that my constituency contains many of the attributes and challenges that other hon. Members find in their localities. I will reflect on three key areas that were addressed by the Budget.

The first area is work and welfare. I am pleased that the number of my constituents claiming jobseeker’s allowance has decreased from 1,400 in 2010 to 613. Those aged 18 to 24 account for just 135 of that number, which is down from 385 in 2010. Those figures demonstrate that some of the 2 million new jobs that have been created in the UK have certainly been delivered in my constituency.

I was pleased to hear from the Chancellor that the Government will continue to protect those who, through disability, cannot work and will never be able to do so.

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Those individuals deserve our care and compassion, and I am pleased that the Government continue to focus their energies on that. I am passionate, however, about giving people the opportunity of work and equally passionate about ensuring that there is not a choice between work and welfare. I am therefore pleased that the welfare cap in my constituency will be reduced to £20,000, which will ensure that work always pays.

Bob Stewart: In my constituency, which is relatively rich, many people go to work and raise a family on well under £20,000.

Huw Merriman: I thank my hon. Friend for making that point. It applies to my constituency, too, which is just further south than his.

It has to be right that those who work should not feel disadvantaged and as though there is no incentive to work. The cap of £26,000 has been a great success. Indeed, the Labour party has adopted that policy, too.

I support the withdrawal of housing benefit from 18 to 21-year-olds. It cannot be right that people of that age who are in work are required to save up for a home of their own or to pay rent, whereas those who are not in work are able to move out and reside in housing that is paid for by the state.

In pledging to deliver a balanced economy that will permit the creation of a further 1 million jobs, I believe that we can help the 613 jobseekers in my constituency to find work and give them a fairer future than the downward spiral that benefits and welfare inevitably bring.

The second area is productivity. I welcome the Chancellor’s commitment to improve Britain’s productivity, particularly his recognition that investing in transport infrastructure will help towards that end. Bexhill and Battle has poor transport connections to London and beyond. Trains from Bexhill take almost two hours and spend more time going backwards or on pause than moving forward.

The Chancellor has brought the news that the Government will support a new high-speed rail service that could take my constituents from Bexhill to London in 78 minutes. Indeed, I noticed a typo on page 79 of the Budget report, where it speaks of the line going just to Hastings and Rye. I hope the author will ensure that that says Bexhill as well, which is planned to be on the route. The new rail link will help us attract new employers to the constituency.

Thanks to the Government, a new link road is being built from Bexhill to Hastings, which will deliver thousands of houses, a 42-acre business park and a country park, all of which will attract high-skilled jobs and boost our economic regeneration and productivity.

In addition—this is still linked to productivity—I welcome the commitment to freeze fuel duty for a further year. In a rural constituency such as the one I represent, a saving of £10 a tank will continue to remain a huge boost. I welcome the commitment to road building and the improvements via the new vehicle excise duty that—when it is introduced—will ring-fence motoring taxes for roads. I would be delighted if the Chancellor wished to spend some of that money on dualling the A21. The productivity gains from new roads, rail, housing and jobs will be immense in my constituency, and I welcome Government spending in that sphere.

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My third point is about making work pay. Increasing the tax allowance will take more than 800 of my constituents out of the tax system altogether in 2016. A further 50,000 of my 80,000 electors will benefit from having their tax allowances increased. Those changes show that the reward for those who work and move off benefits will be given to the worker, not taken back by the Government and merely recycled or wasted. To that end, I spoke yesterday in this House, and in urging a reform of tax credits and encouraging employers to pay their staff more, I suggested that

“there is a case for the Government sharing the cost of this reduction with employers…with some of the savings being recycled as further corporation tax…reductions.”—[Official Report, 7 July 2015; Vol. 598, c. 274.]

Jake Berry (Rossendale and Darwen) (Con): You got in the Budget!

Huw Merriman: Indeed. I was therefore delighted that the Chancellor may perhaps have watched my speech on the television, and I certainly welcome his commitment to reduce corporation tax to 19% in 2017, and to 18% in 2020. With that cut in corporation tax and the increase of the employment allowance to £3,000, funding should be in place to ensure that the new living wage of £7.20 in 2016 and £9 by 2020 will not penalise employers—a vital requirement if we are to continue to encourage employers to expand and create more new jobs.

