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House of Commons

Wednesday 6 January 2016

The House met at half-past Eleven o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Scotland

The Secretary of State was asked—

Fiscal Framework

1. Mike Weir (Angus) (SNP): What recent discussions he has had with the Scottish Government on Scotland’s fiscal framework. [902843]

2. Marion Fellows (Motherwell and Wishaw) (SNP): What recent discussions he has had with the Scottish Government on Scotland’s fiscal framework. [902844]

5. Dr Eilidh Whiteford (Banff and Buchan) (SNP): What recent discussions he has had with the Scottish Government on Scotland’s fiscal framework. [902847]

10. Ronnie Cowan (Inverclyde) (SNP): What recent discussions he has had with the Scottish Government on Scotland’s fiscal framework. [902852]

The Secretary of State for Scotland (David Mundell): May I begin by wishing you a very happy new year, Mr Speaker?

In the light of the recent flooding in Scotland, may I pay tribute to all those in the emergency services and in local authorities, and the volunteers, who have dealt with the challenging circumstances? The thoughts of the whole House will be with those whose homes and businesses have been flooded.

The UK and Scottish Governments are discussing the fiscal framework through the Joint Exchequer Committee, and there have been five meetings between the Deputy First Minister and the Chief Secretary to the Treasury to discuss it. The next meeting is due to take place on Friday.

Mike Weir: I thank the Secretary of State for his answer and associate myself with what he said about the flooding, which has affected my constituency and those of many of my colleagues. We appreciate the work the emergency services are doing.

The block grant will need to be adjusted to take account of the revenue-raising powers that are being devolved, but, as agreed by the Smith commission, the Scottish

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Government should not be financially disadvantaged by the transfer of the new powers. What is the Secretary of State’s view of what a fair indexation for the block grant adjustment would be?

David Mundell: My understanding is that the Deputy First Minister of Scotland, John Swinney, with whom I had a productive meeting just before Christmas, is conducting the negotiations on behalf of the Scottish Government. At our meeting, Mr Swinney assured me that his objective was exactly the same as that of the United Kingdom Government—a settlement that is fair to Scotland and fair to the whole United Kingdom.

Marion Fellows: A fair model of block grant adjustment would ensure that Scotland is no worse off financially as a result of the transfer of new powers. Does the Secretary of State agree with the cross-party view, and that of Anton Muscatelli, Jim Cuthbert and the Scottish Trades Union Congress, that only the model of indexed deduction per capita would adequately deliver the principle of no detriment?

David Mundell: As I said, we are involved in an ongoing negotiation, which Mr Swinney is conducting. I have tremendous respect for his ability to reach a fair settlement for Scotland, and for the Chief Secretary’s ability to reach a fair settlement for the rest of the United Kingdom. On the basis of the discussions that took place between the First Minister and the Prime Minister, my own discussions with the Deputy First Minister and the meeting that is due to take place on Friday, I am confident that we will be able to achieve a fair settlement.

Dr Eilidh Whiteford: A good new year to you, Mr Speaker.

Many people will find it bizarre, and frankly unacceptable, that the Secretary of State for Scotland is not even attending the negotiations on Scotland’s fiscal framework. Can he explain why his office of Secretary of State seems to have been deemed irrelevant to those critical negotiations? Given that he is not directly involved in the negotiations, will he share his personal view on whether he agrees with the learned professors and the STUC on the preferred model?

David Mundell: I think what many people in Scotland will find bizarre is that at a session in Parliament that is called Scottish questions, the Scottish National party could come up with only one question, which all its Members were clearly told to ask.

I know that it may impinge on the importance that some SNP MPs attribute to themselves, but it is the Deputy First Minister of Scotland, John Swinney, who is negotiating the agreement, not them.

Ronnie Cowan: The model of indexed adjustment for the adjustment of the block grant may result in the Scottish block grant falling substantially without consideration of the different rates of population growth north and south of the border. Does the Secretary of State agree that that or any other model of block grant adjustment that results in a diminished Scottish budget year on year will not fulfil the Smith commission’s principle of no detriment?

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David Mundell: I am disappointed with the hon. Gentleman’s analysis because the new powers that are being delivered by the Scotland Bill create the opportunity for Scotland’s economic growth to increase and for Scotland’s population to increase. I am very surprised that he has such a negative view of the use of those powers that it would be impossible to increase population or economic growth in Scotland and therefore increase tax take.

Alberto Costa (South Leicestershire) (Con): Does my right hon. Friend agree that the transfer of the new extensive powers that he has agreed will be given to the Scottish Parliament will for once make the SNP Government truly accountable to the Scottish people, and that the talk of a second referendum is just a smokescreen to take away their accountability to the Scottish people?

David Mundell: I absolutely agree that the impression created again today by SNP Members is that they are entirely driven by process arguments, and not by getting on and getting an agreement on the fiscal framework, getting the new powers in place and then doing something positive for the people of Scotland with those powers.

Maggie Throup (Erewash) (Con): Will my right hon. Friend confirm that, once the fiscal framework has been agreed, the devolution of tax powers to the Scottish Parliament can begin quickly?

David Mundell: I am absolutely committed to delivering the powers set out in the Scotland Bill when it becomes an Act as quickly as possible. We want that Act on the statute book ahead of the Scottish Parliament elections so that it can shape those elections, and so that the parties can set out what they intend to do with the powers. I would like the tax powers in place by April 2017.

John Stevenson (Carlisle) (Con): The success of the fiscal framework is vital to the future success of the tax powers that have been devolved. Confidence in the framework is vital for individuals and businesses, particularly in the border region. Does the Secretary of State believe that the Scottish Government are approaching the discussions in good faith, which will be fair to people on both sides of the border?

David Mundell: I absolutely do, because, from the discussions that Nicola Sturgeon, the First Minister of Scotland, has had with the Prime Minister, and from the discussions I have had with the Deputy First Minister—we have to remember that they are determining what will be agreed in relation to the fiscal framework—their view is clear. I take it as sincere that they want to achieve a fiscal framework agreement in the near future. We can then move forward with enacting the Bill and transferring those powers, which could make such a difference to the people of Scotland.

12 [902854]. Gavin Newlands (Paisley and Renfrewshire North) (SNP): The Smith commission recommended that the cost of establishing the infrastructure for the collection of the newly devolved taxes would be borne by the UK Government. Will the Secretary of State

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for Scotland, and not the Deputy First Minister of Scotland, confirm that the UK Government accept that recommendation?

David Mundell: I can confirm to the hon. Gentleman that that is one of the items that is part of the discussion between the UK Government and the Scottish Government. It is so surprising that SNP MPs have such little confidence in Mr Swinney and the Scottish Government in the negotiation to hold out for positions that would be beneficial to Scotland—I find it staggering.

13. [902855] Kirsten Oswald (East Renfrewshire) (SNP): Does the Secretary of State agree with the First Minister, Professor Muscatelli and the STUC that more powers for Scotland cannot come at any price, but that the fiscal framework settlement must deliver fairness for Scotland? Will the Secretary of State commit to a date before the Scottish elections by which an agreement must be reached?

David Mundell: I absolutely agree that the arrangements must be fair—fair to Scotland and fair to the rest of the United Kingdom. That is perfectly achievable. I do not want to provide a running commentary, but the negotiations and discussions that have taken place have been productive. For example, I absolutely agree with the comments of Mr Swinney to the Scottish Parliament Finance Committee —he clearly said that the Scottish Government should benefit from the positive decisions they take but accept the consequences of bad policy decisions. That should also apply to the UK Government in relation to our responsibilities.

Ian Murray (Edinburgh South) (Lab): May I take this opportunity, Mr Speaker, to wish you and all the staff of the House, as well as the Secretary of State and his office, a happy new year? Mr Speaker, you would have thought that the pantomime season was over, but judging by today’s questions, it clearly is not—[Interruption.] Oh, yes, it certainly is. I was expecting that, from someone who has no jokes whatsoever. We could be questioning the Government on no shortage of things, but the Secretary of State has created this sham by keeping the fiscal framework secret. What is ludicrous is that the SNP Finance Secretary, who is negotiating the very fiscal framework that we are discussing, could be asked what is in it. It is clear that it is the people of Scotland who are being kept in the dark. I have asked the Secretary of State this before, but will he put an end to this pantomime of manufactured grievance and be completely transparent about the fiscal framework?

David Mundell: The Government are completely transparent about our position on the fiscal framework. We want it agreed as soon as possible and we want it to be scrutinised by both Parliaments. When I was in the Scottish Parliament recently I had the opportunity to meet Bruce Crawford, convener of the Devolution (Further Powers) Committee. He assured me that he is satisfied that in conjunction with the Finance Committee in the Scottish Parliament there will be adequate opportunity to scrutinise the fiscal framework. I am clear that there will be an opportunity in the other place to scrutinise it, and the Select Committee on Scottish Affairs is currently conducting an inquiry. I do not think that the people of

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Scotland will be in the dark in any way about the fiscal framework. It will achieve what we want it to achieve but it will also be subject to proper scrutiny.

Ian Murray: I do not think that the Secretary of State understands the process and how important this is. The Scotland Bill constitutes the biggest transfer of powers to Scotland ever, but the underpinning financial provisions are being hidden from the Scottish people. I have written to both Governments and questions have been asked in both Parliaments to try to get transparency, but the response from both Governments has been “no”. Meanwhile, the Scottish Government are threatening to veto the Bill. The danger is that while these negotiations are being conducted in secret, both Governments can blame each other with manufactured grievance, and it is the people of Scotland who will lose out. Will the Secretary of State at least assure us that in future negotiations as important as this on Scotland’s finances will be conducted with greater transparency and democratic scrutiny?

David Mundell: I have no grievance, manufactured or otherwise. I am confident that the Scottish Government want to achieve an agreement. The UK Government want to achieve an agreement based on fairness to Scotland and fairness to the rest of the United Kingdom. I give the hon. Gentleman an absolute commitment that the fiscal framework, as agreed, will be subject to full parliamentary scrutiny here in Westminster and in the Scottish Parliament.

Mr Speaker: Question 3—I call Sir Henry Bellingham.

Defence Installations

3. Sir Henry Bellingham (North West Norfolk) (Con): What plans he has to meet Ministers of the Scottish Government to discuss defence installations in Scotland. [902845]

The Minister for Defence Procurement (Mr Philip Dunne): May I start by adding to your comment in introducing question 3, Mr Speaker? I congratulate my hon. Friend on the recognition he received last week for some 30 years’ service to this House and the people of Norfolk. It is a great pleasure that he received that recognition.

In response to his question, the Ministry of Defence engages with the Scottish Government about defence establishments and other defence matters at many levels, both official and ministerial. The Under-Secretary of State for Scotland and I met the Scottish Government Cabinet Secretary for Infrastructure, Investment and Cities on 17 November to discuss the strategic defence and security review. The Defence Minister responsible for reserves has met the Scottish Government Cabinet Secretary twice previously, and the Defence Secretary has agreed to meet the Scottish Government Cabinet Secretary soon.

Sir Henry Bellingham: I thank the Minister for his generosity. Given that the decision on Faslane will sustain the largest employment site in Scotland for decades to come, is it not clear that Scotland is the biggest beneficiary of the recent SDSR? Surely that makes the stance on Trident of both the Leader of the Opposition and the SNP even more perverse and damaging.

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Mr Dunne: My hon. Friend is right that this Government are investing significantly in defence in Scotland. Following the SDSR, not only will we spend some £500 million at Faslane—one of the Royal Navy’s three operating bases and one of the largest employment sites in Scotland with 6,800 military and civilian jobs, which will increase to more than 8,000 as we move all our submarines to be based there by 2022—but Scotland will be home to our new maritime patrol aircraft, with some 400 extra personnel stationed to man the squadron at RAF Lossiemouth.

