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Points of Order

1.36 pm

Robert Flello (Stoke-on-Trent South) (Lab): On a point of order, Mr Speaker. Thank you for kindly allowing the House to respond to what became a supplementary business statement, but had it been advertised as such, many more Members would have been here wishing to take part. For guidance, would it be possible to have a further supplementary business statement tomorrow to allow other Members to put similar questions to the Leader of the House?

Mr Speaker: The short answer is no. It is up to Members to be in their place and to take their opportunity. I believe there will be a business question on Thursday, and I merely encourage other right hon. and hon. Members in all parts of the House, whatever subject is of interest to them, to display the same perspicacity as the hon. Gentleman.

Mr David Hanson (Delyn) (Lab): On a point of order, Mr Speaker. Will you take this opportunity to remind the House that statements should be made to the House? I first heard this news on the BBC website. It is not appropriate that Members hear news affecting hundreds of their constituents in such a way. Constituents, whether for or against hunting with hounds, have taken a great deal of time to email their Members of Parliament, and to hear about it from BBC News was not appropriate.

Mr Speaker: It is certainly right that statements should be made first to the House. However illustrious the British Broadcasting Corporation might be, it does not deserve to hear of such matters before elected Members of Parliament. Statements should certainly be made first to the House.

Bill Presented

National Insurance Contributions (Rate Ceilings) Bill

Presentation and First Reading (Standing Order No. 57)

Mr Chancellor of the Exchequer, supported by the Prime Minister, Mr Secretary Duncan Smith, Secretary Sajid Javid, Greg Hands, Mr David Gauke, Damian Hinds and Harriett Baldwin, presented a Bill to set a ceiling on the main and additional primary percentages, the secondary percentage and the upper earnings limit in relation to Class 1 national insurance contributions.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 54) with explanatory notes (Bill 54-EN).

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Civil Enforcement Officers and Traffic Wardens (Integration of Duties and Powers) (England)

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

1.38 pm

Mr Philip Hollobone (Kettering) (Con): I beg to move,

That leave be given to bring in a Bill to make provision about the integration of the duties and powers of civil enforcement officers and of traffic wardens with respect to the issuing of fixed penalty notices for additional offences; and for connected purposes.

I thank you, Mr Speaker, for granting me 10 minutes to state my case. I also welcome to his place the Under-Secretary of State for Transport, my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones), and commend him for his help and guidance on this complicated issue. I should also mention in dispatches the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill), who has been most helpful and understands the problems the Bill is trying to solve. I apologise to Members waiting for the last day of the Budget debate, but I hope that in the next 10 minutes they will be as interested in, and intrigued by, the parking issues in Kettering as I am. I hope to outline what the problem is and how it might be resolved.

The problem is that street wardens, whose role in life is to enforce important environmental protection measures, do not have the power in law to enforce parking regulations under a decriminalised parking regime. Likewise, traffic wardens, who can issue tickets under a decriminalised parking regime, are not able to enforce against infringements of environmental legislation. The purpose of this Bill would be to allow both sets of wardens to enforce each others’ provisions and therefore, as it were, establish one generic type of warden, who could take action on lots of important issues at street level.

I declare my interest as a current, serving member of Kettering Borough Council. I want to draw the House’s attention to the tremendous work that Kettering Borough Council has done in establishing an effective generic street warden scheme. The council has sought to remove artificial barriers to service delivery by asking its staff to take an holistic approach to their work. An example of that is the way in which the council has created the generic street warden team, which has required officers to take a creative approach to working within existing legislative constraints. Like most local authorities, Kettering Borough Council originally had a series of small teams, each dealing with areas such as car parking enforcement, dog fouling, litter enforcement, pest control and dog warden duties. The council was also gearing up to introduce residents parking schemes across the borough, which it has now done, and it needed a new resource properly to enforce the residents’ parking zones.

What the council did was combine all those functions into a single, generic street warden team, which was able to absorb the new residents parking enforcement work and reduce the overall cost to the combined service, while at the same time hugely increasing its coverage. As a result, the council now has an enforcement presence across all those areas for 84 hours a week, rather than

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the original 40. That has meant that the council is effectively two and a half times more efficient than it was in enforcing against both environmental and traffic offences. Originally, the council had 10 staff operating from 9 am to 5 pm, Monday to Friday. Now it has a team of eight staff, operating from 8 am to 8 pm— 12 hours a day—seven days a week, providing 84 hours of work. They are able to enforce controls over abandoned cars, stray dogs, litter, off-street car parking, environmental offences, dog waste and fly-tipping, as well as dealing with pest control, supervision of local markets and residents parking.

On-street parking controls—yellow-line parking controls—in Kettering are still provided by the local police, traffic wardens and police community support officers, because the parking arrangements in Kettering have not yet been decriminalised. This peculiar arrangement works extremely well. The residents parking schemes are extremely popular and there is a demand for more of them. They cost only £45 per vehicle per year and up to three vehicles per household are allowed. There are generous arrangements for visitor permits and there is high customer satisfaction, with good value ratings. The enforcement of residents parking zones is provided by Kettering Borough Council’s generic street warden team, which provides a flexible, responsive service, able to handle peaks and troughs, and at a lower cost than the original environmental warden capacity.

The problem in Kettering has arisen because the Government are keen for local authorities to decriminalise their parking arrangements and have asked the county council, Northamptonshire County Council, to look at this. The problem is that if Northamptonshire County Council goes along and decriminalises parking arrangements in Kettering, Kettering Borough Council’s street wardens would not be able to enforce the residents parking that exists in the town. A similar situation will apply to the Minister’s constituency in Harrogate, because Harrogate Borough Council—which I am sure is an excellent local authority—operates civil parking enforcement on behalf of North Yorkshire County Council, alongside Craven District Council and Selby District Council. However, if Harrogate Borough Council wanted its civil enforcement officers for parking to enforce environmental legislation—such as control of litter, abandoned cars, fly-tipping and so on—it would not be able to do so in law. The purpose of my Bill would be to correct that anomaly in law, so that those wardens could enforce each other’s responsibilities.

Kettering Borough Council is extremely keen to ensure that this problem is sorted out before the successful residents parking schemes in Kettering are undermined. I am sure it is not the intention of the existing law to make such residents parking schemes in Kettering unworkable. Ideally, Kettering Borough Council would be happy to see parking decriminalised, with Northamptonshire County Council allowing Kettering Borough Council to enforce the new arrangements, but that would require a change in the law to enable Kettering Borough Council’s wardens to police the new parking arrangements. If the Government are not certain that that correction to the law would necessarily be the right thing, Kettering Borough Council is volunteering to offer itself as a pilot for this new, multifunctional working to apply to the new types of wardens in Kettering, so that the Government can satisfy themselves that the change in the law is required.

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If this more integrated option were taken up, it could provide a template that the rest of the country might like to follow, because what Kettering Borough Council is saying is that we can have better enforcement of on-street provisions for environmental offences and parking offences with a smaller number of wardens, operating a larger number of hours, at a lower cost. If that were rolled out across the country as a whole, I estimate that it could save the Exchequer hundreds of millions of pounds, while also providing better arrangements at street level to police all the things that most of us tend to overlook day to day, but which are very important to making sure that a local area functions properly.

Question put and agreed to.

Ordered,

That Mr Philip Hollobone, Mr Stewart Jackson, Mr John Baron, Andrew Rosindell, Mr Peter Bone, Sir Simon Burns, Mr Christopher Chope, Andrew Percy, Mr Nigel Evans and Tom Pursglove present the Bill.

Mr Philip Hollobone accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 11 September, and to be printed (Bill 55).


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Ways and Means

Budget Resolutions and Economic Situation

Amendment of the Law

Debate resumed (Order, 13 July).

Question again proposed,

That—

(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.

(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide–

(a) for zero-rating or exempting a supply, acquisition or importation;

(b) for refunding an amount of tax;

(c) for any relief, other than a relief that–

(i) so far as it is applicable to goods, applies to goods of every description, and

(ii) so far as it is applicable to services, applies to services of every description.

Madam Deputy Speaker (Mrs Eleanor Laing): I have to inform the House that Mr Speaker has selected the amendment in the name of the hon. Member for Dundee East (Stewart Hosie).

1.48 pm

The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid): Last Wednesday, the Chancellor unveiled a one nation Budget with one aim in mind: security—the economic security of a country that lives within its means; the financial security of lower taxes and higher wages; and the national security of a Britain that defends itself and its values. Since then we have had almost a week of debate—a week of the Opposition trying and failing to pick holes and a week in which we have had the usual predictions of doom and disaster. It is a familiar story from Budget debates past. In June 2010, the then shadow Chancellor called our approach “a profound mistake” that ran the risk of “derailing the recovery”. Two years later, another shadow Chancellor said that our long-term economic plan had “failed”, although I should add that in the same speech, the former Member representing Morley and Outwood also warned that “after hubris comes nemesis”—a lesson he apparently failed to learn himself. Let us fast forward to 2015, and yet another shadow Chancellor said last week that

“this Budget made the wrong choices for working people”.—[Official Report, 9 July 2015; Vol. 598, c. 481.]

We have heard it all before.

Every year, the Opposition warn of catastrophe around the corner, yet every year Britain’s economy has got stronger. They said our policies would lead to mass unemployment, yet today more people are in work than ever before. They said that economic growth would be strangled; today, our economy is growing faster than any other in the G7. They said we could not bring down the deficit, yet today we are on course to have a surplus by the end of this Parliament. Even the most partisan critics can see that our economic plan is working. That is why,

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in May, the British people gave us a mandate to finish what we started, which is exactly what this Budget delivers.

Mr David Anderson (Blaydon) (Lab): While I accept that it is part of political knockabout that the Government say one thing and the Opposition say another, does the Secretary of State agree with external groups such as Parkinson’s UK, which said that the change to welfare benefits will have a debilitating impact on people with Parkinson’s and will do them real harm? Does he think that is part of the political knockabout, or does he accept what it is saying?

Sajid Javid: What I accept is that we need a welfare system that protects the vulnerable and is affordable and sustainable for the long term. As we deal with excessive welfare spending, we are able to strengthen the economy, which means higher wages for working people. I hope that the hon. Gentleman can support that.

Geraint Davies (Swansea West) (Lab/Co-op): Does the Secretary of State accept that child tax credits are, in fact, work incentives based on the American earned incomes tax credit, and that the reason the cost is so high at £30 billion is that productivity and wages are so low? In particular, there are 800,000 fewer people now earning over £20,000 than there were in 2010. Is that not a complete failure?

Sajid Javid: I think the hon. Gentleman would agree that it is better to have a sustainable welfare system that protects the vulnerable while at the same does not allow companies to get away with paying lower wages than they otherwise were. I hope he supports our national living wage, especially the fact that it means someone working at the national minimum wage today will get at least £5,000 more a year by 2020 because of our national living wage.

A business-led economy in which hard work is rewarded, entrepreneurs are encouraged and aspiration is applauded —that is at the heart of our Budget. Above all, it is a Budget that supports business. For all the rhetoric one hears from politicians, Governments do not create jobs; businesses do. As my right hon. Friend the Secretary of State for Work and Pensions said last week:

“It is only when businesses are thriving that the people of our country can thrive too.”—[Official Report, 9 July 2015; Vol. 598, c. 482.]

It is only a strong and growing economy that allows us to invest in the NHS and schools; and it is only a strong and growing economy that allows us to spend money on protecting our most vulnerable citizens. Anyone who is successful in business should be congratulated and not condemned.

Helen Whately (Faversham and Mid Kent) (Con): Does my right hon. Friend welcome, as I do, the introduction of a national living wage, which will increase the pay of the worst paid and help make work pay?

Sajid Javid: My hon. Friend is absolutely right. At the heart of the new national living wage is just what she says—it will mean working people earning even more, and it will go on to boost productivity, too.

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Aggressive regressive policies that penalise honest labour have no place in the modern world. That is why we have already cut the main rate of corporation tax to 20%, rewarding productive companies and boosting UK competitiveness. It will now fall further to 19% in 2017 and just 18% in 2020, making it the lowest in the G20. More than a million businesses will see their tax bill fall as a result, allowing them to invest more in their staff and facilities.

