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House of Commons

Wednesday 16 March 2016

The House met at half-past Eleven o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

International Development

The Secretary of State was asked—

Malawi: Development Support

1. Richard Arkless (Dumfries and Galloway) (SNP): What development support her Department plans to provide to Malawi over the current spending review period. [904125]

The Secretary of State for International Development (Justine Greening): The UK continues to provide essential support to Malawi in areas including health, education and economic development as well as life-saving humanitarian assistance for food-insecure households. We support increasing access to justice for women and vulnerable groups, increasing accountability and governance reforms.

Richard Arkless: Does the Secretary of State agree that domestic resource mobilisation is one of the best ways to ensure that poorer countries can fix their own problems? What conversations has she had with the Chancellor of the Exchequer to ensure that the new tax treaty between Malawi and the UK helps the people of Malawi in that respect?

Justine Greening: The hon. Gentleman raises an important point, and the UK helped to establish the Addis tax initiative, which will see our country and many others, including in Africa, stepping up their support to develop tax systems. We do that in conjunction with Her Majesty’s Revenue and Customs. One of the first things I did in this role was establish a joint working group between the Department for International Development and HMRC to send HMRC officials out to countries such as Malawi to help with their tax systems. I can assure the hon. Gentleman that we work very closely with the Treasury.

Stephen Twigg (Liverpool, West Derby) (Lab/Co-op): On the tax treaty, may I ask the Secretary of State more broadly what role DFID will play as the tax treaty with Malawi is being renegotiated, particularly as regards supporting Malawi in its efforts to reduce poverty and develop more generally?

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Justine Greening: As the hon. Gentleman will be aware, HMRC leads on these negotiations, but they are progressing well and the House may be interested to know that the Government of Malawi issued a press statement on how they feel the negotiation is going. They talked about

“fruitful discussions to review and modernize the existing agreement”

and said that in their view:

“These discussions are progressing very well”.

I can assure the hon. Gentleman that we will continue to work alongside the Treasury to ensure that tax systems in the countries in which DFID works are developed so that in time they can self-fund their own development, releasing the UK from doing that.

Ms Diane Abbott (Hackney North and Stoke Newington) (Lab): But the UK’s current tax treaty with Malawi severely restricts the ability of the Government of Malawi to tax British firms operating there. Is this not a case of DFID giving with one hand while UK tax policies take away with the other?

Justine Greening: I do not agree at all and, perhaps most importantly, neither do the Government of Malawi, who said:

“Whilst the current agreement is admittedly aged, there is no evidence that the agreement has motivated some British investors to deprive the Malawi Government of its revenues. On the contrary, both the Malawi Government and the British Government, as well as the nationals of the two countries, have evidently acted in good faith to ensure that neither party is exploited on the basis of the current agreement.”

Ms Abbott: But does the Secretary of State agree that the era of outdated and unscrutinised tax treaties that create opportunities for multinational tax avoidance must come to an end?

Justine Greening: It is time that the international tax system worked more effectively so that countries such as Malawi can mobilise their own domestic resources, including tax. The hon. Lady will know that this particular treaty was last updated in 1978. The Government have taken the initiative to work with the Malawi Government to update this relatively old treaty and, as I have set out, those negotiations are going well. Of course, it sits alongside the rest of the work the Government have done on beneficial ownership and improving transparency in tax so that developing countries can get their fair share.

West Bank: Humanitarian Situation

2. Ruth Cadbury (Brentford and Isleworth) (Lab): What recent representations she has made to the Israeli government on the effect of home demolitions in the west bank on the humanitarian situation in that region. [904126]

The Minister of State, Department for International Development (Mr Desmond Swayne): Their increase adds to the sum of human misery, undermines any prospect of a peace process and is contrary to international law. I have left the Israeli Government in no doubt about the strength of our disapproval; our embassy continues to do so.

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Ruth Cadbury: I thank the Minister for his response. The latest figures from the UN, from early this month, show that there have been 400 demolitions since the start of the year, more than four times the rate of demolitions last year. The wave of demolitions is depriving Palestinians of their homes and their livelihoods and preventing European taxpayer-funded organisations from providing essential humanitarian support. As the British Government made representations when demolitions trebled, what more effective action or sanction will the Minister impose now that demolitions have quadrupled?

Mr Swayne: The hon. Lady is right that the rate of increase is now faster than at any time since calculations began to be made, and it is essential that the occupied territories, and in particular Area C, are governed in accordance with the fourth Geneva protocol. We will continue to make these representations to the Government. I know the hon. Lady wants to push me further, and I entirely understand the strength of her frustration and anger, but jaw jaw is better than war war.

Michael Tomlinson (Mid Dorset and North Poole) (Con): Will the Minister join me in condemning incitement to violence or glorification of violence on either side?

Mr Swayne: Absolutely. We are wholly opposed to incitement, and when instances of incitement are brought to my attention, I go straight to the telephone to raise the matter with the chief executives of those organisations and make absolutely clear our fundamental disapproval, and our requirement that things are put right.

Tom Brake (Carshalton and Wallington) (LD): With any prospect of a two-state solution fast disappearing, it is of course right that we recognise Israel’s right to self-defence, but is it not also time that we recognised Palestine as a sovereign state?

Mr Swayne: We can only recognise Palestine once. It is essential, therefore, that we do so at a moment where we will have maximum impact on any peace process. That is a fine judgment.

Mr Gregory Campbell (East Londonderry) (DUP): What recent checks have the Government made in relation to support offered in the west bank to moneys that end up in the coffers of terrorist-supporting groups on the west bank?

Mr Swayne: Absolutely none of UK British aid, multilateral or bilateral, ends up in the hands of terrorists.

Overseas Development Assistance

3. Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): What assessment she has made of the potential effect on the disbursement of UK aid of changes to the definition of overseas development assistance made by the OECD. [904127]

The Secretary of State for International Development (Justine Greening): The recent Development Assistance Committee high-level meeting on ODA modernisation was able to agree the first changes in the ODA definition in 40 years and reflect the changing nature of aid delivery. We do not expect a significant shift in the

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disbursement of UK aid because these changes align well with the UK’s focus on conflict, fragility and economic development.

Tom Blenkinsop: Given the changes in definition and the increasing proportion of UK aid spent by Departments other than DFID, how will the Secretary of State ensure that UK aid continues to help the poorest in the world?

Justine Greening: The hon. Gentleman will be reassured to know that the modernisation of the ODA definition had to be under consensus by a number of countries involved. In addition, the primary purpose that underpins aid—economic development and improving the welfare of the recipient country—remains in place. This was really about modernising the definition to reflect how aid is delivered today.

Mr Gary Streeter (South West Devon) (Con): Given that so much poverty and misery is caused by conflict, is it not about time that the OECD definition of ODA included peacekeeping and anti-terrorist activity at the very least, as that bears down directly on poverty?

Justine Greening: I agree with my hon. Friend. In fact, the sustainable development goals agreed in the UN in September 2015 had a goal 16 that was all about the need to improve not only peace but security. It is nonsensical for us to work so hard on tackling sexual violence in conflict and not be able to use our aid programmes to help work with the military to prevent that.

Mr Gareth Thomas (Harrow West) (Lab/Co-op): Given the changes to the definition of overseas development assistance, and given that there are still some 37 million people living worldwide with HIV and AIDS, as well as 2 million new infections each year, can the Secretary of State tell the House whether her Department’s spending on HIV and AIDS will be rising or falling over the comprehensive spending review period?

Justine Greening: The hon. Gentleman will be aware that we plan to set out the results of our bilateral aid review over the coming weeks, but I can assure him that our support for multilateral mechanisms, such as the Global Fund, that do so much great work on tackling aid, will continue, and he will obviously be aware that HIV and AIDS particularly affect adolescent girls in a growing proportion, so it is important that we stay the course on this.

Patrick Grady (Glasgow North) (SNP): It is great to see the Benches so packed for DFID questions. The more money the UK spends on ODA through other Departments, the more pressure there will be on DFID to deliver on its existing commitments. What impact will the changing use of ODA have on staffing numbers and capacity at Abercrombie House in East Kilbride?

Justine Greening: As I said to the hon. Member for Harrow West (Mr Thomas), we will set out the results of our bilateral aid review shortly. The point of the new aid strategy is to achieve a cross-Government approach to drive development in the countries that we work with. I did not think it was right that DFID was

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carrying out all that work on its own. It is important to get other Departments to work alongside us to tackle extreme poverty.

Global Fund to Fight Aids, Tuberculosis and Malaria

4. Dr James Davies (Vale of Clwyd) (Con): What assessment her Department has made of the effect of cost savings in the Global Fund to Fight Aids, Tuberculosis and Malaria on the work of that fund. [904128]

The Parliamentary Under-Secretary of State for International Development (Mr Nick Hurd): The Global Fund is a fantastic success story. Every pound it saves on costs is a pound that can be put to better use saving lives. For example, a negotiated 38% reduction in the price of insecticide-treated bed nets since 2013 is projected to save $93 million over two years, equivalent to 40 million additional nets.

Dr Davies: Will the Minister join me in congratulating a school in my constituency, Ysgol Esgob Morgan, on becoming the first in Wales to be awarded the Welsh primary geography quality mark gold, thanks in part to the DFID-funded global learning programme? Does he agree that every child growing up in the UK should have the chance to learn about the world around them, the facts of poverty and underdevelopment, and the potential to build a freer and more prosperous world?

Mr Hurd: I strongly agree with my hon. Friend. Through him, I congratulate the school in his constituency and the 4,500 schools across the country that participate in the global learning programme, which we are proud to support with funding of £21 million, because we believe strongly in the importance of development education to support school improvement.

Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op): Last week I had the pleasure of meeting Student Stop AIDS activists, who raised with me the crucial issue of access to medicines, in which the Global Fund plays a key role. Will the Minister set out the priorities for the World Health Assembly that is coming up shortly and the work that his Department will be doing to take forward that crucial issue?

Mr Hurd: The hon. Gentleman is right to point to the enormous success of the Global Fund in making it easier to access medicines. It is important to note that since 2002 the Global Fund has helped reduce deaths from the big three diseases by 40%—a staggering achievement—but there are still too many people dying unnecessarily from those awful diseases, which is why we look forward to a successful replenishment of that very important fund.

Jeremy Lefroy (Stafford) (Con): The all-party group on malaria, which I chair, is extremely concerned about resistance to anti-malarial drugs in south-east Asia. The Global Fund is doing a great deal of work on that. Can the Minister update the House on the progress of that work?

Mr Hurd: I congratulate my hon. Friend on his persistent and tireless work in this area. I was with the senior team at the Global Fund the other day in Geneva

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to discuss it. I have no doubt about its commitment in the face of that challenge. I hope my hon. Friend takes some pride in the fact that the British Government continue to lead in this area, with the recent refresh of the commitment to spend £500 million a year in the battle against malaria in all its forms.