Angus Robertson (Moray) (SNP): Scotland is in a vital geostrategic location, with the Iceland gap to our north, the Atlantic to our west and the North sea to our east. As the Scottish National party has been pointing out for a long time, it has been negligent and dangerous for a maritime state such as the UK not to have maritime patrol aircraft. We therefore welcome the Government’s recent U-turn on the procurement of P-8 maritime patrol aircraft. Can the Minister tell us when the entire fleet will be operational?

Mr Dunne: We made it clear in the SDSR that we would be procuring nine P-8 maritime patrol aircraft, and that the fleet would be procured through a foreign military sales procurement contract, the letter for which has already been submitted to the United States. The first aircraft will be operational in 2019.

Angus Robertson: The House will note that the Minister was unable to answer my question on when the entire fleet would be operational. Perhaps when he responds to my second question, he will be able to answer the first one. The RAF is currently maintaining its skill base by training on maritime patrol aircraft with the United States, Canada, Australia and New Zealand. Does the Minister acknowledge the importance of the maritime patrol aircraft training that was scheduled to be based at RAF Kinloss before the scrapping of the Nimrod fleet? Will the Government ensure that training on the P-8 maritime patrol aircraft is based at RAF Lossiemouth, as the training for Tornados and Typhoon aircraft is now?

Mr Dunne: As we are currently in contractual negotiations for the procurement, it would be quite wrong for me to pre-empt the precise nature of those negotiations, so I cannot answer the right hon. Gentleman’s initial question on how many aircraft will be available, and when, until such time as the contract has been concluded. On the question of training, he is right to say that we have crews in service on this platform with other users in the United States. The training basing will be established as part of the procurement process in the coming months.

Strategic Defence and Security Review

4. Nick Smith (Blaenau Gwent) (Lab): What recent discussions he has had with (a) the Secretary of State for Defence and (b) Ministers of the Scottish Government on the effect on Scotland of the strategic defence and security review. [902846]

The Minister for Defence Procurement (Mr Philip Dunne): While defence and national security remain reserved to the UK Parliament, we recognise the importance of

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engaging with the devolved Administrations. As I said in my answer to the previous question, Lord Dunlop, the Under-Secretary of State for Scotland, and I have had meetings with the Scottish Government to discuss these matters.

Nick Smith: UK defence contracts are a major source of jobs in Scotland, with 2,500 people employed on Clydeside. Can the Minister explain why his Government reduced defence spending by 14% in the last Parliament?

Mr Dunne: I am sorry that the hon. Gentleman seeks to hark back, rather than to look forward. At the end of November we published the SDSR, in which the Government committed to increase defence spending in real terms for each year of this Parliament, and that is what we are looking forward to. Much of that investment will be spent in Scotland, and indeed in south Wales, as we procure the Ajax vehicle.

Economic Growth

6. Karen Lumley (Redditch) (Con): What assessment he has made of the level of growth in the economy in Scotland. [902848]

The Secretary of State for Scotland (David Mundell): The Government’s long-term economic plan has laid the foundations for a stronger economy. The Scottish economy has been growing for 11 quarters in a row. Scotland continues to benefit from being part of the UK, which was the fastest growing G7 economy in 2014 and is forecast to be the joint fastest in 2015.

Karen Lumley: My constituency has a number of manufacturing companies that do a great deal of business in Scotland, contributing to the growth of the local economy of Redditch as well as to the economy of Scotland. Does my right hon. Friend agree that that is just one element that makes the Union so successful?

David Mundell: I do agree with my hon. Friend. It is a fundamental part of the growth in Scotland’s economy that we are part of a single market within our United Kingdom. I recently had the pleasure of visiting Alexander Dennis, the bus manufacturer in Falkirk, and I am sure that they would agree that the rest of the United Kingdom was one of their most important markets.

George Kerevan (East Lothian) (SNP): Given that employment in Scotland is now 53,000 higher than it was before the crisis, and that output in Scotland is now 3% higher than at the pre-crisis point, does the Secretary of State concur with Scottish business leaders who oppose the Treasury’s savage cuts to the UK’s trade export agency in the autumn statement?

David Mundell: I very much welcome the figures the hon. Gentleman set out on the positive economic position in Scotland. What I do not subscribe to is the frequently voiced Scottish National party and Scottish Government position that anything good that happens in Scotland is in relation to the Scottish Government and anything bad is in relation to the UK Government. We have two Governments working together for the benefit of Scotland’s economy.

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Wayne David (Caerphilly) (Lab): The North sea oil and gas industry is obviously vital to Scotland’s economy. Yesterday, a Scottish nationalist MSP claimed that there is no crisis in the industry, even though it has been estimated that 65,000 jobs have been lost since 2014. The SNP clearly inhabits a different world from everybody else. Will the Secretary of State tell us what his Government are doing to support the oil industry and to protect the thousands of jobs that depend on it?

David Mundell: I find it extraordinary that anyone who represents the north-east of Scotland could claim that there was no crisis in the oil and gas industry. This Government have demonstrated, yet again, in the Chancellor’s autumn statement that we are committed to that industry and the thousands of jobs that it supports right across the United Kingdom. There will be further evidence of our commitment to Aberdeen and the north-east in the weeks ahead.

Household Incomes

7. Robert Flello (Stoke-on-Trent South) (Lab): What assessment he has made of the effect on household incomes in Scotland of the changes to welfare announced in the summer budget 2015 and the spending review and autumn statement 2015. [902849]

The Financial Secretary to the Treasury (Mr David Gauke): The analysis published at spending review 2015 shows that more than half of all spending on welfare and public services goes to the poorest 40% of households in the UK. That has not changed as a result of the Government’s policies since 2010.

Robert Flello: The Institute for Fiscal Studies estimates that by 2020 more than 2.5 million working families on universal credit will, on average, be £1,600 a year worse off owing to the cuts to the work allowance in universal credit. My constituents know how that is going to damage them, but do the Secretary of State and the Minister have the first clue as to how many of those families will be in Scotland and what the scale of the impact will be on them?

Mr Gauke: The best way to help working households in this country is to ensure that we have a job-creating economy; that wages go up; that we introduce a national living wage that will help millions of people; and that we have a secure and stable economy. That is what this Government are delivering. [Interruption.]

Mr Speaker: Order. Household incomes in Scotland will be of intense interest, not least to people living in Scotland. We must hear the questions and the answers.

Margaret Ferrier (Rutherglen and Hamilton West) (SNP): In a recent written parliamentary question to the Secretary of State, I asked:

“what discussions he has had with the Secretary of State for Work and Pensions on the introduction of the Work and Health Programme in Scotland.”

His response was a masterful example of how not to answer, which is what we have seen again today. Will he now take the opportunity to tell the House whether

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he has bothered to discuss with the Department for Work and Pensions how this new programme will affect my constituents?

Mr Gauke: This Government are making reforms to the welfare system—we are making sure that work always pays. We do have to ensure that the system is affordable, but may I remind the hon. Lady that the Scotland Bill gives the Scottish Government the powers to top up benefits and introduce new benefits?

Undergraduates

8. Mr Christopher Chope (Christchurch) (Con): What discussions he has had with the Scottish Government on increasing the number of undergraduates attending Scottish universities. [902850]

The Secretary of State for Scotland (David Mundell): I regularly discuss a range of matters with the Scottish Government. Although higher education is a devolved matter, the available figures show that application rates for those aged 18 in 2014 and 19 in 2015 were 37% in Scotland compared with 44% in England. [Interruption.]

Mr Speaker: Order. I also wish to hear the voice of Christchurch on the matter of Scottish universities.

Mr Chope: How can it be in the United Kingdom national interest that school leavers from Scotland are being denied access to their own universities because of the arbitrary cap on numbers imposed by the Scottish Government, when school leavers with lower qualifications from the rest of the UK are able to gain such access?

David Mundell: My hon. Friend makes an important point. Students from my constituency have been refused entry to Scottish universities because of the cap imposed by the Scottish Government; we hear a lot about free tuition in Scotland but that is one of the consequences, and I am sure it will be part of the debate in the forthcoming Scottish Parliament elections.

Pete Wishart (Perth and North Perthshire) (SNP): As the hon. Member for Christchurch (Mr Chope) knows, the Scottish Affairs Committee has been looking into higher education, specifically into a post-study work scheme for Scotland. What the Secretary of State will find is that everybody—the universities, the trade unions, and the employers’ association—wants that scheme for Scotland. Will he now be a Secretary of State for Scotland and put that case to the Home Office?

David Mundell: We always listen with interest and take forward in a positive way anything that is forthcoming from the Scottish Affairs Committee, and I look forward to reading the hon. Gentleman’s report.

Mr Speaker: Last but not least Mr Philip Hollobone.

Departmental Running Costs

9. Mr Philip Hollobone (Kettering) (Con): What the administrative cost of running his Department was in 2010; and what he expects that cost to be in 2020. [902851]

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The Secretary of State for Scotland (David Mundell): The administrative cost of running the Scotland Office and Office of the Advocate General for Scotland in the financial year 2010-11 was £7.688 million. The administrative provision for both offices in 2019-20, agreed at the recent spending review, is £9.240 million.

Mr Hollobone: Will the Secretary of State confirm to the House what percentage of his Department’s administrative costs is met by Scottish taxpayers?

David Mundell: My hon. Friend knows that the funding arrangements within the United Kingdom do not work on that basis. He also knows that this Government are committed to retaining the Barnett formula, which delivers a fair allocation of funding to Scotland.

Prime Minister

The Prime Minister was asked—

Engagements

Q1. [902803] Karen Lumley (Redditch) (Con): If he will list his official engagements for Wednesday 6 January.

The Prime Minister (Mr David Cameron): This morning, I had meetings with ministerial colleagues and others, and, in addition to my duties in this House, I shall have further such meetings later today.

Karen Lumley: Will my right hon. Friend confirm that, while he is Prime Minister of this country, condemning terrorist attacks will not be a bar to holding high office?

The Prime Minister: Condemning terrorist attacks is an essential component of aspiring to high office in this country, and that should be the case whether one is a shadow Minister or a Minister of the Crown. It is worth recalling what the right hon. Member for Wolverhampton South East (Mr McFadden) said, which was that

“terrorists are entirely responsible for their actions, that no one forces anyone to kill innocent people in Paris, blow up the London Underground, to behead innocent aid workers in Syria”.

He was absolutely right to say that, and it speaks volumes that he cannot sit in the shadow Cabinet with the Leader of the Opposition.

Jeremy Corbyn (Islington North) (Lab): I would like to thank the firefighters, mountain rescue services, police, armed services, engineers, workers at the Environment Agency, local government workers, and all the volunteers for all the work they did in keeping safe thousands of people from the floods that have affected this country. Two years ago, in January 2014, following devastating floods, the Prime Minister said:

“There are always lessons to be learned and I will make sure they are learned.”

Were they?

The Prime Minister: First, let me join the Leader of the Opposition in thanking the emergency services, the police, and the fire service. I also thank the search and rescue teams who went from around the country to

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areas that were flooded. May I thank the military for all the work that they did? As he says, what we saw was communities coming together and volunteers carrying out extraordinary work.

Let me deal directly with the issue of lessons learned. Having seen my own constituency very badly flooded in 2007 and having had floods while being Prime Minister, a number of lessons have been learned. This time, the military came in far faster than ever before. The Bellwin scheme was funded at 100%, not 85%, and more money was got to communities more quickly. A lot of lessons have been learned. Are there more to learn? I am sure there are; there always are, which is why I will review everything that has been done. Let us be clear that, as we do that, we will make money available because we have a strong economy to build flood resilience in our country.