That is not all. As corporation tax falls, tax allowances for growing businesses will rise. The annual investment allowance will be set at £200,000—its highest-ever permanent level, while the employment allowance will increase by £1,000 to £3,000, cutting employer national insurance contributions still further. By next year, businesses will be able to employ four people full time on the national living wage and pay no national insurance at all. By April next year, we will publish a business tax road map, setting out our plans for business taxes over this Parliament and giving employers the information they need to plan ahead.

From September 2017, working families with three and four-year-olds will receive 30 hours of free childcare—twice what they currently receive. This will help the parents themselves, but it will also get more skilled employees back in the workforce sooner—a real bonus for British business.

David Rutley (Macclesfield) (Con): I welcome my right hon. Friend’s announcements. In tandem with the enterprise Bill and plans to review self-employment, does he agree that they will help boost the enterprise culture that we Government Members believe is vital to further the interests of our national economy?

Sajid Javid: I agree absolutely with my hon. Friend. Conservative Members have always understood the power and importance of enterprise, while Labour Members have never understood just how important it is to boosting our productivity and making sure that our economy keeps growing and creating jobs at a record rate.

Nia Griffith (Llanelli) (Lab): The Secretary of State makes great play of the importance of long-term planning. We all understand its importance for business, so what would he say to the company near Chepstow that used to make wind turbines but is now facing closure because of the sudden change in policy by his Government? Is it not sad that this Government, which should be offering certainty to business, are not only changing policy willy-nilly, but leaving a really big question mark over the European Union that is making businesses very jumpy indeed?

Sajid Javid: No one wants to see any company close in Britain, and no one wants to see any of the job losses that would potentially come alongside that. What is most important when changes in the economy affect businesses is a growing economy so that businesses are growing at record rates. We have record high growth as a country among the G7, which is exactly the sort of environment we want so that other companies can continue to grow alongside.

The national living wage will put more money in customers’ pockets. This will deliver a real boost to businesses right across the country, as eight out of

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10 people who will see their pay rise live outside London and the south-east of England. These measures will all support growing, dynamic businesses, as we work with them to tackle the economic challenge of our time.

Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op): The right hon. Gentleman has made an intellectual case for what he calls the national living wage, which most people would call a rise in the national minimum wage. Why did the Government not choose to bring in the national living wage? Surely the case he has made is for the national living wage.

Sajid Javid: Perhaps the hon. Gentleman missed last week’s Budget and what the Chancellor said. The Chancellor did introduce the national living wage. Of course it will be phased in over five years, but by 2020 it will be equal to at least 60% of median earnings. It is the national living wage.

Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP): Will the right hon. Gentleman confirm the situation in Scotland for UK Government employees? Will they get his Government’s low national living wage or will they get the living wage that applies in Scotland, which is considerably higher?

Sajid Javid: People will be receiving the new national living wage, as set out by the Chancellor in his Budget. That is a huge step forward, raising the incomes of millions of people throughout Britain. At least 2.6 million people will benefit directly, and a further 6 million will also benefit. I am sure that the hon. Gentleman will join me in welcoming that.

Mr Anderson: The Secretary of State is being very generous. May I ask him what will be the living wage—his living wage—for under-25s and for under-21s?

Sajid Javid: As the hon. Gentleman may know, the new national living wage applies to those aged 25 or older. The statutory wages for younger age groups are already being set by the Low Pay Commission.

The economic challenge of our time is boosting Britain’s productivity. Britain is home to some of the world’s most dynamic businesses, staffed by incredibly talented, hard-working individuals, yet our productivity—the rate of output per hour worked—is well below its potential. Let me put this in stark terms. It now takes a worker in the United Kingdom five days to produce what his or her counterpart in France can deliver in four. There is encouraging news—the British automotive industry is among the most productive in the developed world, with a vehicle rolling off the production lines every 20 seconds—but by and large, in a situation familiar to fans of the England men’s football team, the country that invented modern industry has fallen behind its competitors, and the Germans in particular.

Mr Jim Cunningham (Coventry South) (Lab): What does the Secretary of State think we need to do in Britain to improve our productivity?

Sajid Javid: If the hon. Gentleman had joined me in Longbridge on Friday, he would have heard me set out the Government’s productivity plan, which I shall come to in a moment.

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Productivity is not just some obscure measure that is of interest only to economists. Higher productivity means higher incomes. When productivity rises, standards of living rise too. That is why, as part of last week’s Budget, we published “Fixing the foundations: Creating a more prosperous nation”. It is our blueprint for getting Britain moving, building and growing, and creating the environment that is needed to tackle the productivity gap once and for all.

The productivity plan will support apprentices with a new compulsory apprenticeship levy that requires large businesses to invest in their own future. It will boost skills with a radical streamlining of further education qualifications and the creation of prestigious institutes of technology. It will support infrastructure, with vehicle excise duty paying for a new roads fund, and a plan to put Network Rail and the rail investment programme back on track. It will allow us to invest in innovation, putting nearly £7 billion into the UK’s resurgent infrastructure, and developing our network of Catapult centres for commercialising technology. It will make our world-class universities open to all, removing the student cap and putting higher education on a more sustainable footing. It will ensure that superfast broadband is available to 95% of UK households and businesses by 2017, and it will make it easier for the market to roll out fixed and mobile infrastructure by reforming planning rules on taller masts. It will mobilise the whole of Government behind exporting, working alongside a more effective UK Trade & Investment and building stronger links with emerging markets.

Geraint Davies: I am grateful to the Secretary of State for his generosity in giving way again. Why did the front page of The Economist sum up the Budget with the words “politically astute, economically flawed”? Why did its editorial observe that it was a result of quick fixing that focused not on productivity but on abandoning investment in the railways, not allowing enough easy access to universities, and not raising skill levels and improving infrastructure in order to make Britain strong?

Sajid Javid: Probably because The Economist was published before I launched the productivity plan on Friday.

The productivity plan will strip further red tape out of the planning system, making it easier to build the homes that British workers need. It will rebalance our economy, devolving further powers and responsibilities to the elected mayors of London and Manchester and working towards devolution deals with the west midlands, Sheffield, Liverpool, Leeds and West Yorkshire. It will create open and competitive markets with the minimum of regulation, an environment in which innovative businesses can thrive to the benefit of consumers.

The drivers of productivity are not a mystery; the barriers that prevent it are well understood. What has been lacking in this country for too long is the political will to do something about the problem by making the bold decisions that are necessary to unleash the full potential of British business. That is not lacking any more. This Government have the mandate and the will to deliver lasting change, and that is exactly what the Budget will do.

In the past few days, we have heard Labour’s former Chancellor say that his party lacks “a credible economic policy”. The Leader of the Opposition has attacked our

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changes in tax credits one day and supported them the next. We have heard the SNP’s economy spokesman, the hon. Member for Dundee East (Stewart Hosie), promise somehow to reduce the national debt while still running a deficit. On the Opposition Benches, economic competence is almost as rare as a Liberal Democrat Member.

Only this Government have the policies and the will to back British business. Only this Government have the foresight to invest in infrastructure and skills. Only this Government will build the homes that the country needs and the economy that it deserves. This Budget does not just fix the roof while the sun is shining. It fixes the foundations too, and I commend it to the House.


2.6 pm

Mr Chuka Umunna (Streatham) (Lab): We gather here today to conclude the Budget debates, but before I dive in, I want to put the Budget in a long-term, global context.

All political parties in advanced economies face the challenge of translating their values into action in an era of change and globalisation. In some circles “globalisation” is seen as a dirty word, but in my view it is wrong to view it as such. We cannot ignore the fact that it has lifted millions of people out of poverty and destitution in developing economies around the world: that is something that we should celebrate. It has also expanded opportunities in advanced economies for some particularly highly skilled, internationally mobile workers. However, globalisation, powered by technological forces, is also displacing and reshaping industry after industry in economies like ours. It has failed to deliver for nearly enough people in middle and lower-income jobs, often destroying jobs that families and whole communities have done for generations.

The nature of work is also changing. More people are becoming self-employed, and more people need to work around caring and family responsibilities. That is not a bad thing, but our systems are not set up to serve those new work patterns so well. Anyone who speaks to a self-employed person about how difficult it is to take out a mortgage, or to a working family about the rising cost of childcare or the challenge of working while also caring for an elderly relative, will see what I mean. Economic policy is about nothing if it is not about the job that people do, from which so much else flows: self-esteem, a sense of security, and the ability to support a family.

The job of Governments, in addition to providing a safety net for those who cannot work, is to decide what policy responses can transform the challenges posed by technology, globalisation, and other changes from obstacles to solutions—solutions to problems related to jobs, growth and competitiveness—today and in the coming decades. That, ultimately, is the yardstick against which we must measure the Government’s Budgets during this Parliament. Do they empower people to get on in an era of globalisation? Do they promote growth and prosperity, at the same time as reducing our debt and deficit in a fair way?

Let me now turn specifically to this Parliament’s first Budget, and the projections for the economy and public finances in the short term. The Office for Budget

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Responsibility’s growth forecasts for the forecast period are relatively unchanged compared to those in March, although growth has been revised down for this year. The current recovery is real, but it is the slowest on record. The economy is still fragile. If that were not the case, the foot would not be firmly on the floor when it comes to monetary policy levers: the base rate has sat at 0.5% for more than six years. So there can be no complacency on growth. At the same time, we still need to reduce public sector borrowing and the national debt in the wake of the global financial crisis of 2008-09. That crash was triggered by grossly irresponsible behaviour in the banking sector. It caused a recession that precipitated a fall in tax receipts and the debt and the deficit to substantially increase. I will deal with the debt and deficit issues first, because I want to deal in more detail with matters of growth. Ultimately, the best way to reduce our debts is by people earning more and for the economy to grow in a sustainable way.

James Cleverly (Braintree) (Con): The hon. Gentleman sticks rigidly to the Labour party’s script that it was all the fault of the banking sector, but does he concede that his Government—whether through too little, too much or the wrong regulation—had any part to play in the economic downturn we are now coming out of?

Mr Umunna: First, undoubtedly we should have better regulated the banks during our time in office, but it is worth Conservative Members remembering that the Financial Services and Markets Act 2000 that put in place a tripartite system for banking regulation was not opposed by them at the time—[Interruption.] No, it was not; I have read the Hansard myself. It is also worth noting that, to the extent that we were criticised by Conservative Members, they were saying we were regulating the banking sector too much.

Secondly, I will happily acknowledge that after 15 years of economic expansion we should not have been running a deficit—albeit an historically small and unremarkable one—going into the crash, but again I remind Conservative Members that the average deficit during our time in office before the crash hit was 1.3% of GDP, whereas in the 18 previous years it was 3.2%. It was not that small deficit that caused the increase in the wake of the crash; it was the fall in tax receipts precipitated by the recession.

David Rutley: By anybody’s measure there was a record structural deficit before the crash. That was on the Labour Government’s watch. Will the hon. Gentleman now join others in his party who have had the guts to apologise for creating that huge structural deficit?

Mr Umunna: That is simply not true—and if it were true, why did the hon. Gentleman’s party sign up to our spending plans in 2007?

Robert Flello (Stoke-on-Trent South) (Lab): I came into this House in 2005, and right up until the crash, week in, week out Conservative Members were saying in the Chamber and in Committee meetings that we were killing the banks—that we were stifling them with overregulation and we needed to weaken it. I also remember them coming to the House week in, week out saying they wanted more schools and hospitals in their constituencies; they wanted more spending.

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Mr Umunna: I could not agree more with my hon. Friend.

Geraint Davies: Does my hon. Friend agree that in the 10 years up to the 2008 banking crisis the economy grew by 40% under Labour, which is how we afforded to double spending on the health service, and that since 2010—when, incidentally, the economy was growing under Labour—the share of the economy that is debt has risen from 55% to 80% because of the Conservatives’ failure to grow the economy and their focus on cuts instead of growth to get the deficit down?