Mr Virendra Sharma (Ealing, Southall) (Lab): TB is the world’s leading infectious killer. The Global Fund provides more than three quarters of international finance to fight that epidemic. As we approach World TB Day on 24 March, will the Minister call on all Governments around the world to come together to ensure that the Global Fund’s replenishment target of $13 billion is met as a minimum?

Mr Hurd: I thank the hon. Gentleman for throwing a spotlight on a huge killer, on which we are not making enough progress. We are proud that the UK is the third-largest donor to the fund that provides, as he said, 70% of the funding around the world to combat that disease. It is critical, therefore, that the replenishment of that fund is a success and that other countries step up to the mark so that we can bear down on that unacceptable death rate.

Yazidi Communities (Iraq, Turkey and Syria)

5. Anne McLaughlin (Glasgow North East) (SNP): What support her Department is providing to Yazidi communities in Iraq, Turkey and Syria. [904129]

The Minister of State, Department for International Development (Mr Desmond Swayne): Our response to the Syria crisis is a commitment of more than £2.3 billion, with an additional £79.5 million to Iraq. All our aid is distributed according to need, irrespective of creed or ethnicity.

Anne McLaughlin: Daesh is systematically targeting Yazidi children, forcing little girls into sexual slavery and conscripting young boys as child soldiers, yet there are reports from Turkey that support is not reaching some of the Yazidi refugee camps near the Syrian border. What steps is the Department taking to help ensure that children rescued from Daesh receive the support they need and that support reaches survivors in those camps?

Mr Swayne: The first thing is that we have gone to war with Daesh, and that is a very significant contributor. Equally, we are supporting the UNHCR and a number of organisations that are principally funded through the Iraqi national action plan and the Iraq pooled fund, to which we are the largest contributor.

Mrs Caroline Spelman (Meriden) (Con): Some of us met a delegation of Yazidis yesterday who explained the plight of almost 2,000 women still held captive. Would the Minister be willing to meet that delegation to hear at first hand of the difficulty they have in reaching help?

Mr Swayne: I have met a number of Yazidi delegations and, indeed, a number of representatives of other religions. I would be delighted to meet my right hon. Friend and her delegation.

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Margaret Ferrier (Rutherglen and Hamilton West) (SNP): I do not think we have actually had an answer from the Minister. Reports of thousands of Yazidi women being captured by Daesh and sold as slaves, many suffering serious sexual abuse, are harrowing. What measures are the UK Government taking to address that slave trade?

Mr Swayne: We are fighting Daesh. We are providing large sums of money to organisations that are delivering aid directly to Yazidi women and to children. I know it is frustrating—terrible things happen—but the hon. Lady cannot always blame Ministers.

Cat Smith (Lancaster and Fleetwood) (Lab): What medical and psychological services are the Government able to provide to the women referred to in the previous question, who have been held as sex slaves?

Mr Swayne: We have sent a number of experts to the region specifically to deal with violence against women. The pooled fund, to which we are the largest contributor, provides maternal and child healthcare services, protection for women and girls, and livelihoods for female heads of households. The Iraqi national action plan delivers similar services, and we are dealing specifically with the needs of women in Dohuk, Kirkuk and the northern areas through the human rights and democracy fund.

Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op): Would the Minister describe what is happening to the Yazidis as genocide?

Mr Swayne: I believe that the decision as to what constitutes genocide is properly a judicial one. The International Criminal Court correspondent, Fatou Bensouda, has decided that, as Daesh is not a state party, this does not yet constitute genocide.

Topical Questions

T1. [904141] Mr Jim Cunningham (Coventry South) (Lab): If she will make a statement on her departmental responsibilities.

The Secretary of State for International Development (Justine Greening): This morning I arrived back from heading the UK delegation at the United Nations for the Commission on the Status of Women. I also took part as a member in the first meeting of the Secretary-General’s high-level panel on women’s economic empowerment. Women’s economic empowerment is the best poverty-tackling and global economy-boosting strategy out there.

Yesterday marked the fifth anniversary of the devastating Syria conflict. Since day one, the UK has been at the forefront of the response, and that has included hosting last month’s conference. [Interruption.]

Mr Speaker: Order. I understand the sense of anticipation, but I just gently remind the House that we are discussing policy affecting some of the most vulnerable people on the face of the planet, and I think we owe them some respect.

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Mr Cunningham: What assessment has the Secretary of State made of the humanitarian situation in Sri Lanka?

Justine Greening: As the hon. Gentleman will be aware, the UK has been at the forefront of ensuring that there is humanitarian support in Sri Lanka, where necessary. He will also be aware of the role that the Prime Minister played in tackling the issues faced by Tamil communities in a part of the country where there had been long-standing conflict. Under the new Government, we hope to see Sri Lanka move forward to a more peaceful, democratic future.

T4. [904144] Tom Pursglove (Corby) (Con): How much UK aid is currently given to Turkey, and are Ministers having any discussions to increase that figure?

Justine Greening: Since February 2012, DFID has allocated £35 million in Turkey. The country hosts about 2 million Syrian refugees, and we are helping it to support them, and indeed other displaced people, with food, education, and skills training. Looking ahead, we shall also contribute our share of the €3 billion EU-Turkey refugee facility.

Imran Hussain (Bradford East) (Lab): Efforts that will address education are welcomed by Labour Members. However, to make substantial progress on achieving a good standard of education for all children in developing countries, we must address the barrier of child labour. In June 2015, UNICEF found that 13% of children aged five to 14 in developing countries are involved in child labour. What progress, therefore, is DFID making to help developing countries tackle the use of child labour?

Justine Greening: The hon. Gentleman is right to mention the barriers that keep children out of school. DFID is working on many of them, not least female genital mutilation and child marriage. Many of the children he talks about are girls who often do unpaid work at home and on family farms.

T5. [904145] Fiona Bruce (Congleton) (Con): Bangladesh is a significant recipient of UK aid, yet last week the Conservative Party Human Rights Commission heard grave concerns about the shrinking civil society space there. What can Ministers do to help address this?

Justine Greening: I can assure my hon. Friend that DFID and Foreign Office officials, together with other donors, raise concerns about the space for civil society with Governments, including the Government of Bangladesh. This is an incredibly important area. Non-governmental organisations funded by UK aid are active in negotiating with Governments to protect the space for civil society to operate.

T2. [904142] Dr Philippa Whitford (Central Ayrshire) (SNP): Over 150 charities have raised concerns about the supposed anti-lobbying clause attached to new Government grants. Does the Minister not recognise that advocacy is an intrinsic duty of charities in raising issues associated with poverty and ill health across the world?

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Justine Greening: I do not think these changes prevent charities from doing that, and they are often advocating the very same things as the UK Government in my area of international development. In fact, only yesterday I was at an event at the UN with charities combating child marriage.

T7. [904147] Bob Blackman (Harrow East) (Con): Senior Palestinian officials have condemned peace-building initiatives between Israelis and Palestinians, with one condemning football matches between Israeli and Palestinian youths as “normalisation of the Zionist enemy”. What representations has my right hon. Friend made to the Palestinian Authority to condemn these moves, and what moves is she making to build peace between Israel and Palestine?

Justine Greening: As my right hon. Friend the Minister set out earlier, we deplore incitement on both sides of the Israeli-Palestinian conflict. We monitor allegations of incitement very closely and raise instances with both leaderships.

T6. [904146] Mr Ronnie Campbell (Blyth Valley) (Lab): Has the Secretary of State given, or does she envisage giving, any aid to any country in the European Union?

Justine Greening: The hon. Gentleman will be aware that we have played our role in supporting refugees who have fled the Syrian conflict and are now arriving in the European Union, and it is right that we do so. However, he is also perhaps right to say that we should also look to those countries to provide the support that they can, too.

T9. [904149] Mike Freer (Finchley and Golders Green) (Con): AIDS remains the No. 1 global killer of women of reproductive age. What more can DIFD Ministers do to ensure that tackling this remains a priority for this Government?

Justine Greening: My hon. Friend is right. In fact, in 2013 we had stats that showed that an adolescent girl gets infected with HIV every two minutes. We very much put the empowerment of girls and women at the heart of our development agenda. We are the second largest funder of HIV prevention, care and treatment, and we have pledged up to £1 billion to the global fund.

T8. [904148] Margaret Greenwood (Wirral West) (Lab): At the weekend, we saw pictures of a new-born Syrian baby being washed with just a bottle of water outside a crowded a tent in the Idomeni refugee camp in Greece, where more than 14,000 people are trapped as a result of the latest border closures. Will the Government work with other European states to ensure that there are safe and legal routes for refugees to claim asylum?

Justine Greening: I assure the hon. Lady that, from an international development perspective, we are working to support people caught up in those situations, and we are, of course, playing our role in resettlement through our vulnerable persons relocation scheme.

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Prime Minister

The Prime Minister was asked—

Engagements

Q1. [904110] Karen Lumley (Redditch) (Con): If he will list his official engagements for Wednesday 16 March.

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: With unemployment falling by more than 60% and with more than 5,000 new apprenticeships, Redditch is doing well. I will hold my third jobs fair in the next few weeks, with 25 companies taking part. Does my right hon. Friend agree that we have made a good start but that we must not be complacent, and that, through the midlands engine, we must continue to get good quality jobs into our region?

The Prime Minister: I very much agree with my hon. Friend. If we look at the west midlands and today’s unemployment figures, we see that since 2010 the claimant count there has come down by 91,000 people. I am sure the House would also welcome an update on the unemployment figures out today. Employment in our country is at a new record high of 31.4 million people. Compared with 2010, there are now 2,370,000 more people in work than when I became Prime Minister, and the claimant county today is down 18,000 in the last month—figures that I am sure will be welcomed right across the House.

Jeremy Corbyn (Islington North) (Lab): Could the Prime Minister tell the House how many people will die from respiratory disease as a result of air pollution before this country meets its legal obligations on air quality by 2025?

The Prime Minister: I do not have those figures to hand, but what I do know is that we need to make progress on air quality. That is why we have the new regulations on diesel engines, which are helping; the steady decarbonisation of our power sector, which will help; and very strong legislation already in place to make sure we have clean air, particularly in our cities.

Jeremy Corbyn: May I help the Prime Minister? The sad truth is that 500,000 will die because of this country’s failure to comply with international law on air pollution. Perhaps he could answer another question: how much does air pollution cost our economy every year?

