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I want to support working people—we all do, and, I might add, more seriously on the Labour Benches. The Chancellor seems to feel that working people live a lavish lifestyle that he wants to curb. Before the election, Jenny Jones asked the Prime Minister to put to bed rumours that he planned to cut child tax credit and restrict child benefit. David Cameron replied: “Well thank you, Jenny. I don’t want to do that.” What has changed?

Madam Deputy Speaker (Mrs Eleanor Laing): Order. I must interrupt the hon. Lady because although she is new to the House at the moment, she is not really new. The Prime Minister is referred to in this Chamber as the Prime Minister.

Dawn Butler: Apologies, Madam Deputy Speaker. I think that at the time he was not the Prime Minister, but I apologise.

Brent has the above average number of 5,609 lone parents, which is 11% of all households. Some 64% of families in Brent Central are receiving tax credits. It is okay to have universal credit—I agree with that; I used to work in the employment service—but the Institute for Fiscal Studies has stated that 13 million families will be affected by the benefit cap, and that 3.4 million working families will lose £1,000 a year. There will be an increase in absolute child poverty.

Why is that happening? In Brent, we have large Muslim and Irish communities. Many families have more than three children per household. I would like to challenge the Chancellor to do a husband swap with some of my constituents. I am sure they would be able to give him advice on managing budgets and debt. Given that family breakdown costs the country an estimated £49 billion a year, this is a false economy. The OBR has forecast that household debt will rise even above the record levels seen prior to the crash in 2007-08. What does that mean for the future of our country? The root cause of welfare spending is low pay and high housing costs, so in one fell swoop the Chancellor could build more affordable and social housing, and more people would be in work and paying taxes. We should just stop playing politics and make it happen.

Millions of households are forecast to plunge into debt. We will see another increase in homelessness and children living in absolute and relative poverty. That is not scaremongering—this afternoon the IFS has said just that. Is this really the legacy that the Chancellor wants as he launches his bid to become the Prime Minister? He has lost weight, he has got longer trousers and he has styled his hair differently. All he needs now are some workable policies for working people. The Chancellor always mentions fixing the roof while the sun is shining, but he always forgets to mention the Thatcher legacy of £19 billion worth of household repairs that Labour had to make. Now, with these supposed fixes, the first Tory Budget in almost 20 years is taking the roof from over the heads of my constituents. He should be a little bit embarrassed about that.

The Chancellor spoke about apprenticeships. The reality is that the majority of apprenticeships in the previous Parliament were rebranded jobs. People were already working for companies and their jobs were rebranded as apprenticeships. We have actually seen a reduction in apprenticeships of almost a quarter, from 82.3% under the Labour Government to 63.2% under this Government.

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As I said, I used to work in the employment service. I welcome the simplifying of the benefit system, but I am afraid the Chancellor needs to seek some advice from the Social Security Advisory Committee and examine any variations in his policy. Do not say that young people in university have a future and then burden them with about £53,000 of debt when they finish. It was estimated that 923,000 young people would take up maintenance grants in 2014-15. Do not tell me that that will not have an effect on my constituents and young people in Brent Central when they are choosing whether to go on to further and higher education.

This is a reminder of who the Budget is really for: the haves, not the have-nots. I see nothing in the Budget that aims to address the scandal of a 50% increase in long-term youth unemployment among black, Asian and minority ethnic—

Madam Deputy Speaker: Order.

Dawn Butler: Sorry, Madam Deputy Speaker.

Madam Deputy Speaker: I was hoping the hon. Lady would voluntarily bring her remarks to a close.

4.18 pm

Tom Elliott (Fermanagh and South Tyrone) (UUP): It is a privilege to be able to speak in the Budget debate. It would be remiss of me not to accept that a number of good points have been made today and I do not want to demean them. One point clearly relates to the Ulster Unionist party policy on the living wage, which the Conservatives have adopted. That will be extremely helpful, but I have concerns about how it will be implemented. There needs to be support for employers and businesses along the way, particularly small and medium-sized businesses. It may have the effect of SMEs employing fewer people to meet that living wage, so I hope the Government have a plan in place to bring forward definitive proposals to help those small and medium-sized businesses.

Secondly, I am extremely positive about the reduction in corporation tax. I come from Northern Ireland, to which the Government have helpfully promised to devolve corporation tax. The reduction here will make our 12.5% much more realistic and help make us competitive with our neighbours in the Irish Republic. We have a land border with another EU state, so I welcome the reduction set out in the Budget, which will make it much easier for us to implement our reduction. Thirdly, I also welcome the 2% year-on-year increase in the defence budget, which is helpful and will leave the UK right at the centre of world defence.

A lot of today’s debate has been taken up with tax credits. I note that 164,100 families in Northern Ireland are in receipt of tax credits and that almost 70% of them are working families. In recent months, one of the huge difficulties in our constituencies has concerned the HMRC helplines available to people making inquiries about their tax credits, and that is only going to get worse after the reduction. I therefore appeal to the Government to invest more resources to help constituents who are worried they might lose some or all of their tax credits. It is a worrying time for them. It is difficult even for us, their elected representatives, to get answers. HMRC needs to do a major job of work to provide that assistance and support mechanism. I feel that there is

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going to be a huge reduction in the tax credit element, which will create particular issues in areas such as Northern Ireland, where we have a lower wage base. These families, many of whom are working, cannot afford to spend up to 60 minutes on the phone waiting for answers to their tax credit queries, but that is what is happening.

I am also concerned about the effect on the Barnett formula and the Northern Ireland Executive budget. The Government will know of the difficulties around the welfare reform proposals in Northern Ireland. I noted in yesterday’s statement the reference to the Stormont House talks. I want to make it clear that there was no agreement around those talks, as we have now realised, because some parties are now reneging on the proposals. We want to ensure that the £90 million agreed for welfare reform, to be taken from other budgets, can be implemented, because it is important for those suffering in our communities, such as the most deprived and the severely disabled. It is important they have the help and support they require, so I am looking to hear from the Government how we can ensure that the people most in need can be assisted.

The Budget is a curate’s egg: there are some good parts, but there are also some difficult issues to deal with, particularly around tax credits.