Mr Umunna: I will come on to that right now.

The Prime Minister said in a speech to the CBI in 2010:

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

The Government have failed to do that. It is worth revisiting the promises made then before giving the Chancellor the congratulations he seeks now for this 2015 Budget. In June 2010 they set a forward-looking fiscal mandate to achieve a cyclically adjusted current balance by this financial year. It was a rolling target, but no one took the rolling nature of it very seriously, so let us put that to one side. In short, they were saying they would eliminate the deficit by this financial year. In 2010, by their own measure, we were told they would do this, achieving a surplus of 0.3% last year and 0.8% this year. That is what we were told would happen. In the event, the Chancellor completely failed to meet that goal. The deficit came in at 2.4% last year, is forecast to be 1.7% of GDP this year and does not move into a surplus until 2017-18, some three years later than planned on their own measures.

There was also a supplementary target for public sector net debt as a proportion of GDP to be falling by 2015-16. The Chancellor managed to achieve that through some jiggery-pokery with the numbers, namely rapid asset sales in the last Parliament to pay down enough of the debt for his supplementary target to be met. But rushed asset sales mean poor value for the taxpayer, as the disastrous sale of Royal Mail illustrated in technicolour.

It is also worth reflecting on what we were told the debt-to-GDP ratio would be in 2010. It was supposed to fall from 61.9% of GDP in 2010 to 69.4% and 67.4% last year and this year, but debt as a proportion of GDP was 80.8% last year and is forecast to be 80.3% this year.

The Chief Secretary to the Treasury (Greg Hands): It is falling.

Mr Umunna: The truth is—I say this to the Chief Secretary—the Government borrowed over £200 billion more than they planned in the last five years. That is more in five years than the last Labour Government borrowed in 13 years. Now they want us to pat them on the back for their failure. I will not do it.

James Cleverly: The hon. Gentleman bemoans rushed asset sales. Does that include the significant sale of our gold reserves under a former Labour Chancellor of the Exchequer?

Mr Umunna: Oh dear; I think I will move on.

Why does all this matter? It matters because reducing the deficit is a progressive endeavour. We seek to balance the books because it is the right thing to do. We will not

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stand by while the state spends more paying interest every year to City speculators and investors holding Government debt than on people’s housing, skills or transport. It follows that aiming to reduce the national debt in the long term, and running surpluses when the economic circumstances allow and the economy is robust, is the right approach. It means we can free resources to invest in people to help them succeed in an era of globalisation. I would much rather invest in people than spend the £36 billion the Red Book tells us we will be spending on debt interest this financial year.

By the way, I say to Conservative Members that this is in keeping with the history of our party. In our 1964 election-winning manifesto we criticised, as we did in the lead-in to the last general election, “an ever-increasing burden” of debt payment on the country. I note that the Chancellor wants to legislate to make surpluses a legal requirement in “normal times”. In 2010, when the then Chancellor Alistair Darling sought to enshrine in law, in the Fiscal Responsibility Act 2010, a deficit reduction target, the Chancellor said that it was “vacuous and irrelevant.” to enshrine such things in law. The Conservatives now need to explain what has brought about this change of mind.

This recognition that we need to reduce the national debt is why we said before the last general election that there would be efficiency savings and cuts under a future Labour Government. However, we were clear we would achieve this in a fair way—not by balancing the books of the nation off the backs of the poor and the vulnerable. The centrepiece of this Budget was to proceed with further fiscal consolidation, principally by slashing the support which helps—[Interruption.] I ask the Minister for Skills to wait for me to finish my paragraph, and then perhaps he can comment on the national living wage.

As I was saying, the centrepiece of this Budget was to proceed with further fiscal consolidation, principally by slashing the support that, for lower and middle income earners, helps to make work pay, and then by supposedly compensating them with an increase in the national minimum wage, which people such as the Skills Minister have sought to re-badge as a living wage, even though it is anything but. Let me say a few things about that. No one will ever forget how the Conservatives opposed the very establishment of the national minimum wage in the first place. They can say what they like about it now, but no one will ever forget that.

In the lead-up to the election, I received sustained criticism from the Conservatives’ supporters in business about our plans to increase the national minimum wage in this Parliament. People say that imitation is the sincerest form of flattery, and in some senses that is what this is, but there are important differences between what we were proposing to do and what the Government are now doing. First, our national minimum wage increase would have applied to all adults on the main rate. This Government, however, do not believe that anyone aged between 21 and 24 deserves an increase. Having abolished their education maintenance allowance and trebled their tuition fees, they are now saying that when those young people get into work, they do not deserve to earn what everyone else does when they reach adulthood.

Secondly, we would not have punished any adult benefiting from the increase we were proposing by subsequently withdrawing their tax credits. The Government

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have called this a new deal, but it is a gigantic con-trick. Thirteen million families will be affected by the changes, and the Institute for Fiscal Studies could not have been clearer when it said that it was “arithmetically impossible” for the increase in the minimum wage to make up for the withdrawal of the credits that help people to work.

Let us take as an example a couple, both aged over 25, with two children. Both adults work full time and earn the minimum wage. Yes, they will gain £1,560 from the increase in the minimum wage, but they will lose more than £2,200 next year as a result of the change to tax credits. [Interruption.] I say to the Conservative Members who are chuntering that I totally accept that it would be better for people to be in receipt of a salary that did not necessitate the payment of tax credits to make ends meet, but reforming our economy so that it delivers more highly paid jobs must come first; otherwise, it is the working poor who will suffer.

Let me remind Conservative Members that nearly half the people in poverty in this country are in work. The Government seem to forget that. That is why it is unsurprising that the IFS calls this a “regressive” budget and says that the tax and welfare changes between them will result in poorer households losing out quite significantly, and much more significantly than richer households.

Geraint Davies: Does my hon. Friend agree that the minimum wage increase cannot replace children’s tax credits? If a single man and a woman with two children both went for the same job, which paid the minimum wage, the woman would have greater needs due to her childcare responsibilities. Tax credits provide an incentive for people such as her to work, yet they are being withdrawn. We accept that increasing the minimum wage is a good idea, but this measure will not help business at all, because putting up the minimum wage while removing tax credits will clearly be a disincentive for families to work.

Mr Umunna: That is quite right. The problem with Conservative Members is that they just lump everyone into the same bracket. Anyone who is in receipt of support is told, “It’s your fault. You’re not working.” The thing about tax credits is that they help to make work pay, but that seems to be lost on Government Members—

Paul Scully (Sutton and Cheam) (Con) rose

Mr Umunna: Although perhaps it will not be lost on the hon. Member for Sutton and Cheam (Paul Scully). Let us see.

Paul Scully: The hon. Gentleman mentioned welfare changes. Does he agree with his interim leader that Labour should support a number of the welfare changes that we are proposing?

Mr Umunna: We are very clear that, in principle, we accept the benefit cap. In respect of the overall changes to tax credits, I have just made a comprehensive argument to illustrate the problem with those. This is not just about the overall tax changes. I will come on to talk about the withdrawal of support for students in poorer

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households, which the hon. Gentleman is going to vote for, and about other matters. It is for all those reasons that we cannot give our overall support to this Budget.

Ultimately, the best way to cut the deficit and the debt is to ensure that we have better-paid jobs, which will increase tax receipts and reduce people’s need for extra support from the state. We are among the countries with the highest incidence of low-paid work in the developed world. We come fifth in the rankings of the OECD economies in that respect. We have to change that by rebalancing and restructuring our economy through the active prosecution of industrial strategies—a term that the Business Secretary seems to have a problem with. Now is not the time to junk the approach that started under the last Labour Government and that his Liberal Democrat predecessor sought to continue. Now is the time to move up a gear on industrial strategy if we are to achieve the necessary rebalancing. I say this because, in fairness to the Government, they started with good intentions and sought to rebalance the economy, with their Liberal Democrat partners, from 2010.

I am happy to acknowledge—and have done so publicly—that rebalancing was something that the Major Government failed to do and that we failed sufficiently to address in office, in spite of our many achievements. Our economy was one with too few savings; it was also too concentrated in too few sectors and regions of the UK, and it was based too strongly on cheap credit. The problem is that the current recovery has those same weaknesses that have plagued British recoveries for decades: productivity growth has been absent, as the Business Secretary mentioned; our export performance remains lacklustre; output depends on private consumption; household debt is rising; regional imbalances persist; and investment in innovation and research and development lags behind that of our competitors. I am not at all convinced that the Budget will reverse those weaknesses.

Tulip Siddiq (Hampstead and Kilburn) (Lab): Going back to the question of tax credits, does my hon. Friend agree that they gave a boost to employment, and especially to the employment of families with a single parent? Between 1997 and 2010, employment in that group increased by 28%.

Mr Umunna: My hon. Friend makes a very good point.

I want to comment on each element of the rebalancing that the Business Secretary mentioned. The first relates to productivity. We have the worst productivity in the G7, save for Japan. There was some fanfare around the Treasury-BIS co-sponsored productivity plan published on Friday—[Interruption.] Ministers might chunter, but having taken account of that amazing plan, the Office for Budget Responsibility has downgraded its forecast for productivity per hour for next year and the following three years. I am not surprised. Two key ways of increasing productivity are to sort out the skills system, which is simply not doing enough to resolve the chronic skills shortages in our economy, and to boost business investment.

After half a decade of Tory-led Government, the CBI warned in its annual skills survey this week of ongoing skills shortages acting as a drag on productivity. Its deputy director general could not have been clearer yesterday when she said that

“firms are facing a skills emergency now, threatening to starve economic growth. Worryingly, it’s those high-growth, high-value

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sectors with the most potential which are the ones under most pressure. That includes construction, manufacturing, science, engineering and technology.”

Of course we all want to see more apprenticeships, and we support the proposed apprenticeship levy, but we need to see far more action from the Government to ensure that all those apprenticeships are of sufficient quality to reduce the skills shortage. More than one in five apprentices are currently receiving no formal training whatsoever, and almost four in 10 employers do not regard the qualifications they are providing as apprenticeships, even though the Government deem them to be apprenticeship qualifications. Also, there are simply not enough people doing qualifications at level 3 and above.

Mr Jim Cunningham: It has always been generally accepted that, at a time of economic downturn, we should train people with the skills necessary to bring about the upturn. I have never understood why that was not undertaken sooner in this country. Germany has been doing it for many years. Why has it taken until now for the Government here to recognise that?

Mr Umunna: That is a good question, but in fairness I do not believe that there was consensus among employers that that would help increase the number and quality of apprenticeships. There is growing consensus in much of our manufacturing sector in particular—I know that my hon. Friend represents a constituency with a wonderful manufacturing tradition and history—that they must go down this route to prevent those who are not providing training in the different sectors from freeloading.

Mr Cunningham: I have worked in manufacturing, unlike the Secretary of State, who had a crack earlier about visiting Rover. I have not only visited the factories, I have actually worked in the factories. One thing we did when I was involved in the trade unions to try to encourage employment, and particularly investment, was to get the companies to invest, as in a recession the first thing that happens is that training budgets are cut.

Mr Umunna: My hon. Friend makes a very good point. While I am on the subject of apprenticeships, it is worth remembering that the number of apprentices still not receiving the legal minimum wage is alarming. According to the Government’s recent apprenticeship pay survey, 15% are not receiving the appropriate minimum wage, rising to 24% for young apprentices. If we want more young people to study the science, technology, engineering and maths skills that we need them to study, taking away the maintenance grant from the poorest who want to study those subjects at university is hardly the way to encourage that. The Government are taking a huge gamble that that policy will not deter students from lower-income households from going to university.

Catherine West (Hornsey and Wood Green) (Lab): Does my hon. Friend agree that cuts to further education of up to 24% could undermine the good idea of the employment levy? That is the glue that holds the whole thing together.

Mr Umunna: That is a good point. The cuts that the Government are making in FE are already having a hugely negative impact, not least in the college that the Secretary of State attended.