Let me highlight three further measures that I believe will help my constituents in Bexhill and Battle, due to its demographics. First, we have an ageing population and the increase in the inheritance tax threshold to £1 million will be welcomed by those who have worked hard and want to leave a legacy to their children. Secondly, my constituency contains a number of small businesses and a farming industry, and my constituents will welcome the proposal to keep the annual investment allowance at £200,000 per annum. Thirdly, my constituents regularly let me know that they are concerned about the UK potentially not meeting its commitments to NATO’s 2% spending pledge. My postbag will be all the lighter for the Government maintaining that commitment.

As with any Budget, there is a balance to be struck and the measures must be reviewed to assess impact. I am passionate about building new houses for constituents, particularly at an affordable level. Reducing housing rent by 1% at a time when we are rightly promoting the right to buy for housing association tenants must not cause house building to slow down in that sector due to the inability to tap markets for finance. This Government built more council houses in five years than the Opposition did in 13.

Harry Harpham (Sheffield, Brightside and Hillsborough) (Lab): The hon. Gentleman mentioned affordable housing. Is he aware that the Office for Budget Responsibility forecasts that a 1% reduction in rent will lead to 40,000 fewer affordable homes being built over that period? Does he think that his constituents will welcome that?

Huw Merriman: That brings me to a point raised by the hon. Member for Eltham (Clive Efford). The Government aim to encourage people to buy their social housing. Once they do that, resources will be freed up to build more housing stock. It will also cause house prices to come down, making it easier for all to rent and buy, so, no, I do not agree with that statistic.

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I am passionate about giving those from disadvantaged backgrounds the opportunity of a university education. This Government have delivered more students from disadvantaged backgrounds than ever before, and I hope that those from poorer backgrounds are not put off going to university following the announcement that the student maintenance grant will be replaced by a loan. They should not be put off; it is the best investment that a student will ever make, as I know to my benefit.

In conclusion, I wholeheartedly commend this Budget. It rolls back the state and rewards those who make brave decisions and work hard. It maintains our commitment to look after those who cannot look after themselves, and it encourages those who can look after themselves to do so. In bringing them the path to work and prosperity, I believe that this Government will help my constituents and those of all Members.

6.29 pm

Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP): I am afraid that I have to start by disappointing you somewhat, Madam Deputy Speaker—and no doubt the whole House—but because of a throat infection, I am unlikely to last 10 minutes.

I will come on to say a few words on productivity, but I was stunned by the comments made by the hon. Member for North East Somerset (Mr Rees-Mogg) earlier this afternoon. He talked about the Budget being a highly moral one, with a great moral imperative behind it. His comments reminded me that today is the 131st anniversary of the formation of the National Society for the Prevention of Cruelty to Children, the very day the Government are bringing in a Budget that attacks tax credits for children.

I was going to leave my remarks on that there, but I will refer to something my hon. Friend the Member for Glasgow Central (Alison Thewliss) raised. I will re-read, for those who were absent at the time, a small sentence on page 88 of the Government’s Budget. It read thus:

“The Department for Work and Pensions and HMRC will develop protections for women who have a third child as the result of rape”.

Where is the morality in that? What on earth is moral about dragging women in to talk about the fact that they may have been raped, so they can get some decent treatment from the benefit system? What can possibly be moral about that? I appeal to the Government: for goodness’ sake, they may seek savings in many other parts of welfare, but they should not punish children and not force women, who have gone through the trauma of rape, to have to justify themselves to the taxman.

I shall move on now to productivity. The Government make great play that they have a plan for productivity, but any search for it in the Red Book will be in vain. Let me pick up on one or two matters that have been referred to by Members who are no longer in their place. Mention was made of science. Why is science and research important? If we are to stimulate investment, innovation and enterprise, one of the key things we need is the production of knowledge. In 2010, the Government chose to freeze the budget—or ring-fence it, as they grandly called it—for science and research at £4.6 billion a year. By the time we got to the Budget of

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March 2015, it had degraded in value by £900 million in the succeeding five years, yet they still proclaimed in the Budget that they had ring-fenced the budget for science and research. When I received the Red Book for today’s Budget, one of the first things I did was to search for the core budget for science. Surprisingly, the table produced in the March Budget is entirely missing. There is no comment about the retention, even in cash terms, of the core science and research budget. Perhaps that was a slip, but surely it cannot be justified in any way by any Government who claim they have a strategy for productivity.