Jeremy Corbyn: In 2011, a £190 million flood defence project on the River Aire in Leeds was cancelled by the Government on cost grounds. One thousand homes and businesses in Leeds were flooded in recent weeks, and the Government are still committed only to a scaled-down version of the project, worth a fraction of its total cost. This from a Prime Minister who claimed that “money was no object” when it came to flood relief. When he or his Secretary of State meets the Leeds MPs and Judith Blake, the leader of Leeds City Council, in the near future, will he guarantee that the full scheme will go ahead to protect Leeds from future flooding?

The Prime Minister: First of all, let me make one point before answering the right hon. Gentleman’s points in detail. It is worth putting on record before we get on to flood defence investment—and I will cover it in full—that this was the wettest December for over 100 years, and actually in Leeds and in Yorkshire it was the wettest December ever on record. That is why rivers in Yorkshire flooded, including the Aire in Leeds, which was a metre higher than it has ever been in its history.

No flood defence schemes have been cancelled since 2010. The investment in flood defences was £1.5 billion in the last Labour Government, £1.7 billion in the Government I led as a coalition Government, and will be over £2 billion in this Parliament. It has gone up and up and up. It has gone up because we run an economy where we are able to invest in the things that our country needs. And one more point—let us not forget this. We inherited the Darling plan for our economy. That was a plan for a 50% cut in capital spending, and DEFRA was not a protected Department. We protected that flood spending and we increased it—something Labour would not have done.

Jeremy Corbyn: Of course the rainfall was excessive, of course the river levels were high, but the Prime Minister has still not answered the question on the Leeds flood protection scheme—I will give him an opportunity to do so in a moment. In 2014, Cumbria County Council applied for funding for new schemes in Keswick and Kendal—both were turned down and both areas flooded again in the last few weeks. Does the Prime Minister believe that turning down those schemes was also a mistake?

The Prime Minister: We are spending more on flood defence schemes and stacking up a whole series of schemes that we will spend more on. Let me make this

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point to the right hon. Gentleman: if he is going to spend £10 billion on renationalising our railways, where is he going to find the money for flood defences? The idea that this individual would be faster in responding to floods when it takes him three days to carry out a reshuffle is frankly laughable. Since I walked into the Chamber this morning, his shadow Foreign Minister resigned and his shadow Defence Minister resigned—he could not run anything.

Jeremy Corbyn: It is very strange that when I have asked a question about Leeds flood defence, then on Cumbria flood defence, the Prime Minister still seems unable to answer. Can he now tell us if there is going to be funding for those schemes?

In October, Professor Colin Mellors, the head of the Yorkshire regional flood and coastal committee, warned the Government about funding cuts leading to flood defences in Yorkshire being “formally discontinued” in the future. Would that also be a mistake? Can the Prime Minister now tell us: is he going to reverse the cuts in the defences that have taken place to make sure that those cities and areas are protected in the next round of floods which will no doubt come?

The Prime Minister: As I have told the right hon. Gentleman, we have increased and continued to increase the spending on flood defences. We are spending more in this Parliament, and for the first time it is a six-year spending perspective, which is £2.3 billion extra on flood defences—money that would not be available if we trashed the economy in the way that he proposes. Of course, after every incident of flooding, you go back and look at what you have spent and what you have built, you look at what you are planning to spend and what you are planning to build, and you see what more can be done. The head of the Environment Agency was absolutely clear that he had the money necessary to take the action that was necessary, but we can only do that with a strong economy—an economy that is growing, where more people are in work and more people are paying taxes. We have got the strength to solve this problem of floods, and we will do it in a proper way.

Jeremy Corbyn: The Prime Minister has not answered on Leeds, he has not answered on Cumbria, and he has not answered on the warning from Professor Mellors.

Like the Prime Minister, last week I met people in York who had been affected by flooding. I met a young couple, Chris and Victoria, whose home had been flooded over Christmas—[Interruption.] It was not very funny for them. This young couple lost many of their possessions, including photos and children’s toys and school work, and they have the foul stench of floodwater in their home, as have many families all over this country. They are asking all of us wholly legitimate questions. Why was the insufficient pump capacity at the Foss barrier—which, again, we were alerted to in 2013 by a Government report—not dealt with or the pumps upgraded? That meant that people in York were flooded and their possessions and homes severely damaged. Those people want answers from all of us, and in particular from the Prime Minister.

The Prime Minister: I have the greatest sympathy with anyone who has been flooded. We have to do what it takes to get people and communities back on their feet. That is why we have put record sums in more

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quickly to help communities in Cumbria, in Lancashire and now in Yorkshire. We will continue to do that. Specifically on the question of the Foss pumps, that was about to be tendered for extra investment, and that investment will now go ahead, because the money is there.

I say to the right hon. Gentleman that we are putting in the money and doing so more quickly, and the military got involved more quickly. For that couple who got flooded, we are also doing something that previous Governments have talked about but never achieved, which is to have an insurance scheme—Flood Re—so that every single household can get insured. That has not been done before.

Have lessons been learned? Yes, they have. Are there more lessons to learn? There always are, but frankly we do not need a lecture from Malta from the right hon. Gentleman.

Jeremy Corbyn: The reality is that flood defence scheme after flood defence scheme has been cancelled, postponed or cut, many more homes have been flooded and too many lessons have been ignored. Why cannot the Prime Minister support our calls for a co-ordinated, cross-party approach to flooding that looks at everything, including upland management, making people’s homes more flood resilient, and more properly funded protection schemes?

Does the Prime Minister at least agree that the fire and rescue service, which has done such a great job over the past few weeks in all parts of this country, should now be given a statutory duty to deal with floods, to help us through any crisis that might occur in the future?

The Prime Minister: I think the best I can say is that when the right hon. Gentleman has worked out how to co-ordinate his own party, perhaps he could come and have a word with me.

On the issue of a statutory duty, everybody knows what they have to do when floods take place. That is why there was such a magnificent response from the emergency services, the fire services and the emergency rescue services. They have our backing to do the vital work. We will go on investing in flood defences. We will increase the money we are spending on flood defences, because we have got a strong economy and a strong country that can back the action that is needed.

Q6. [902808] Nadhim Zahawi (Stratford-on-Avon) (Con): In 2016 we will mark the 400th anniversary of William Shakespeare’s passing away. Does my right hon. Friend agree that our country should unite to commemorate his works? The Prime Minister rose— Nadhim Zahawi: There are special events at the Royal Shakespeare Company; the Shakespeare Birthplace Trust is renovating the site of his home, New Place; and King Edward’s School is opening his original classroom. May I invite my right hon. Friend, the whole House and the world to come and celebrate our greatest bard?

The Prime Minister: My apologies for almost interrupting my hon. Friend’s soliloquy—I am very sorry about that. The 400th anniversary of the death of Shakespeare is a

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very good moment for us to celebrate everything he has given to our language and our culture and, indeed, to the world. It is going to be a fantastic moment for people to visit Britain and come to see Stratford and all the other places that have such a great association with Shakespeare.

I find that Shakespeare provides language for every moment. Let us consider what we are thinking about at the moment. There was a moment when it looked like this reshuffle could go into its twelfth night. It was a revenge reshuffle, so it was going to be as you like it. I think, though, we can conclude that it has turned into something of a comedy of errors—perhaps much ado about nothing. There will be those who worry that love’s Labour’s lost.

Angus Robertson (Moray) (SNP) rose—

Hon. Members: More!

Angus Robertson: Thank you very much for the warm welcome. The health service is devolved, but junior doctors in Scotland are not planning to strike next week. Why does the Prime Minister think the Scottish Government have good relations with junior doctors and his Government do not?

The Prime Minister: And now for the Scottish play! The right hon. Gentleman raises an important question. We have taken a different approach from the Government in Scotland. We have increased spending on the NHS by more than the Government in Scotland, which I think is the right approach. We are determined to have a genuine seven-day NHS. Everybody knows—doctors know it, patients know it, the management of the NHS know it, the BMA knows it—that there is a problem with the NHS at the weekend.

One way to correct that is to make sure that we have new contracts, including with junior doctors. That is not to make them work longer hours. In fact, under our plans, many will work many fewer hours. It is not to reduce doctors’ pay. No one who works legal hours will see a cut in their pay. Indeed, 75% of doctors will see a pay rise. We think that this is a good deal for a good advance in the NHS. I am sure that Scotland will be looking at it too.

Angus Robertson: The Scottish Government have been investing record levels of funding in the NHS in Scotland and they work very hard to have the best possible relations with doctors, nurses and all NHS staff. Will the English Health Secretary speak to his Scottish colleague, Shona Robison, to learn how to resolve the situation in England and stave off strike action that no one wants, least of all junior doctors?

The Prime Minister: There should always be good relations and discussions between the Health Secretary in the United Kingdom Government and Health Ministers in the devolved Administrations. Importantly, when we make a decision to increase funding in the NHS, as we have done with the £19 billion more in this Parliament, it has consequences for Wales, Scotland and Northern Ireland under the Barnett formula. Of course, I find it very depressing that the Welsh have decided, under Labour, to spend less than we are planning to spend, and that Scotland has done the same thing.

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Q9. [902811] Chris Green (Bolton West) (Con): The local economy in my constituency of Bolton West continues to strengthen, with great businesses such as Eventura and LLaborate both relocating to and growing in Westhoughton; Heritage Trade Frames investing £1 million in equipping a new factory in Lostock; and Trojan Utilities winning new contracts and recruiting more staff in Horwich.—[Interruption.] Does the Prime Minister agree that the northern powerhouse is about not just our great northern cities, but our great northern towns?

The Prime Minister: My hon. Friend is absolutely right. It is instructive that Opposition Members do not want to hear good news about the businesses, jobs and investment in our economy. Sometimes, it can sound as if the plan for a northern powerhouse is all about the cities of the north of England. Our view is that by linking up the cities, we will help the towns in the north-west and across our country. It will also help rural areas because we are rebalancing the economy and increasing opportunity in the north of our country.

Q2. [902804] Anna Turley (Redcar) (Lab/Co-op): In 2014, in response to the flooding of the Thames valley, the Prime Minister said that money would be “no object”. In the light of his cuts to the flood defences, his cuts to the fire and rescue service and his cuts to the Environment Agency, can he say the same to the people of Leeds, Rochdale, York, Whitby and Teesside, or is it one rule for his constituents and another for ours in the north?

The Prime Minister: The hon. Lady is completely wrong about the funding figures. As I have explained in great detail, they have gone from £1.5 billion to £1.7 billion to £2 billion. What this Government have put in place is funding under Bellwin of not 85% of what a council spends, but 100%, so what I said absolutely stands good.

Q10. [902812] Simon Hart (Carmarthen West and South Pembrokeshire) (Con): The Prime Minister has always been a staunch supporter of the Welsh TV channel S4C, which was set up under the Thatcher Government. Will he use this opportunity to reinforce his support for the channel and the commitment that we made to safeguard its funding?

The Prime Minister: I am very happy to do that. S4C is a very important part of our broadcasting structure. It is very popular and well-liked in Wales. I want to ensure that we meet both the wording and the spirit of our manifesto promise to make sure that it continues to be a very strong channel.

Q3. [902805] Clive Efford (Eltham) (Lab): With home- ownership down to its lowest level in a generation, and down every year since the right hon. Gentleman became Prime Minister, why did Tory MPs vote against Labour’s amendment to the Housing and Planning Bill last night, which would have protected the publicly funded discount for new starter homes for future buyers? Is that not better value for money for first-time buyers and for the taxpayer, yes or no?