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To go back to undergraduate student financing, I note that the Government are switching from student grants to loans, but that simply dumps more debt on students. In the end, that is debt that, along with the loans taken out to pay tuition fees, will end up in the hands of the taxpayer. It is estimated, according to House of Commons Library figures, that that will add £280 billion to the national debt and we have heard no solutions from the Government to address that.

In the 2011 plan for growth, the Government told us to judge them not only against their achievements on skills but on whether they helped to deliver a substantial boost in business investment. Clearly, we must address that, because, as I said, our performance lags behind that of our competitors.

Mr Anderson: The Secretary of State said that the Government were working on a one-nation basis. Young people in this one nation are being deprived—they are being denied maintenance grants, will lose housing benefit and will not be allowed the proper living wage or minimum wage, yet they are supposed to be able to make their way in that one nation. Is that not nothing other than a two-nation strategy from the Conservative party?

Mr Umunna: My hon. Friend is right to draw attention to the assault on the aspirations of young people all the way from school to when they get a job. We remember that the Government stopped the Building Schools for the Future programme, which helped to give our young people a decent place to work. The Government took away the education maintenance allowance when people got to college and trebled their tuition fees when they got to university. Now, when they leave university the Government tell them that they should not earn as much as everybody else and that they will not extend the increase in the national living wage to those under 25.

Let me return to research and development. Although I welcome putting the annual investment allowance on a more long-term footing and the corporation tax changes, which also help, I would ask Ministers, who have suddenly perked up, this: where was the action on business rates for small businesses in this Budget? They create two thirds of private sector jobs, so where was the news for them?

Reducing the tax burden is all well and good, but in order to invest people need to be able to raise the finance to do so. According to the Bank of England, net lending to small firms has fallen by more than £1 billion in the past year and it continues to be an issue. Towards the end of his time in office, the Secretary of State’s predecessor joined us in championing a state-backed investment bank and put in place the British Business Bank, which we support. Now that he is no longer in post, and with the Government flogging off the Green Investment Bank, the British Business Bank has had no guarantees of future funding in the spending review and faces an uncertain future. I note that there was just one mention of it in the Red Book. I am happy to give way to the Business Secretary if he wants to answer this question: can he confirm today whether the Government plan to sell off the British Business Bank, too, and can he rule out doing that in this Parliament? The silence is deafening.

Let me turn now to infrastructure. We must end the dither and delay in making decisions on projects that not only increase our productivity but iron out regional

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imbalances and help people travel around in a more cost-effective way. In the Red Book, we are told that the Government believe that a modern infrastructure network is vital, so why, having commissioned the Davies report on aviation, do they appear to be locking themselves into a holding pattern right through until the autumn before coming into land and making a decision on this important matter? Our aviation industry employs hundreds of thousands of people, contributes more than £50 billion to GDP and pays the Exchequer more than £8 billion in tax every year. We have been clear that we will make a swift decision on this matter in the national interest. If the commission’s proposals to build a third runway at Heathrow can meet our tests, including consistency with our climate change obligations, we will take swift action to back them. I suspect that the Business Secretary agrees with me and all I say to him is that he needs to face down the opposition arising in Cabinet and do the right thing.

As for the regional growth policy, there has been a lot of chat about the northern powerhouse, so let me make a few observations. We cannot build a powerhouse if there is no power to connect our northern cities. The decision to shelve northern rail electrification, such as for the TransPennine Express route between Manchester and Leeds, was a kick in the teeth to the areas and regions of the north, and plans for a northern Oyster card do not make up for it. If I have one criticism of the Government’s overall approach to devolution, it is that they should be seeking to make every region a powerhouse rather than simply having a northern powerhouse.

Helen Whately rose—

David Rutley rose—

Mr Umunna: I will give way to the hon. Lady.

Madam Deputy Speaker (Mrs Eleanor Laing): Order. Before the hon. Gentleman gives way any more times, I should draw his attention and that of the House to the fact that a very large number of colleagues wish to speak in this important debate. The hon. Gentleman has taken well over half an hour of the time so far, in contrast to the Secretary of State—[Interruption.] Order. I hope that the hon. Gentleman will bear that in mind before considering taking further interventions.

Mr Umunna: I think my generosity in taking interventions perhaps got the better of me, Madam Deputy Speaker.

Let me finish by dealing with trade. In 2010, we were promised that an export boom would fuel the recovery. The Government set a target of tripling exports to £1 trillion by 2020 and getting 100,000 more small businesses exporting. What has happened since? The current account deficit widened to 5.9% of GDP last year —the largest peacetime deficit since at least 1830 according to the OBR. Frankly, I am not surprised given the degree to which we have seen various initiatives fail. Ministers have to sort out what is happening at UK Trade & Investment. UKTI’s own surveys show that more than a quarter of businesses that use its services saw no business benefit in doing so, and it is little wonder when we consider the range of different schemes and the failure to command the attention of Ministers. Records are not even kept of the trade missions that Ministers go on.

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We are a great country. We have a great history and great people. We have a tradition not only of ensuring that those who can get on are able to realise their ambitions and aspirations, but of looking after those who cannot. That is one of the big problems with the Budget: it is unfair and regressive. Ultimately, if we really want to get the economy powering on all levels, we have to ensure that our people have the wherewithal and the tools to do that, particularly the skills and business investment needed, but they come up short as well. This Budget is unfair and not equal to the challenges we face as a country, and that is why I ask all hon. Members to support us in opposing the Budget today.


2.40 pm

Rishi Sunak (Richmond (Yorks)) (Con): It is a privilege to be called to speak in this debate, Madam Deputy Speaker, and a pleasure to follow the hon. Member for Streatham (Mr Umunna).

There is much to commend in this excellent Budget, but to me one conclusion stands out: that by the end of this Parliament, under this Government, Britain will live within its means. No more irresponsible borrowing. No more spiralling debt at the taxpayer’s expense. No more passing the debt to the next generation. I was delighted to hear the Chancellor’s plans for this nation finally to run a budget surplus.

I have spent my career in business. Every company I have been involved in sets a budget, as indeed does every household in this nation, and when they do they operate with these basic principles: first, “How much is coming in?” and only then, “How much can I spend?” For too long, Governments have got that back to front, spending first, ignoring how much is coming in, then letting borrowing endlessly make up the difference.

Coming from a financial background, I decided to spend some time analysing our nation’s fiscal history. I wanted to know, when it comes to our Government’s revenue, how much does in fact come in. I can tell the House that, since 1955, tax receipts, with limited variation and remarkable consistency, have averaged 36% to 38% of GDP. In spite of the vast differences between Labour and Conservative Members in our approach to setting tax rates, the average tax take has been remarkably similar under Governments of both parties. There appears to be a natural ceiling to what any Government can extract from the pockets of its hard-working taxpayers.

That to me suggests a simple conclusion: in normal times, public spending should not exceed 37% of GDP. That is the best estimate of our income as a Government and therefore the best guide to what we can afford to spend. So the Government’s plans to get public spending to that level are not, as some Opposition Members have suggested, an ideological crusade or clever politics; rather, tackling excessive public spending is simply the sensible, logical and responsible course of action. That action, taken to make sure that we live within our means, is the same course of action that any business or household would take when presented with the facts. We all know what happens when those facts are ignored: more borrowing, more debt.

Catherine West: The hon. Gentleman makes a good point about debt. Does he agree that a graduate in social care from London Metropolitan University with

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personal debt of £54,000 not only has a personal problem on her hands, but represents a long-term national problem for us, because in the end we will have to pick up that debt?

Rishi Sunak: It is clear that university graduates’ earning power is raised. It is hardly fair to ask people working hard without the benefits of a university degree to pay for the earnings of someone in the legal profession or the City who is earning a great deal. That is why this Government created a progressive system whereby those who earn more pay more back and those who do not pay just a fair share.

Catherine West: Will the hon. Gentleman give way?

Rishi Sunak: I would like to make some progress. As you said, Madam Deputy Speaker, many people wish to speak.

All debts need to be repaid, with interest. For the next generation, that means higher taxes or less money to spend on public services. As the hon. Member for Streatham said, we already spend more money on debt interest than we do on the police, transport or housing. That simply cannot go on.

Whether one is a Thatcherite or a Trotskyite, the rules of budgeting are the same: one cannot sustainably spend more than one earns. I commend the Chancellor for acting on that principle and ensuring that Britain’s finances will once again be back in the black.

2.45 pm

Michelle Thomson (Edinburgh West) (SNP): I beg to move an amendment, after “importation”, insert

“other than in relation to Police Scotland and the Scottish Fire and Rescue Service”.

The amendment stands in the name of my hon. Friend the Member for Dundee East (Stewart Hosie).

On this final day of the Budget debate, we have heard a great deal about debt and deficit, the Budget itself, and the recently released productivity plan. All the Scottish National party Members have listened with sadness to the planned cuts, which strike fear into our hearts and those of our constituents. I have found myself reflecting a great deal on it—both the conflict of moral principles and the economic madness I believe is contained therein. Called out by the Institute for Fiscal Studies, this Budget is described as having

“benefit cuts at the centre”;

and as a “tax-raising budget”, the IFS gives the stark warning that,

“unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average”,

and that ultimately it is a “regressive” budget.

We are supposed to believe that the smart economic choice is for the UK to eliminate any deficit, pay down all debt, and run—and then sustain—a surplus. We are fed the yarn that an economy must be in surplus; that the gain is worthy of the pain. Despite the concerns of Robert Chote of the Office for Budget Responsibility, who described the plan—somewhat euphemistically—as “ambitious”, and the concerns of 77 leading economic academics, the Chancellor has ploughed on regardless. Now, I know that a degree in history—or, for that matter,

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one in music—does not equip one with an instinctive understanding of cause and effect, supply and demand or even so-called Micawber economics for that matter, but history does teach us about previous economic choices, and that ability to look back provides real accuracy. We know how the Chancellor’s previous predictions failed to meet actuality, and we know that the much vaunted current growth has taken place only over the past few years.

A number of issues concern me today, one of which is levels of personal debt. The OBR predicts household debt going above the levels of 2008 and reaching an incredible 173% of GDP by 2019. That household debt figure excludes mortgages but is based on unsecured lending such as credit cards and store cards and, with increasing frequency, payday loans. Fundamentally, it contributes to a very real risk of a repeated debt crisis as a direct result of the cuts. We have seen a consumption-led crisis before, yet here it is planned again. I quote the Chancellor, who said:

“This growth is driven by stronger private consumption”.—[Official Report, 8 July 2015; Vol. 598, c. 322.]

There is a small mention in the productivity plan about championing enterprise by stimulating finance for small and medium-sized enterprises—but what and how specifically? Simply privatising RBS with the mantra “private equals good” is frankly not good enough. A lack of access to liquidity remains the biggest single issue for small business, while at the other end of the spectrum large businesses stockpile their cash. It has been asked before but is worth reiterating: where is the support for the challenger banks? The cut in corporation tax has been trailed as encouragement for businesses to invest, but there is no clear link or evidence to suggest that will happen. I would have thought that I would have been intervened on by now to ask what within the Budget I agree with, and I confirm that, although I am disappointed with the cut in the annual investment allowance from £500,000 to £200,000, it is better than what was proposed, which was taking it down to £25,000.

The continued focus on financial services, in which I must declare a previous interest, without rebalancing to improve our exports or manufacturing is a worry, particularly where we continue with the models we have adopted. The New Economics Foundation has expressed the view that the

“United Kingdom has the least resilient financial system among leading industrial (G7) nations. It is unusually large and homogenous, highly interconnected . . . highly complex and highly reliant on funding from the wholesale financial markets”.

I recommend to all Members that they read the foundation’s recent report; its concerns concur with those of many other economists.

The SNP is urging action so that we can end the unfair anomaly whereby Scottish police and fire and rescue services alone are liable for payment of VAT. The proposed change to the Budget resolutions would enable us to introduce the necessary changes to the Finance Bill. Were this unfair and discriminatory situation to be corrected, we could free up an additional £23 million of resource for the Scottish Police Authority and £10 million for the Scottish Fire and Rescue Service—money which, I trust, all hon. Members would agree could provide welcome funds to support the fantastic work that our emergency services do.