Let me pick up one other matter—I am pleased that my throat is holding out. Mention has been made of a return to the 1950s by the bringing back of a levy for apprenticeships. Of course I welcome employers making a bigger contribution towards skills and development, but the problem in terms of productivity is not a general one about access to apprenticeships. We have had a structural weakness in the UK for more than 20 years in intermediate and higher intermediate skills—in other words, the technicians in science laboratories and the manufacturing sector, for example. I am not so much talking about the people at what might be traditionally called the pure craft end or at the higher professional end; OECD figures tell us that we have a worse record on producing higher intermediate skills than most of our competitors. I see no mention of that in either this Budget or the March Budget, so what are the Government going to do about it?

Madam Deputy Speaker, I feel myself in need of a Macallan 12-year-old, because of my throat, so I shall have to leave it there.

6.35 pm

Louise Haigh (Sheffield, Heeley) (Lab): Today’s Budget is the final act in a financial crisis that has seen debts moved from the financial sector to the public purse and piled on to individuals who will be comprehensively unable to foot the bill for the Chancellor’s raid on tax credits, housing benefit for under-25s and families with more than two children.

I shall deal with this before hon. Members leap to intervene. The living wage is not set at a level that would permit households to cope without in-work support. The Resolution Foundation, which the Chancellor referenced, has said:

“If in-work support is cut then, as night follows day, the Living Wage will rise.”

Excluding in-work support raises the London living wage to £11.65, revealing the Chancellor’s announcement as mere rhetoric. As my right hon. and learned Friend the Leader of the Opposition said, it is giving with one hand and taking with the other.

The Budget serves notice that we have a Chancellor steadfastly refusing to tackle fundamental issues in our economy that are causing rising levels of household debt. It is ominous to listen to him talk with such confidence, given that significant underlying weaknesses in the economy that have been causing serious concern for some time are completely ignored. He might have wanted a rebalanced economy and a recovery built on rising incomes, but that is simply not happening. High debt, low pay, an economy based on credit and a housing bubble, a deregulated financial sector—back to business as usual.

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What was wrong in 2007 remains wrong to this day. It is that we do not have a resilient financial system. In the recently published “Financial System Resilience Index”, the UK ranked lowest of all G7 countries. It is that household debt is rising to levels not seen before—higher even than at the peak of the crisis. Last year alone, it grew by 9%, which was an increase of £20 billion on households’ credit cards and other debts. It is that the housing bubble continues apace and markets are overheating. Exhortations from the Governor of the Bank of England have been ignored. He warned:

“What happens if households are borrowing at high multiples is they have to economise on everything else in order to pay their mortgages. And if enough people are highly indebted, that has a big macroeconomic impact… There is the possibility that currently responsible lending standards become irresponsible to reckless.”

These issues are all interlinked. We have shifted the debts of the financial sector on to the public balance sheet, and now, in the final act of the financial crisis, the Chancellor is shifting it on to individuals. Ours is an economy built on the same old mistakes. I do not think that anyone in this place would care to suggest any longer that we are beyond the days of boom and bust—we are witnessing this in the international markets as we speak. While the world is understandably focused on Greece, China’s markets are in little short of meltdown. Unfortunately, crashes are far from being a thing of the past, and I would suggest that in the UK we are closer to the next one than we are to the last.

Before I entered this place, I worked in the City of London, and I can report to the House that the culture of risk taking, short-termism and excessive pay and bonuses remains as prevalent today as it was before the crash—although I hasten to add that I was not privy to such excessive pay.

Huw Merriman: Does the hon. Lady not agree that segregating retail banks from investment banks makes it less likely that if the investment bank collapses, it will contaminate the commercial bank? I declare an interest, having worked on the unwinding of the Lehman Brothers estate.