The Prime Minister: The proposal for starter homes is a Conservative party proposal put into our manifesto and opposed throughout by the Labour party. This is

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only happening because we won a majority and put a housing Bill through the House of Commons. We are taking every step we can to help more people to get on the housing ladder. In London, part of which the hon. Gentleman represents, we are seeing Help to Buy now funding 40% of the home people want to buy, rather than 20%. We are going to see 200,000 starter homes built during this Parliament. We are managing our economy properly so interest rates are low and it is now easier for people to get a mortgage. With our help to save scheme, there is now every opportunity for people to put aside money to help them with their deposit. We are absolutely on the side of the homeowner, but above all those people who want to get on the housing ladder. We are helping with jobs, helping with tax cuts, helping with Help to Buy, helping with help to save and, crucially, helping by building more homes.

Q13. [902815] Seema Kennedy (South Ribble) (Con): On Boxing Day, the village of Croston in my constituency suffered the worst floods in living memory, with damage to schools, homes and businesses. Will my right hon. Friend join me in praising the efforts of everybody in Croston who pulled together to protect their community? Will he ask the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Penrith and The Border (Rory Stewart) to review the decision by the Environment Agency to switch off the pumps at Alt Crossens?

The Prime Minister: First, let me pay tribute to my hon. Friend’s constituents, who worked around the clock to help each other in appalling floods and an incredibly high level of rainfall. Let me join her in thanking the emergency services again for all the work they did.

After floods like this, there are always questions about which pumps were used, which floodgates were opened and what decisions were made by the experts on the ground. It is very important, having seen many communities flooded in my own constituency, to hold meetings with community after community; to go through those decisions, to work out what lessons can be learned and to work out whether the right decisions were made. I absolutely pledge that that should be done. We have announced £40 million for the work across Lancashire and Cumbria to help people out, and we will ensure that the flood alleviation money for households and businesses, the schemes we set up after 2013, is paid out as quickly as it can be.

Q4. [902806] Caroline Lucas (Brighton, Pavilion) (Green): In the light of last month’s Paris climate agreement, at which all countries agreed to progressively increase their ambition and to keep global warming well below 2°, does the Prime Minister agree that we must now urgently begin the process of strengthening the EU’s 2030 greenhouse gas reduction target to 50% below 1990 levels at the very least, a position he argued for, I am glad to say, at the European Council?

The Prime Minister: First, let me join the hon. Lady in once again recognising that Paris was a very big step forward. Previous agreements, such as at Kyoto, did not include action by China or America. Now we have all the big countries and big emitters as part of the deal. We argued that the EU should go further. We achieved,

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I think, a very aggressive package for the EU, but that was the best we could do in the circumstances. I think the EU agreement helped to bring about the general agreement. No one should be in any doubt that Britain is playing a very major role in bringing that about. Let me give the House one statistic. I know there is a great deal of interest in the House about solar panels. The other day I asked what percentage of solar panels had been installed in Britain since this Government took office in 2010. I expected the answer to be 50% or 60%; the answer is 98%.

Ben Howlett (Bath) (Con): Yesterday, it was announced that the Foxhill housing zone in Bath would receive £313,000 of Government funding to help to kick-start work to build thousands of new homes in the city. Does the Prime Minister agree that that funding will help to reverse the lack of housebuilding under the Labour party and enable struggling families to get on to the property ladder?

The Prime Minister: I am delighted to hear about the development in my hon. Friend’s constituency. The fact is that we have built 700,000 houses since the Government came to office in 2010, but a lot more needs to be done. Sometimes it is specific bits of transport infrastructure, specific planning permissions or disagreements between district councils and county councils that need to be sorted out. We should not forget the fact, however, that the developers and housebuilders will go ahead with housebuilding only if they believe that there is a benign economic environment with a strong and growing economy and stable interest rates, and all the things we need. That is the key to the success in housing.

Q5. [902807] Kevin Brennan (Cardiff West) (Lab): The Prime Minister promised to cut the number of Government special advisers, and the Chancellor wants to limit pay increases for public sector employees to 1%. How does he square that with his now having 26 more special advisers than in 2010 and the 42% pay increase for the Chancellor’s own personal image consultant?

The Prime Minister: There are fewer special advisers under this Government than there were under the last Government.

Mr Stewart Jackson (Peterborough) (Con): Does my right hon. Friend agree that it is more than a matter of regret that the new shadow Defence Secretary has seen fit to take a donation from the immoral, thieving and ambulance-chasing lawyers Leigh Day, who, together with public interest lawyers, specialise in hounding our brave service personnel in Iraq with spurious claims? Is it not time we removed the latter from the pernicious clutches of the Human Rights Act and honoured our manifesto commitment to a British Bill of Rights?

The Prime Minister: Yes, we should honour our commitment to a British Bill of Rights, on which I look forward to making progress. I do think that this organisation, Leigh Day, has questions to answer, not least because it was deeply involved in the al-Sweady inquiry, where a lot of claims completely fell apart and there was, it seems, evidence that could have shown that those claims were false. It is instructive that we have lost a shadow Defence Secretary who believed in strong

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defence and our nuclear deterrent, and instead we have someone who apparently takes funds from Leigh Day. I think that that raises serious questions. Frankly, it goes to a bigger truth: one day, I suppose this reshuffle will be over, and we will be left with a collection of politicians—be in no doubt about this—who have signed up to unilateral nuclear disarmament, racking up taxes, debt and spending and one of the most left-wing programmes in living memory. This is a collective act in which they have taken part. We should not be asking, “Is the Leader of the Opposition happy to have the right hon. Member for Leeds Central (Hilary Benn) in his shadow Cabinet?”; we know he is not. The question is: “What on earth are the right hon. Member for Leeds Central and others doing in this Labour party shadow Cabinet?”

Q7. [902809] Mr George Howarth (Knowsley) (Lab): The Prime Minister might know that Knowsley also has a Shakespeare connection? For example, “A Midsummer Night’s Dream”, among other plays, was written there. Will he lend his support to the proposal for a Shakespearean theatre of the north to complete the triangle—the Globe theatre, Stratford-on-Avon and Knowsley—in a celebration of Shakespeare’s work?

The Prime Minister: That sounds like an excellent proposal. We should not try to constrain Shakespeare to Stratford, but make sure that this is a national—indeed, international—celebration, so I shall look carefully at the right hon. Gentleman’s proposal.

Maggie Throup (Erewash) (Con): In Derbyshire, the county council has announced plans to cut four care homes, including Hillcrest in my constituency, as well as to axe sheltered housing wardens from March. This is clearly an attack on the elderly and vulnerable of Derbyshire by an authority with a proven track record of wasting taxpayers’ money. Will my right hon. Friend look into this dismal situation to ensure that all Derbyshire residents have access to good levels of care?

The Prime Minister: I am very happy to look at the problem my hon. Friend raises. Obviously, it is a Labour-controlled council taking these decisions. I urge it to consider our proposals in the spending review and the fact that councils can now use a surcharge on council tax to fund additional social care, and then recognise that its job, instead of playing politics, should be to serve local people?

Q8. [902810] Debbie Abrahams (Oldham East and Saddleworth) (Lab): Last year, the International Monetary Fund warned that income inequality was

“the most defining challenge of our time”,

was getting worse and slowed economic growth. By last night, FTSE 100 chief executives had been paid more for five days’ work than the average UK worker will be paid for the whole of 2016. They got a pay rise of nearly 50% last year, while the average worker got one of less than 2%. Will the Prime Minister support the High Pay Centre’s recommendations for organisations to publish data on the ratio of top pay to average pay?

The Prime Minister: I am a great supporter of transparency in these things, as we have proved in government. Let us be clear that since I have become

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Prime Minister income inequality has fallen whereas it went up under Labour. Those are the facts. One of the biggest things we are doing to help with income inequality is, for the first time ever, to bring in a national living wage. This is the year in which we will see people paying no tax until they have earned £11,000. This is the year in which we will see a national living wage at £7.20. Those are big advances in helping the low paid in our country.

Mr Nigel Evans (Ribble Valley) (Con): I, too, would like to pay tribute to the countless number of people and organisations that helped out during the recent floods. Yesterday, I spoke with the chairman of the new Flood Re insurance scheme. I know that people who have been hammered by the floods will welcome the fact that their premiums will be quashed and that they will not meet eye-watering excesses. The chairman told me, however, that the scheme will not cover any houses built since 2009 or any businesses. Will the Prime Minister look again at the scheme to ensure that it is properly comprehensive?

The Prime Minister: We are looking very carefully at the scheme, particularly on the issue of businesses. What we have heard so far is a number of anecdotal stories, with small businesses saying that it will be difficult to get insurance. Meanwhile, the insurance companies are telling us that they will not turn down any small businesses, so we need to get to the bottom of this. That is absolutely key before we get to the final introduction of Flood Re in April this year.

Q11. [902813] Mike Kane (Wythenshawe and Sale East) (Lab): It was good to welcome the Prime Minister and his excellency the President of China to Manchester airport in my constituency recently to talk about investment. What is in the north’s interest and the nation’s interest is extra runway capacity in the south-east. Why does the Prime Minister continue to procrastinate?

The Prime Minister: Let me first thank the hon. Gentleman and everyone in Greater Manchester who helped to welcome President Xi at the excellent lunch held in Manchester and then at the very good visit to Manchester airport. Let me respond to the hon. Gentleman’s question. The Environmental Audit Committee and the author of the original report, Sir Howard Davies, have both said that the problems of air quality raise new questions that the Government have to answer, and I am in favour of answering those questions and then making a decision.

Several hon. Members rose—

Mr Speaker: Order. Two years ago tomorrow, I believe, the House lost a superb parliamentarian and a colleague much loved in all parts of the House. I refer to the predecessor of the hon. Member for Wythenshawe and Sale East (Mike Kane), Paul Goggins. We remember him with affection and respect, and we also remember and think fondly of his widow, Wyn, and their children Matthew, Theresa and Dominic. They are all wonderful human beings, and we wish them well for the future.

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Philip Davies (Shipley) (Con): As the Prime Minister knows, my constituency was decimated by the recent floods. It was reported in the Bradford Telegraph and Argus earlier this week that the Bradford district would not receive any of the extra funding that the Prime Minister announced for flood defences in Yorkshire. Will he take this opportunity to confirm that that is not the case, that whatever money is necessary to protect my constituency from future flooding will be spent—and if he is struggling to find the money, perhaps he could use funds from the overseas aid budget, because I am sure he believes that victims of flooding in Shipley should not be discriminated against when it comes to victims of flooding in other parts of the world?

The Prime Minister: We will do what it takes to make sure that families, communities and businesses can get back on their feet. That is why we have invested record sums more quickly into the affected areas. We have learned the lessons of previous floods, where sometimes the schemes were too bureaucratic and too much time was taken. Whether it comes to building new bridges, repairing roads, building the flood defences, examining where the water went this time or what more can be done, we will make sure that that work is carried out—in Bradford, as everywhere else.

Q12. [902814] Jim Dowd (Lewisham West and Penge) (Lab): Is the Prime Minister aware of the valuable work done by the National Wildlife Crime Unit in enforcing the law, promoting animal welfare and contributing to the international effort against the trade in endangered species? Is he further aware that the funding for the unit expires in just a couple of months’ time and that the Department for Environment, Food and Rural Affairs and the Home Office are yet to make a decision to continue it? Will the Prime Minister prevail on his right hon. Friends to ensure that this extremely important and valuable work is continued?

The Prime Minister: My understanding is that we have kept the funding for this organisation, which does important work both domestically and overseas, but I will look very carefully at what the hon. Gentleman suggests. I think that there is a decision still to be made about the future, although up to now we have backed the organisation very fully.