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Our calls for an end to this anomaly have gained cross-party support in the Scottish Parliament, and I am disappointed that the Government have so far refused to address the disparity in their treatment of emergency services north and south of the border. I hope that Members will take the opportunity today to take action and put this situation right.

We all agree that this is about choices, and the choice is how we grow the economy. This must fundamentally be by investment. Despite the productivity plan and various Ministers suggesting an increase in capital expenditure, a comparison between the Red Book of July and that of March 2015 shows total capital spend going down through the lifetime of this Parliament. If the Chancellor is unwilling to invest in the UK economy, give us the powers in Scotland and we will get on with the job.

When talk turns to economic and productivity comparisons, we hear a lot about the G7, the group of the world’s largest western economies, with which the UK likes to compare itself.

Roger Mullin: On productivity in the economy, my hon. Friend may be aware that since 2008 and until about 2014, it is fair to say that in terms of productivity per capita the UK has effectively been flatlining, while many other countries, including smaller countries such as Ireland, have seen their productivity rise significantly. There is much to learn from others, is there not?

Michelle Thomson: I thank my hon. Friend for his intervention, and I thank the House of Commons Library for some excellent work on GDP per capita and GDP per hours worked, including in relation to Ireland. I shall come on to that.

Where the UK stands in relation to Germany, France, Italy, the USA, Canada and so on provides some useful benchmarks for relative economic performance. The fact that the UK lags behind its peers on so many key indicators is another, all too sad, story. Last out of the recession, lowest productivity, and lowest GDP per capita growth rates—a record that does not tally with the UK Government’s “back in business” narrative.

Although the G7 provides a useful comparison for the UK, its relevance to Scotland is less apparent. We do not aspire to be one of the largest economies in the world, to strut faded imperial grandeur on the world stage or to maintain the pretence of exerting some kind of global influence, 100 years after the height of the British empire. Our ambitions are different—more modest, some would say; more enlightened, others would call it. In business there is a saying, “Turnover is vanity, profit is sanity.” To be big is not always to be beautiful. Scotland seeks fairness and prosperity for those who live there.

Jeremy Quin (Horsham) (Con): Given what the hon. Lady said about financial services in this country and how they should be funded, how would she propose to deal with the situation of RBS?

Michelle Thomson: We know that at its heart the sell-off of RBS is an attempt to balance the books, but the issue that I pointed out earlier is that banks such as

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RBS are still not lending enough to small businesses. That is vital. I referred to challenger banks. I come from a business background and speak to many people. That is what I hear from them about what they consider to be a critical issue.

For us, the G7 has more limited relevance. What we need to know is how we are performing as a medium-sized north-west European nation. Are we doing well, or are there opportunities for improvement? Thankfully, there is no shortage of comparable countries—our very own G7 equivalents, nations with characteristics similar to those of Scotland, but in most cases with far fewer natural resources. Whether we look north to Scandinavia, east to central Europe, south to the low countries or west to our Celtic cousins, comparisons abound among nations of similar size to Scotland. They are medium-sized in global terms, sitting in the middle third of global population rankings, not too big, not too small—the Goldilocks nations. Let us call them the M8, and I do not mean the boring motorway that runs between our two great cities. Those are countries with diverse histories, a range of memberships of international organisations and monetary systems, and varying levels of natural resources, physical geographies and cultures, but in their diversity all providing useful comparisons for Scotland. So how does the UK line up against them?

The M8 countries are among the wealthiest nations in the world. In terms of GDP per head their average has consistently outperformed that of both the G7 and the European 28. In terms of GDP per hour worked, which it is so vital to improve as a measure of productivity, their average also beats that of the G7 and Euro28. M8 countries are all richer than the UK by 25% on average, and the M8 countries are 9% richer per capita than the G7 as well—not a bad place to start, given our ambitions. Our aspiration as a nation is to be the best we can be, not to accept the poor performance and failed austerity agenda of the UK Government, but to look to what can be achieved when we set our sights a bit higher. Perhaps it is time we used the M8, rather than the G7, to frame our aspirations.

2.56 pm

Victoria Borwick (Kensington) (Con): Thank you, Madam Deputy Speaker, for allowing me to make my maiden speech in this important debate. It is a privilege to have the opportunity to speak from these Benches that have borne witness to so much of our country’s rich history.

I would like to begin by paying tribute to my predecessor, Sir Malcolm Rifkind. One of only five Ministers to serve throughout both the Thatcher and Major premierships, Sir Malcolm has a long and distinguished record of service to our country.

A fierce opponent of injustice, Sir Malcolm is not one to be cowed or intimidated. In 1984, as a junior Foreign Minister on an historic visit to Poland, against the wishes of the then Polish communist Prime Minister, General Jaruzelski, Sir Malcolm insisted on meeting the leaders of the Solidarity movement and laying a wreath at the grave of a Polish priest who had been brutally murdered at the hands of his communist oppressors. Sir Malcolm is also a visionary and a forward thinker. Quick to identify Mikhail Gorbachev as someone with whom the west could “do business”, he was instrumental

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in convincing Margaret Thatcher of the importance of our engagement with the Soviet Union. Above all, Malcolm Rifkind was much admired in the constituency.

Like Sir Malcolm, who as Transport Minister was sent to inspect the early construction of the channel tunnel, I too have had the good fortune to inspect multimillion-pound infrastructure projects. Upon the instruction of my now hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson), I was lowered through a manhole cover to inspect sewers, as part of the re-engineering work for Crossrail. Separately, I have made further visits to inspect the sewers as part of the Thames tideway renewal work. Who says being deputy Mayor of London is without glamour?

While preparing for this maiden speech I dipped into the fantastic resource of books in the Library; I am very grateful for the assistance of the Library team. I re-read my predecessors’ maiden speeches: Sir Malcolm spoke about children with special needs, and incapacity benefit, still topical today. Michael Portillo highlighted what an area of contrasts Kensington is, with some of the most expensive property in the land contrasting with some of the poorest, drawing attention to people living in leasehold property struggling against unscrupulous landlords.

Alan Clark, before Michael Portillo, not only wrote about the delightful architecture of our leafy squares, but spoke about our splendid, robust and diligent local authority, which I am glad to say continues today. I must mention, however, that when my husband was skimming through Alan Clark’s diaries and found my name in the index, he was somewhat concerned. [Laughter.] The story remains untold. I am glad to say that again we were fortunate to have an MP who was a charismatic supporter of Kensington.

Dudley Fishburn, our MP in 1988, reminded the House that it was Sir Brandon Rhys-Williams who argued for people having the right to portable private personal pensions, so I am delighted that this Government have at last made some progress on implementing one of my predecessor’s proposals. I hope that the whole House can empathise with my sense of trepidation in following in the footsteps of such political titans, and in being the first woman to represent the residents of Kensington.

Having come from a family background in engineering, I went into business for many years, becoming a school governor, a campaigner and then a local councillor. As a lifelong Londoner, I was honoured to be elected to the London Assembly in 2008, and in 2012 I was honoured that the Mayor, now my hon. Friend the Member for Uxbridge and South Ruislip, asked me to be his deputy.

Kensington is my home; it is where I grew up, went to school, worked and raised my family. Although I have seen Kensington change over time, I am not quite old enough to have seen the deprivation of the mid-19th century piggeries and potteries, which were some of the most evil-smelling in London, but which have since been transformed into the stylish streets of Notting Hill.

I know many hon. Members are familiar with Kensington. How many have beaten a path with their families to twirl the handles and press the knobs at the Science Museum, to explore the world of the dinosaurs and meet the much-maligned Dippy in the great hall—now the Hintze hall—of the Natural History Museum, and to marvel at the glories of the V&A, to name but a few

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of our cultural attractions? Twelve million visitors came to our museums last year. Nationally, more people visit museums and cultural attractions than go to football matches.

However, the museums and the streets lined with terraced mansions tell only one side of the story in Kensington. Beyond the affluent stereotype there is a deeper story: the blight of poverty and social isolation afflicts Kensington, too, with some of London’s poorest communities. The constituency is not just for the rich and famous; it is home to a melting pot of constituents who make London the greatest city on earth. I intend to be a champion for all my constituents, irrespective of their backgrounds. It is with this sentiment in mind that I would like to touch briefly on my campaigning priorities.

I have been married to Jamie for over 30 years, and we have four wonderful children. Sadly, our eldest two were born with serious heart defects. Our eldest son spent a year in the Royal Brompton & Harefield hospital. Despite the excellent care, he was left with permanent disabilities. But Jamie and I are great believers in the American maxim, “When life gives you lemons, make lemonade.” We quickly gained a working knowledge of paediatric cardiology and, of course, lifelong disability. I know that I am not alone in this Chamber when I talk about the hours spent by the bedside of a sick child or loved one, or about the toll that being a carer takes. I intend to work steadfastly here with others to represent the needs of the disabled, just as my husband takes up the cudgels for that campaign on the red Benches.

The second issue of vital importance to me is the need to support local businesses, which is topical, given today’s Budget debate. Only by supporting entrepreneurs and small businesses can we help promote jobs and employment. For much of my career I was involved with the art and antiques industry. There are over 7,000 specialist art and antique dealers nationally, offering jobs and employment, particularly in Kensington Church Street and, of course, our famous Portobello Road. As president of the British Antique Dealers Association, I support our trade. We should be working with those small businesses to ensure that we in this House do not impose ill-considered restrictions upon them.

So it is that I come here to fight for the needs of the vulnerable and disabled in our country, and to work with the Government to build on and promote both our small businesses and our national industries, which offer such a valuable contribution to Britain’s growing economy. I welcome the challenge.

3.6 pm

Mhairi Black (Paisley and Renfrewshire South) (SNP): Thank you, Madam Deputy Speaker, for calling me to make my maiden speech in such an important debate. I want first to pay tribute to my predecessor, Douglas Alexander, who served the constituency for many years—I was only three when he was elected. It is for that reason that I want to thank him for all he did for the constituency. I especially commend him for the dignified way he handled himself on what must have been a very difficult election night for him. He did himself proud, and he did his party proud. I wish him the best for the future.

When I discovered that it is traditional for a new Member to speak about the history and legacy of their constituency in their maiden speech, I decided to do some research, despite the fact that I have lived in mine

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all my life. I am at the tail end of Scottish National party colleagues making their maiden speeches, and I have noticed that they tend to mention Rabbie Burns a lot. In particular, they have tried in their maiden speeches to own him for themselves by claiming some intrinsic connection between him and their constituencies. I feel no need to do that, because during my research I discovered a fact that trumps them all: William Wallace was born in my constituency, in Elderslie, which you will be familiar with, Madam Deputy Speaker.

Beyond the Hollywood film and the historic name, my constituency has a fascinating history, from the mills of Paisley to the industries of Johnstone and the weavers of Kilbarchan. It has a wonderful population with a cracking sense of humour and much to offer, both to tourists and to residents. But the truth is that things are not all fantastic in my constituency. We have watched our town centres deteriorate and our communities decline. Our unemployment level is higher than the UK average. One in five children in my constituency go to bed hungry. Paisley’s jobcentre has the third highest number of sanctions in the whole of Scotland.

Before being elected, I volunteered for a charitable organisation. There was a gentleman there who I grew very fond of. He was one of those guys who have been battered by life in every way imaginable—you name it, he has been through it. He used to come in to get food, and it was the only food he had access to and the only meal he would get. I remember sitting with him while he told me about his fear of going to the jobcentre. He said, “I’ve heard the stories, Mhairi. They try to trick you out and tell you you’re a liar. I’m not a liar, Mhairi.” I said, “It’s okay. Calm down. Go and be honest and you’ll be fine.”

I then did not see him for two or three weeks and became very worried. When he finally came back in, I asked him how he had got on. Without saying a word, he burst into tears—a grown man standing in front of a 20-year-old and crying his eyes out. What had happened was that in order to get to the jobcentre he had needed to use the money that he would normally have paid to travel to the charity in order to get his food. He needed to save the money, so he did not eat or drink for five days. He fainted while on the bus going to the jobcentre due to exhaustion and dehydration. He was 15 minutes late and was sanctioned for 13 weeks.