4.23 pm

Anna Turley (Redcar) (Lab/Co-op): I have heard a lot of self-congratulation and hubris and I have even seen some fist-pumping from those on the Government Benches about the long-term economic plan, of which this Budget is part, but the people of Redcar and Teesside have seen what the last five years of the Tory’s economic plan have meant for them and will be forgiven some scepticism about what they heard yesterday.

In Redcar in the last five years, we have seen six food banks a week, where formerly there were none; we have seen nearly 2,000 people hit by the bedroom tax and forced from their family homes; we have seen people sanctioned for accidentally filling in a form wrong or for missing an appointment because a child has had to go to hospital; we have seen pay freezes and redundancies and half of all women on less than a living wage, many of whom will be reliant on tax credits. Nationally, we have seen 500,000 more children in absolute poverty since 2010; the biggest fall in wages since 1874; rampant job insecurity; escalating private debt; a ballooning trade deficit; a shocking productivity record; and stagnating business investment.

In fact, if the Chancellor had any decency or integrity, he would have left himself a note in May saying, “I’m afraid there is still no money”, because the past five years have seen a greater increase in debt than under 13 years of Labour, a total failure to eradicate the deficit as promised, the loss of our triple A rating, mass under- employment, terms and conditions being undercut, a huge increase in bogus self-employment and rampant low pay.

What about this Budget and how it should deal with those issues? As many of my colleagues have said, it is a Budget of smoke and mirrors. Its living wage is not actually a living wage: it is 65p per hour less than the living wage should be. Some 4,000 people in my constituency of Redcar will be worse off because of the impact on tax credits, and the one nation narrative is divisive.

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The Budget turns nation against nation, public sector workers against private sector workers, north against south, the inherited haves against the have-nots, the young against the old, and taxpayers against fellow citizens.

As for the northern powerhouse, it is nothing more than a slogan. The north-east was not even mentioned in the Budget speech. One in three children in the north-east is still in poverty. Our unemployment rate is still the highest in the country, and the trend in our region is going up, not down. We lost 60,000 public sector jobs and they were not magically replaced, as predicted, by private sector jobs. Those left now have the indignity of a pay rise of less than 1% for the next five years.

The plug has been pulled on infrastructure, and that includes the cancellation of the electrification of the railways. Spending on transport in the north-east is £5 per head compared with £2,600 per head in London. Local authority budgets have been cut by a third, despite higher levels of deprivation in our area. All we have got from this Chancellor is the change of name from the A1 to the M1, without any accompanying infrastructure investment.

In summary, I congratulate the Government on finally acknowledging that the past five years have been a disaster for wage levels, but their solutions provide nothing but smoke and mirrors and will leave my hard-working constituents, who are doing their best to feed their families and get through the month, worse off than ever.

4.26 pm

Cat Smith (Lancaster and Fleetwood) (Lab): I shall keep my remarks brief, to allow time for other speakers.

I fully agree with what my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) said about the northern powerhouse.

The so-called living wage is a complete sham. Even the national minimum wage is not enforced in this country, with the TUC estimating that 350,000 workers are already paid below it, so what guarantees do we have that a living wage would be enforced?

I want to focus most of my attention on the changes to tax credits to limit them to two children. It is wrong to punish children by putting them into poverty for being born into families with one or more siblings. I would also like to stress that there are 3,000 children in this country waiting to be adopted. Since baby P, there has been a huge increase in the need for fostering and adoption places. Many of those placements are found in kinship care and often in families who already have children. If the Government insist on going ahead with capping tax credits at two children, will they provide some flexibility and exempt those who choose to adopt or foster one of the 3,000 children who are desperately seeking a home in this country?

This Budget is an attack on the younger generation. Cutting housing benefit for under-21s will particularly affect lesbian, gay, bisexual, and transgender youth, who are more likely to find themselves homeless. Student grants are now gone and have been turned into loans, thereby passing more debt on to some of the poorest students as they graduate and begin life. The fact that the so-called living wage does not apply until age 25 just goes to show that there is little understanding of the

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fact that someone aged 25 or under still needs a roof over their head and still needs to buy food. All that costs the same as it does for a consumer or renter over the age of 25.

Frankly, this Budget does not work for young people, the north or families. Worst of all, I left the Chamber after the Budget speech thinking that, although I personally will be better off, family members of mine who work in minimum wage jobs and who try to balance the demands of having young families are worse off, and that is wrong.

4.29 pm

Daniel Zeichner (Cambridge) (Lab): I shall tackle three areas and be brief. First, student finance has clearly been a controversial issue for a number of Parliaments. The tripling of tuition fees in the last Parliament was obviously highly controversial, and we now know that it was also an unsustainable system, with almost half of current students unable to repay their loans and the Government building up a huge amount of debt.

What is curious is that by abolishing the maintenance grant, the Government seem to be repeating the mistake. The Chancellor boasted yesterday that students from poorer backgrounds had not been put off going to university, but as hon. Members have pointed out, that was partly because these maintenance grants existed. Taking them away is likely to make that less the case. We should not underestimate the numbers involved. I was surprised to find that at Anglia Ruskin University in my own city, 5,697 students were in receipt of maintenance grants, while at the University of Cambridge, there were 2,720. Almost 8,500 young people in my constituency will, I suggest, all be angry when they learn about this.

The problem is not solved either, because more debt is created for the next generation, and the Government’s cunning plan to solve all this is to sell off the student loan book and raise huge amounts of money from it. We know that is controversial, too. Warning bells should be ringing if people read the small print on page 59 of the Red Book, where the Government say they will “review the discount rate”. What that basically means is that students will pick up the tab. They will notice this—and they will be loud.

My second point is about the proposal to limit public sector pay rises to 1% for the next four years. I do not think anyone knows what the economic situation is going to be in four years’ time. Frankly, it is hard to predict for four weeks when it comes to interest rates, oil prices and all the rest. One thing I do know is that rents in a city like Cambridge are shooting up and up. What that means is that for public sector organisations such as our national health service, recruitment—already difficult—will become near impossible in the future. Some of the high-flying research scientists in Cambridge are, in fact, public servants, and they had been waiting to see a sign that things were going to improve. I fear that what the Chancellor has done is in effect to write their exit visa to other countries. Our brightest and best—the people we need if we are to be competitive in the future—are being told that they can expect 1% over the next four years. That is not sustainable.