Louise Haigh: I absolutely agree that separating the investment arm from the high street banking arm was one of the answers to the cause of the financial crash, but we have not had an update recently, and as I understand it, the banks are not co-operating on this issue—either with each other or with the regulators. It would therefore be very helpful to have on update on that from the Minister.

The financial sector heaped masses of debts on to ordinary people—our constituents. We do not want it to pay; we are not vengeful sorts in this House—we want it to reform so that what happened can never happen again. However, instead of learning from the mistakes that I accept the last Labour Government made—mistakes that would have enabled the Government to build a sustainable economy in which everyone can share—the Conservatives have imposed their ideological agenda on a terrible crisis in order to shrink the state and entrench inequality. That is why the UK’s recovery was delayed by three years after America’s and Germany’s, squandering billions of pounds in lost output. However, what matters now is what the Government will do about that. The problem is that the Government are not merely acting with intransigence; they are exacerbating the problems.

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The measures in today’s Budget on tax credits may take debt off the Government books, but they heap it directly on to some of the most low-paid and the most vulnerable and those who can just about afford their mortgage, if they have one at all. Fourteen-hundred pounds for a working parent who lives on their own—that is what the Government have saved, but do they think that a lone parent can afford to lose £1,400 a year? He or she will take out credit cards to pay for their children’s school trip, clothes, the rent or the mortgage, and household debt will rise and rise. Turning maintenance grants into student loans, passing debt straight off the Government’s books on to those who can least afford it and who are the most averse to debt—a generation of young people is being created that is not just accustomed to personal debt but reliant on it.

The Chancellor said today that he wanted to move away from an economy based on debt, but he made no mention of records of household debt. Indeed, some of the OBR’s forecasts were not mentioned by the Chancellor today—for example, the forecast that the ratio of total household debt to income will rise by 26% by 2020, most of it unsecured debt, an additional £48 billion of which the OBR expects to be added by 2020, compared with the March outlook. Overall household debt is now expected to reach 167% of household income by 2020, while household disposable income will be down by 1.5% in 2020, compared with the estimate at the previous Budget.

Private debt turned into public debt and put on to the backs of individuals, and the same mistakes being repeated: if this were a Budget genuinely designed to help working people, we would have seen measures to tackle the inherent issues in our economy. We would have seen genuine ambition on lifting wages, not mere rhetoric. We would have seen action to lower housing costs, commitments to increase social housing, and measures to militate against spiralling household debt. Instead, we have seen yet more tinkering around the edges, just like in every Budget in the last five years. Not only does this Budget hurt working people; it stores up yet more problems for the future that it will take at least a generation to fix.

6.43 pm

Sir Peter Bottomley (Worthing West) (Con): I welcome the chance to contribute to this debate. On 16 March 1944, Mr Henry Willink—later Sir Henry Willink—moved a motion:

“That this House welcomes the intention of His Majesty’s Government…to establish a comprehensive National Health Service.”—[Official Report, 16 March 1944; Vol. 398, c. 427.]

I think there is a lot to be said for having one day each year in this country for the national health service and one day for health. I welcome the Chancellor’s commitment to meet the request of NHS England for funding of the health service and I hope the same will apply in other parts of the United Kingdom. Others have welcomed the commitment to the NATO target of 2% on defence; if I may, I shall speak about the health service for a time.

Henry Willink talked about the importance of ensuring that what we had to pay for the health service, which in those days was going to come from taxation, the rates and social security contributions, would provide a service that was comprehensive and free at the point of use. I

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think we are maintaining that. We need to go further to see that the funding keeps increasing and that the staff in the health service—those who support the clinicians, the nurses and the doctors—get the support they need, but we also need to be more imaginative in trying to ensure that people live healthier lives and in trying to reduce the demands of visits.

We could have a national health service day and, separately, a health day—one might be on 17 February, for example, which is the day Henry Willink put forward the White Paper, following the Beveridge report of December 1942, and the other might be, say, on 16 March, when the motion was put to this House.

Too often, people with short memories, or political bias, claim that the national health service was created by the Labour party. It was actually created after the Liberal Beveridge published his report. The first party leader to welcome the proposal was Winston Churchill, who was the leader of the coalition Government but, in party terms, the leader of the Conservatives.