Simon Hoare (North Dorset) (Con): My right hon. Friend knows that the legacy of thalidomide still hangs over more than 500 people in our country today. In the last Parliament, he signalled strong support for the securing of a fair and just solution to their problems. May I invite him to renew that pledge in this Parliament, and to work with the all-party parliamentary group on thalidomide to bring about a just outcome?

The Prime Minister: I am very happy to make that clear. In the last Parliament, I met some of my own constituents who had been affected by thalidomide. There were a number of things that they wanted parliamentarians to do, and I think that a lot of people got behind their campaign. I shall be happy to continue to work with them in this Parliament.

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National Health Service and Social Care (Commission)

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

12.36 pm

Norman Lamb (North Norfolk) (LD): I beg to move,

That leave be given to bring in a Bill to establish an independent commission to examine the future of the National Health Service and the social care system; to take evidence; to report its conclusions to Parliament; and for connected purposes.

Two former Secretaries of State for Health—one Labour, one Conservative—and other Members on both sides of the House have joined me in calling for the Government to establish a commission of this kind. We have also been joined by an organisation called NHS Survival, a group of progressive junior doctors, patients and others which now has 8,000 members, and by Care England, which represents social care providers. The purpose of the commission would be to engage with the public, staff in the NHS, care services and civic society to tackle the massive challenge faced by the NHS and care services, with the objective of establishing a long-term new settlement for the NHS and care.

Why is this needed? The NHS and social care face an existential crisis. In the post-war period, demand has risen by about 4% every year. We all understand the reasons for that. We are all living longer. The number of people surviving cancer has increased dramatically. According to Cancer Research UK, half those diagnosed with cancer now survive their disease for 10 years or more, compared with only a quarter 40 years ago. The number of people living with three or more chronic conditions is expected to have risen by more than 50% during the 10-year period up to 2019. New medicines are invented that enable the underlying cause of some genetic diseases to be tackled for the first time, and we are seeing remarkable advances in surgical procedures. All that is a triumph of modern medicine and of our NHS, and it is something that we should celebrate.

For the last five years, the coalition Government ensured that spending on the NHS was protected, but real-terms increases have been marginal. With demand continuing to rise, this has been the toughest financial settlement in the history of the NHS. Meanwhile, social care has been cut in real terms, despite significant increases in demand. A widely accepted assessment is that there will be a gap of £30 billion in the NHS by 2020. The Government have committed to finding £10 billion, including the increase in this financial year, but few experts in the NHS believe that that will be enough. The Health Foundation has estimated a gap of £2 billion in 2020 on top of the £10 billion commitment and many others believe that the gap will be much larger.

A reflection of the rapidly deteriorating financial position is shown in the accounts of NHS and foundation trusts. They are facing a projected £2.2 billion deficit by the end of this financial year. Pension changes announced by the Chancellor of the Exchequer are likely to add another £1 billion to costs. Pressures across the system are very evident. Today’s news that at least 100 GP surgeries applied to stop accepting patients because of shortages of doctors is the latest example.

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The position in social care is perhaps more serious. The respected Health Foundation has estimated that there will be a £6 billion funding gap by 2020, without taking into account the increase in the minimum wage; the Local Government Association has estimated that that alone will add £1 billion to costs by 2020. It also does not take into account the planned introduction of the cap on care costs, which the Government have said they are committed to introducing in 2020.

The spending review provision for councils to increase council tax by 2% will narrow that gap by an estimated £1.7 billion by 2020 according to the LGA, but only if every council takes advantage of the new power. The plan for an increase in the better care fund will add £1.5 billion, but only in 2019-20. So a substantial shortfall remains. That means that further cuts to social care are inevitable.

Simon Stevens, the head of NHS England, has made it clear that, if we cut social care, it will have an impact on the NHS and, in effect, create a larger funding gap in the NHS by 2020 than the projected £30 billion. So the situation based on planned spending over this Parliament looks unsustainable and, beyond 2020, it just keeps on getting more challenging.

It is worth looking at how we compare with other European countries. In 2000, the then Prime Minister, Tony Blair, set the objective of the UK hitting average EU spending on health by 2006. We now risk drifting further away from the EU average. An analysis shows that of the 21 OECD countries in the EU in 2013 only Slovakia, Hungary, the Czech Republic, Poland and Estonia spent a lower proportion of GDP on health than the UK.

Looking ahead, the picture is just as disturbing. Projected health spending in England as a proportion of UK GDP up to 2020-21 shows a declining share of GDP spent on the NHS. According to the Office for Budget Responsibility, based on the Government’s spending review, funding for the Department of Health declines as a percentage of GDP from 6.1% in 2015-16 to just 5.4% by 2020-21. The position for social care is more dramatic. Given what we know about the inexorable rise in demand, can it make any sense at all to commit a reducing share of GDP to health and care? I fear that the consequences of failing to address that funding situation could be very serious.

The Government argue that substantial further efficiency savings can be achieved. Yet, however much we hope that the necessary “efficiency savings” will be achieved through smart re-engineering of the system to deliver better value and better care, the reality is that around the country anecdotal evidence suggests that too often preventive services are cut as clinical commissioning groups indulge in crisis management.

The financial incentives in the system do not help. We have payment for activity for acute hospital care but block contracts for community care and mental health. That ensures that rational allocation of resources is distorted. Acute hospitals continue to see increases in income, but demand for their services also increases, in part because of a failure to invest in preventive care, so their financial position becomes more perilous despite that increase in income. It is a vicious circle that has to be broken.

In social care, the anticipated shortfall, with rising demand, up to 2020, will result in more people losing support, or support packages becoming more inadequate.

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We are currently witnessing reductions in care packages in my own county of Norfolk, and I suspect that that is widespread. There are also serious concerns of significant numbers of providers of social care leaving the market. There is a sense of the system living on borrowed time. The unattractive effect of all this will be that those with money will be able to get good care. Those relying on the state will increasingly get nothing at all or substandard care. None of us can tolerate that, and none of this addresses the fact that mental health desperately needs more investment, despite the help given in the spending review.

The Government face a choice—either the system will drift into a state of crisis or we confront the existential challenge now. This transcends narrow party politics. We have to decide as a country how much we want to spend on our NHS and care system. What can we do differently to make better use of the resources available? Should we consider, as I have proposed, a dedicated NHS and care tax, and give local areas the ability to vary it? Should we end the artificial divide between the NHS and social care? We fund health and social care through three different routes—through the NHS, local authorities and the benefits system. Does that make sense?

The NHS commands an extraordinary level of support in our country. It is an amazing demonstration of social solidarity and decency. It is also the best system in the world, according to the Commonwealth Fund in 2014. Yet we cannot take the survival of the NHS and social care services for granted. William Beveridge proposed the national health service. It is now time for a new Beveridge commission for the 21st century.

Question put and agreed to.

Ordered,

That Norman Lamb, Tim Farron, Tom Brake, Mr Nick Clegg, Mr Alistair Carmichael, Mr Graham Allen, Mark Durkan, Dr Andrew Murrison, Jim Shannon, Dr Phillip Lee, Mr Ivan Lewis and Caroline Lucas present the Bill.

Norman Lamb accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 11 March and to be printed (Bill 115).

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Opposition Day

[14th Allotted Day]

Universal Credit Work Allowance

12.47 pm

Owen Smith (Pontypridd) (Lab): I beg to move,

That this House calls on the Government to reverse its decision to cut the universal credit work allowance, which is due to come into effect in April 2016.

I start by wishing you a happy new year, Mr Speaker. I wish the same to Ministers, Members on both sides and all in this House, and especially to the Secretary of State for Work and Pensions, who has just joined us. I am disappointed that it will not be the Secretary of State who responds to the Opposition day debate in the name of my right hon. Friend the Leader of the Opposition. This is the second time that the Secretary of State has failed to address the House when questions have been asked of his Department. I am not sure what his excuse is today, but it is a shame that he is shirking his duty to speak to the House today.

Perhaps we ought to take a lesson out of the playbook of the right hon. Gentleman’s Department and think about sanctioning the Secretary of State if he continues to shirk work in this way. Some 600,000 people in the UK were sanctioned by him last year, some for failing to turn up to a job interview, some because they were selling poppies, some because they were attending their father’s funeral, and one because they had had a heart attack. Someone suggested to me that an appropriate punishment for the Secretary of State—a sanction—might be to ban him from the House of Commons canteens for a month or so, thereby forcing him to go and visit a food bank at last.

It is extraordinary that the Secretary of State cannot be bothered to defend his pet project, universal credit, today. Perhaps it is because he thinks he is above answering questions from Members in the House of Commons, or perhaps he now agrees that universal credit is indefensible. The changes that we are debating today are among the most radical ever undertaken to social security; they are changes that should have done what the Secretary of State originally intended and made work pay for working people on benefit—on in-work support—and should have made millions of people in this country better off, but after the recent cuts I fear they are set to make millions of people worse off.

Angela Rayner (Ashton-under-Lyne) (Lab): My constituency was one of the first places in Britain to pilot universal credit. Analysis by the House of Commons Library shows a single mother of two working full-time in my constituency on the minimum wage and on UC will have a net income loss of £2,981 next year. My constituents will be the first of millions of people in the country to be hit by these cuts, because they were the first in the country to be put on UC. Does my hon. Friend agree that this is just not fair and another example of Tory broken promises?

Owen Smith: I agree wholeheartedly. In fact I believe that in my hon. Friend’s constituency 12,000 people will by 2020 be subject to far lower incomes as a result of

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the cuts to UC. That is 12,000 people—less the northern powerhouse than a northern workhouse.

Let me be clear about what we are talking about, because this is complicated; UC is a bit of a black box and I think many people out in the country—and many on the Tory Benches—do not quite yet appreciate what is going on and have believed the smoke and mirrors from this Government. The changes that were snuck out—mentioned in passing in last summer’s Budget and then leaked out piecemeal in a statutory instrument subject to negative resolution that we had to pray against in order to get it even debated in this House—will halve the value of the work allowance under UC, which is the piece of UC that is essential to making work pay.

Let me illustrate exactly the nature of those changes to the work allowance by giving a few examples. For a single mother with one or more children, the work allowance will be halved from April of this year from £8,808 to £4,764, a reduction of £4,044. In cash terms, that working mother will lose £2,628 next year. That is the nature of the loss to a single mother. For a joint couple living and working together, one or both with limited capacity to work as they are disabled, their budget —the work allowance—will be cut from £7,700 to £4,700, a loss of £3,000 in their income. A single individual in receipt of UC will lose everything—a £1,332 reduction; a net loss to their income of £865.

Alison McGovern (Wirral South) (Lab): I am so glad my hon. Friend has mentioned single parents and how they are going to be hit. The last Labour Government did us all proud with the new deal for lone parents. Does my hon. Friend agree that the fate that now befalls single parents in this country is an absolute reversal of what past Governments did to help them work?

Owen Smith: Let me be very clear: under the Tory Governments in the 1980s I remember the right hon. Member for Wokingham (John Redwood) being dragged through the newspapers in this country for damaging the reputation of working mothers almost irreparably after comments he made about the St Mellons estate in Cardiff, and the Tories are back on the same track. In their sights are single mothers. They are the biggest single group of losers from all these changes to tax credits and UC, and it is an absolute disgrace that the Tories are undoing all the good work the last Labour Government did.

Oliver Dowden (Hertsmere) (Con): The hon. Gentleman talks about examples; can he confirm that it is the case that without these reforms a family with a net household income of £57,513 would be in receipt of benefits? Does he think that is in any way sustainable?