The Prime Minister: Of course it costs our economy billions, because people are being injured. That is why we have the new clean air zones, and emissions from cars are coming down. If I may give the right hon. Gentleman one example, if we deliver on our carbon reduction plan for electricity generation, we will see roughly an 85% reduction in carbon between 1990 and 2030. That will give us one of the best green records anywhere in the world.

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Jeremy Corbyn: The Royal College of Physicians estimates that air pollution costs our economy £20 billion a year. The failure to deal with air pollution is killing people. Only a few days ago, London faced a severe smog warning. The Prime Minister’s friend the Mayor of London has presided over a legal breach of air quality in the capital every day since 2012, so why cannot the Prime Minister hurry up action to make us comply with international law and, above all, help the health of the people of this country?

The Prime Minister: It was the Conservative Governments of the 1950s that passed the clean air Acts, and I am sure that it will be this Conservative Government who will take further action, including the clean air zones that we have and lower car emissions. Why are we able to do that? It is not only because we care about our environment, but because we have an economy that is strong enough to pay for those improvements, as we are just about to hear.

Jeremy Corbyn: We all welcome the Clean Air Act 1956, but things have moved on a bit since. The Government are now threatened with being taken to court for their failure to comply with international law on air pollution. The Prime Minister is proposing to spend tens, possibly hundreds, of thousands of pounds of public money defending the indefensible. Why not instead invest that money in cleaner air and better air quality for everyone in this country?

The Prime Minister: We are investing money in clean air in our country. For instance, we are phasing out the use of coal-fired power stations far in advance of other European countries and blazing a trail in more renewable energy and the clean nuclear energy that we will be investing in. All those things will make a difference, but let me say again: you can only do this if you have a strong economy able to pay for these things.

Jeremy Corbyn: If the Government and the Prime Minister are so keen on renewable and clean energy, can he explain why on Monday the House approved new legislation to allow communities a veto on clean energy projects such as onshore wind? I have a question from Amanda from Lancaster. She asks the Prime Minister this—[Interruption.] If I were him, I would listen. Will the Prime Minister offer the same right of veto to her community, and communities like hers across the country, of a veto on fracking?

The Prime Minister: We have a proper planning system for deciding these things. If the right hon. Gentleman wants to know what is happening in terms of renewable energy, I point out to him that 99% of the solar panels in this country have been installed since I became Prime Minister. That is the green record that we have. The United Kingdom now has the second largest ultra-low emission vehicle market anywhere in the European Union. We have seen one of the strongest rates of growth in renewable energy.

Is it not remarkable—five questions in, and no welcome for the fall in unemployment? No mention of the 31 million people now in work. No mention of the fact that we have got more women in work and more young people in work, and that more people are bringing home a salary—bringing home a wage—and paying less tax.

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Not a word from the party that I thought was meant to be the party of labour. This is the truth: the party of working people, getting people into work, is on this side of the House.

Jeremy Corbyn: The Prime Minister once boasted that he led the greenest Government ever—no husky was safe from his cuddles. So will he explain why the Select Committee on Energy and Climate Change has produced a report that is damning when it comes to green energy, saying that major investors describe his policies as “risky” as a result of cuts and changes? Why are the Government so failing the renewable energy sector, clean air, investors, consumers and those who work in that industry?

The Prime Minister: Any proper look at the figures will find that the Government have a remarkable record on green energy. Let me take the Climate Action Network, which said that Britain is the second best country in the world for tackling climate change, after Denmark. That is our record. Since 2010, we have reduced greenhouse gases by 14%. We are over-delivering against all our carbon budgets. We secured the first truly global, legally binding agreement to tackle climate change, and we have got annual support for renewables more than doubling to over £10 billion by 2020. On renewable electricity, we are on track to deliver a target of at least 30% from renewable sources by 2020. Almost all of that will have happened under a Conservative-led Government. That is our record, and we are proud of it.

West Midlands: Economy and Public Sector

Q2. [904111] Michael Fabricant (Lichfield) (Con): What assessment he has made of the (a) performance of the economy and (b) adequacy of provision of public sector services in the west midlands; and if he will make a statement.

The Prime Minister: There are some very positive things going on in the west midlands economy, and today’s figures show that employment in the region is up by 140,000 since 2010. More than 108,000 businesses were created in the region between 2010 and 2014. Thanks to our long-term economic plan for the midlands engine, we have been able to invest in our public services in the west midlands, helping to build a strong NHS, reform our education system and give our police the resources they need.

Michael Fabricant: Unemployment is down again in my beautiful Lichfield! And yesterday was an absolute first for the west midlands, when the whole region co-operated to present 33 investment schemes at an international conference in Cannes, which will create a further 178,000 jobs. What more can the Prime Minister do to support the midlands engine—apart from ensuring, of course, that we never get a Labour Government?

The Prime Minister: I am very glad my hon. Friend chose to be here rather than in Cannes. I am very relieved by that. He is right about the 33 schemes. Just last week, we had a £300 million signed between Chinese investors and CAD CAM Automotive that will create 1,000 jobs in Coventry. My right hon. Friend the Business Secretary was in Staffordshire with Nestlé to open a

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new coffee factory, bringing 400 jobs. We of course got that historic deal with the west midlands, which will see significant new powers devolved to the combined authority and the directly elected mayor. We are changing the way our country is run—devolving power, building the strength of our great cities—and Birmingham is the second city of our country.

Angus Robertson (Moray) (SNP): There is widespread reporting that the UK Government are about to commit to send ground troops to Libya to train Government forces there. Is this true, and why has Parliament not been informed about it?

The Prime Minister: If we had any plans to send conventional forces for training in Libya we would of course come to this House and discuss them. What we want to see in Libya is the formation of a unity Government. There is progress with Prime Minister Siraj, who can now lead a Government of national accord. We will want to hear from him what assistance and help should be given in Libya. Countries such as Britain, France, America and Italy will definitely try to help that new Government, because right now Libya is a people smuggling route, which is bad for Europe and bad for us, and we also have the growth of Daesh in Libya, which is bad for us and bad for the rest of Europe. If we have any plans for troop training or troop deployment in a conventional sense we will of course come to the House and discuss them.

Angus Robertson: The UK spent 13 times more bombing Libya than it did on securing the peace after the overthrow of the hated Gaddafi regime. The critics of UK policy even include President Obama of the United States. Will the Prime Minister give a commitment to bring to Parliament the issue of any potential Libyan deployment of any British forces for approval before giving the green light for that to happen? Will he give that commitment—yes or no?

The Prime Minister: I am very happy to give that commitment, as we always do. I am very clear that it was right to take action to prevent the slaughter that Colonel Gaddafi would have carried out against his people in Benghazi. I believe that was right. Of course, Libya is in a state that is very concerning right now, and everyone has to take their responsibilities for that. What I would say is that after the conflict the British Government did support the training of Libyan troops, we did bring the Libyan Prime Minister to the G8 in Northern Ireland and we went to the United Nations and passed resolutions to help that Government, but so far we have not been able to bring about a Government of national accord that can bring some semblance of stability and peace to that country. Is it in our interest to help the Government do exactly that? Yes, it is, and we should be working with others to try to deliver that.

Engagements

Q3. [904112] Byron Davies (Gower) (Con): My constituency of Gower, which was won for the first time ever by the Conservatives, could be transformed, along with the rest of the region, by the Swansea Bay tidal lagoon. Having signed a £1.2 billion deal for Cardiff yesterday, will the Prime Minister give an absolute

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assurance that the Government review on tidal lagoons will do everything to ensure that the wider Swansea Bay tidal lagoon project fits the UK energy strategy, and does he recognise the economic potential it will bring to the Swansea bay region?

The Prime Minister: I thank my hon. Friend. I remember visiting his constituency just after his excellent victory last year. I seem to remember that we went to a brewery for a mild celebration. He is right that tidal lagoons do have potential. Last month, we launched an independent review of tidal lagoon power to understand the technology better. We will look carefully at the findings of that review and continue working closely with the developers in order to make a decision on Swansea.

Q4. [904113] Ian C. Lucas (Wrexham) (Lab): Wrexham and north Wales is a strong manufacturing and exporting region, but its growth is constrained by lack of access to airports in north-west England. The Office of Rail Regulation is currently considering applications for rail paths from north Wales. Will the Prime Minister support a cross-party campaign for fairness for north Wales and for access to airports in north-west England?

The Prime Minister: The former Secretary of State for Wales, my right hon. Friend the Member for Clwyd West (Mr Jones), came to see me recently about this. I think there is a very strong argument for how we can better connect north Wales with the north-west of England and make sure we build on the economic strength of both, so I will look very carefully at what the hon. Gentleman says and what my right hon. Friend says about the potential for increasing rail capacity.

Q5. [904114] Dr James Davies (Vale of Clwyd) (Con): Last week, a High Court judge ruled in favour of a compulsory purchase order for the grade II* listed former north Wales hospital in Denbigh. Years of neglect by its offshore company owner resulted in the buildings being brought to the point of collapse. Thanks to groundbreaking work carried out by Denbighshire County Council and the Prince’s Regeneration Trust, their future should now be safeguarded. What can the Prime Minister do to prevent buildings such as these, which are deemed national assets, from falling into the hands of those who are not fit and proper guardians, particularly those outside the control of our judicial system?

The Prime Minister: My hon. Friend makes an important point. I am aware of this case. While heritage is a devolved matter, it is great news that these buildings—I know how important they are—will be safeguarded. It is my understanding that they were bought way back in 1996 by a company and then left completely abandoned. As he says, that is no way to treat a grade II* listed building. That is why we have the powers in place for compulsory purchase orders. In this case, I think Denbighshire County Council was absolutely right to use them. Councils should have confidence in being prepared to use these measures when appropriate.

Q6. [904115] Kevin Barron (Rother Valley) (Lab): Two weeks ago, in front of the Education Committee, the head of Ofsted, Sir Michael Wilshaw, said that

“16-19 education should be done in a school-based environment, not in an FE institution.”

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He went on to say that some pupils who head off to a further education institution

“do badly. They get lost, drop out”.

Does the Prime Minister agree with him?

The Prime Minister: I think we need a range of settings for A-levels and post-16 study. I would say this: there are a lot of secondary schools that would like to have a sixth form. I think there are great benefits, in particular for 11-year-olds going to secondary school who can look to the top of the school and see what girls and boys are achieving at 16, 17 and 18: what A-level choices they are making and what futures they are thinking of. For many people it is very inspiring to go a school with a sixth form, but let us encourage both. Let us have the choice. This is why the academisation of schools is so important, because it gives schools the ability to make these choices for our children.