Finally, let me deal with housing, which is the key issue in Cambridge. There was nothing in the Budget to deal with the things that really matter in a city like Cambridge—nothing on more affordable housing, nothing on the huge trend of people from foreign countries

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buying up housing off-plan before it is even built, and nothing on the dreadful insecurity faced by tenants in the private rented sector, who are a different group of people these days. Conservative Members stole quite a few things from Labour’s manifesto, but they could do with stealing some of our proposals on the private rented sector, which would really help. As for the extension of the right-to-buy process, I have to say that almost half of all council homes sold in Cambridge under right to buy since 1980 are now back in the private rented sector, building up the housing benefit bill, which has increased by 51% since 2010.

Let me conclude by making one or two general points about the assault on council housing, including the threat to lifetime security of tenancy. Many people have told me about the difference it made to them when they actually got a council home that really was a secure home for them. People cannot be treated as if they are simply pawns in a game that can be moved from place to place. We are talking about people’s homes; if they are not secure, it makes thing very different for them.

Conservative Members have no understanding of what council housing was intended to be. It used to be a public service, not a safety net. We need to remember that tenants pay rent, and some of these houses have been paid for time after time. Extraordinarily, if there is any cross-subsidy going on, all too often, thanks to the vagaries of housing finance, it is happening the other way round, so council tenants are subsidising the wider community. Who can forget the dreadful “daylight robbery” situation under the last Conservative Government when council tenants were in effect subsidising all those on housing benefit.

The housing situation is deeply complicated. I finish by saying that the great goal of British housing policy was mixed communities. Nye Bevan famously said that he wanted a situation in which

“the doctor, the grocer, the butcher, the farm-labourer all live in the same street”.

We can update that image. We know that mixed communities work best, but they are hard to achieve, and this “pay to stay” is exactly the wrong thing to be doing. We need people to stay in their communities, not to be driven out. What a ridiculous situation it is when people who have done well are faced with a false choice, as my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) suggested. An income of £30,000 in a city like Cambridge is not extraordinary. My friend Councillor Kevin Price, the executive member for housing in Cambridge, tells me that people will face a 45% rise in rent if this proposal goes through. For a lot of those people, the sensible thing to do would then be to work fewer hours or for one person in the household not to go to work at all, which is the exact opposite of what the Government are claiming to want.

There is a real danger that we could lose our mixed communities and create no-go areas and dumping grounds of despair, fomenting future discontent. That is not about building one nation; it is about a divided nation, at a time when we should be bringing people together. I genuinely urge Conservative Members to think hard about these dangers and to step back from these proposals. These might just be a few lines at the bottom of a page in the Red Book, but they could do serious damage to our communities. and I urge Conservative Members to dissociate themselves from them.

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4.35 pm

Stephen Timms (East Ham) (Lab): Let me begin, as others have, by congratulating all those who have made their maiden speech during the debate: my hon. Friends the Members for St Helens South and Whiston (Marie Rimmer) and for Bradford South (Judith Cummins) and the hon. Members for Berwickshire, Roxburgh and Selkirk (Calum Kerr), for Caithness, Sutherland and Easter Ross (Dr Monaghan) and for North Warwickshire (Craig Tracey). The House enjoyed hearing from each of them today and we look forward to hearing from them again in the years to come.

Yesterday’s Budget contained a number of ideas that we support, not least because we campaigned for them at the election. For example, we argued that the pathway to a surplus that the Chancellor committed to in March would in fact lead to spending cuts so extreme that they would not be credible. We discovered yesterday that the Chancellor had caved in and accepted our argument. He has deferred the planned surplus for a further year, and I have to say that that was a sensible U-turn. He might have told us that that was what it was, but he did not. As a result of his U-turn, the scale of the cuts, though still substantial, will no longer be as extreme as he suggested in March.

We said that it was unreasonable to try to take £12 billion out of the social security budget in two years. The Chancellor has done a U-turn on that as well. He now plans to do it over four years. We also campaigned for Britain to have a pay rise, stating that an increase in the national minimum wage was key to reducing the cost of welfare. The Chancellor has accepted that argument. On the basis that imitation is the sincerest form of flattery, we welcome his change of heart on that as well.

It is a great disappointment, however, that productivity growth is so low. My hon. Friend the Member for Luton North (Kelvin Hopkins) was right to draw the House’s attention to what the Office for Budget Responsibility had to say about that. It has stated that productivity growth has fallen short of expectations once again. It is a relief that this Budget speech at least mentioned productivity—there was no such mention in March—although it was accompanied by a very thin package. My right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) and my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) pointed out that the cancellation of the electrification of the TransPennine line was a glaring failure if we are to bring about the infrastructure investment necessary to improve productivity across the country. It is a big disappointment that so little is being done.

It is a tragedy that the Chancellor is accompanying his welcome U-turns with such a swingeing attack on the incomes of working families. The analysis published today by the Institute for Fiscal Studies highlights the fact that the proposed tax credit cuts focus on working families. It is working families that are going to be hit. They have been badly let down by a party that had promised to be a party for working people. That promise seems to have been torn to shreds in everything other than the rhetoric. Vital support has been ripped away at a time when so many of those working families are already struggling to make ends meet.

In 2010, the Chancellor promised

“we will bring down the benefits bill”.

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At the beginning of this year, the Institute for Fiscal Studies said:

“Real terms benefit spending…is forecast to be almost exactly the same in 2015–16 as it was in 2010–11.”

The benefits bill has not been brought down. The reason is that, in the previous Parliament, the Government failed to tackle low wages and rising private rents, which are the real drivers of welfare spending. As a result we saw 400,000 more people who are in work forced to rely on housing benefit to pay the rent, and 1.5 million more people paid less than a living wage at the end of the Parliament than was the case at the beginning. That led to a £25 billion overspend on welfare by the Secretary of State’s Department. With this Budget, working families are being told to pay for that failure—so much for being on the side of working people.

The Chancellor is cutting tax credits immediately, but taking five years to increase pay. As my hon. Friends have pointed out, the tax credits cuts hit immediately, full scale, from the beginning of the next financial year. The pay rises intended to compensate for them, which in fact do not compensate for them, are being phased in over five years. Working families are losing out in a very big way. This is not about making work pay, but about making working families pay, which is wrong.