Owen Smith: We are not talking about families in receipt of £57,000; we are talking about families on low and middle wages. We are not talking about people who are in the highest tax bracket, and it is a complete misrepresentation of the facts and of this debate to try and turn this discussion to high-earning taxpayers. That is not what we are talking about.

Chris Stephens (Glasgow South West) (SNP): I want to come back to the process the shadow Minister outlined at the beginning of his remarks. He said this was

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sneaked through by a statutory instrument. Has he read the many questions Opposition Members, including myself, asked at the statutory instrument Committee about the impact of this change, such as on carers, particularly young carers?

Owen Smith: We have repeatedly asked for any sort of impact assessment in respect of these measures, and as usual the Government singularly fail to offer one. I believe that in the hon. Gentleman’s constituency 13,000 households will lose out by the end of this Parliament as a result of these cuts, and in the constituency of the hon. Member for Hertsmere (Oliver Dowden) I believe 5,000 people will lose out on average £950 by the end of this Parliament; perhaps he ought to reflect on that when he votes on this motion later today.

Andrew Gwynne (Denton and Reddish) (Lab): I commend my hon. Friend on bringing this motion to the House today, because the impact of these changes will be devastating to a very great number of my constituents in Tameside who, because they go through the Ashton-under-Lyne job centre, were part of the pilot for UC. Does my hon. Friend agree that there is another con here in that the Secretary of State has indicated that the £69 million support fund will help to bring in transitional arrangements, but that fund is used for myriad other purposes, and we already know the impact of the cuts to working families of UC changes this year alone will be £100 million?

Owen Smith: My hon. Friend is absolutely right as usual, and I think 10,000 of his constituents will eventually be affected with lower incomes as a result of these changes. He is also right about the transitional protections and the way in which the Secretary of State has, I think, sought to misrepresent those as covering the losses; I will come to that later in my speech.

Ms Karen Buck (Westminster North) (Lab) rose—

Owen Smith: Before I do, however, I will give way to my expert friend.

Ms Buck: That is kind—and inaccurate. Like many Opposition colleagues I was besieged by constituents concerned about their tax credit cuts in the run-up to the spending review. They were horrified that a Government who said making work pay was going to be their mantra should do this to working people. Does my hon. Friend think the 600,000 Londoners on tax credits—7,000 in my constituency—will be equally horrified to know the sting is still in the tail and working people are going to lose out dramatically as UC is rolled out?

Owen Smith: I think that, more than that, they will be absolutely cheesed off to the back teeth that this Government have tried to pull the wool over their eyes, because the truth is these are precisely the same cuts that were proposed through tax credits—almost exactly the same amount of money will be saved through these cuts to the work allowances as was previously proposed.

James Cartlidge (South Suffolk) (Con): Excellent.

Owen Smith: A Member says “Excellent” from a sedentary position. I think—

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James Cartlidge: Will the hon. Gentleman give way?

Owen Smith: I will be delighted to give way.

James Cartlidge: I have just a minor detail: every penny paid out in benefits has to be raised in tax out of working people’s taxes. The money paid out in tax credits is not wages; it is means-tested benefits. Does the hon. Gentleman not recognise that the great advantage of UC is that it reduces the harsh impact of means-tested withdrawal of income?

Owen Smith: Where do I start? I start by telling the hon. Gentleman that 7,000 of his constituents will be hit by this by the time he next stands before them at the election, and he ought to reflect on that. More importantly, I tell him that it is precisely people in work paying tax—working hard, long hours, many on the minimum wage, working every hour they get—who are getting hit by his Government. That is what these cuts are doing. This is not a different set of people—they are not the scroungers that the Government like to talk about; they are the strivers, and they are being hit by the Government. The truth, as the Institute for Fiscal Studies has said, is that there is no difference between these cuts and the ones to tax credits that the Government proposed, on which they U-turned. According to the IFS, the U-turn makes “no difference”. The Government will end up saving the same £5 billion, at the end of the Parliament as opposed to the beginning, and they will strip £10 billion out of the pockets of working families. They should be ashamed of themselves.

Maria Caulfield (Lewes) (Con): I understand what the hon. Gentleman is saying, but he has previously said in the House that he is committed to making £12 billion of savings to tackle the country’s deficit. How would he make those savings if not through these changes?

Owen Smith: What I absolutely would not do is cut the incomes of 5.5 million working families, many of them in the hon. Lady’s constituency, by an average of £950. I would not take £1,600 from 2.6 million working families—[Interruption.]

Mr Speaker: Order. The hon. Gentleman’s mellifluous eloquence has to be interrupted for a moment for me to make this obvious point. Whatever their dissimilarities, the hon. Members for Elmet and Rothwell (Alec Shelbrooke) and for Birmingham, Yardley (Jess Phillips) have one thing in common: they are extremely excitable. They need to calm down a little bit, not least so that we can hear the flow of the shadow Secretary of State’s eloquence and the eloquence of his flow.

Owen Smith: I am extremely grateful, Mr Speaker.

Simon Hoare (North Dorset) (Con): Will the hon. Gentleman give way?

Owen Smith: No.

Disabled workers will lose £2,000 a year, and as my hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) reminded the House, the worst affected group will be single mothers. A single mother working full time on the new, shiny national living wage will be £3,000 worse off. How have the Government justified

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that? They have made a series of attempts to defend it. The first was to refer to their manifesto and say, “We said we were going to deliver £12 billion of cuts from welfare, and here we go.” What they did not say at the election, as I recall, was that they would be stripping the money from working families. I do not recall them talking about nursery nurses, security guards or shop workers on the minimum wage as the sort of wage scroungers they now seek to vilify, yet those are the very people who will be scragged by the change.

Mrs Madeleine Moon (Bridgend) (Lab): My hon. Friend was asked whether he would find alternative ways of raising money instead of taking it from the disabled, single parents, carers and working families. Would it not be more appropriate to collect tax from the many top companies in the UK that are avoiding paying their tax, rather than to steal from low-paid families as the Government propose?

Owen Smith: I found it interesting to learn, as part of the massive data dump before Christmas, that some of our largest banks such as J. P. Morgan and Merrill Lynch paid absolutely no corporation tax in the UK last year, in the same week when we learned that there would not be an investigation of the practices of our banks. Others can draw conclusions from that; I will stick to the subject at hand, which is universal credit.

I turn to transitional protection for those affected. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, the Government keep telling us that there will be transitional protection, and I will go so far as to concede that that is true—sort of—for some of the 350,000 people who will be on universal credit by April.

The Parliamentary Under-Secretary of State for Disabled People (Justin Tomlinson): Two hundred and fifty thousand.

Owen Smith: The Minister says it is 250,000, but 350,000 is the latest estimate that I have seen from the Office for Budget Responsibility. Perhaps it is wrong—it could be wrong about other things in future, as well. However, there will not be transitional protection for the 5.8 million people who will eventually be on universal credit. Even for the 350,000 who are currently on it or will be on it by March, there will not really be transitional protection if they undergo anything that constitutes what the Government call a “serious change of circumstances”. In that case, the maintenance of their in-work support at tax credit levels will stop. It will interest the House, especially given the Secretary of State’s interest in marriage as an institution, that getting married will constitute a serious change of circumstances. If someone who is on tax credits and enjoying transitional protection gets married, the Secretary of State for Work and Pensions will take that money away from them.

There will be no protection whatever for any of the millions of new claimants by 2020. The Secretary of State has implied on several occasions that there will be transitional protections. Indeed, when he intervened on me in the debate before Christmas—he was not leading for the Government in that debate—he said explicitly:

“We are transitionally protecting those who are moving on to universal credit.”—[Official Report, 7 December 2015; Vol. 603, c. 696.]

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Unfortunately, the Minister for Welfare Reform, Lord Freud, had to correct him in the House of Lords, saying:

“It is not the same as transitional protection…it might be some more work or it might be upskilling”.—[Official Report, House of Lords, 14 December 2015; Vol. 767, c. 1910.]

In truth, the £69 million fund that the Secretary of State has prayed in aid as transitional funding will in no way make up for the £3.2 billion loss over this Parliament.

The truth came out in the infamous data dump of documents snuck out in Christmas week. Responding to criticism by the Government’s own Social Security Advisory Committee, Ministers had to admit that the only way to recoup the losses would be to work an additional three to four hours a week. That is right—the House heard me correctly. The Government are now saying to a single mother who is working full time on the national minimum wage and looking after her children in the evening and who will lose £3,000 that she has to get another job working an extra three or four hours a week—approximately 200 hours a year—to make sure that she is no worse off. Tell me, Mr Speaker—I cannot see it—how that single mother who has a child at home and who is working full time will, even on the new national minimum wage, be able to work an extra three to four hours a week or 200 hours a year. Is she meant to get a job after work in a bar, in a garage or serving coffee? Is she meant to get a job in addition to the full-time job she is doing during the day and in addition to looking after her children—for example, cleaning in the mornings—to earn an extra few quid?

What on earth is the incentive for that mother to undertake that extra work? I ask that because the other massively damaging effect of the cuts is that they fundamentally undermine and destroy the very premise of universal credit—to make work pay.

Alison McGovern: I thank my hon. Friend for being so generous and giving way again. I remind him that when the Chancellor announced his so-called living wage, he assumed a rising personal allowance in his calculations in the Budget book that suggested that work would pay. Given the Government’s broken promises left, right and centre, why should any single parent believe what they say?

Owen Smith: My advice to single parents is absolutely clear: do not believe a single word that the Government say in response to today’s debate, or what they are telling the country about making work pay and about universal credit. Each and every promise is being broken.

Oliver Dowden: Will the hon. Gentleman give way?

Owen Smith: No, I have given way to the hon. Gentleman once.

The Secretary of State used to say that universal credit was a watershed benefit. Indeed, he used to say that it would

“ensure that work pays, and more work pays, for everyone”.

The cuts to the universal credit work allowance have holed that argument below the waterline. The House of Commons Library briefing, which was produced yesterday evening and circulated to every Member, makes it clear that a single mother will have to work an extra 12 hours each week to earn an extra forty quid, at £3.30 an hour,

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after these changes. Before the changes, she would have got £92 for those extra 12 hours at £7.66 an hour. How on earth is this meant to increase her incentives to go out and work harder and work longer? It is absolute nonsense.

Heidi Allen (South Cambridgeshire) (Con): I wonder whether there is something in the integrity of the people the hon. Gentleman speaks about, and whether they will raise their heads high enough to say, “Okay. It’s not great and it’s not the end result, but I am lifting myself and my children off a life of welfare dependency.” In that is a pride. I would like us to talk a little more in those terms and that language.

Owen Smith: I have a great deal of respect for the way in which the hon. Lady stood up for her constituents and spoke out against her party and Government Front Benchers on the tax credits changes because many thousands of people would be affected in her constituency. I point her to the document commissioned and chaired by the Secretary of State when he first conceived of universal credit: in his introduction, he demolished the argument she has just made. He effectively said that we could not expect people to work harder simply out of responsibility and moral obligation, and that we needed to introduce incentives. That was the underpinning rationale of universal credit. Unfortunately, these changes—the cuts to the taper rate, the cuts to the work allowance and the cuts to the childcare provision—are fundamentally undermining the initial premise. They are destroying universal credit. In 2020, 5,000 of the hon. Lady’s constituents will suffer lower incomes as a result of the changes to universal credit.

Jess Phillips (Birmingham, Yardley) (Lab): I lived on in-work benefits. The delightful feeling of being lifted out of welfare benefits never fed my children. Does my hon. Friend agree?