Q7. [904116] Richard Graham (Gloucester) (Con): In National Apprenticeship Week, I am sure the Prime Minister will join me in thanking employers who have created 6,500 apprenticeships in Gloucester since 2010, the Gloucester Citizen for its support, and all the apprentices themselves, including my first apprentice Laura Pearsall, who is now Gloucester’s youngest ever city councillor. Looking forward, will my right hon. Friend do all he can to hasten the introduction of associate nurses, who will be higher apprentices? They will make a huge difference to the NHS and our health sector more broadly.

The Prime Minister: My hon. Friend is right. The south-west has delivered more than 280,000 apprenticeship starts since 2010, so it is absolutely pulling its weight—and well done to his constituents for doing that. He is also right about the introduction of associate nurses. We are working with Health Education England to offer another route into nursing, which I think will see an expansion of our NHS.

Q8. [904117] Ronnie Cowan (Inverclyde) (SNP): According to the statistics provided by the House Library, there are an estimated 280,000 problem gamblers in the United Kingdom. Will the Prime Minister indicate when the Government will take forward the 2010 report prepared for the Department for Culture, Media and Sport? Does he agree that the money from dormant betting accounts should be used to support those whose lives have been destroyed by gambling?

The Prime Minister: We will study the report carefully. We did take some action in the previous Parliament in the planning system and on the way fixed odds betting terminals worked to deal with problem gambling. I am very happy to keep examining this issue and to act on the evidence. I will be discussing it with the Secretary of State for Culture, Media and Sport.

Q10. [904119] Mr Ranil Jayawardena (North East Hampshire) (Con): The systematic killing of Christians and other minority groups by the so-called Islamic State across the middle east has reached unprecedented proportions, so the action being taken by Her Majesty’s Government is just. What more will my right hon. Friend do, working with the international community,

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to halt this genocide being committed against Christians by what I would rather call the satanic state?

The Prime Minister: My hon. Friend is absolutely right to draw attention to Daesh’s persecution of Christians and those of other faiths, including Muslims it disagrees with. We must keep to the plan. We have shrunk the amount of territory it holds in Iraq by about 40% and we are seeing progress in Syria as well, but this will take time, and we must show the patience and persistence to make sure we rid the world of this evil death cult.

Q9. [904118] Callum McCaig (Aberdeen South) (SNP): The Prime Minister’s energy policy is a complete shambles and wholly dependent on the troubled and eye-wateringly expensive new nuclear plant at Hinkley. There is barely a plan A, let alone a plan B. Is the Prime Minister seeking to build the world’s most expensive power station or the world’s biggest white elephant?

The Prime Minister: We are planning to continue with a successful energy policy that is seeing cheaper and lower carbon energy at the same time. The strength of the Hinkley deal is that there is no payment unless the power station goes ahead and is built efficiently by EDF. That will be good for our energy supplies because, if we want low-cost, low-carbon energy, we need strong nuclear energy at the heart of the system.

Q11. [904120] Kevin Hollinrake (Thirsk and Malton) (Con): Antibiotic Research UK, situated in my constituency, is the world’s first charity to tackle antimicrobial resistance, which is a looming global danger of disaster-movie-style proportions. Will the Prime Minister agree to meet me to see how we can fund this vital research, so that this time it is not the Americans who save the world but the British?

The Prime Minister: I am very happy to meet my hon. Friend, who is absolutely right to raise this issue. Owing to the growing resistance to antibiotics, which in many cases now do not work, we face a genuine medical emergency around the world. That is why Britain must put this issue squarely on the G20’s agenda; why it was a large part of our discussions with the Chinese during their state visit last year; and why we are investing £50 million in an innovation fund, working with the Chinese Government to take it forward. I hope that the organisation in my hon. Friend’s constituency can benefit from some of this research.

Tim Farron (Westmorland and Lonsdale) (LD): The Prime Minister will know that his Home Secretary is once again trying to deport Afghan interpreters seeking sanctuary in the UK. These brave people risked their lives serving our armed forces, yet they now face being sent back, where they will be at the mercy of the Taliban or have to join hundreds of thousands of people rotting in refugee camps. Is this how Britain should repay those who put their lives on the line for us? Instead, will the Prime Minister do the right thing and do whatever is possible to ensure that they are offered safe haven here?

The Prime Minister: The last Government, in which the hon. Gentleman’s party played a role, agreed a set of conditions for Afghan interpreters to come to the UK

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and be given sanctuary, but we also provided for a schemee so that those who wanted to stay and help rebuild their country could do so. I would still defend that scheme, even if his party has changed its mind.

Q12. [904121] Andrea Jenkyns (Morley and Outwood) (Con): My constituent Deborah Reid and her sister watched their mother Joan waste away in hospital due to inadequate care after a fall, as has been admitted by the consultant in charge. Last week, my right hon. Friend the Health Secretary hosted a global summit on patient safety and announced the creation of the new healthcare safety investigation branch. What more can the Government do to ensure that patient safety is at the heart of the NHS and to prevent such instances from occurring in the future?

The Prime Minister: My hon. Friend is absolutely right to raise such cases, which are obviously horrendous and should be properly investigated, but, as she said, we then need to learn the lessons from them. I think we have made some progress. The proportion of patients being harmed in the NHS has dropped by over a third in the last two years, and MRSA bloodstream infections have fallen by over half in the last five years. My right hon. Friend the Health Secretary was absolutely right to hold the conference and to examine what other industries and practices have done to ensure a zero-accident safety culture. We have seen it in other walks of life, and it is time we applied it to the NHS.

Dawn Butler (Brent Central) (Lab): Just eight days ago, Oliver Tetlow popped to the shops and was brutally shot dead. The community is shocked and saddened by the murder of an innocent young man, and has asked for more community local policing and greater youth engagement. Will the Prime Minister meet me and community champions to discuss how we can make our streets safer?

The Prime Minister: The hon. Lady raises a very important point. What we have seen in London is a reduction in gun crime. She refers to a tragic case, and our hearts go out to the family of the person she talked about, but as I say, we have seen a reduction—and more active policing in our communities and better intelligence policing for dealing with gun crimes. We must keep that up. I shall certainly arrange whatever meeting is best to ensure that the voices the hon. Lady mentions are listened to.

Q13. [904122] Stephen Metcalfe (South Basildon and East Thurrock) (Con): As my right hon. Friend will be aware, Highways England is consulting on a new lower Thames crossing, with the preferred option being so-called option C, which will divert 14% of traffic away from the existing Dartford crossing. Does my right hon. Friend agree that before spending billions on the new crossing, we should sort out the problem at the existing crossing, not only to help a greater number of motorists, but to address illegal levels of poor air quality and restore resilience to the M25 motorway network? Will he meet me to discuss these matters further?

The Prime Minister: My hon. Friend makes an important point. As we discussed earlier, we need to tackle congestion and air quality. Stationary traffic is more polluting than

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moving traffic, so sorting out the problems at the existing Dartford crossing is important, but I believe we have to look at the options for a new crossing. As I understand it, two locations are now on the table as a result of early detailed work, and these are the best available options. Highways England has looked in detail at both locations, taking into account economic and community impact. We look forward to seeing what it recommends. When it does, I hope we can make progress. This is a vital set of arteries for our country’s economy, and we need the traffic to be flowing smoothly.

Chris Leslie (Nottingham East) (Lab/Co-op): On reflection, was it wise of the Chancellor to bank on the theory of a £27 billion windfall when it has gone and vanished in the space of only the last three months?

The Prime Minister: We will be hearing quite a lot from the Chancellor in a minute or two. What I would say is that we have a fundamentally strong economy that is facing a very difficult set of world circumstances. Here in Britain, with unemployment at 5%, inflation at virtually 0%, unemployment figures showing a fall again today and wages growing at 2%, that is a better record than most other countries in the developed world can boast. A lot of that is down to the very clear plan set out by my right hon. Friend the Chancellor and followed these past six years.

Q14. [904123] Steve Double (St Austell and Newquay) (Con): Last week was English tourism Week, and I was delighted to welcome an international delegation to the Eden Project to promote Cornwall as a destination for international tourists. Visitor numbers are up in Cornwall, but there is still more we can do to attract overseas visitors out of London and into the regions of our country. What more can the Government do to support the tourist industry and particularly to get more overseas visitors to come to Cornwall?

The Prime Minister: My hon. Friend knows that, as far as I am concerned, there is nothing finer than getting out of London and down to Cornwall. There is no better place than Polzeath beach when the sun is setting, the waves are big and my phone is working—and the Daily Mail photographer has gone home. That helps. We need to get people who come to our country to visit the wonders of London also to spend some time outside London. That is what some of the new schemes that we have announced—the £40 million Discover England fund, for instance—are all about. I urge the authorities in Cornwall to make the most of it.

Angela Smith (Penistone and Stocksbridge) (Lab): In 2014, we exported £12.8 billion-worth of food products, with 73% of the total going to other European states. It is no wonder that 71% of Food and Drink Federation members want us to avoid Brexit. Does the Prime Minister think that our prospect of further improving the export profile of food manufacturing will be strengthened by staying in the European Union?

The Prime Minister: The view from food manufacturers, farmers and indeed the wider business community, 81% of which said yesterday that they wanted to stay in a reformed Europe, is very clear. The arguments on food are particularly clear. Our farmers produce some of the

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cleanest and best food anywhere in the world, and they know that they have access to a market of 500 million consumers without tariffs, without quotas and without any problems. We should not put that at risk. When we look at some of the alternatives to being a part of the single market—a Canadian-style free trade deal, for example—we can see that there are restrictions. Quotas on beef are one example, and I do not want to see that applying to British farmers who have so much to be proud of.

Q15. [904124] Sir Simon Burns (Chelmsford) (Con): Does my right hon. Friend agree that having an inspirational mentor can give young people opportunities from which they would never have benefited before? Can he tell me how the £14 million that the Government will be putting into a new national mentoring scheme will benefit some of the most disadvantaged children in our society?

The Prime Minister: I absolutely agree with my right hon. Friend. I think that one of the most important things that our schools can seek to do in the future is encourage mentors from business, the public sector and charities into their schools to give that extra one-on-one help from which young people benefit so much. I visited a Harris academy in Southwark yesterday to see how well that is going. Every child who is studying for GCSEs who wants a mentor can have one, and I think that that makes a huge difference to those children’s life chances.

The £14 million that we are putting in should allow an extra 25,000 of the most disadvantaged people in our country to have a mentor, and I urge all schools to consider that. There are so many people in business, the public sector and charities who would love to take part and help young people to achieve their potential.

Caroline Lucas (Brighton, Pavilion) (Green): The Prime Minister likes to suggest that he is the champion of localism, but today his Government are seeking to gag local communities with a crass forced academies policy

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that will stamp out local consultation and dissent. Can he explain to the vast majority of parents and residents in Brighton and Hove who recently roundly rejected academy status for two local schools why their views will count for nothing in the future?