The Chancellor spoke in his Budget speech about fixing the roof while the sun is shining, but who is the sun shining on? When he spoke about benefits not supporting certain kinds of lifestyles, is that the kind of lifestyle that he was talking about? If we go back even further, when the Minister for Employment was asked to consider if there was a correlation between the number of sanctions and the rise in food bank use, she stated:

“Food banks play an important role in local welfare provision.”—[Official Report, 22 June 2015; Vol. 597, c. 608.]

Renfrewshire has the third highest use of food banks, and food bank use is going up and up. Food banks are not part of the welfare state—they are a symbol that the welfare state is failing.

The Government, quite rightly, pay for me, through taxpayers’ money, to be able to live in London while I serve my constituents. My housing is subsidised by the taxpayer. The Chancellor said in his Budget:

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“It is not fair that families earning over £40,000 in London…should have their rents”

paid for

“by other working people.”—[Official Report, 8 July 2015; Vol. 598, c. 335.]

But it is okay so long as you are an MP?

In this Budget the Chancellor also abolished any housing benefit for anyone below the age of 21. So we are now in the ridiculous situation whereby because I am an MP, I am not only the youngest, but I am also the only 20-year-old in the whole of the UK that the Chancellor is prepared to help with housing. We now have one of the most uncaring, uncompromising and out-of-touch Governments that the UK has seen since Thatcher.

I must now turn to those with whom I share these Benches. I have sat in this Chamber for 10 weeks. I have very deliberately stayed quiet and listened intently to everything that has been said. I have heard multiple speeches from Labour Members standing to talk about the worrying rise of nationalism in Scotland. Yet all these speeches serve to do is to demonstrate how deep the lack of understanding about Scotland is within the Labour party. I, like so many SNP Members, come from a traditional socialist Labour family, and I have never been quiet in my assertion that I feel it is the Labour party that left me, not the other way about. The SNP did not triumph on a wave on nationalism; in fact, nationalism has nothing to do with what has happened in Scotland. We triumphed on a wave of hope—hope that there was something different from and better than the Thatcherite, neo-liberal policies that are produced from this Chamber, and hope that these representatives could genuinely give a voice to those who do not have one.

I do not mention this in order to pour salt into wounds that I am sure are very open and very sore for many Labour Members, both politically and personally; colleagues, possibly friends, lost their seats. I mention it in order to hold a mirror to the face of a party that seems to have forgotten the very people it is supposed to represent and the very things it is supposed to fight for. After hearing of Labour leaders’ intentions to support the changes to tax credits that the Chancellor has put forward, I must make this plea through the words of one of their own, and a personal hero of mine. Tony Benn once said that in politics there are weathercocks and signposts. Weathercocks will spin in whatever direction the wind of public opinion may blow them, no matter what principle they have to compromise. And then there are signposts, which stand true and tall and principled. They point in one direction and they say, “This is the way to a better society and it is my job to convince you why.” Tony Benn was right when he said that the only people worth remembering in politics are those who are signposts.

Yes, we will have political differences; and yes, in other Parliaments we may be opposing parties, but within this Chamber we are not. No matter how much I may wish it, the SNP is not the sole opposition to this Government—but neither is the Labour party. It is together with all the parties on these Benches that we must form an Opposition. In order to be effective, we must oppose, not abstain. So I reach out a genuine hand of friendship which I can only hope will be taken. Let us come together; let us be that Opposition; let us be

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that signpost to a better society. Ultimately people are needing a voice and people are needing help—let us give them it.

[

Applause

.

]

Madam Deputy Speaker (Mrs Eleanor Laing): Order. The hon. Lady has just made an excellent speech—particularly her reference to William Wallace and Elderslie, where I was also born—but the House will show its appreciation in a way other than clapping. [Hon. Members: “Hear, hear!”] The House—[Hon. Members: “Aye!”] Yes, the House can show its appreciation vociferously—just do not clap.

3.14 pm

Chris Davies (Brecon and Radnorshire) (Con): It is a great privilege to stand before you today to make my maiden speech in a such an important debate, particularly as the Chancellor’s Conservative Budget is one of the greatest Budgets of modern times. It is also an enormous pleasure to follow my hon. Friend the Member for Kensington (Victoria Borwick), who delivered a wonderful maiden speech that puts me in a difficult position in following it.

I feel that, as a Welshman, I should—I must—tell the House a little story. I have to admit that this was not the easiest speech I have ever had to write. Many hon. Members might find this surprising, as one’s maiden speech should be the easiest of them all. In many ways it was, but in many others it was rather difficult. You see, since my election, my time in this House has been a total whirlwind. When I arrived in this place, I was given my pass and a laptop and set about meeting a great many people and discovering how this place works. I was rushed off my feet and time never seemed to stop.

That was until I came to write my maiden speech. I sat down at my desk, pen in hand, ready to go, but no words flowed forth. At first, I thought it could be the pressure I felt after listening to so many of my colleagues’ excellent maiden speeches, or the realisation that electioneering was now over and the real work would now begin—but I was wrong. As I looked out of the window at London, I realised that it is almost 180 miles from here to my constituency of Brecon and Radnorshire —the largest constituency in England and Wales, where the distance from Lower Cwmtwrch, below Ystradgynlais in the Swansea valley in south Breconshire, to Llanbadarn Fynydd in north Radnorshire is 85 glorious miles. As I sat in my office, I was a long way from my home in the village of Glasbury in the beautiful Wye valley, and a long way from my family—my wife and my two children. I will be honest—I felt very, very homesick. I wondered what I could do to make myself feel better so I decided to put down my pen and go for a walk; I thought that might make me cheer up and give me inspiration. I left my office and began walking.

The first place I came to was Central Lobby. I looked up and saw the mosaic of St David looking down on me. I smiled and thought of Wales and of how proud I am to be a Welshman—and proud to be a Unionist. I immediately began to feel a little less homesick. I then looked around and saw everybody waiting to meet their Member of Parliament, and I was reminded of my constituents and how honoured I am that they elected me with the largest majority in Brecon and Radnorshire for nearly four decades. I am truly indebted to them for

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putting their faith in me to represent them, and I will do my utmost to repay that faith by always putting them and their interests first in this House.

I then left Central Lobby and entered Members Lobby, where I encountered the postboxes of Members of this House. I stopped and looked at all the names of current Members and thought of the names of all those who have had their postboxes here over the years. Roger Williams, my immediate predecessor, whom I would like to thank for all of his hard work over the past 14 years, would have had his name here when he was campaigning for lower VAT on the tourism industry—a cause I also intend to champion. Jonathan Evans, my friend and my last Conservative predecessor back in 1992, who served as a junior Minister in John Major’s Government, would have had his name on a postbox. Even Walter D’Arcy Hall, my Conservative predecessor from 1924, whose heroics on the battlefields of world war one won him the Military Cross and Bar, would also have had his name there—though I do hope that my battles in this House are not as ferocious as his on the fields of northern France. As I stood in front of the postboxes, I realised that I too get to walk in their shadows and collect my post as they would have done.

I turned around and saw my Whip coming out of the Whips Office, ready to keep me in order. As he headed towards me, I was reminded of my wife back at home, so I quickly slid into the Chamber. It was there that I saw your Chair, Madam Deputy Speaker. I was reminded that as an auctioneer by trade and an announcer at the Royal Welsh show for more than 25 years, I have some understanding of the role that you undertake, although my time as an auctioneer was in the rural sector, encouraging animals to parade around the ring, preening and prancing and showing off their best sides—of course, that is very different from your role in this House, Madam Deputy Speaker.

Taking a load off my feet, after my thus far long walk, I sat down and took my place on these very green Benches. Looking at their colour, I was reminded of the green fields, valleys and hills of my constituency and of the enormous respect I have for those who farm the beautiful and varied acres that make up the rural counties of Brecon and Radnorshire. I thought of my election to the Select Committee on Environment, Food and Rural Affairs and how I cherished the opportunity to play my part in helping our family farms and young farmers clubs to continue to play a vital role as the backbone of our rural economy.

My eyes continued to gaze around the Chamber and I saw the crests and shields that adorn the walls. I remembered that they represent Members of this House who fell during active service in conflicts past. I was reminded of the armed forces that are based in Brecon and Sennybridge in my constituency, and the courage that those servicemen and women show day in, day out on our behalf.

Thinking about my constituency raised my spirits and I was beginning to feel less homesick. As I sat on the Bench, I listened to the speeches being made from the Government Benches and I was pleased to see so many of colleagues called to speak—and yes, their surnames were Davies. It felt just like being at home. I was reminded of the abundance of Davieses in the regiment of the South Wales Borderers, who won 11 Victoria Crosses in the battle of Rorke’s Drift, which

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was made famous by the film “Zulu” and brilliantly commemorated by the Regimental Museum of the Royal Welsh in Brecon—an organisation for which I am the resident fundraising auctioneer.

Having listened intently to my colleagues, I began to walk back to my office, feeling in much higher spirits, which only began to rise as I encountered a tour group walking around this beautiful Palace and thought of the excellent tourism industry in Brecon and Radnorshire, which plays host to some of the best events this country has to offer. Many in this place will have come to the Hay literary festival in Hay-on-Wye trying to sell one of their books—I hope that they were successful. [Laughter.] We have the Crickhowell and Talgarth walking festivals, the Llandrindod Wells Victorian festival, the Rhayader and Knighton carnivals and the Royal Welsh show, to which I will be delighted to welcome my right hon. Friend the Prime Minister for the second year in succession next week. Then, of course, we have the world alternative games at Llanwrtyd Wells, which includes the world bog snorkelling championship, where, I have no doubt, many in this House would excel if they attended.

As my walk came to a close, I was feeling much happier. I found myself in Westminster Hall. The glorious old building was full of visitors, staff members and even more tourists, but the people who caught my attention most were the schoolchildren. There were school parties of all ages, shapes and sizes in the hall and, as I climbed the stairs and opened the door to my office, I was reminded of schools in my constituency, including Gwernyfed high school, where I am a governor. Its future is currently under threat unnecessarily. I decided that I would continue to take a proactive role in promoting our schools’ interests to ensure that every child in Brecon and Radnorshire has the opportunity of the best start in life.

I sat down at my desk once more and realised that there were reminders all around me of my constituency, as Brecon and Radnorshire is as much this place as this place is Brecon and Radnorshire. I lifted my pen with a smile, for I no longer felt homesick. In fact, I felt right at home and, with that, my maiden speech was as good as written for me.

3.24 pm

Mr Michael Meacher (Oldham West and Royton) (Lab): It falls to me to comment on the excellent maiden speeches that we have just listened to. The hon. Member for Kensington (Victoria Borwick) made a lovely, warm and engaging speech, with some generous recollections of her predecessor. She need not feel trepidation in following him. We will all remember the emotional and feeling way in which she talked about carers and the disabled. She will make a clear contribution to the House in that regard.

The hon. Member for Paisley and Renfrewshire South (Mhairi Black) made a remarkably confident, relaxed, witty and effective speech. It is not often that a maiden speech in this House makes a strong political case, but she certainly got away with it. I liked her distinction between weathercocks and signposts, with which I wholeheartedly agreed. I think that we will hear a great deal more from the hon. Lady in future debates in this House.

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I congratulate the hon. Member for Brecon and Radnorshire (Chris Davies), who again made a warm and generous speech about his first recollections in this place. I am not sure whether his speeches will remain so generous, not least given his early contact with the Whip. It is nice that in some ways, this place reminds him of Wales, his constituency and his roots. I very much hope that he will continue to reflect those things, and I wish him well.