Owen Smith: I completely agree, and my hon. Friend’s personal experience ought to be listened to by the Secretary of State and Members on both sides of the House. She will know that 17,000 of her constituents will be hit by the changes in 2020—an extraordinary number of families will have lower incomes as a result of the changes.

The truth is that the changes cannot increase work incentives and will not increase outcomes. They cannot. That is why successive independent experts have come out and told the Government to think again, as they did on tax credits. The Social Security Advisory Committee—the Government’s own advisory committee—tells them to reverse their plans. The Resolution Foundation, chaired by a former Tory Minister, tells them the same. Most recently, and most importantly of all, on 17 December the Government’s social mobility commission, deputy-chaired by a Tory peer, Baroness Shephard, said with great clarity to the Secretary of State in its “State of the Nation 2015: Social Mobility and Child Poverty” report:

“The immediate priority must be taking action to ensure that the introduction of Universal Credit does not make families with children who ‘do the right thing’ (in terms of working as much as society expects them to) worse off than they would be under the current system. That means reversing the cuts to Universal Credit work allowances enacted through the Universal Credit (Work Allowance) Amendment Regulations”.

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The commission is right and the Opposition agree, just as we agreed when the hon. Member for South Cambridgeshire (Heidi Allen) and her colleagues urged the Government to go into reverse last time.

Mr Jacob Rees-Mogg (North East Somerset) (Con): In a deft but somewhat selective speech, is the hon. Gentleman not missing the point that universal credit, with a single rate of taper, will make it invariably clear to people that if they work more, they will earn more? Under the current system, taper rates go up to 90%. It is incredibly confusing and many people do not risk taking on extra work because they will have to re-apply for benefits and may be worse off. Universal credit has a beautiful simplicity and will encourage people to work.

Owen Smith: I congratulate the hon. Gentleman on his equally deft selectivity. Dare I say that my point is that universal credit might have done all those things? If we had, as was originally envisaged, a 55% taper rate, or even if we had the current 65% taper rate, and if we had work allowances that were double what are now proposed, as was originally intended, universal credit would have made work pay and it would have been an incentive for people to work those extra hours. I have made that plain in my speech. However, with the cuts—the seven successive cuts that have been made since 2012—it will not deliver what was promised. The hon. Gentleman and the country are being sold a pup by the Secretary of State. It was not what was written on the tin when he first brandished it. Conservative Members need to understand that, because thousands of families in their respective constituencies will be affected by those cuts. Many of them will lose as much or more than they would have lost under the tax credit cuts. I say to all Tory Members: join us or tell me how these cuts are different from those they stood against last time around, other than that Tory Members might not quite have the time to realise that these cuts are being made before they next stand in an election. So far as I can see, that is the only plausible reason for their failure to follow their consciences this time and rail against the cuts.

Justin Tomlinson: I want to be clear on one point. The taper at the conception of the policy was 65%. There has been no cut and no change to that. It is important that the shadow Secretary of State does not make a mistake on that.

Owen Smith: I did not make a mistake in any way, shape or form.

The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): You said it was cut.

Owen Smith: No I did not. I referred to the original document commissioned and chaired by the Secretary of State, in which it was recommended that there be a 55% taper rate. I might also refer to the social mobility commission, which is telling him to go into reverse. It argues that he needs to get back to a 55% taper rate.

Mr Duncan Smith: You said it was a cut.

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Owen Smith: The Secretary of State can chunter all he wants, but if he really wants to make an argument in favour of his pet project, he ought to get off his rear end and speak from the Dispatch Box. I would be more than grateful any time he wants to intervene and talk to me about it. As I have said before to our effectively absent Secretary of State—he was very bold to brief the press before the Budget that he would resign if his pet project was touched by the Chancellor—now is the time to go. The Secretary of State’s plans have been shredded by No. 11 since 2012. He said universal credit would be more generous than the benefits it replaced, but it will be £5.7 billion less generous than he promised. It will be £4 billion less supportive of working families than the current system, thanks to the Chancellor’s raids on the Secretary of State’s budget. He said it would make work pay, but as I have shown today, after the cuts the policy is tantamount to asking single mothers to pay to work.

Jessica Morden (Newport East) (Lab): My hon. Friend mentioned the disabled. It is worth underlining how the policy hits disabled people in work particularly hard. Liverpool Economics assesses that they could lose up to £2,000 as a result of the changes.

Owen Smith: As ever, my hon. Friend is completely right. Nine thousand of her constituents will be worse off. Those among them who are disabled or who are part of a couple in which one or more of them are disabled will lose £2,000 under the cuts. That is a disgrace.

Under this Government, people are working in a period of wage restraint and austerity that we have not seen since the 1920s. This Tory decade promises the lowest 10-year period of wage growth in a century, with gains to workers half those they had under the Labour Government—6% wage growth versus 12%. That includes all the fancy promises about a national living wage.

The living wage will make up just 22% of the losses that working people will incur under the changes. It is misleading to the country and the House to suggest otherwise. Under this Secretary of State, we have a bedroom tax that leaves people without money to pay for food or heating. We have a sanctions regime that has driven some to suicide. Now we have universal credit, which will reduce security and rewards for people doing the right thing and working hard for their families and our society. The Secretary of State should have addressed those questions today and spoken to the House. He should consider his position.

1.19 pm

The Parliamentary Under-Secretary of State for Disabled People (Justin Tomlinson): I join the shadow Secretary of State in wishing everybody a happy new year. I am sorry that I am not the person with whom he wished to have this exchange, but this is a real area of passion for me. My background, my school, my work and starting my own business mean that I understand opportunity, which all too often is not a given in society. The changes that have helped shape my journey into politics are integral to why we need to reform the welfare state. That is absolutely key.

Stephen Timms (East Ham) (Lab): Given the background that the Minister has set out, he will well understand why it would have been a mistake to go ahead with the

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tax credit cuts that were U-turned before Christmas. Why then are the Government going ahead with precisely those cuts for people whose only mistake is to have the misfortune of receiving universal credit instead of tax credits?

Justin Tomlinson: That was a very early intervention and, to be fair, I need a little time to expand my argument, which will address those points. An element of patience is needed; I know that we all needed it last night with the late sitting and the reshuffle news. A key point about tax credits was that people argued that all the changes needed to be phased in, and I will set that out.

The welfare system we inherited was simply not working. It was not supporting people to get into work, to stay in work and to progress in work. People were left with unfulfilled potential, languishing on benefits, with little or no incentive to work or to progress in work, and opportunity was stifled. Opportunity should be a given; it should not be stifled.

The truth is that our welfare system had become distorted and complex, as we all know from our casework with residents. Too often, residents were missing out on the benefits they were entitled to because they could not navigate something so complex. All too often, the system firmly shut the door on opportunity, because it paid more to be on benefits than to be in work. We all know that, and the electorate—hard-working families—were quick to remind us of it.

Let me be clear that I say that with no disapproval for those who claim benefits. The system itself was to blame, which is why we undertook to reform it. Our aim was and continues to be to create a system that extends opportunity and ensures that work always pays, moving Britain from a low wage, high welfare, high tax society to a higher wage, lower welfare, lower tax society. It is a common-sense approach, creating a system that is fairer to the taxpayers who face an ever-increasing bill and delivering a welfare system that is sustainable for our country but that, crucially, protects the most vulnerable.

Let me remind the House that welfare spending on people in work rose from £6 billion in 1998 to almost £28 billion in 2010.

Barbara Keeley (Worsley and Eccles South) (Lab): It might help the debate if the Minister and his colleagues on the Front Bench had an accurate definition of transitional protection. My hon. Friend the Member for Pontypridd (Owen Smith) made an excellent speech from the Front Bench outlining Labour’s calls for transitional protection, but it seems that that is something that Conservative Members just do not understand. We are having a similar debate tomorrow concerning the state pension equalisation for women. People should not lose out in achieving the principles the Minister is outlining. Why should certain families on universal credit lose out compared with families on tax credit and why will the Government not protect those people so that they do not lose out?

Justin Tomlinson: That will be set out in my speech and I will cover the transitional arrangements. I gently ask the hon. Lady where the transitional arrangements were when the 10p income tax rate was changed. We will be mindful of the advice that we take.

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Mark Spencer (Sherwood) (Con): Does the Minister have access to any figures that point to successes since 2010 in the number of people in employment and the number of people receiving benefits?

Justin Tomlinson: I thank my hon. Friend, who I know has worked incredibly hard in his constituency to help more people get into work. Across the country, more than 2 million more people are in work—record numbers—with record low numbers of people out of work.

Welfare spending overall went up by almost 60% in real terms, costing every household an extra £3,000 a year in 2010. What was the result of all that spending? The number of working people in poverty actually went up by around 20% and nearly one in five households had no one working. That was too often the norm.

Owen Smith: Will the Minister confirm that under his Government welfare spending has gone up more than it has under any Government, breaching £1 trillion under the previous Government, and £130 billion more than under the previous Labour Government?

Justin Tomlinson: In percentage terms, it is now back to 2008-09 levels. These reforms are key to that. Having an open blank chequebook is simply not an approach that we or hard-working taxpayers would take.

Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): Everybody understands the rationale for having a welfare system that incentivises people to work, but I would like the Minister to explain how these proposals, which mean that people have to work longer hours for the same money, will achieve that purpose.

Justin Tomlinson: I will now try to make some progress so that I can set that out.

The old approach of taking money from people’s wages and recycling it back to them in handouts was not transforming lives, it was trapping them. Why? It did not provide the right incentives or support for people to get on and realise their ambitions. Our central approach is therefore about ensuring people are better off in work and better off working more.

Simon Hoare: The Minister is being a little too charitable to the Opposition. I might be being a bit cynical, but did not their policy seek to create a hinterland constituency of people wedded to welfare and therefore reliant on the Labour party? The voters saw through that in May and they are not going back to that again.

Justin Tomlinson: There is no need for my hon. Friend to feel that he is being cynical, as the statistics make that very clear.

Through universal credit people can support their families and have the dignity and independence that comes with having a job. We have already made huge progress through our reforms. Employment is at a record high, up by more than 2 million since 2010. Unemployment is down by more than 750,000 since 2010. The claimant count rate is at its lowest level since 1975. The number of people claiming the main out-of-work benefits has

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fallen by 1 million since 2010. Wages are rising—for 13 months consecutively—higher than inflation. I know that the shadow Secretary of State started talking about the 1920s—an easy mistake to make, perhaps, forgetting about inflation. That is why living standards are up. Business confidence is underpinning all this progress, which the Opposition are—

Several hon. Members rose—

Justin Tomlinson: I will take some more interventions, but let me make a little more progress because they might be on subjects that are coming up.

Against that backdrop, universal credit is removing the barriers to work that existed in the old system. The major reforms that are needed to our welfare system after 13 years of Labour’s culture of dependency are not without difficult choices, but universal credit is designed to provide certainty for claimants and provide the right incentives and support to find work and, crucially, progress in work. That has always been at the heart of universal credit, and it continues to be so. Universal credit policy remains unchanged since the summer Budget, despite attempts by the Opposition to suggest the contrary. The improved public finances allow us to reach the same goal of achieving a surplus while cutting less in the earlier years. We are smoothing the path to the same destination. That is a welcome move and the point I made in response to an earlier intervention.

I want to remind the House of the incentives that universal credit creates and the support it provides.

Andrew Gwynne: Will the Minister give way?

Justin Tomlinson: Shortly, shortly.

A single taper of 65% means that financial support is withdrawn at a consistent and predictable rate, helping claimants clearly to understand the advantages of work. Universal credit also extends financial incentives to people working fewer than 16 hours per week and removes the limit to the number of hours someone can work each week. Nobody can understand why we had a welfare system that created those artificial barriers.