The Labour Government did a lot of work on it when they came to office in 1945, but, as in the case of steel, electricity, gas and so many other things, they made the mistake of nationalising the hospitals. I think that if they had left us with a diverse collection of hospitals, including those run by volunteers and local authorities, we would have avoided many of the problems that we have faced over the last 50 or 60 years.

Organising the nation’s finances is never easy, but I believe that the Government are beginning to reach the stage that was achieved by the person from whom I was supposed to have learned economics. He won the Nobel prize for demonstrating mathematically something that is blindingly obvious—namely, that the rich will not pay tax, the poor cannot pay it, and the people in between cannot avoid it. He did not believe in going much above 27% in real terms, although he may have become soft by now and made it about 33%. It was certainly nothing like the amount—over 40%—with which I believe we shall still be left, or the 45% or more that applied when this Government came to office. We must go on finding ways of reducing what is necessary from tax spending, and some of that is going to involve transfer payments.

Let me return for a moment to the demands on the health service. If it is true that most people my age—and, indeed, those 20 years younger—should be taking statins, why on earth do we still have a system that requires me to go my doctor and obtain a form that will enable me to have my blood tested in another part of the health service, in order to establish my cholesterol level, and then requires me to go back to my doctor to find out whether I should be taking statins? We are told that virtually everyone should be taking them anyway.

Why is it impossible to obtain birth control pills, which are needed by many people during their active reproductive years, without having to bother the doctor so often? Obviously nurses can deal with more of that, and there are other ways of arranging things. I have encountered some GPs’ surgeries where, in order to be given a flu injection, people had to ring up, or else go to the surgery and book in advance so that they can go there at a particular time. In others, people were told, “It is open house: come on Saturday morning”, and were

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processed in about two minutes, without the need for administration and without burdens being placed on the surgery.

Let me now turn to the subject of the economy itself. When I was knighted, the economics supervisor whom I mentioned earlier wrote to me saying that I was the fourth of his pupils to receive a knighthood, and that, having shared the credit with the first three, with me he shared only the pleasure. That was fair enough, as I was probably his most useless undergraduate student. I was certainly the laziest.

In economics, there must be people who are willing to take risks. I am glad that the House now contains—especially among the new intake—people who have been entrepreneurs, handling serious issues involving distribution, manufacturing and the like, and who can contribute their wisdom and knowledge. I think that that matters. I have been incredibly impressed not just by the way in which Members in all parts of the House have spoken, but by the kind of people who are now in the House. When I spoke just after the first speech of an SNP Member, I said I thought that what she had done in the past was an example of a useful qualification.

Of course, some Members arrive here almost by mistake. They may have said when they were selected, “Darling, I promise you that I will not be elected”, and then had to go back after the election and say, “I apologise; I was elected.” However, even if Members are here for only one or two Parliaments, their contributions will matter. I think that in future we shall be grateful to the new Labour, SNP and, certainly, Conservative Members. I am not sure that the Liberals had new Members this time.

I think we shall have a Parliament the quality of whose membership will match the intake of 1945. I am talking about people with experience not just of war, but of helping to run the country and keep the factories going, including those on the trade union side. I am talking about the contribution of people who have been foremen, people who have been owners, and people who have been salaried managers.

The House of Commons benefits when people can bring their experience to it. Too often, we come out with a straightforward “We were better than you”, or “We are going to be better than you.” What we ought to do is try to ensure that when parties lose elections, they say, “We were wrong, and we will now adopt some of the policies that the people have preferred.”

It is remarkable that, within a week of the general election, when the people—unexpectedly, in the opinion of some—put the Conservatives into government without the need for a coalition, it was being said that what the Conservatives proposed had been right, and that the people were right to trust the Conservatives to govern alone. We will not get everything right, but this Budget has shown that it is possible to trust the Conservatives, and I think many people will be grateful that this has happened. I believe that when we have an election in five years’ time—if Parliament lasts that long, which it probably will—people will say this Budget was a good foundation for the economy and an even better one for society, and gave hope to all kinds of people.