Turning to the debate, all the hoo-hah about the Budget has centred on the £9 so-called living wage in 2020, even though the living wage in London is already £9.35. It is therefore not a living wage at all, but a slightly revamped minimum wage. Nevertheless, it is the macroeconomics of the Budget that really matter—and they are unreservedly depressing. If this is such a wonderful economic recovery, as we are constantly being told, why are average wages still 6% below their pre-crash level seven years ago? Why was the growth rate in the last quarter—the first of this year—just 0.4%, with an annual rate of just 1.5%? Why has productivity been flat for the past five years?

David T. C. Davies (Monmouth) (Con): Clearly we would all like to see even higher growth rates, but does the right hon. Gentleman not acknowledge that we currently have the highest growth rate in the G7 and that that is a good thing?

Mr Meacher: I would like to ask the hon. Gentleman—although I am not inviting him to come back in—how he would explain the fact that in the latest quarter the growth rate was 0.4%, up from 0.3%. In the last three quarters it has gone down from 0.9% to 0.6%, and then to 0.3% or 0.4%. It was clearly a short-term growth surge, which is now fading.

We all regard productivity as crucial, but the UK’s investment as a percentage of GDP is now among the lowest in the world at barely 14%. By the time depreciation is netted off the growth figure, we are actually down at just 2.5%, which hardly even keeps up with our rising population.

Why does the OBR’s Budget report forecast a never-ending decline in Britain’s share of world exports, even compared with 2014, when this country experienced the biggest proportionate balance of payments current account decline since 1830? Why have the Government squeezed the economy so hard that they are now looking to a steep rise in household borrowing as the main source of future demand? Dangerously, the borrowing level already exceeds £2 trillion and may well be the source of the next economic crisis.

For all those reasons, the Chancellor’s boasts about the state of the economy do not bear even superficial scrutiny. Nor is his explanation of the cause of the economic crisis any more truthful. He continually lambasts the last Labour Government for overspending, but their economic record actually shows the opposite. The largest budget deficit under the Blair and Brown Governments in the 11 years from 1997 to 2008, before the crash, was 3.3% of GDP. The Thatcher and Major Governments ratcheted up budget deficits in excess of that in 10 of their 18 years. Who were the profligate ones? It was not Labour.

Then there is the question of which party has handled better the enormous rise in the deficit, caused by the bankers and the international recession. Again, it is

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valuable to look at the economic record. Alistair Darling, the last Labour Chancellor, gave the economy a big fiscal stimulus worth nearly 5% of GDP, allowing the automatic stabilisers to work and bringing forward public investment projects worth more than £30 billion.

Robert Flello: Would that be the same Alistair Darling who said that we should halve the deficit between 2010 and 2015, and who was lambasted by the Conservative party for proposing such a measure?

Mr Meacher: My hon. Friend makes a good point, and I will come on to comparing what the Government have achieved with what the Chancellor said in 2010.

Bearing in mind that it takes between 12 and 18 months for Budget measures to work their way through the economy fully, we should remember that Alistair Darling cut the deficit from its peak of £154 billion to just £114 billion by the fourth quarter of 2011—a cut of £40 billion in fewer than two years at a rate of £20 billion a year. The current Chancellor, however, through his successive austerity Budgets, slowed that deficit reduction to a trickle. Today it is still £90 billion, which represents a reduction of £24 billion in three years at a rate of £8 billion a year. If he wanted to reduce the deficit as efficiently and as fast as possible, he has clearly failed. But of course, his real aim all along has been to shrink the state and squeeze the public sector. The deficit has merely been a convenient pretext to enable him to do so.

Now the Chancellor is telling us that he will eliminate the structural deficit by 2019-20. Judging by the fact that he boasted that he would achieve that by this year, when it is still a whopping £90 billion, we can take that with a fair pinch of salt. His Budget forecasts assume a 2.5% a year growth rate all the way to 2020, but with the £25 billion of further expenditure and benefit cuts now being imposed on the economy, we are likely to see a reprise of what has happened in the past five years. The reimposed austerity will flatten growth, exactly as it did from 2010 to 2012, when it was relieved only by postponing austerity to generate a short 18-month economic surge in 2013-14. As I have explained, that surge has now deflated. That pattern is likely to be reproduced in the next five years. I fear that we will have the worst of both worlds—a short-lived growth spurt that fizzles out and is achieved only through a further postponement of deficit reduction extending well into the medium-term future.

The most fundamental question is: what is the right way to deal with a large deficit? We all agree that it is far too large and has to be reduced. It is a statement of the blindingly obvious, but one that is not publicly stated, that there are two ways of doing that—either by cutting expenditure or by increasing income. An individual does not have that option, of course, but the state does, because it controls the momentum of the economy through either expanding or contracting it. The Chancellor chose exclusively to pursue the latter because it suited his political ends of shrinking the state, but economically, it has been dire—the impoverishment of a quarter of the population and the generation of 350 food banks, rather like a third world country, while cutting the deficit by only a marginal amount.

Historically, all the evidence is against the Chancellor. The reduction of large deficits by both the US and Sweden in the 1990s occurred as a result of sustained

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growth policies. Above all, we have the precedent of Britain in 1945, when the debt was 260% of GDP—three times higher than the 80% it is today. That did not prevent the Attlee Government from introducing the NHS and the welfare state, building 300,000 houses a year, reconstructing the country’s broken infrastructure and, above all, restoring full employment, with the deficit steadily decreasing to 60% over the next 30 years.

The Chancellor has not only failed to cut the deficit by much, but his legacy will be that he fundamentally chose the wrong way to do it, for the wrong reasons, with huge, irrecoverable losses to UK growth and output.

Several hon. Members rose

Mr Deputy Speaker (Mr Lindsay Hoyle): If we aim for speeches of up to 10 minutes, everybody should get the same amount of time.

3.36 pm

Luke Hall (Thornbury and Yate) (Con): I congratulate colleagues on the excellent maiden speeches we have heard this afternoon. My hon. Friend the Member for Kensington (Victoria Borwick) made a passionate speech about the work she wants to do for the House and what brought her here. My hon. Friend the Member for Brecon and Radnorshire (Chris Davies) reminded me, as another Member of Parliament who represents a rural constituency, that the green of these Benches reminds us of home when we are so far away. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) made a passionate speech. I very much enjoyed her signpost analogy and might well use it myself in future.

This was by far the most aspirational Budget I have seen delivered. It speaks to people who want to get up, work hard and get on in life. It promises that work will be rewarded, and seeks to cut taxes and let people spend their hard-earned money as they see fit.

People who work on the minimum wage in my constituency, as I did for a number of years, will take great pride in the implementation of the living wage. I am sure they will also be extremely pleased to know that the Government are clamping down on tax avoidance on a scale never seen before. For those who are successful, who put money away and who want to support the next generation, it is a welcome step that the inheritance tax threshold has been raised.

I should like to discuss the Chancellor’s proposals for devolving Sunday trading hours rules. I am a retailer who has worked in supermarkets since the age of 16. I remember somebody on the campaign trail telling me they would vote for me if I could tell them the price of milk. They were very surprised when I told them not just the price, and how many millilitres were in the carton, but that the barcode was 20076795, and that they could get it mix-and-match with a loaf of bread at best value at the shop round the corner.

I am familiar with the Sunday trading hours rules and they have caused me and other retailers no end of frustration. I understand that there are concerns about the reforms among some smaller retailers and have spoken to a number of retailers in my constituency in the past few days. Many stores are extremely keen for the right to trade when and how they wish, as they already do online, but Stanshawe service station, a local

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business in my constituency located within a mile of a Tesco, a Lidl and a Morrisons, is concerned that it could lose business to larger stores if opening hours are relaxed.

The Government’s stance is the right one. The internet is a risk to the high street and I want shops to have the freedom to work and innovate wherever possible. I have heard stories of stores doing whatever they can to ensure cash flow by bending the Sunday trading hours rules and serving customers on Sunday when opening hours are restricted. I understand that, in some cases, stores even provide computers for customers to order the product online before giving it to them inside or just outside the store. The stores do not want to break the rules. They simply want to be able to trade freely at times when they know they can sell their goods.

The internet does not rest on a Sunday. In 2011, online sales accounted for just 8.3% of all retail sales. That figure is now at 11.2%. Wherever we can, we must help stores manage that shift in consumer behaviour and for some stores—especially those that serve weekend activity, such as garden centres—Sundays can be the busiest trading day of the week because of the nature of the business. It is right that local authorities can determine the opening hours of such businesses.

Amanda Milling (Cannock Chase) (Con): Does my hon. Friend agree that we need to find ways to help our high street retailers to adopt online methods of retailing so that they have many ways to reach their customer base?

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. When the hon. Member for Thornbury and Yate (Luke Hall) gives way, he should sit down until the intervention has finished, and then he can stand back up. We cannot have two people on their feet at the same time. He should not worry; we are all learning. It is not a problem.

Luke Hall: Thank you, Mr Deputy Speaker.

I absolutely agree that we should do everything we can to support retailers, including the option of trading online. Removing the restrictions on Sunday trading will give consumers and families the flexibility that they need. People who work in small businesses often have Sunday as their day off, because it can be an easy day to manage stores. Current restrictions mean that their first day off—Sunday—is often the least productive and, in the modern world and the retail industry, convenience is key.

I will work closely with local shops in south Gloucestershire to ensure that their voices are heard when local authorities consult on these changes. It is vital that any consultation includes all retailers in any area, and that small shops in the catchment area of larger stores and supermarkets have a strong voice locally in any consultation.

In conclusion, I once again voice my support for the Budget, and I look forward to hearing ones like it in the future. We should support workers by ensuring that work always pays, encourage employers and free the market to provide what the public demand. The Budget

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delivered the Conservative promise and supports our long-term economic plan to get this country moving forward.

3.41 pm

Mr George Howarth (Knowsley) (Lab): I should start by saying a few words about the three maiden speeches that I have recently heard. All were passionate, witty or lyrical, and one was all three. We will look forward to hearing more from those hon. Members in the future.

I want to concentrate my remarks on young people, especially those in Knowsley. Three years ago I carried out a project over the summer in my constituency. I think we called it, “What young people in Knowsley think”. It is not a very original title, but it summed up what we were trying to do. Without going through the whole process and perhaps spending too much time on an analysis of what we did, I just want to talk about two conclusions that I drew from the questions that we asked some 80 young people.

The first conclusion was that young people in Knowsley are no less ambitious than young people anywhere else in the United Kingdom. Like other people, they want to have their own business, to join one of the professions or to be in the entertainment business. Some of them were remarkably specific about what they wanted to do: one young man wanted to be a diesel fitter in Canada. I never did get to the bottom of that story. In any case, they were all very ambitious.

The second conclusion, however, came from asking the young people what barriers they saw to achieving what they wanted to achieve in their lives. Most of them were between 14 and 18, and it was staggering that at that young age they recognised that in an area such as Knowsley—one of the poorest in the country—the barriers to achieving what they wanted in life were enormous. Some of the barriers were to do with educational qualifications—they thought that they would not get the requisite number of GSCEs to go on to do A-levels or to higher education, and that there was a lack of availability of training in the things they wanted to do.

Others feared that they did not have the right connections to get into professions they wanted to follow. In other words, mum and dad could not buy them an internship in a firm of national accountants so that they could get a head start to put on their CV. I say that not with any sense of bitterness, but at the tender age of 14 to 18 young people in Knowsley already know the limits of their potential owing to the poverty of their background. I am not saying that some will not get out of that—some will—but at that point in their lives they realise that there are enormous barriers to their achieving what they want to do.

What will the Budget do for children and families with children, particularly for those in receipt of tax credits? There are 9,900 such families in Knowsley, compared with the average in English constituencies of about 3,342—we have more or less three times the number. The number of families affected by the changes to tax credits will be nearly 10,000, which is an enormous number. That will have an impact on the children in those families. The percentage of children in families receiving tax credits in Knowsley is 71%, compared with 55% for England as a whole. On top of that—I am grateful to the Children’s Society for these statistics—the Government have allocated just £6.8 million in early

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intervention funding to Knowsley Council for the current year. That is £10 million less on early intervention than in 2010, yet we know that to overcome the sort of barriers I referred to earlier early intervention support is crucial. Children need that head start at an early age, but fewer resources will be available.