Today, the IFS said:

“Unequivocally, tax credit recipients in work will be made worse off”.

That is the reality of what was announced in the Budget yesterday. The Chancellor’s decision to cut tax credits leaves 3 million families worse off. Working families who are doing the right thing are finding that the rug has been pulled out from under them. A couple with one person working full-time on average earnings will lose more than £2,000 in tax credits next year. A single parent trying to provide for her two children, working 16 hours a week, will lose £860 in tax credits next year. Those losses are nowhere made up for by the modest pay rise that that person is likely to receive.

I cannot help wondering what happened to the families test. The Prime Minister promised that

“every single domestic policy that government comes up with will be examined for its impact on the family.”

Well, here are working families being hammered. The measures clearly fail the families test, but they are being announced nevertheless. That is another broken promise from this Government when so many families are losing out.

The IFS says that the striking consequence of yesterday’s cuts is that the work incentive effects of universal credit—if we ever see universal credit; only 1% of benefit claimants have been switched on to it so far, and at that rate it will take 150 years or so to roll out fully—are being substantially reduced.

I have made it clear that we welcome the increase in the national minimum wage—indeed, we campaigned for it. However, as my hon. Friends have pointed out, just because the Chancellor calls it a living wage does not make it a living wage. My hon. Friends the Members for Birmingham, Erdington (Jack Dromey) and for Ellesmere Port and Neston (Justin Madders) emphasised that point in particular. The Living Wage Foundation, the custodian of the living wage, made the position clear last night. It said that

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“this is effectively a higher National Minimum Wage and not a Living Wage.”

That is the reality. Simply calling it a living wage does not make it one. The Chancellor is trying to sell us a dud.

That was not the only dud in the Budget speech. I cannot resist the temptation of quoting what the Financial Times said about the Budget speech yesterday: “When you heard” the Chancellor

“say six times in his Budget speech that he had moved British towards a ‘lower tax society’, he made a small but important mistake. He really meant ‘higher tax’.”

Of course that is right. The living wage is based on the full take-up of benefits such as tax credits and housing benefit. With the cuts to tax credits, the current figure for the living wage will no longer be enough and will certainly have to be revised upwards. We are in favour of tax cuts for those on middle incomes and we support the increases in the personal allowance and the higher rate threshold, but cuts to tax credit mean yet again that the Chancellor is giving with one hand and taking away with the other.

What a missed opportunity the Budget was to promote a proper living wage by introducing Labour’s plan for tax breaks for firms that pay a proper living wage! My hon. Friend the Member for Brent Central (Dawn Butler) drew attention to the excellent initiative that Brent Council has introduced along those lines. It is clearly succeeding, and our make-work-pay contracts could have started to boost wages straight away.

My hon. Friend the Member for Lancaster and Fleetwood (Cat Smith) was right to point out that, once again, young people have been badly hit by the Budget, but where there are good reforms, we will support them. We support the Government’s plan for a youth obligation, which is strikingly similar to our manifesto pledge and the Institute for Public Policy Research proposal that underpins it. The principle of earn or learn is right. Of course, it is absolutely vital that the right exemptions to the withdrawal of housing support should be in place. My hon. Friend the Member for Sheffield South East (Mr Betts) underlined that absolutely rightly. Can the Minister confirm in winding up that young people leaving care, those who are at risk of abuse or homelessness and those who are the parents of young children will still be eligible for housing support under these proposals?

We will not support cuts for disabled people. We were told in the election campaign that the £12 billion package would protect the vulnerable and the disabled, but cutting employment support allowance will hit those who are assessed as not fit for work, which is the reason why they are not on jobseeker’s allowance. That includes people with cancer and people with Parkinson’s disease. Ministers said that they would protect sick people in these changes; instead, they are cutting their support, and that will hit some very vulnerable people very hard. It will also drive even more claimants into the ESA support group at even higher cost. In 2010, Ministers said that they would cut the cost of ESA. In fact, given their failure to manage assessments and the failure of the Work programme for ESA claimants, costs have rocketed. ESA will cost £4.5 billion more this year than they said it would in 2011, but that is no justification for punishing the sick.

There is nothing in the Budget to boost the number of homes being built. The cost of renting and buying is soaring out of reach, particularly in London and south-east.

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My hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) drew attention to that. Yet again, rather than tackling the housing shortage and bringing rents down, the Government have chosen to cut housing support.

We welcome the Chancellor’s U-turns from his election campaign, but this is not the Budget that working people need. It leaves working people worse off. Working people needed a Budget that supported them and their families, not one that cut the support that so many people rely on. We support reform that protects those who cannot work and that makes work pay. We will not support cuts that make working families pay.

Madam Deputy Speaker (Mrs Eleanor Laing): Before I call the Minister, the House should note that several Members who have taken part in the debate were not here for the beginning of the speech of the right hon. Member for East Ham (Stephen Timms). That is discourteous. Some Members who have taken part in the debate are still not here. That is extremely discourteous and has been noted.

4.49 pm

The Economic Secretary to the Treasury (Harriett Baldwin): This has been a lively debate on a summer Budget that puts the country’s security first—economic security, national security and financial security for the record numbers of people in this country who are now working, including the 2 million who have joined the workforce since 2010. It is a Budget that continues to carry Britain toward a secure, prosperous future by backing the aspirations of working people at every stage of their lives.

For too long, we have been a low-wage, high-tax, high-welfare society—one that took money away from the poorest in taxes, then gave it back to them in the form of tax credits and welfare. In this Budget, we are changing that around. We are setting out to build a high-wage, low-tax, low-welfare economy: an economy in which work always pays and working more always pays more; an economy in which working households are supported through higher wages and lower taxes, not subsidised through a tax credits system that even Labour Members have described as simply not sustainable; an economy that gives 2.5 million people—those on the lowest pay today—a 10% direct pay rise and establishes a living wage that could, at this Parliament’s end, exceed £9 an hour.

Mr Betts: How does the hon. Lady deal with the comments from the IFS? Does she dismiss them, or is she saying that the IFS is absolutely wrong to say that, as a result of a small increase in their wages but a bigger cut in their tax credits, 3 million people will be £5,000 a year worse off? Does she disagree with that figure or, if she accepts it, how does she justify it?