Andrew Gwynne: I am grateful to the Minister for giving way. Although we all understand how universal credit is intended to work, does he not understand that there is an inbuilt disadvantage for those areas that were universal credit pilots, such as the Tameside part of my constituency? As universal credit is phased in across the country, these cuts will hit the areas that were the early entrants to the programme much harder than other parts of the country.

Justin Tomlinson: We are seeing that people on universal credit are more likely to progress into work and to secure more hours, and I will come on to that in more detail later.

Several hon. Members rose—

Justin Tomlinson: I will take one last intervention for now.

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Stephen Timms: The Minister said in response to my earlier intervention that there were to be transitional arrangements, but the trouble is that people receiving universal credit will get the full cut in April this year. They are going to be clobbered.

Justin Tomlinson: I gently remind the right hon. Gentleman that I shall be going into those details later, so he needs to have just a little more patience.

Crucially and uniquely, universal credit stays with claimants when they enter work until their earnings reach a certain level or until they can support themselves. That gives them the confidence to start a job without having to go through the bureaucracy of changing their benefit claim. Universal credit is not just about IT or streamlining bureaucracy, as it is often portrayed. It is about people having a single point of contact with a work coach who provides personalised support, advice and guidance. This is where universal credit comes into its own, and this is the bit that I am really passionate about.

In life, we are all confident individuals and when we are faced with challenges it is a given that we can normally take them on, but that is not the case for everybody. We are now giving people a named personal contact to help them to deal with their individual case when they are navigating complicated benefit systems. That work coach will be by their side helping them to develop their role when they first get their foot in the door. They will not simply say, “We wish you all the best now you’ve got a job”. They will help them to make progress and develop their role. They will help them to seek and secure more hours, and to develop the skills and confidence to progress through the grades. In other words, universal credit will not only support people to move into a job; it will also help them to build a career. It will break the cycle of dependency and create opportunities.

Catherine West (Hornsey and Wood Green) (Lab): Does the Minister not accept that we are really talking about people who are doing the hours but whose rate of pay is very low? Is not this really about productivity? The fact is that the Government are not creating higher level jobs. We are far too dependent on the service sector, which essentially involves low-paid jobs rather than jobs that offer a higher rate of pay for the hours worked.

Justin Tomlinson: Three quarters of new jobs being created are at managerial level, and the majority are full-time jobs. I shall go into more detail about what we are doing in terms of money.

Helen Whately (Faversham and Mid Kent) (Con): My hon. Friend has been talking about the benefits of universal credit. I have spoken to two jobcentres that serve my constituents and that are piloting universal credit, and I have heard very good feedback, both from the job coaches and from the jobseekers themselves, who say that it is giving them more flexibility to work. Please will my hon. Friend confirm that the roll-out will continue, because those jobcentres want to be able to give more jobseekers the opportunity to be on universal credit?

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Justin Tomlinson: My hon. Friend highlights the importance of that personalised support, which people find absolutely vital. We have seen this in our casework, in our experience of life and through friends who have navigated through the system. My hon. Friend has taken the time to visit her jobcentres, and I would gently encourage the shadow Secretary of State to go and visit one of the universal credit sites and to see it at first hand.

Owen Smith: I spoke to one of the people piloting universal credit just two weeks ago. Is the Minister seriously telling the single mother I mentioned earlier, who is working full time on the new national minimum wage, that she should not worry about the £3,000 drop in her income that will result from these cuts? Is he saying that she should not worry because she will have a personal work coach who will encourage her and give her greater confidence to get another job, maybe in management? Is he seriously saying that to the country?

Justin Tomlinson: I will extend my invitation further: I will join the hon. Gentleman if he wishes to come and see this work in action. If he is worried about going on his own, I will in effect be his work coach. We have talked about examples. Let us talk about a working lone parent with two children who is doing 35 hours on the national living wage. They will be £330 better off. We could continue to trade examples, but that would be to assume that this is a static analysis. I will address that point later.

The evidence is clear: universal credit is working. Independently reviewed statistics published at the end of last year show that under universal credit people spend 50% more time looking for work, are 8 percentage points more likely to have been in work, and when in work, they earn more and seek more hours. So, universal credit is supporting people whether they move into or out of work, and focusing on getting people not just into work but into sustainable employment where earnings increase and the number of hours they work rises.

Chris Stephens: The Public and Commercial Services Union has real concerns about the cuts to the work allowance, which will affect the Government’s own staff. What assessment has been made of the effect of those cuts on the employees in the Department for Work and Pensions?

Justin Tomlinson: As I shall explain, this is not a static analysis.

I want to focus on how we are going to support people. People will benefit from the improved support. For those directly affected by the changes to work allowances, we have been careful to put further measures in place. The affected claimants will benefit not only from additional work coach support but from access to funding through the flexible support fund. This will help people to retain work and to increase their earnings through training, travel and care, and we will support people to access those things. In the longer term, we are ensuring protection for claimants who are moved from legacy benefits to universal credit. We have always been clear that there will be no cash losers as a result of the managed migration of claimants from one system to another, as long as their circumstances remain the same.

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Owen Smith: This will be the last time I intervene on the Minister, I promise. Is he seriously telling the House that the £69 million flexible support fund that he has just prayed in aid once again will in any way make up for the £3.2 billion loss to working families?

Justin Tomlinson: The shadow Secretary of State is mis-matching the two parts. The people who are going across will continue to have their cash protected. The £69 million fund will provide ongoing support to help people to navigate through the process.

Melanie Onn (Great Grimsby) (Lab): I want to return to the Minister’s point about work coaches. The mapping exercise that was undertaken in my constituency and across the borough of North East Lincolnshire was out by 150%, and the local authorities there cannot meet the needs of the work coaches who are needed to support people on universal credit. That task has now been passed on to the citizens advice bureau, which also cannot manage the load because the figures that it was initially given were incorrect.

Justin Tomlinson: This is actually delivered through the jobcentres and the universal service, so I think we will have to discuss that a bit further.

Figures have been bandied about, and I want to make it clear that they were wildly inaccurate. They were based on a fundamental misunderstanding of universal credit, which is why I am so keen to arrange a visit for the hon. Member for Pontypridd (Owen Smith). The vast majority of those on the universal credit caseload will not lose out as a result of the changes. That is because the measure affects only those people who are in work, most of whom would have received nothing under tax credits. I have not seen the Opposition campaigning on this issue before. Unlike tax credits, universal credit is a dynamic benefit.

Owen Smith rose—

Stephen Timms rose—

Justin Tomlinson: The hon. Member for Pontypridd has had his turn. I give way to the right hon. Gentleman.

Stephen Timms: I think we have now got to the appropriate point in the Minister’s speech. Does he acknowledge that the 50,000-plus working people who are today receiving universal credit will see their benefits sharply cut in April?

Justin Tomlinson: I will come on to those specific people—[Interruption.] In the overall numbers, it is the vast majority—[Interruption.] I am going to make some progress.

We have to see the bigger picture. A lot of the analysis that has gone on is static. Even the Institute for Fiscal Studies, which I know a lot of hon. Members will refer to, acknowledges that it is a static analysis. Universal credit is not a stand-alone measure. It is part of our wider, dynamic package of reforms to support families in work and to make sure work pays. We are raising the personal allowance to £11,000 for the next tax year, saving the typical taxpayer over £900 a year, and we have pledged to raise it to £12,500 by the end of this

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Parliament. The national living wage will come into effect from April. That will directly benefit 2.75 million people and it is forecast to reach over £9 an hour by 2020. That might upset Opposition Members who campaigned for £8 an hour, but we felt that that did not go far enough.

Carolyn Harris (Swansea East) (Lab): The House of Commons Library has given me some figures; I wonder whether the Minister will say that they are wrong. They show that a single parent working full time on the minimum wage will be nearly £3,000 a year worse off than they would have been on tax credits. I would appreciate some clarification on this from the Minister.

Justin Tomlinson: I thank the hon. Lady for her question. I worked closely with her on our commitment to halving the disability employment gap, and I have a lot of respect for the work she does. In this case, the person—again, presuming it is a static analysis and that they are already in—will be cash protected as they are transferred to universal credit, so they will not be cash worse-off.

We have rising wages and near zero inflation. We have had 13 months—[Interruption.] We have strong economic growth, delivering record jobs and creating opportunities for people to get into work and to increase their hours. We have simplified the benefits system, reducing the potential for claimants to miss out on money to which they are entitled and, crucially, allowing them the time to focus on actually finding work, rather than on navigating the complex, chaotic system. We have already seen from the independent investigation that we are talking about 50% more time. We also have work coaches to support people in work, which is vital.

Several hon. Members rose—

Justin Tomlinson: I will make a bit more progress and then take a few more interventions.

Finally, and importantly, we are increasing the childcare offering. Universal credit currently covers up to 70% of eligible childcare costs, but from April we will increase that to 85%. That will make a huge difference to people’s lives, with the increase worth up to £1,368 per year for every child. We are also doubling free childcare to 30 hours a week for working parents of three and four-year-olds, which is worth up to £5,000 per child per year to working parents. Tax-free childcare from early 2017 will give working parents who are not in receipt of universal credit or tax credits up to another £2,000 per child per year, or up to £4,000 for a disabled child. All those measures are designed to help families keep more of the money they earn and support them in work. Therefore, our combined package of measures will make a real difference to real people’s lives.

Tulip Siddiq (Hampstead and Kilburn) (Lab): I wish briefly to divert the Minister’s attention to homelessness and, in particular, its rise in London. A network of charities have said that the rise is a result of not only the chronic housing shortage, but cuts to welfare reform and social security, particularly universal credit. I do not know now whether the Minister is aware that last

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year the level of homelessness rose to a point where 7,500 people were sleeping rough on the streets of London. Does he recognise that universal credit will exacerbate that problem? Can he say how the rolling out—

Madam Deputy Speaker (Mrs Eleanor Laing): Order. An intervention has to be very short, and I think the Minister has got the gist of this one.

Justin Tomlinson: That is why it is key that this Government are committed to building and delivering more affordable housing, particularly in London. I welcome the measures that the Chancellor set out to make that happen. [Interruption.] The hon. Member for Birmingham, Yardley (Jess Phillips) may laugh, but we saw record low house building under the last Labour Government, robbing people again of opportunity.

Ruth Cadbury (Brentford and Isleworth) (Lab): Has the Minister made an assessment of how many people on universal credit will be able to afford even a starter home in London?

Justin Tomlinson: That shows why we have to create opportunities, so that people can get into work, increase their hours—[Interruption.] Again, the hon. Member for Birmingham, Yardley does not like creating opportunity. We can all play top trumps on trading backgrounds, but we have to create those opportunities for people, regardless of the challenges they face. My party values the prospect of the potential for people to have home ownership.

Alex Chalk (Cheltenham) (Con): Does the minister agree that under Labour the welfare system spiralled completely out of control? Crucially, in the words of the former Chancellor Alistair Darling, it ended up

“subsidising lower wages in a way that was never intended”.

Will these reforms not address that?

Justin Tomlinson: I thank my hon. Friend for raising that point. Not only did we see that under the last Labour Government we were talking about £3,000 per hard-working family, but the decision to reverse all these dynamic changes will have to be paid for—we cannot magically print money. I know that promising that would help in a potential future reshuffle, but back in the real world it will mean painful, expensive tax rises for hard-working people.

Universal credit is a significant welfare reform that is transforming lives. At its heart, this is about putting work first and ensuring everyone can realise their ambitions and improve their quality of life. It is part of our wider commitment to return welfare spending to a sustainable level and deliver fairness to the taxpayer. That will be delivered through reform, support and, crucially, creating opportunities.