I shall end with some remarks on minimum wages. I once went to see a Secretary of State for Employment and said, “Do you know what your Department has agreed with the trade unions to pay employees aged 17,

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18, 19 and 20?” He said, “No.” I said, “Here’s the list”— I had looked it up and found it. I said, “Do you know how many people aged 17, 18, 19 or 20 you employ in this Department?” He said, “No.” I said, “One. You’ve agreed a rate of pay at which you will not employ people, not a rate of pay at which you will employ people. I suggest you start a cadetship, because if people can come into the civil service aged 17, 18, 19 or 20 and spend a year or two with the excellent training the civil service provides, you’ll find that they can go on either in the civil service or in outside jobs with the qualifications and the reference and the opportunity to move forward.”

Whatever our achievements in school, college or university, all of us deserve the chance to show what we can do, learn from others at work, and get into the kind of habits that will make us valuable to others and give ourselves a more productive life. I suspect that that way we will leave fewer people behind and we will work together for a better future for us all.

Ordered, That the debate be now adjourned.—(Jackie Doyle-Price.)

Debate to be resumed tomorrow.

Business without Debate


Madam Deputy Speaker (Natascha Engel): With the leave of the House, we will take motions 2 to 12 together.


Business, Innovation and Skills

That Paul Blomfield, Richard Fuller, Peter Kyle, Amanda Milling, Amanda Solloway, Jo Stevens, Michelle Thomson, Kelly Tolhurst, Craig Tracey and Chris White be members of the Business, Innovation and Skills Committee.

Culture, Media and Sport

Bill Wiggin, on behalf of the Committee of Selection That Nigel Adams, Andrew Bingham, Damian Collins, Paul Farrelly, Nigel Huddleston, Ian C. Lucas, Jason McCartney, Christian Matheson, John Nicolson and Steve Rotheram be members of the Culture, Media and Sport Committee.

Energy and Climate Change

That Mr Alistair Carmichael, Glyn Davies, James Heappey, Ian Lavery, Melanie Onn, Matthew Pennycook, Dr Poulter, Antoinette Sandbach, Julian Sturdy and Dr Alan Whitehead be members of the Energy and Climate Change Committee.

Environment, Food and Rural Affairs

That Sarah Champion, Chris Davies, Jim Fitzpatrick, Harry Harpham, Simon Hart, Dr Paul Monaghan, Rebecca Pow, Ms Margaret Ritchie, David Simpson and Rishi Sunak be members of the Environment, Food and Rural Affairs Committee.

Foreign Affairs

That Mr John Baron, Ann Clwyd, Mike Gapes, Stephen Gethins, Mr Mark Hendrick, Adam Holloway, Daniel Kawczynski, Yasmin Qureshi, Andrew Rosindell and Nadhim Zahawi be members of the Foreign Affairs Committee.

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That Dr James Davies, Andrea Jenkyns, Liz McInnes, Rachael Maskell, Andrew Percy, Paula Sherriff, Emily Thornberry, Maggie Throup, Helen Whately and Dr Philippa Whitford be members of the Health Committee.

Home Affairs

That Victoria Atkins, James Berry, Mr David Burrowes, Nusrat Ghani, Mr Ranil Jayawardena, Tim Loughton, Stuart C. McDonald, Keir Starmer, Anna Turley and Mr David Winnick be members of the Home Affairs Committee.

International Development

That Fiona Bruce, Dr Lisa Cameron, Mr Nigel Evans, Mrs Helen Grant, Fabian Hamilton, Pauline Latham, Jeremy Lefroy, Wendy Morton, Albert Owen and Mr Virenda Sharma be members of the International Development Committee.


That Robert Flello, Mary Glindon, Karl McCartney, Stewart Malcolm McDonald, Mark Menzies, Huw Merriman, Will Quince, Iain Stewart, Graham Stringer and Martin Vickers be members of the Transport Committee.


That Mr Steve Baker, Bill Esterson, Mark Garnier, Helen Goodman, Stephen Hammond, George Kerevan, John Mann, Chris Philp, Mr Jacob Rees-Mogg and Wes Streeting be members of the Treasury Committee.