Harriett Baldwin: The IFS figures do not include, for example, the full impact of the increased offer of free childcare. According to the Treasury figures, eight out of 10 working households will be better off as a result of the changes, acting in combination, by 2017.

As a country, we have 1% of the world’s population, we produce 4% of global GDP, and we are responsible for 7% of the world’s welfare payments. That is not

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right, it is not sustainable and it needs to be reformed. In introducing the reforms, we have set out four principles. The first is protecting the most vulnerable—that is fundamental. It is why we will honour our commitments to uprate the state pension according to the triple lock; we will neither means-test nor tax disability benefits—in fact, all disability benefits are exempt from the four-year freeze of working-age benefits—and we will increase funding for domestic abuse victims and for women’s refuge centres.

The second principle is to expect those who can work to look for work and to take work when it is offered, because work is the best route out of poverty. The third principle is to place the entire welfare system on an affordable and sustainable footing, fulfilling our commitment to run a budget surplus, because that is the best route to long-term economic security.

Edward Argar (Charnwood) (Con): Given the shadow Chancellor’s and Opposition Front Benchers’ unwillingness throughout the day to comment on Alistair Darling’s remarks, perhaps my hon. Friend will say whether she agrees with the former Labour Chancellor’s reported comments that the Labour party

“is in disarray”

and is

“paying the price of not having a credible economic policy.”

Does she agree with me that, judging by their performance yesterday and today, the search parties for that policy are still out and meeting with very little success?

Harriett Baldwin: My hon. Friend makes an extremely good point. Even when we announce elements of policies they were campaigning on only weeks ago, Labour Members seem to be unable to bring themselves to welcome the measures.

The Budget is not just about making changes to welfare; it is about ensuring that those who are in work do not face more difficult choices than those on benefits. Full-time benefits should never pay more than full-time work. Those are the principles underlying the welfare reforms. Over the next two years, eight out of 10 working households will have benefited from the measures announced in this Budget, such as our introduction of the national living wage. By 2020, a full-time worker on the national living wage should be earning over £5,200 more in cash terms. The tough decisions we are taking now will lead us into a more prosperous and more secure future.

We enjoyed five maiden speeches. My hon. Friend the Member for North Warwickshire (Craig Tracey) has a remarkable distinction that may be in the record books. He succeeded a colleague with a majority of 54 and took the majority up to nearly 3,000, which is a remarkable achievement.

I enjoyed the maiden speeches of the hon. Members for Bradford South (Judith Cummins) and for St Helens South and Whiston (Marie Rimmer). I understand that there is already a bit of a rivalry between them—they support different rugby league teams—which will be followed closely during their time representing those areas in Parliament.

We heard from Members from two beautiful areas of Scotland. The hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr) spoke eloquently about the

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Scottish border country, which we all know is exceptionally beautiful. He speaks for his party on agriculture and rural issues. He succeeded the former Secretary of State for Scotland, the Liberal Democrat Michael Moore, and spoke eloquently about his lasting contribution in the form of the 0.7% commitment that he achieved through his private Member’s Bill. That was no mean feat, as I discovered early on in this place. The hon. Gentleman also received something you may have frowned on, Madam Deputy Speaker—a round of applause for his excellent delivery. I will say no more on that because he might get into trouble.

We also heard from the hon. Member for Caithness, Sutherland and Easter Ross (Dr Monaghan). I have yet to visit his part of Scotland, but it sounds absolutely wonderful. After he had taught us about the history of the highland clearances, I was sorry that he could not welcome with greater fervour the significant increase in wages for people working in his constituency, which currently enjoys the lowest unemployment in its history.

A range of other issues were raised, and I will briefly go through some of the questions asked. Several Members made the point that the national living wage was different from the living wage calculated by other organisations. I can clarify that the methodology that has been followed is based on the work of Sir George Bain, who wrote the paper “More than a Minimum” for the Resolution Foundation. Labour Members carped on endlessly about the methodology, but none of them welcomed the fact that this represents a 10% pay rise for the lowest-paid 2.5 million working people in the UK.

Several Members raised student finance, and representatives of university towns paid particularly close attention to such points. The former Labour Chief Whip, the right hon. Member for Newcastle upon Tyne East (Mr Brown), probably remembers that a Labour Government abolished maintenance grants completely back in 1998. He probably had to do some deals in 2004, when maintenance grants made their reappearance. He is chuckling in his place about his memories of that time, so I am sure he had to make many arguments

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about how wise the policy was when his Government implemented it. I want to emphasise that students from low-income households will not have to pay up front. Over the course of their lifetime, people who go to university will earn more—women who go to university will earn £250,000 more over their lifetime—and the cash they receive through their student loan will be more generous than it was before.

The hon. Member for Fermanagh and South Tyrone (Tom Elliott) and other Members asked about support for businesses. I can confirm that we will increase by 50% the amount that businesses can receive through the employment allowance. That will enable the small businesses that are the backbone of our economy to take on four people paid the national living wage. Effectively, it will be kept at the same level: employers will pay no national insurance for four people working full time on the national living wage. Employers will also benefit from my right hon. Friend the Chancellor’s announcement of a reduction in the corporation tax rate to 18% over this Parliament.

Several questions were asked about housing. I can reassure Opposition Members that there will be consultations on the housing changes, and a lot of exemptions in vulnerable cases.

In the brief time available, I conclude by saying that this is a Budget for the working people of Britain. It is a Budget that supports Britain’s working households not through state subsidies, but through lower taxes and higher wages.

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

Debate to be resumed on Monday 13 July.

Business without Debate



That the Order of the House of 1 July, that the matter of the Legislative Programme as outlined in the Queen’s Speech and the Budget Statement as it relates to Wales be referred to the Welsh Grand Committee, be discharged.—(Jackie Doyle-Price.)

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House of Commons Commission

5 pm

The Leader of the House of Commons (Chris Grayling): I beg to move,

That Sir Paul Beresford, Tom Brake, Mr Nicholas Brown and Stewart Hosie be appointed as members of the House of Commons Commission under the House of Commons (Administration) Act 1978.

I wish to express my thanks to all those who served on the Commission in the last Parliament and those who will do so in this one.

Question put and agreed to.