We also know from the Children’s Society that nationally there are 3 million children living in poverty. Some 5,290 of them are in Knowsley alone, of whom 3,840 are living in families who are the working poor. In other words, the families are in employment but they are still classified as being in poverty. I know the Government might like to redefine poverty in such a way that a lot of these statistics fall out of the definition, but there is real poverty in many of those families. We know that from some of the things that have already been mentioned.

For example, two weeks ago I spent Saturday morning collecting food for the Big Help Project food bank in Knowsley. As always when I do that, I am struck by the incredible generosity of people. They were going around Tesco, as it happened, buying their own food and then setting aside one or two bags full of food to donate to the food bank. Other hon. Members have referred to food banks. I am a huge supporter of the Big Help Project and I recognise the necessity of food banks because of the situation some families are in—many of them, by the way, are in employment, not on benefits. I never thought—a number of customers in Tesco made the same point to me—that I would live through a time when we saw families dependent on food banks to feed their children.

Chris Stephens (Glasgow South West) (SNP): Does the right hon. Gentleman agree that in many communities across the United Kingdom the food bank is the only growth industry?

Mr Howarth: The hon. Gentleman is probably right. In some areas, a food bank has an enormous impact. It is something I honestly never thought I would live to see.

Mr Anderson rose

Mr Howarth: I will give way to my hon. Friend and then I will press on, because I know, Mr Deputy Speaker, that you do not approve of interventions in added-on time.

Mr Anderson: Does my right hon. Friend agree that Conservative Members would probably say that going to a food bank is a lifestyle choice?

Mr Deputy Speaker: I do not mind interventions, but I want to ensure that speeches come in below 10 minutes.

Mr Howarth: I shall try my best, Mr Deputy Speaker.

My hon. Friend is right; of course it is not a lifestyle choice. Who would choose a system where they have to get a voucher, turn up somewhere and give it to someone they have never met before in return for food to take home to their family? It is not a lifestyle choice. Of the 7,000-odd people—a staggering number—who have used the food bank in Knowsley, 700 are in employment. It is definitely not a lifestyle choice for them, and I do not think it is for the others either.

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In conclusion, I have set out the reality for many children in Knowsley, and Knowsley is not unique—I am not making that argument—but even at the end of it all, what sort of employment opportunities are available? For many, there are zero-hours contracts under which the person does not know when they are expected to turn up for work, or even how many hours they are going to work, and in some cases—I have spoken to people for whom this is the case—the person gets a call at 11 o’clock at night telling them to go 10 miles away to do a two-hour shift in a packaging factory, the first hour’s earnings from which go on a taxi because public transport does not start until after 6 o’clock. Is that the sort of work these children should inherit? I think not. And these are often major international firms. For those not lucky enough to go into higher education, the other option is a rolling contract. That sounds great, doesn’t it? Why would anyone not want to be on a rolling contract? Actually, it means that every now and then the person gets sacked, so they do not have any continuity of employment rights. Sadly, that is the future for many young people, and this Budget does nothing to take away the fear of that future.


3.52 pm

Wendy Morton (Aldridge-Brownhills) (Con): Thank you, Mr Deputy Speaker, for giving me the opportunity to speak in today’s Budget debate, particularly on enterprise and business. It has been an honour to listen to the maiden speeches of colleagues from across the Chamber, each so different, so eloquent and so passionate. I have two lasting memories: the references to Dippy the Dinosaur and—I cannot resist—the “preening and prancing” of animals into the auction ring. They were all really enjoyable speeches.

I am particularly pleased to speak on business and enterprise, not just because I come from a family manufacturing business—we started 25 years ago thanks to the enterprise allowance, introduced by the then Conservative Government, without which we would never have taken that first step and for which I will always be grateful—but because I believe business is at the heart of Britain’s economic recovery.

A main objective of the summer Budget was recognising that business was leading our economic revival. Like other colleagues, I spend time visiting and using local businesses in my constituency, be they the large manufacturers, the small shops and traders in the villages and high street shopping centres, or the farmers. Each business plays a vital part and contributes to our local economy, be it in Aldridge, Brownhills, Pelsall, Rushall or any of our other communities, and each plays a part in securing the economic future of our country. We must never forget that.

We hear much about the plans for the northern powerhouse. As someone from the north originally—my roots are in Yorkshire—I welcome those plans; they are exactly what we need. But let us not forget the west midlands. I believe that the west midlands is the engine room of our economy—the engine room of the future. That is what I will be supporting and fighting for. It will come as no surprise that I am not a mechanic, but I know that a good engine needs to be well tuned. In a similar way, businesses need to be well tuned to keep running smoothly and to keep our economy moving

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forward. I believe that there are measures in the Budget that will help to make a big and positive difference to businesses in this country.

Back in 2010, corporation tax was a staggering 28%. It was lowered under the coalition Government to 20%, and this Budget sets out further reductions, from 20% to 19% from April 2017 and down again to 18% from April 2020. From April next year, the employment allowance, which gives national insurance contribution-free allowances to businesses, will be extended, from £2,000 to £3,000. That means that a company will be able to employ four people full time on the new living wage without paying any national insurance. These are the sorts of practical measures that I believe help businesses today. They therefore also help local communities—when we help a business, we are helping to create jobs and put money back into the economy.

In 2010, the figure for jobseeker’s allowance claimants in my constituency was 4%. In May this year, it was down to just 1.4%. That does not just happen; it happens because of the economic policies of the Government of the day—a Conservative Government. It is also down to the hard work and the efforts of all those businesses and traders, who work day in, day out, often to keep those businesses going and to support their staff. The Budget will be a strong step forward in continuing to support and encourage business, enterprise, and apprenticeships and skills. We will continue to deliver this country’s economic recovery and security. We will continue to show not only that Britain is backing business, but that we are well and truly back in business.

Before I finish, I want to refer to the welcome news on vehicle excise duty and the fact that we will be putting that money into improving our roads. With my Aldridge-Brownhills hat on, I want to make a plea: please make sure that some of that money really comes down to the local level and that we all feel the benefit of it.

I for one welcome this Budget. It is the right Budget for this country. It is the right Budget for moving us forward.

3.58 pm

Jim Shannon (Strangford) (DUP): It is a pleasure to speak in this vital debate. I commend the three Members who have given their maiden speeches. The hon. Member for Kensington (Victoria Borwick) spoke of her constituency and how we can deal with what life gives us. I commend her for that. The hon. Member for Brecon and Radnorshire (Chris Davies) did not walk too far in the House, but he walked the length and breadth of his constituency, and we appreciate that. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) has just left the Chamber. I am unashamedly a Unionist and I do not agree with the ultimate goal of the Scottish National party, but I tell the House this: I agree very much with many of the issues that she raised, as my speech will reflect. I commend her for her contribution. While she speaks for her constituents, I know that I speak for mine.

There are several issues that I feel must be addressed, as I have already been inundated with phone calls from constituents concerned in particular by the announcement

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on tax credits. That is a massive issue for me; the mailbag has been enormous. Those who have phoned or written have been worried. There are some pleasing announcements in the Budget—I recognise that—including on defence spending. I am on the Select Committee on Defence and I am pleased that we will be spending 2% of GDP, but is that enough? The Chairman of the Defence Committee has said we should have 3%, and I agree with him.

Sammy Wilson (East Antrim) (DUP): Does my hon. Friend accept that the 2% on defence spending has been reached only as a result of including expenditure on internal security—it is not pure defence spending—which is a disappointment and, indeed, a manipulation of the figures?

Jim Shannon: I thank my hon. Friend for his contribution. We made the decision in the Defence Committee just today that we will look at this issue. We will thoroughly investigate whether the 2% figure amounts to real money. As I said earlier, the Chairman of the Defence Committee wants 3%, and I want it too.

Another of my concerns is about the national living wage. I also fear for the huge number of small and medium-sized enterprises across the Province and particularly in my Strangford constituency. I have grown increasingly concerned about the large number of people using food banks, to which other hon. Members have referred. Some people in secure employment simply do not earn enough to live, so it obviously goes without saying that wages have to increase. We must help to safeguard the most vulnerable in our society.

The Federation of Small Businesses Northern Ireland claimed that 99.9%—its figures—of employment in the Province comes from small and medium-sized businesses, so naturally this change in wages poses a huge threat to some employers. I am concerned about that. What is the Chancellor going to do about the minimum wage? We welcome it, but what is he going to do to help small and medium-sized businesses to remain profitable and successful. Will some businesses be forced to employ people in the lower-age bracket, and will it demean and detract from what is being put forward?

As for child tax credits, it seems that we are given something on the one hand, but a great deal is taken away on the other hand. It is great to hear that tax-free personal allowances will increase next year. I hope that it will put a little bit of extra money into our constituents’ pockets, but whether it will really help the poorest in our society is debatable.

I find it rather distressing that the Government are virtually saying that by 2017 they will support people if they have two children or fewer, but if they happen to have more than two children, they are on their own. One cannot help but draw comparisons between the United Kingdom of Great Britain and Northern Ireland and the Democratic Republic of China. I am reminded of a quote from the American poet, Maya Angelou, who said:

“I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

Clearly, this Government are in danger of adversely affecting the people they are supposed to be standing up for. This change in tax credits and benefits will greatly affect many of my constituents.

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The anti-child poverty charity, Barnardo’s in Northern Ireland, has claimed that 160,000 families across the Province could be left struggling if plans to cut tax credits go ahead. Barnardo’s also warned, as it launched a campaign, that the Westminster Government should keep the “lifeline” benefit. Lifeline benefit is rightly named, because that is exactly what it is. With low wages and high living costs stretching budgets across Northern Ireland, tax credits are an everyday lifeline for families. It would be remiss of me not to remind the Government of the impact on families of the reduction or removal of child tax credits and working tax credits. Let me assure the Chancellor and the Minister that people feel extremely aggrieved. Large families feel totally alienated, and people feel they are being punished for having more than two children.

In the last Parliament, the Democratic Unionist party worked alongside the Conservative Government to deliver the marriage allowance. What a breakthrough that was: we encouraged marriage, we encouraged the family. Yet now, one year later, it seems that the Government intend to punish those with more than two children. I find that quite incredible. Last year, the family was the cornerstone of our society, and we agreed that family brought communities closer together; now it seems that the Government have done a U-turn. The Government cannot claim to support the family unit, and then attach terms and conditions to it. We cannot say that we support families so long as they do not go over the two-child criterion—this is simply ludicrous. I have already had many calls from concerned parents, from families and from many of my constituents who are struggling. This reduction in child tax credits is going to make it even more impossible for them just to get by. Unfortunately, this is evidence that the Budget was certainly not designed to help working people in our society.

Another issue that concerns me—this, too, was raised by the hon. Member for Paisley and Renfrewshire South—is the change in housing benefit for those aged between 18 and 21, which will force young adults to live at home with their parents until they are 21. They will have to either “earn or learn”. In principle, that seems a good idea, given that a significant number of 18 to 21-year-olds are either working or still in education, but the fact is that a great many of them are not. All that this measure will do is increase the pressure on social workers, and that concerns me greatly.

The Budget has made some welcome changes, but a great many others will cause the worst off in society to struggle even more. It has been estimated that, in the years leading up to 2019, a 10th of the population in the United Kingdom will lose about £800 a year as a result of the tax and benefit changes. That is equivalent to nearly 7% of their net income. As I have said, I fear that the pluses in the Budget do not outweigh the disadvantages, especially for the most vulnerable and the worst off in society.

It is good to see the economy recovering and growing, but those at the bottom are struggling to see that that is happening. I fear that if the Chancellor and the Government press ahead with their £9 billion saving, reducing tax credits, housing benefit and other benefits and pushing 160,000 more families in Northern Ireland—including families in my constituency—towards child poverty, they will undo all the economic good that has been

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done. They may well lose sight of it altogether as, once again, the purse strings tighten around those who can least afford to absorb the changes.

Those are my concerns about the Budget, and they reflect the concerns of my constituents. I shall vote against the Budget this evening.