Work and Pensions

That Debbie Abrahams, Heidi Allen, Mhairi Black, Ms Karen Buck, John Glen, Richard Graham, Mrs Emma Lewell-Buck, Craig Mackinlay, Jeremy Quin and Craig Williams be members of the Work and Pensions Committee.—(Bill Wiggin, on behalf of the Committee of Selection.)


Closure of Fire Stations in South Staffordshire

6.52 pm

Gavin Williamson (South Staffordshire) (Con): I rise to present a petition signed by 2,824 of my constituents who are backing my campaign to keep open the fire stations in Kinver, Brewood, Codsall and Bilbrook.

The petition states:

The petition of residents of South Staffordshire,

Declares that the petitioners note that there have been proposals by Staffordshire Fire and Rescue Service to close fire stations in South Staffordshire; further that the petitioners believe that a reduced fire service across Staffordshire and the closure of the fire stations would impact on the safety of the residents; and further that the petitioners believe that these proposals should be rejected and the fire stations kept open.

The petitioners therefore request that the House of Commons urges the Government to request that Staffordshire Fire and Rescue Service ensures that fire stations in South Staffordshire remain open.

And the Petitioners remain, etc.


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South-west England (Long-term Economic Plan)

Motion made, and Question proposed, That this House do now adjourn.—(Jackie Doyle-Price.)

6.53 pm

Dr Liam Fox (North Somerset) (Con): Today the Chancellor set out in his Budget a number of measures to help strengthen our national economy and keep the promises we made as a party to the British people in May, but before the general election the Conservatives set out a clear set of aims for the south-west in a speech given by the Chancellor in Plymouth. He outlined six clear strategic objectives.

They were: first, to increase the long-term growth rate of the south-west to at least the expected average of the UK as a whole—although the south-west constitutes 8.4% of the UK population, it provides only 7.5% of UK economic output; secondly, to sustain job creation in the region and have 150,000 more people employed by the end of the decade; thirdly, to transform connections, both in transport, via a £7.2 billion investment plan, and in the crucial area of digital connectivity; fourthly, to ensure that the large defence assets in our region support the local economy, high-tech manufacturing and high-end skills—we will have been heartened indeed today to hear the Chancellor commit to spending 2% of our GDP on defence; fifthly, to boost science, and support tech clusters and green energy to promote skills development and an innovative rural economy; and, sixthly, to make the most of the region’s outstanding natural beauty and unique cultural heritage as part of a boost to tourism.

To those aims, we, the south-west Members, would add one of our own: a fair and equitable funding settlement across education, health and local government, redressing the current underfunding in these largely rural areas. Not all those strategic objectives are of equal importance to all our constituencies. For example, the economic situation in Cornwall is quite different from that in North Somerset, which has the lowest unemployment of any constituency in the UK.

Mrs Sheryll Murray (South East Cornwall) (Con): Small businesses are a key part of the economy in my constituency. Does my right hon. Friend agree that we need to ensure that information is made available to them so that they do not miss out on any opportunities?

Dr Fox: My hon. Friend is right about that point, and I am sure the Minister will want to address it. Transparency and information are key to people being able to take the opportunities that the Government are making available by their economic approach.

Anne Marie Morris (Newton Abbot) (Con): Does my right hon. Friend agree that growth in our Devon and Somerset area in the items he has listed is very important? Does he also recognise that the Government have already done substantially good things and have demonstrated their support in the settlement on the growth deal funding for 2016 to 2021? The Heart of the South West local enterprise partnership got £130 million in growth

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deal 1, which was in the top 10, and in growth deal 2 we got £65.2 million, which is the highest award of all the LEPs across the country. That is a sign that the Government are serious about supporting the south-west.

Dr Fox: My hon. Friend makes an important point. One thing we will all have to do, if we are to get the best out of the opportunities being made available by the Government, is to work with these emerging groupings, especially the LEPs. Those of us who have worked with these organisations where they are at their best can see the benefits they can bring. If Members of Parliament, as well as local authorities, can co-ordinate with the LEPS, we will get so much more from them.

Steve Double (St Austell and Newquay) (Con): Jobs are always welcome, and it is really good news that the Government are backing job creation across the south-west, but the type of jobs we will create is also very important. That is especially the case in Cornwall, where the average wage is 30% below the national average—indeed, in my constituency, the average wage is only £14,500 a year. It is vital that we create better jobs and invest in the economy to grow the average wages for our residents.