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Transatlantic Trade and Investment Partnership

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

5.1 pm

Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP): I am grateful for the opportunity to discuss this important issue here today. While the public debate around the Transatlantic Trade and Investment Partnership, or TTIP, seemed to quieten down after the white hot heat of the general election, the issue is once again in the spotlight following the debate on the Lange report in the European Parliament this week. It is right that, at this important moment in the development of this agreement, the House considers the deal and its possible implications for our public services, especially in light of yesterday’s vote—although it is an indicative vote, and therefore non-binding.

After two years of negotiations, TTIP remains a highly controversial issue across Europe. To date, almost 2.5 million people have signed a Europe-wide petition in opposition to the proposals. It is clear from that, and from the high degree of public participation in consultations on the issues, that many people remain highly sceptical about the detail of those complex negotiations. That mobilisation of public opinion is a credit to the tireless campaigning work carried out by organisations such as War on Want and other campaigns, including that of 38 Degrees, which plays a valuable role in helping to inform the debate on a range of issues and in affording people the opportunity to make their voice heard.

Before I move to the areas of most concern to my constituents and me, I should state that some parts of the current proposals, despite their faults, have widespread support. I agree with the fundamental principle that has underpinned the negotiations. Europe and the US should work together to increase trade across the Atlantic. Trade is good for jobs. Scotland alone enjoyed £3.9 billion of exports to the US in 2013, making the US our single biggest market outside the EU. The US remains the largest inward investor in Scotland, with investment supporting some 100,000 jobs. I support measures that would grow the market for Scottish products in the US, and back any plans that will attract new investment to Scotland to support our growing economy. Our export potential is huge, and we must do all we can to support Scottish firms in maximising that.

It is in that context that I support a reduction in tariffs that would allow Scottish firms to compete on a level playing field with US manufacturers, because that would be good news for Scottish jobs. Despite these potential benefits, however, several key aspects of the proposals serve to undermine the whole process as things stand. The lack of transparency around the negotiations has prevented proper scrutiny and diminished public confidence.

Patrick Grady (Glasgow North) (SNP): Does the lack of transparency in the negotiations not stand in stark contrast to my hon. Friend’s earlier point about the huge democratic engagement by the public on this issue and the huge concern expressed, including by several hundred of my constituents, before and since the election?

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Ms Ahmed-Sheikh: I am sure my hon. Friend speaks on behalf of many of our hon. Friends’ constituents who have written to us with similar concerns.

It is unacceptable that Members of the House and the European Parliament have been prevented from properly examining the documents in the process. At one stage, Members of the European Parliament were only allowed to see the documents relating to the treaty in a secret room and could not even remove them. It is self-defeating to act in the public good but prevent the public from properly examining the work that is being carried out on their behalf.

It is also of great concern to many that, in order to standardise the rules governing markets in the US and the EU, TTIP will lead to the lowest common standard of regulations. The European Union in particular has been a force for good in the creation of world-leading safety standards, which protect the best interests of workers and consumers. It is one of the many benefits of retaining membership of the European Union. We should celebrate those successes, not seek to undermine them.

However, my main point is that the Transatlantic Trade and Investment Partnership has the potential to undermine public services in my constituency and across Scotland and the UK. We need to take decisive action now to prevent this outcome. The Scottish Government have already made a number of representations to the UK Government and the European Commission about the possible implications of TTIP for Scottish public services, in particular the Scottish NHS and Scottish Water. I welcome the tone of the responses to date, which have contained encouraging words about how TTIP does not pose any threat to the NHS. In particular, I welcome the statement by the European Commission Director General for Trade that

“the net effect of the EU’s approach is that nothing in TTIP will lead to privatisation of the NHS”.

However, the fact remains that both the Scottish public and the Scottish Government must be able to see the final legal text of any agreement to be fully assured on this vital issue.

Peter Grant (Glenrothes) (SNP): I have been contacted by a number of people who work in the NHS and a number whose lives depend on a successful NHS. Their concern is that TTIP may be the first step along a road towards the kind of health service that we see in parts of north America, where the first thing they do with a casualty coming into hospital is check their credit rating before checking for a pulse. I hear what my hon. Friend is saying about the assurances we have had from the European Commission. Does she believe that the people of Scotland have had sufficient reassurances to take the Commission’s words at face value?

Ms Ahmed-Sheikh: I do not think we have had sufficient reassurances, but the people of Scotland can be absolutely assured that every one of my hon. Friends will be here to ensure that we continue to represent their best interests and protect the public services that are dear to our heart and, indeed, to the people of Scotland, whom we represent.

The lack of transparency on the detail continues to undermine the public statements made by Ministers and European officials. I am disappointed that yesterday the European Parliament failed to take the opportunity to amend the Lange report to explicitly protect public services such as the NHS and water.

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Rachael Maskell (York Central) (Lab/Co-op): Does the hon. Lady agree that we would be better served by putting areas of trade on the positive list, rather than the negative list, so that we could include the areas of trade that we wanted in the trade agreement, as opposed to including all services, with only those named being removed?

Ms Ahmed-Sheikh: I agree with the hon. Lady.

What is demanded, and what we require, is a clear and unambiguous exemption from the deal that guarantees that democratically elected Governments in Scotland and beyond cannot be forced to privatise services, and that any attempts to roll back previous privatisation will not be open to challenge under the new rules. These conditions must be explicit.

We come now to one of the areas of greatest concern: the process known as investor-state dispute settlement, or ISDS. Including this type of measure in the agreement potentially undermines the right of European Governments to regulate effectively on a range of issues. As the Minister will be aware, the most relevant example of that is the recent action by the Uruguayan Government to legislate to increase the size of the health warnings on cigarette packs, in an attempt to reduce the number of people smoking and improve public health.

In response, the multinational tobacco giant, Philip Morris, used a similar process to sue the Uruguayan Government. The concern of many of us, including the Scottish Government and our trade unions, is that similar measures could be used by private organisations here to limit our democratically elected Government’s powers in a range of important areas. My right hon. Friend the Member for Gordon (Alex Salmond) has considerable experience in this area, Madam Deputy Speaker, and I understand that if he catches your eye he hopes to raise it before the Minister replies.

Chris Stephens (Glasgow South West) (SNP): Will my hon. Friend confirm that Unison Scotland has concerns about TTIP being a threat to the new public procurement legislation that has just been passed through the Scottish Parliament, whereby Scottish public bodies can take local environmental and social wellbeing concerns into account in contracts?