The Prime Minister: I would argue that academy schools represent true devolution, because the parents, the governors and the headteacher end up having full control of the school and are able to make decisions about its future. If that does not convince the hon. Lady, I ask her to look at the results. She will see that primary sponsored academies have better records and are improving faster, and she will see that 88% of converter academy schools have been rated good or outstanding. This is true devolution: making sure that every headteacher is in charge of his or her school and providing the great education that we want for our children.

Pauline Latham (Mid Derbyshire) (Con): My constituent Jacci Woodcock has been diagnosed with terminal breast cancer. She has shown outstanding courage in her fight against the disease, but unfortunately she did not receive support or compassion from her employer, who wanted to dismiss her through capability procedures. Now her former partner, Andy Bradley, is trying to have the house that they own together repossessed, leaving her homeless while she is dying. Does the Prime Minister agree that we require better protection for working people who are diagnosed with terminal illnesses, and will he join me, and Jacci, in supporting the changes outlined in the TUC’s Dying to Work campaign?

The Prime Minister: The points my hon. Friend has made are absolutely right, and I will look very carefully at the case that she has raised. The truth, in all these things, is that as well as clear rules, we need organisations—employers, housing associations, landlords or, indeed, trade unions—to act with genuine compassion, and to think of the person, the human being, at the other end of the telephone.

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Ways and Means

Financial Statement

Mr Deputy Speaker (Mr Lindsay Hoyle): Before I call the Chancellor of the Exchequer, I remind hon. Members that copies of the Budget resolutions will be available to them in the Vote Office at the end of the Chancellor’s speech. I also remind them that it is not the norm to intervene on the Chancellor of the Exchequer or the Leader of the Opposition.

12.33 pm

The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne): Today I report on an economy set to grow faster than any other major advanced economy in the world. I report on a labour market delivering the highest employment in our history, and I report on a deficit down by two thirds, falling each year, and, I can confirm today, on course for a budget surplus. The British economy is stronger because we confronted our country’s problems and took the difficult decisions. The British economy is growing because we did not seek short-term fixes, but pursued a long-term economic plan. The British economy is resilient because, whatever the challenge, however strong the headwinds, we have held to the course we set out.

I must tell the House that we face such a challenge now. Financial markets are turbulent; productivity growth across the west is too low; and the outlook for the global economy is weak. It makes for a dangerous cocktail of risks, but one that Britain is well prepared to handle if we act now so we do not pay later. Britain has learnt to its cost what happens when you base your economic policy on the assumption that you have abolished boom and bust. Britain is not immune to slowdowns and shocks, but nor as a nation are we powerless. We have a choice. We can choose to add to the risk and uncertainty, or we can choose to be a force for stability. In this Budget we choose to put stability first. Britain can choose short-term fixes and more stimulus, as others are, or we can lead the world with long-term solutions to long-term problems.

In this Budget we choose the long term. We choose to put the next generation first. We choose, as Conservatives should always choose, sound public finances to deliver security, lower taxes on business and enterprise to create jobs, reform to improve schools, and investment to build homes and infrastructure, because we know that that is the only way to deliver real opportunity and social mobility. And as Conservatives, we know that the best way we can help working people is to help them to save and let them keep more of the money they earn. That is the path we have followed over the past five years, and it has given us one of the strongest economies in the world; and that is the path we will follow in the years ahead. In this Budget we redouble our efforts to make Britain fit for the future.

Let me turn to the economic forecasts. I want to thank Robert Chote and his team at the Office for Budget Responsibility. To make sure that they have available to them the best statistics in the world, I am today accepting all the recommendations of Sir Charlie Bean’s excellent report. I also want to take this moment to thank another great public servant, Sir Nicholas

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Macpherson. He has served as permanent secretary to the Treasury for 10 years, under three very different Chancellors, and throughout he has always demonstrated the great British civil service values of integrity and impartiality. He is here today to watch the last of the 34 Budgets he has worked on, and on behalf of the House and the dedicated officials in the Treasury, I thank him for his service.

The OBR tells us today that in every year of the forecast, our economy grows and so too does our productivity. But it has revised down growth in the world economy and in world trade. In its words, the outlook is “materially weaker”. It points to the turbulence in financial markets, slower growth in emerging economies such as China, and weak growth across the developed world. Around the globe, it notes that monetary policy, instead of normalising this year as expected, has been further loosened. We have seen the Bank of Japan join Sweden, Denmark, Switzerland and the European Central Bank with unprecedented negative interest rates.

The OBR also notes that this reflects concerns across the west about low productivity growth. The secretary-general of the OECD said last month that

“productivity growth...has been decelerating in a vast majority of countries”.

As a result, the most significant change the OBR has made since its November forecast is its decision to revise down potential UK productivity growth. The OBR had thought that what it describes as the

“drag from the financial crisis”

on our productivity would have eased by now, but the latest data show that it has not. The OBR acknowledges today that this revision is, in its words, a “highly uncertain” judgment call, but I back the OBR 100%. We saw under the last Labour Government what happened when a Chancellor of the Exchequer revised up the trend growth rate, spent money the country did not have and left it to the next generation to pick up the bill. I am not going to let that happen on my watch. These days, thanks to the fact that we have established independent forecasts, our country is confronted with the truth as economic challenges emerge, and can act on them before it is too late. We fix our plans to fit the figures; we do not fix the figures to fit the plans.

The IMF has warned us this month that the global economy is “at a delicate juncture” and faces a growing “risk of economic derailment”. Eight years ago, Britain was the worst prepared of any of the major economies for the crisis we then faced. Today, Britain is among the best prepared for whatever challenges may lie ahead. That is what our long-term economic plan has been all about.

When I became Chancellor, we borrowed £1 in every £4 we spent. Next year, it will be £1 in every £14. Our banks have doubled their capital ratios, we have doubled our foreign exchange reserves, and we have a clear, consistent and accountable monetary policy framework, admired around the world.

The hard work of fixing our economy is paying off. In 2014, we were the fastest-growing major advanced economy in the world. In 2015, we were ahead of everyone but America. So let me give the OBR’s latest forecasts for our economic growth in the face of the new assessment of productivity and the slowing global economy. Last year, GDP grew by 2.2%. The OBR now

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forecasts that it will grow by 2% this year, then 2.2% again in 2017, and then 2.1% in each of the three years after that. The House will want to know how this compares to other countries. I can confirm that, in these turbulent times, the latest international forecast expects Britain to grow faster this year than any other major advanced economy in the world.

The OBR is explicit today that its forecasts are predicated on Britain remaining in the European Union. Over the next few months, this country is going to debate the merits of leaving or remaining in the European Union, and I have many colleagues whom I respect greatly on both sides of this argument. The OBR correctly stays out of the political debate and does not assess the long-term costs and benefits of EU membership, but it does say this, and I quote directly:

“A vote to leave in the forthcoming referendum could usher in an extended period of uncertainty regarding the precise terms of the UK’s future relationship with the EU.”

It goes on to say:

“This could have negative implications for activity via business and consumer confidence and might result in greater volatility in financial and other asset markets”.

Citing a number of external reports, the OBR says this:

“There appears to be a greater consensus that a vote to leave would result in a period of potentially disruptive uncertainty while the precise details of the UK’s new relationship with the EU were negotiated.”

The House knows my view. Britain will be stronger, safer and better off inside a reformed European Union. I believe we should not put at risk all the hard work that the British people have done to make our economy strong again. [Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. We all want to hear what the Chancellor has to say. Some people may agree, some may disagree, but I want to hear him, the electorate want to hear him, and this country wants to hear him.

Mr Osborne: Let me turn to the OBR forecasts for the labour market. Since the autumn statement just four months ago, the businesses in our economy have created over 150,000 more jobs than the OBR expected. That is 150,000 extra families with the security of work, and that is 150,000 reasons to support our long-term economic plan. This morning, unemployment fell again, employment reached the highest level ever, and the data confirm that we have the lowest proportion of people claiming out-of-work benefits since November 1974.

Now the OBR is forecasting a million more jobs over this Parliament. We remember what our political opponents said in the last Parliament: they claimed 1 million jobs would be lost—instead, 2 million were created. When the jobs started coming, we were told that they were going to be low-skilled, but today we know that almost 90% of the new jobs are in skilled occupations. We were told the jobs were going to be part-time, but three quarters are full-time. We were told the jobs would all be in London, but the unemployment rate is falling fastest in the north-east, youth unemployment is falling fastest in the west midlands and employment is growing

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fastest in the north-west. And in today’s forecast, real wages continue to grow and outstrip inflation in each and every year.

The OBR forecasts lower inflation, at 0.7% this year and 1.6% next year. I am today confirming in a letter to the Governor of the Bank of England that the remit for the Monetary Policy Committee remains the symmetric consumer prices index inflation target of 2%. I am also publishing the new remit for the Financial Policy Committee, the body we created to keep an eye on emerging long-term risks in our financial system. I am asking it to be particularly vigilant in the face of current market turbulence, because in this Budget we act now so that we do not pay later.

That brings me to our approach to public spending and the OBR forecasts for our public finances. In every year since 2010, I have been told by the Opposition that now is not the right time to cut Government spending. When the economy is growing, I am told we can afford to spend more. When the economy is not growing, I am told we cannot afford not to. Today, I am publishing new analysis that shows that if we had not taken the action we did in 2010, and had listened instead to our opponents, cumulative borrowing would have been £930 billion more by the end of the decade than it is now forecast to be. If we had taken their advice, Britain would not have been one of the best-prepared economies for the current global uncertainties, we would have been one of the worst-prepared.

Now, the very same people are saying to us that we should spend more again—I reject that dangerous advice. The security of families and businesses depends on Britain living within its means. Last autumn’s spending review delivers a reduction in Government consumption that is judged by the OBR to be the most sustained undertaken in the last 100 years of British history, barring the periods of demobilisation after the first and second world wars. My spending plans in the last Parliament reduced the share of national income taken by the state from the unsustainable 45% we inherited to 40% today. My spending plans in this Parliament will see it fall to 36.9% by the end of this decade. In other words, the country will be spending no more than the country raises in taxes. And we are achieving that while at the same time increasing resources for our NHS and schools, building new infrastructure and increasing our security at home and abroad.

The OBR now tells us that the world has become more uncertain, so we have two options: we can ignore the latest information and spend more than the country can afford—that is precisely the mistake that was made a decade ago—or we can live in the world as it is, and cut our cloth accordingly. I say we act now so we do not pay later. So I am asking my right hon. Friends the Chief Secretary and the Paymaster General to undertake a further drive for efficiency and value for money. The aim is to save a further £3.5 billion in the year 2019-20. At less than half a percent of Government spending in four years’ time, that is more than achievable while maintaining the protections we have set out.