Dr Fox: I am sure that is absolutely right. One thing we have to do across the region is ensure that the prosperity in the wealthier parts of the south-west is more evenly spread across the region. I am thinking, for example, about the tech clusters around Bristol. In my constituency, unemployment is now below 0.5%, and we need to ensure that many of the high-tech jobs we have are spread more widely, right across the south-west peninsula, rather than being concentrated around the big cities.

Simon Hoare (North Dorset) (Con): Does my right hon. Friend agree that there is a key role to play for local government and our district councils, through the planning process? If they can speed up decisions on planning applications that create jobs and opportunity, the growth will come faster.

Dr Fox: Indeed, and I would add that we need co-operation among local authorities. Where we can get good, functional local government clusters, things work well. The one thing I would say to the Minister is that we do not want to push our luck where we have local authorities co-operating and working well together; we do not need to see a change in the organisational structure that would only be expensive and bureaucratic. Where it is working already, we should leave well alone—that is a very good Conservative principle.

One common thread that runs between us is that the economic welfare of the south-west is very closely linked to the transport infrastructure. The new large group of Conservative south-west MPs will be putting that transport infrastructure at the very front of what we intend to do.

John Glen (Salisbury) (Con): Does my right hon. Friend acknowledge that one of the key decisions of the previous Government was the welcome investment in the A303—

7 pm

Motion lapsed (Standing Order No. 9(3)).

Motion made, and Question proposed, That this House do now adjourn.—(Jackie Doyle-Price.)

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John Glen: Does my right hon. Friend acknowledge that one of the key decisions of the previous Government was the vital investment in the upgrading—the dualling—of the A303, particularly the contentious but much-needed investment in the Stonehenge tunnel in my constituency? That development will be pivotal in opening up the road to the south-west, which will be of vital significance to the whole region.

Dr Fox: The tunnelling to which my hon. Friend refers is a big improvement not only in the transport infrastructure, but in the tourist infrastructure, which go hand in hand. I will come back to that point in a moment.

Such transport infrastructure issues are to be found right across the south-west. Those of us who have campaigned extensively on these matters know all too well how two points on a map, which might look pretty close, can, in effect, be a long way apart. A very good example of that is getting to Barnstaple. On that point, I will give way to my hon. Friend.

Peter Heaton-Jones (North Devon) (Con): That seemed almost planned. Will my right hon. Friend join me in welcoming the announcement made by the Chancellor today in the Red Book of £1.5 million to start planning work for the North Devon link road? Will he join me in hoping that we can push that ahead, because it is a vital piece of infrastructure for economic development and tourism in North Devon?

Dr Fox: The North Devon link road is a vital piece of infrastructure. If we are serious about spreading prosperity throughout the region and if we are able to get those with capital to invest and to create the jobs, they must be able to get there. One problem that we have, even in the more affluent parts such as around the southern part of Bristol, is the fact that our transport infrastructure is very poor. We may have low unemployment in my constituency and we may be able to provide many jobs, but where do we get the labour from if people cannot travel from a relatively close conurbation such as Bristol and Weston-super-Mare to get to where the jobs can be provided?

Neil Parish (Tiverton and Honiton) (Con): I thank my right hon. Friend for giving way and for securing this Adjournment debate. The south-west is the milk and honey of this country. It is a marvellous place to be. I welcome what the Chancellor said today, but there is still the Waterloo to Exeter railway line, the rest of the A303 from Ilminster to Honiton that needs to be finished, and the electrification and other work that needs to be done to the Great Western railways. As much as Bristol is important, there is a lot of west country beyond Bristol as well. I very much welcome this debate.

Dr Fox: Rail electrification will be key to what we are able to do. If we are able to get the investments that we want, we need to get that central Government investment as well. What we are seeing in the House tonight are the very first stirrings, politically and economically, of the south-west powerhouse. I hope that the Treasury notices how many south-west MPs, compared with some of the other groups in this Parliament, have come to the Chamber to talk about their long-term economic plan.