Ms Ahmed-Sheikh: I absolutely agree with my hon. Friend’s position in relation to Unison. I am about to come to Unite in a similar respect.

In February this year, SNP Members of the Scottish Parliament, led by our First Minster, signed up to a pledge proposed by Unite, which stated, amongst other clauses, that

“TTIP must not give current or future US investors new rights that they could use to sue any level of government, public authority or NHS organisation because of their policies or actions relating to public healthcare.”

My colleagues and I absolutely support that pledge. Of course we welcome the recent developments announced by the Commission in May, but there is still some distance to travel if the final agreement is to gain our full support. This Government must clearly state to our European partners that the UK will veto TTIP unless we receive an explicit exemption for the NHS and Scottish Water as part of a general public sector exemption.

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We are very proud of our public services. Governments in Scotland, the UK and beyond must therefore be able to manage those services for the greater good without fear that their democratic mandate might be overruled in the courts.

Catherine West (Hornsey and Wood Green) (Lab): Will the hon. Lady give way?

Ms Ahmed-Sheikh: I will make some progress.

I hope that the Minister can start to set out today how this Government are making progress in delivering the kind of deal that Scottish MPs and the Scottish Government can support and the current timetable for agreement and ratification. In particular, I hope he takes this opportunity to set out how Parliament will be able to scrutinise the final proposal before it is ratified. We must have a full debate on this important matter.

The Transatlantic Trade and Investment Partnership undoubtedly has great potential to help grow the Scottish economy. We must ensure that that is not undermined by unwarranted and damaging provisions that put our public services at risk.

5.12 pm

Alex Salmond (Gordon) (SNP): I congratulate my hon. Friend the Member for Ochil and South Perthshire (Ms Ahmed-Sheikh) on securing this debate. I thank her and the Minister for agreeing to my making a brief contribution on this subject.

I saw a few minutes ago at the closure of the Budget debate that the Secretary of State for Work and Pensions was in his place. Of course, he goes by the acronym IDS. He is a very controversial Minister at the present moment, as he should be, because he is at the heart of plans to impoverish millions of people across the United Kingdom and hundreds of thousands of people in Scotland. If IDS is a controversial acronym, then so is ISDS—the investor state dispute settlement mechanism that is at the heart of the Transatlantic Trade and Investment Partnership arrangement.

I congratulate my hon. Friend not just on securing this debate—her first Adjournment debate in the House—but on its topicality, because only yesterday in the European Parliament, by a vote of 447 to 229, there was an approval to revamp the disputed investor court that will be part of TTIP. The text proposes to

“replace the ISDS system with a new system for resolving disputes between investors and states.”

I know that the Minister will appreciate the extraordinary importance of not offering additional avenues for corporate challenge to democratic decision making. We have seen many examples in these islands over the past few years. The Government I led as First Minister of Scotland had to battle through the courts the insurance companies that were trying to prevent those suffering from pleural plaques from having access to compensation for industrial injury. I am delighted to say that the Scottish Government’s position was upheld first by the inner house and the outer house of the Court of Session—our highest court in Scotland—and then by the UK Supreme Court.

The Scottish Government are currently battling the Scotch Whisky Association, which is trying to prevent the implementation of the legislation that was passed and then endorsed by a democratic majority of the Scottish people in 2011 on the minimum pricing of

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alcohol, which we believe will save a substantial number of lives in Scotland and rebalance our relationship with alcohol. However, that is being challenged, blocked and tackled through the courts.

The United Kingdom Government are facing a legal challenge from British American Tobacco and other tobacco companies, such as Philip Morris, to the proposal on plain packaging for tobacco products, despite the fact that tobacco, as the Department of Health reminds us, costs 80,000 lives in England each year and a slightly higher pro rata number of lives in Scotland, where there are similar proposals from the Scottish Government.

We see corporate interests challenging the decisions of democratic legislatures and Governments. However, those challenges have happened through the domestic and European courts. The danger is that through the system of ISDS, a whole new dimension of challenge will be offered to corporate interests.

Does the Minister support the revamping proposal that was carried in the European Parliament yesterday? How can that give us assurance that the public interest will be protected from corporate challenge? Is he satisfied that we will arrive at a position where each and every democratic decision of this Parliament, the Scottish Parliament and other Parliaments across Europe will not be challenged by corporate interests, who see, as is demonstrated by the precedents cited by my hon. Friend the Member for Ochil and South Perthshire, in what otherwise might be seen as a welcome move toward free trade, an avenue to advance their own corporate interests?

In the Minister’s response, will the Government shape up and give us a position that shows that they recognise the danger, and will they assert, as all Governments and Parliaments should, the primacy of democratic decision making to protect the welfare of their people and the right to pursue democratically agreed policies without vested interests challenging them through a court process?

5.17 pm

The Minister for Skills (Nick Boles): It is a pleasure to respond to this Adjournment debate. I know that you, Madam Deputy Speaker, and the right hon. Member for Gordon (Alex Salmond) are disappointed that I am replying to the debate rather than his new friend the Minister for Small Business, Industry and Enterprise. She was due to be here, but is on her way to “Question Time”, where she may well meet the right hon. Gentleman again. I shall do my best to respond to the debate on her behalf. If I do not adequately answer any of the detailed questions that have been posed, I will make sure that she writes to hon. Members with all the details.

I congratulate the hon. Member for Ochil and South Perthshire (Ms Ahmed-Sheikh) on securing this debate on an important subject that has been raised with me by constituents in a number of emails and letters over the past few months. I am glad she acknowledged that this is a once-in-a-generation opportunity to create a very beneficial free-trade area, and that her fine country and the entire United Kingdom rely on trade and have benefited from trade over centuries and generations. Indeed, we think that we are quite good at it and that we usually benefit more even than our trading partners from its expansion.

The Government are confident that the agreement will produce huge economic benefits on both sides of the Atlantic. Outside the EU, the US is the largest

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export market for British goods and services, and a successful deal could eventually boost our economy by as much as £10 billion each year. That is a large and abstract number, but it translates into additional disposable income of about £400 a year for the households that the hon. Lady and I represent. More money in people’s pockets, cheaper goods and services, more jobs, and new markets for small and growing businesses—those are the things that we are talking about when we talk about this agreement. It is not an abstract or technical process established by elites; it is an opportunity for people up and down the land to benefit.