At the same time, we will continue to deliver sensible reforms to keep Britain living within its means. On welfare, last week my right hon. Friend the Secretary of State for Work and Pensions set out changes that will ensure that within the rising disability budget, support is better targeted at those who need it most. Let me

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confirm that this means the disability budget will still rise by more than £1 billion, and we will be spending more in real terms supporting disabled people than at any point under the last Labour Government.

On international aid, I am proud to be part of a Government that was the first to honour Britain’s commitment to spend 0.7% of national income on development. We will not spend more than that, so the Budget will be readjusted, saving £650 million in 2019-20.

We are also going to keep public sector pensions sustainable. We reformed them in the last Parliament, which will save more than £400 billion in the long term. To ensure that those pensions remain sustainable, we have carried out the regular revaluation of the discount rate, and the public sector employer contributions will rise as a result. This will not affect anyone’s pension, and will be affordable within spending plans that are benefiting from the fiscal windfall of lower inflation. Each of these decisions is a demonstration of our determination that the British economy will stay on course. We will not burden our children and grandchildren. This is a Budget for the next generation.

Let me now give the Office for Budget Responsibility’s forecasts for the debt and the deficit. The combination of our action to reduce borrowing this year, along with the revisions to our nominal GDP driven by lower inflation, have produced this paradoxical result. In cash terms, the national debt is lower than it was forecast to be in the autumn, but so too is the nominal size of our economy. We measure the fiscal target against debt to GDP, so that while debt as a percentage of GDP is above target and set to be higher in 2015-16 than the year before, compared with the forecast, the actual level of our national debt in cash is £9 billion lower. In the future, debt falls to 82.6% next year, then 81.3% in 2017-18, then 79.9% the year after. In 2019-20, it falls again to 77.2%, then down again the year after to 74.7%.

Let me turn to the forecast for the deficit. When I became Chancellor, the deficit that we inherited was forecast to reach 11.1% of national income—the highest level in the peacetime history of Britain. Thanks to our sustained action, the deficit is forecast to fall next year to just over a quarter of that, at 2.9%. In 2017-18, it falls to 1.9%. Then it falls again to 1% in 2018-19. In cash terms, in 2010, British borrowing was a totally unsustainable £150 billion a year. This year we are expected to borrow less than half that, at £72.2 billion. Indeed, our borrowing this year is actually lower than the OBR forecast at the autumn statement. Borrowing continues to fall—but not by as much as before—to £55.5 billion next year, £38.8 billion the year after, and £21.4 billion in 2018-19.

I know that there has been concern that the challenging economic times mean we would lose our surplus the following year, and that would have been the case if we had not taken further action today to control spending and make savings. But because we have acted decisively, in 2019-20 Britain is set to have a surplus of £10.4 billion. That surplus is then set to rise to £11 billion the year after. That is 0.5% of GDP in both years.

We said that we would take the action necessary to give Britain’s families economic security. We said that our country would not repeat the mistakes of the past and instead live within our means. Today, we maintain that commitment to long-term stability in challenging

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times. We have taken decisive action to achieve a £10 billion surplus. We act now, so that we do not pay later. We put the next generation first.

In every Budget I have given, action against tax avoidance and evasion has contributed to the repair of our public finances, and this Budget is no different. In the Red Book, we have set out in detail the action that we will take to: shut down disguised remuneration schemes; ensure that UK tax will be paid on UK property development; change the treatment of free plays for remote gaming providers; limit capital gains tax treatment on performance rewards; and cap exempt gains in the employee shareholder status.

Public sector organisations will have a new duty to ensure that those working for them pay the correct tax rather than giving a tax advantage to those who choose to contract their work through personal service companies. Loans to participators will be taxed at 32.5% to prevent tax avoidance, and we will tighten rules around the use of termination payments. Termination payments over £30,000 are already subject to income tax. From 2018, they will also attract employer national insurance. Taken altogether, the further steps in this Budget to stop tax evasion, prevent tax avoidance and tackle imbalances in the system will raise £12 billion for our country over this Parliament.

The Labour party talked about social justice, but left enormous loopholes in our tax system for the very richest to exploit. The independent statistics confirm that, under this Prime Minister, child poverty is down; pensioner poverty is down; inequality is down; and the gender pay gap has never been smaller.

The distributional analysis published today shows that the proportion of welfare and public services going to the poorest has been protected. I can report that the latest figures confirm that the richest 1% paid 28% of all income tax revenue—a higher proportion than in any single year of the previous Labour Government and proof that we are all in this together. [Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. It is strange that we cannot hear your Chancellor of the Exchequer. I want to hear him, and I am sure that you do as well.

Mr Osborne: I can report solid steady growth; more jobs; lower inflation; and an economy on course for a surplus—and all done in a fair way. This is a Britain that is prepared for whatever the world throws at us, because we have stuck to our long-term economic plan.

Credible fiscal policy and effective monetary policy have only ever been part of our plan. A crucial ingredient has always been the lasting structural reforms needed to make our economy fit for the future. With new risks on the horizon, and with all western countries looking for ways to increase living standards, now is not the time to go easy on our structural reforms. It is time to redouble our efforts. My Budgets last year delivered key improvements to productivity, such as the apprenticeship levy, lower corporation tax and the national living wage.

My Budget this year sets out the further bold steps that we need to take: first, fundamental reform of the business tax system, with loopholes closed and reliefs and rates reduced, and the result a huge boost for small business and enterprise; secondly, a radical devolution

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of power so that more of the responsibility and the rewards of economic growth are in the hands of local communities; thirdly, major new commitments to the national infrastructure projects of the future; fourthly, confronting the obstacles that stand in the way of important improvements to education and our children’s future; and, fifthly, backing people who work hard and save. In short, this Budget puts the next generation first, and I will take each step in turn.

In the last Parliament I cut corporation tax dramatically, but I also introduced the diverted profits tax to catch those trying to shift profits overseas. As a result, Britain went from one of the least competitive business tax regimes to one of the most competitive—and we raised much more money for our public services. Today, the Financial Secretary and I are publishing a road map to make Britain’s business tax system fit for the future. It will deliver a low-tax regime that will attract the multinational businesses that we want to see in Britain, but ensure that they pay taxes here too—something that never happened under a Labour Government. It will level the playing field, which has been tilted against our small firms. The approach that we take is guided by the best practice set out by the OECD. This is work that Britain called for, Britain paid for and Britain will be among the very first to implement.

First, some multinationals deliberately over-borrow in the UK to fund activities abroad, and then deduct the interest bills against their UK profits. From April next year, we will restrict interest deductibility for the largest companies at 30% of UK earnings, while making sure that firms whose activities justify higher borrowing are protected with a group ratio rule.

Next, we are setting new hybrid mismatch rules to stop the complex structures that allow some multinationals to avoid paying any tax anywhere, or to deduct the same expenses in more than one country. Then, we are going to strengthen our withholding tax on the royalty payments that allow some firms to shift money to tax havens, and, lastly, we are going to modernise the way that we treat losses. We are going to allow firms to use losses more flexibly in a way that will help over 70,000 mostly British companies, but, with these new flexibilities in place, we will do what other countries do and restrict the maximum amount of profits that can be offset using past losses to 50%. This will apply only to the less than 1% of firms making profits over £5 million, and the existing rules for historic losses in the banking sector will be tightened to 25%.

We will maintain our plans to align tax payment dates for the largest companies more closely to when profits are earned, but we will give firms longer to adjust to these changes, which will now come into effect in April 2019. All these reforms to corporation tax will help create a modern tax code that better reflects the reality of the global economy. Together, they raise £9 billion in extra revenue for the Exchequer. But our policy is not to raise taxes on business. Our policy is to lower taxes on business. So, everything we collect from the largest firms who are trying to pay no tax will be used to help millions of firms who pay their fair share of tax.

I can confirm today that we are going to reduce the rate of corporation tax even further. That is the rate Britain’s profit-making companies, large and small, have to pay, and all the evidence shows that it is one of the

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most distortive and unproductive taxes there is. Corporation tax was 28% at the start of the last Parliament and we reduced it to 20% at the start of this one. Last summer, I set out a plan to cut it to 18% in the coming years. Today I am going further. By April 2020, it will fall to 17%. Britain is blazing a trail; let the rest of the world catch up.

Cutting corporation tax is only part of our plan for the future. I also want to address the great unfairness that many small businessmen and women feel when they compete against companies on the internet. Sites such as eBay and Amazon have provided an incredible platform for many new small British start-ups to reach large numbers of customers, but there has been a big rise in overseas suppliers storing goods in Britain and selling them online without paying VAT. That unfairly undercuts British businesses both on the internet and on the high street, and today I can announce that we are taking action to stop it.

That is the first thing we are doing to help our small firms. Secondly, we are going to help the new world of micro-entrepreneurs who sell services online or rent out their homes through the internet. Our tax system should be helping these people so I am introducing two new tax-free allowances, each worth £1,000 a year, for both trading and property income. There will be no forms to fill in, no tax to pay—it is a tax break for the digital age and at least half a million people will benefit.

On top of the two measures comes the biggest tax cut for business in this Budget. Business rates are the fixed cost that weigh down on many small enterprises. At present, small business rate relief is only permanently available to firms with a rateable value of less than £6,000. In the past, I have been able to double it for one year only. Today I am more than doubling it, and more than doubling it permanently. The new threshold for small business rate relief will rise from £6,000 to a maximum threshold of £15,000. I am also going to raise the threshold for the higher rate from £18,000 to £51,000.

Let me explain to the House what that means. From April next year, 600,000 small businesses will pay no business rates at all. That is an annual saving for them of up to nearly £6,000, forever. A further quarter of a million businesses will see their rates cut. In total, half of all British properties will see their business rates fall or be abolished altogether. To support all ratepayers, including larger stores who face tough competition and who employ so many people, we will radically simplify the administration of business rates, and from 2020, switch the uprating from the higher RPI to the lower CPI. That is a permanent long-term saving for all businesses in Britain. A typical corner shop in Barnstaple will pay no business rates. A typical hairdresser in Leeds will pay no business rates. A typical newsagents in Nuneaton will pay no business rates.

This is a Budget which gets rid of loopholes for multinationals and gets rid of tax for small businesses. A £7 billion tax cut for our nation of shopkeepers. A tax system that says to the world: we are open for business. This is a Conservative that are on your side.

Just over a year ago, I reformed residential stamp duty. We moved from a distortive slab system to a much simpler slice system, and as a result 98% of homebuyers are paying the same or less and revenues from the expensive properties have risen. The International Monetary Fund welcomed the changes and suggests we do the

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same to commercial property, so that is what we are going to do, and in a way that helps our small firms. At the moment, a small firm can pay just £1 more for a property and face a tax bill three times as large. That makes no sense. So from now on, commercial stamp duty will have a zero rate band on purchases up to £150,000, a 2% rate on the next £100,000, and a 5% top rate above £250,000. There will also be a new 2% rate for those high-value leases with a net present value above £5 million.

This new tax regime comes into effect from midnight tonight. There are transitional rules for purchasers who have exchanged but not completed contracts before midnight. These reforms raise £500 million a year and while 9% will pay more, more than 90% will see their tax bills cut or stay the same. So, if you buy a pub in the midlands worth, say, £270,000, you would today pay over £8,000 in stamp duty. From tomorrow, you will pay just £3,000. It is a big tax cut for small firms, all in a Budget that backs small business.

Businesses also want a simpler tax system. I have asked Angela Knight and John Whiting at the Office of Tax Simplification to look at what more we can do to make the tax system work better for small firms and I am funding a dramatic improvement in the service that Her Majesty’s Revenue and Customs offers them. Many retailers have complained bitterly to me about the complexity of the carbon reduction commitment. It is not a commitment; it is a tax. I can tell the House that we are not going to reform it. Instead, I have decided to abolish it altogether. To make good the lost revenue, the climate change levy will rise from 2019. The most energy intensive industries, such as steel, remain completely protected, and I am extending the climate change agreements that help many others.

The Secretary of State for Energy and Climate Change and I are announcing £730 million in further auctions to back renewable technologies, and we are now inviting bids to help develop the next generation of small modular reactors. We are also going to help one of the most important and valued industries in our United Kingdom, which has been severely affected by global events. The oil and gas sector employs hundreds of thousands of people in Scotland and around our country. In my Budget a year ago, I made major reductions to its taxes but the oil price has continued to fall, so we need to act now for the long term. I am today cutting in half the supplementary charge on oil and gas from 20% to 10% and I am effectively abolishing petroleum revenue tax too, backing this key Scottish industry and supporting jobs right across Britain—[Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Mr Ellis, Mr Shelbrooke, just relax. There is more to come.

Mr Osborne: Both those major tax cuts will be backdated so that they are effective from 1 January this year and my hon. Friend the Exchequer Secretary will work with the industry to give them our full support.

We are only able to provide this kind of support to our oil and gas industry because of the broad shoulders of the United Kingdom. None of this support would have been remotely affordable if, in just eight days’ time, Scotland had broken away from the rest of the UK, as the nationalists wanted. Their own audit of Scotland’s public finances confirms that they would have struggled

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from the start with a fiscal crisis under the burden of the highest budget deficit in the western world. Thankfully, the Scottish people decided that we are better together in one United Kingdom.

Believing in our United Kingdom is not the same as believing that every decision should be taken here in Westminster and Whitehall, and that is the next step in this Budget’s plan to make Britain fit for the future. Because as Conservatives we know that if we want local communities to take responsibility for local growth, they have to be able to reap the rewards. This Government are delivering the most radical devolution of power in modern British history. We are devolving power to our nations. The Secretary of State for Scotland and I have agreed the new fiscal framework with the Scottish Government. We are also opening negotiations on a city deal with Edinburgh; we back the new V&A museum in Dundee; and in response to the powerful case made to me by Ruth Davidson we are providing new community facilities for local people in Helensburgh and the Royal Navy personnel nearby at Faslane, paid for by our LIBOR fines.

In Wales, we are committed to devolving new powers to the Assembly and yesterday the Secretary of State for Wales and the Chief Secretary to the Treasury signed a new billion-pound deal for the Cardiff region. We are opening a discussion on a city deal for Swansea and a growth deal for north Wales, so it is better connected to our northern powerhouse. I have listened to the case made by Welsh Conservative colleagues and I can announce today that from 2018 we are going to halve the price of the tolls on the Severn crossings.

The Secretary of State for Northern Ireland and I are working towards the devolution of corporation tax. I am also extending enhanced capital allowances to the enterprise zone in Coleraine and we will use over £4 million from LIBOR fines to help establish the first air ambulance service for Northern Ireland.

In this Budget we make major further advances in the devolution of power within England too. It was less than two years ago that I called for the creation of strong elected Mayors to help us build a northern powerhouse. Since then, powerful elected Mayors have been agreed for Manchester, Liverpool, Tees Valley, Newcastle and Sheffield. Over half the population of the northern powerhouse will be able to elect a Mayor accountable to them next year. We will have an elected Mayor for the West Midlands too.

These new devolution arrangements evolve and grow stronger. Today I can tell the House that the Secretary of State for Justice and I are transferring new powers over the criminal justice system to Greater Manchester. This is the kind of progressive social policy that this Government are proud to pioneer. I can also announce to the House that today, for the first time, we have reached agreement to establish new elected Mayors in our English counties and southern cities too. I want to thank my right hon. Friend the Secretary of State for Communities and Local Government and my Treasury colleague Jim O’Neill for their superhuman efforts. We have agreed a single powerful East Anglia combined authority, headed up by an elected Mayor and almost a billion pounds of new investment. We have also agreed a new West of England mayoral authority—and they

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too will see almost a billion pounds invested locally. The authorities of Greater Lincolnshire will have new powers, new funding and a new Mayor. North, south, east and west—the devolution revolution is taking hold.

When I became Chancellor, 80% of local government funding came in largely ring-fenced grants from central Government. It was the illusion of local democracy. By the end of this Parliament, 100% of local government resources will come from local government—raised locally, spent locally, invested locally. Our great capital city wants to lead the way. My friend the Mayor of London and my hon. Friend the Member for Richmond Park (Zac Goldsmith) passionately argue for the devolution of business rates. I can confirm today that the Greater London Authority will move towards full retention of its business rates from next April, three years early. Michael Heseltine has accepted our invitation to lead a Thames Estuary growth commission and he will report to me with its ideas next year.

In every international survey of our country, our failure for a generation to build new housing and new transport has been identified as a major problem. But in this Government we are the builders. So today we are setting out measures to speed up our planning system, zone housing development and prepare the country for the arrival of 5G technology. My right hon. Friend the Business Secretary will be bringing forward our innovation proposals. And because we make savings in day-to-day spending we can accelerate capital investment and increase it as a share of GDP. All these are things that a country focused on its long-term future should be doing.

Our new stamp duty rates on additional properties will come into effect next month. I have listened to colleagues and the rates will apply to larger investors too. We are going to use receipts to support community housing trusts, including £20 million to help young families on to the housing ladder in the south-west of England. This is a brilliant idea from my hon. Friend the Member for Truro and Falmouth (Sarah Newton) and many other colleagues. And it is proof that when the south-west votes blue, their voice is heard loud here in Westminster.

Because under this Government we are not prepared to let people be left behind, I am also announcing a major new package of support worth over £115 million to support those who are homeless and to reduce rough sleeping.

Last year, I established a new National Infrastructure Commission to advise us all on the big long-term decisions we need to boost our productivity. I am sure everyone in the House will want to thank Andrew Adonis and his fellow commissioners for getting off to such a strong start. They have already produced three impressive reports. They recommend much stronger links across northern England. So we are giving the green light to High Speed 3 between Manchester and Leeds; we are finding new money to create a four-lane M62; and we will develop the case for a new tunnelled road from Manchester to Sheffield. My hon. Friends the Members for Carlisle (John Stevenson), for Penrith and The Border (Rory Stewart) and for Hexham (Guy Opperman) have told us not to neglect the north Pennines. So we will upgrade the A66 and the A69 too.

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I said we would build the northern powerhouse. We have put in place the Mayors. We are building the roads. We are laying the track. We are making the northern powerhouse a reality and rebalancing our country.

I am also accepting the National Infrastructure Commission’s recommendations on energy and on London transport. The Government who are delivering Crossrail 1 will now commission Crossrail 2. I know this commitment to Crossrail 2 will be warmly welcomed by the Leader of the Opposition, the right hon. Member for Islington North (Jeremy Corbyn). It could have been designed just for him, because it is good for all those who live in north London and are heading south.

Across Britain this Budget invests in infrastructure—from a more resilient train line in the south-west, to the crossings at Ipswich and Lowestoft in the east that we promised—we are making our country stronger.

To respond to the increasing extreme weather events our country is facing I am today proposing further substantial increases in flood defences. That would not be affordable within existing budgets. So I am going to increase the standard rate of insurance premium tax by just half a per cent., and commit all the extra money we raise to flood defence spending. That is a £700 million boost to our resilience and flood defences. The urgent review already under way by the Secretary of State for Environment, Food and Rural Affairs and the Chancellor of the Duchy of Lancaster will determine how the money is best spent. But we can get started now. I have had many representations from colleagues across the House, including my hon. Friends the Members for Morley and Outwood (Andrea Jenkyns) and for Calder Valley (Craig Whittaker). So we are giving the go-ahead to the schemes for York, Leeds, Calder Valley, Carlisle and across Cumbria.

In this Budget we invest in our physical infrastructure and we invest in our cultural infrastructure too. I am supporting specific projects from the Hall for Cornwall in Truro, to £13 million for Hull to make a success as city of culture. Our cathedral repairs fund has been enormously successful so I am extending it with an additional £20 million, because there is one thing that is pretty clear these days—the Conservative party is a broad church. In the 400th anniversary of the great playwright’s death, I have heard the sonnets from the right hon. Member for Knowsley (Mr Howarth) and we commit to a new Shakespeare North theatre, on the site of the first indoor theatre outside of our capital. My hon. Friend the Member for Newark (Robert Jenrick) has proposed that we introduce a new tax break for museums that develop exhibitions and take those exhibitions on tour. It is a great idea and we add that to our collection today.

We cut taxes for business. We devolve power. We develop our infrastructure. The next part of our plan to make Britain fit for the future is to improve the quality of our children’s education. Providing great schooling is the single most important thing we can do to help any child from a disadvantaged background succeed. It is also the single most important thing we can do to boost the long-term productivity of our economy, because our nation’s productivity is no more and no less than the combined talents and efforts of the people of these islands. That is why education reform has been so central to our mission since we came to office five years ago. Today we take these further steps.

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First, I can announce that we are going to complete the task of setting schools free from local education bureaucracy, and we are going to do it in this Parliament. I am today providing extra funding so that by 2020 every primary and secondary school in England will be, or be in the process of becoming, an academy. Secondly, we are going to focus on the performance of schools in the north, where results have not been as strong as we would like. London’s school system has been turned around; we can do the same in the northern powerhouse and I have asked the outstanding Bradford headteacher, Sir Nick Weller, to provide us with a plan. Thirdly, we are going to look at teaching maths to 18 for all pupils.