Ian Blackford (Ross, Skye and Lochaber) (SNP): The Minister made an interesting point about a £10 billion benefit to the United Kingdom economy. Where did that figure came from, and what analysis was undertaken to produce it?

Nick Boles: I do not have that information in my pack, but I shall be happy to provide it. As I have said, my right hon. Friend the Minister for Small Business, Industry and Enterprise will reply in writing to any detailed questions that Members may have.

Rachael Maskell: Will the Minister give way?

Nick Boles: I want to make a bit of progress, but I will give way later if I have time.

The hon. Member for Ochil and South Perthshire referred to concerns, which have certainly been expressed to me, about the potential impact—or the alleged potential impact—on our national health service. All of us in the House have a responsibility to provide our constituents with the facts as we best understand them, and not to fuel scare stories. I therefore think it important to say that absolutely nothing in the proposed deal would threaten the public nature of our public services, and, in particular, our national health service.

Catherine West: Will the Minister give way?

Nick Boles: No, I will not.

The hon. Lady referred to, and I will now repeat, some of the words of the European Commissioner for Trade, Cecilia Malmström, who wrote to a Minister in January about the NHS. She said:

“member states do not have to open public health services to competition from private providers, nor do they have to outsource services to private providers”.

She also said:

“member states are free to change their policies and bring back outsourced services back into the public sector whenever they choose to do so, in a manner respecting property rights… it makes no difference whether a member state already allows some services to be outsourced to private providers, or not”.

The European Union negotiating position for the TTIP deal is to ensure that EU countries will be free to decide how they run their public health systems. The NHS—our NHS: the Scottish NHS, the English NHS, and the NHS in all parts of the United Kingdom—is not at risk from this agreement.

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Ms Ahmed-Sheikh: I appreciate that you are able to offer some kind of comfort, but in yesterday’s vote, when there was an amendment for a specific opt-out from TTIP for the NHS, we were defeated. You supported us in the motion—

Madam Deputy Speaker (Mrs Eleanor Laing): Order. I let the hon. Lady get away with it the first time, but now that she has done it a second time, I must tell her that she must not address the Minister as “you”. In the Chamber, “you” means the Chair. The Minister is the Minister.

Ms Ahmed-Sheikh: I apologise, Madam Deputy Speaker.

The Minister will have noted that the proposal for a specific opt-out was defeated in yesterday’s vote. How can he be so sure that we will be protected in any future agreement, and can we be assured that we will have an opportunity to debate it?

Nick Boles: I shall come to the point about debating it, but let me first deal with the hon. Lady’s point about an opt-out.

Of course it would always be great for the text of any agreement to contain all the reassurances that are required, but, even before yesterday’s vote, the Government were entirely satisfied that the position regarding TTIP would not threaten the public status of our NHS or other public services. We were entirely satisfied that there was absolutely no intention on the part of the Commission in negotiating the agreement, or on the part of any other EU member state, to allow the status of either our public services or theirs to be threatened. We are satisfied with the substance, although I acknowledge that more reassurance for our constituents would be welcome if it could possibly be provided. I fear that, to some extent, the hon. Lady praised 38 Degrees, but I would not be so kind. I think that, all too often, that organisation whips up a great many ungrounded fears. It is important for us, as Members of Parliament, to try to reassure our constituents.

Catherine West: Will the Minister give way?

Nick Boles: I must move on. I am afraid that there are a number of issues to be discussed.

The hon. Lady referred to—and the right hon. Member for Gordon also dwelt on—some of the questions relating to the ability that corporate interests might be given to challenge regulations. I want to be very clear about what will be involved. The ISDS tribunals will be able to grant compensation for actions and decisions by Governments according to regulations that investors can show to have been unfair or conducted in an undue way. They will not be able to overturn, amend or eradicate any regulations that Governments bring in legitimately.

As a believer in the rule of law and as a practitioner of that rule of law in other phases of his life, the right hon. Gentleman will understand that it is always important that every decision by Government, every rule and every law that we pass can be challenged in court or in proper tribunals by those interests that are affected by them. What matters is that ultimately the responsibility

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for changing or amending those rules rests with Parliaments, and there is nothing in the agreement that would alter that fact.

Alex Salmond: I deny absolutely the suggestion that I am a lawyer. I am an economist. I want to put that on the record. What was the revamping that was proposed by the European Parliament in the vote yesterday? Will the Minister explain how that revamping will improve and consolidate the protection that democratic decision making is going to have against challenge from corporate interests?

Nick Boles: I will be glad to get the right hon. Gentleman a specific answer to that question. I do not believe in pretending to know things that I do not know, and I do not have the information required to answer it. I am sorry for having assumed from his eloquence in this place that he must at one point have been a lawyer. I agree that that is an appalling slur on any man’s character and I withdraw it unreservedly.

I want to move on to the important question raised by the hon. Member for Ochil and South Perthshire about whether Parliament will have an opportunity to consider the Bill. I want to be clear so, if hon. Members will forgive me, I will read a little from the text in front of me. The agreement is expected to be a mixed agreement to which the UK is individually a party. It will therefore be subject to agreement by member states’ Parliaments—

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including that of the UK—the EU Council and the European Parliament. As part of this process the UK Parliament will receive the complete draft text of the agreement to scrutinise in debates in both Houses.

I hope that provides the reassurance that the hon. Lady seeks. I note that the party that currently governs Scotland is now very adequately represented in this House and I note the level of interest shown by her party late on a Thursday afternoon, so I am sure that she and her colleagues will provide the level of scrutiny that she seeks.

In conclusion, I am certain that this agreement could have enormous benefit for the people of Scotland and the people of the United Kingdom. I am satisfied that the agreement will not threaten the public services that we hold dear and that we want in large measure to remain public—there is nothing in it that will do that. I am also satisfied that there is no process in it that will usurp Parliaments or democratic processes for changing regulations or laws, but I endorse and support the desire for proper scrutiny of an agreement that will be a very substantial commitment by all member states of the EU. I congratulate the hon. Lady on starting that process here this afternoon. I have no doubt that she will continue it over the months to come.

Question put and agreed to.

5.28 pm

House adjourned.