Fourthly, we are going to introduce a fair national funding formula, and I am today committing £500 million to speed up its introduction. We will consult, and our objective is to get over 90% of the schools that will benefit on to the new formula by the end of this Parliament. The Conservative Government are delivering on their promise of fair funding for our schools. Tomorrow my right hon. Friend the Education Secretary will publish a White Paper setting out further improvements that we will make to the quality of education, because we will put the next generation first.

Doing the right thing for the next generation is what this Government and this Budget are about, no matter how difficult and controversial that is. We cannot have a long-term plan for the country unless we have a long-term plan for our children’s healthcare. Here are the facts that we know: five-year-old children are consuming their body weight in sugar every year. Experts predict that within a generation more than half of all boys and 70% of girls could be overweight or obese. Here is another fact that we all know: obesity drives disease. It increases the risk of cancer, diabetes and heart disease, and it costs our economy £27 billion a year. That is more than half the entire NHS pay-bill.

Here is another truth we all know: one of the biggest contributors to childhood obesity is sugary drinks. A can of cola typically has nine teaspoons of sugar in it. Some popular drinks have as many as 13 teaspoons. That can be more than double a child’s recommended added sugar intake. Let me give credit where credit is due. Many in the soft drinks industry recognise that there is a problem and have started to reformulate their products. Robinsons recently removed added sugar from many of its cordials and squashes. Sainsbury’s, Tesco and the Co-op have all committed to reduce sugar across their ranges. So industry can act, and with the right incentives I am sure it will.

I am not prepared to look back at my time here in this Parliament, doing this job, and say to my children's generation, “I’m sorry. We knew there was a problem with sugary drinks. We knew it caused disease, but we ducked the difficult decisions and we did nothing.” So today I can announce that we will introduce a new sugar levy on the soft drinks industry. Let me explain how it will work. It will be levied on the companies. It will be introduced in two years’ time to give companies plenty of space to change their product mix. It will be assessed on the volume of the sugar-sweetened drinks they produce or import. There will be two bands—one for total sugar content above 5 grams per 100 millilitres, and a second, higher band for the most sugary drinks with more than 8 grams per 100 millilitres. Pure fruit

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juices and milk-based drinks will be excluded, and we will ensure that the smallest producers are kept out of scope.

We will, of course, consult on implementation. We are introducing the levy on the industry which means that companies can reduce the sugar content of their products, as many already do. It means that they can promote low-sugar or no-sugar brands, as many already are. They can take these perfectly reasonable steps to help with children’s health. Of course, some may choose to pass the price on to consumers, and that will be their decision, and this would have an impact on consumption too. We as Conservatives understand that tax affects behaviour. So let us tax the things we want to reduce, not the things we want to encourage. The Office for Budget Responsibility estimates that this levy will raise £520 million, and that is tied directly to the second thing we are going to do today to help children’s health and wellbeing.

We are going to use the money from this new levy to double the amount of funding we dedicate to sport in every primary school. For secondary schools, we are going to fund longer school days for those that want to offer their pupils a wider range of activities, including extra sport. It will be voluntary for schools but compulsory for the pupils. There will be enough resources for a quarter of secondary schools to take part, but that is just the start. The devolved Administrations will receive equivalent funding through the Barnett formula and I hope they spend it on the next generation too.

I am also using the LIBOR funds specifically to help with children’s hospital services. Members across the House have asked for resources for children’s care in Manchester, Sheffield, Birmingham and Southampton, and we provide those funds today. We have a determination to improve the health of our children, a new levy on excessive sugar in soft drinks, the money used to double sport in our schools—a Britain fit for the future, a Government not afraid to put the next generation first.

Let me now turn to indirect taxes. Last autumn I said that we would use all the VAT we collect from sanitary products to support women’s charities. I want to thank the many Members here on all sides, in all parties, for the impressive proposals they have put forward. Today we allocate £12 million from the tampon tax to these charities across the UK, from Breast Cancer Care to the White Ribbon Campaign and many other causes. We will make substantial donations to the Rosa fund and to Comic Relief so that we reach many more grassroots causes.

I now turn to excise duties. When we took office, we inherited plans that would have seen fuel duty rise above inflation every year and cost motorists 18p extra a litre. We wholeheartedly rejected those plans and instead we took action to help working people. We froze fuel duty throughout the last Parliament—a tax cut worth nearly £7 billion a year. In the past 12 months, petrol prices have plummeted. That is why we pencilled in an inflation rise. But I know that fuel costs still make up a significant part of household budgets and weigh heavily on small firms. Families paid the cost when oil prices rocketed; they should not be penalised when oil prices fall. We are the party for working people, so I can announce that fuel duty will be frozen for the sixth year

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in a row. That is a saving of £75 a year to the average driver and £270 a year to a small business with a van. It is the tax boost that keeps Britain on the move.

Tobacco duty will continue to rise, as set out in previous Budgets, by 2% above inflation from 6 pm tonight and hand-rolling tobacco will rise by an additional 3%. To continue our drive to improve public health, we will reform our tobacco regime to introduce an effective floor on the price of cigarettes and consult on increased sanctions for fraud.

I have always been clear that I want to support responsible drinkers and our nation’s pubs. Five years ago we inherited tax plans that would have ruined that industry. Instead, prompted by my hon. Friend the Member for Burton (Andrew Griffiths) and others, the action we took in the last Parliament on beer duty saved hundreds of pubs and thousands of jobs. Today I back our pubs again. I am freezing beer duty, and cider duty too. Scotch whisky accounts for a fifth of all the UK’s food and drink exports. So we back Scotland and back that vital industry too, with a freeze on whisky and other spirits duty this year. All other alcohol duties will rise by inflation, as planned.

There are some final measures that we need to take to boost enterprise, back the next generation, and help working people keep more of the money they earn. All these have been themes of this Budget. Let me start with enterprise. We Conservatives know that when it comes to growing the economy, alongside good infrastructure and great education we need to light the fires of enterprise, and our tax system can do more. To help the self-employed I am going to fulfil the manifesto commitment we made, and from 2018 abolish class 2 national insurance contributions altogether. That is a simpler tax system and a tax cut of over £130 for each of Britain’s 3 million-strong army of the self-employed.

Next, we want to help people to invest in our businesses and help them to create jobs. The best way to encourage that is to let them keep more of the rewards when that investment is successful. Our capital gains tax is now one of the highest in the developed world, when we want our taxes to be among the lowest. The headline rate of capital gains tax currently stands at 28%. Today I am cutting it to 20%. and I am cutting the capital gains tax paid by basic rate taxpayers from 18% to just 10%. The rates will come into effect in just three weeks’ time. The old rates will be kept in place for gains on residential property and carried interest. I am also introducing a brand-new 10% rate on long-term external investment in unlisted companies, up to a separate maximum £10 million of lifetime gains. In this Budget, we are putting rocket boosters on the backs of enterprise and productive investment.

In this Budget, I also want to help the next generation build up assets and save. The fundamental problem is that far too many young people in their 20s and 30s have no pension and few savings. Ask them and they will tell you why. It is because they find pensions too complicated and inflexible, and most young people face an agonising choice of either saving to buy a home or saving for their retirement. We can help by providing people with more information about the multiple pensions

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many have, and providing more tax relief on financial advice, and the Economic Secretary and I do both today.

We can also help those on the lowest incomes to save, and the Prime Minister announced our Help to Save plan on Monday. Over the past year, we have consulted widely on whether we should make compulsory changes to the pension tax system. But it was clear that there was no consensus. Indeed, the former Pensions Minister, the Liberal Democrat Steve Webb, said I was trying to abolish the lump sum. Instead, we are going to keep the lump sum and abolish the Liberal Democrats. [Laughter.] I am tempted to say it will take effect from midnight tonight.

My pension reforms have always been about giving people more—[Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Mr Opperman, you may have been an amateur jockey, but I do not want you to fall short on this Budget.

Mr Osborne: My pension reforms have always been about giving people more freedom and more choice. So, faced with the truth that young people are not saving enough, I am today providing a different answer to the same problem. We know people like ISAs—because they are simple. You save out of taxed income, everything you earn on your savings is tax-free, and it is tax-free when you withdraw it too. From April next year, I am going to increase the ISA limit from just over £15,000 to £20,000 a year for everyone.

For those under 40, many of whom have not had such a good deal from the pension system, I am introducing a completely new, flexible way for the next generation to save. It is called the Lifetime ISA. Young people can put money in, get a Government bonus, and use it to either buy their first home or save for their retirement.

Here is how it will work. From April 2017, anyone under the age of 40 will be able to open a Lifetime ISA and save up to £4,000 each year. For every £4 you save, the Government will give you £1. So put in £4,000 and the Government will give you £1,000. Every year. Until you are 50. You do not have to choose between saving for your first home or saving for your retirement. With the new Lifetime ISA, the Government are giving you money to do both.

For the basic rate taxpayer, that is the equivalent of tax-free savings into a pension, and unlike a pension, you will not pay tax when you come to take the money out in retirement. For the self-employed, it is the kind of support they simply cannot get from the pensions system today.

Unlike a pension, you can access your money anytime without the bonus and with a small charge. And we are going to consult the industry on whether, like the American 401(k), you can return the money to the account to reclaim the bonus—so it is both generous and completely flexible. Those who have already taken out our enormously popular Help to Buy ISA will be able to roll it into the new Lifetime ISA—and keep the Government match. A £20,000 ISA limit for everyone. A new Lifetime ISA. A Budget that puts the next generation first.

I turn now to my final measures. This Government were elected to back working people. The best way to help working people is to let them keep more of the

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money they earn. When I became Chancellor, the tax-free personal allowance was less than £6,500. In two weeks’ time, it will rise to £11,000. We committed in our manifesto that it would reach £12,500 by the end of this Parliament. Today we take a major step towards that goal. From April next year, I am raising the tax-free personal allowance to £11,500. That is a tax cut for 31 million people. It means a typical basic rate taxpayer will be paying over £1,000 less income tax than when we came into government five years ago. And it means another 1.3 million of the lowest paid taken out of tax altogether—social justice delivered by Conservative means.

We made another commitment in our manifesto, and that was to increase the threshold at which people pay the higher rate of tax. That threshold stands at £42,385 today. I can tell the House that from April next year I am going to increase the higher rate threshold to £45,000. That is a tax cut of over £400 a year. It is going to lift over half a million people who should never have been paying the higher rate out of that higher rate band altogether. It is the biggest above-inflation cash increase since Nigel Lawson introduced the 40p rate over 30 years ago. A personal tax free allowance of £11,500. No one paying the 40p rate under £45,000. We were elected as a Government for working people. And we have delivered a Budget for working people.

Five years ago, we set out a long-term plan because we wanted to make sure that Britain never again was powerless in the face of global storms. We said then that we would do the hard work to take control of our destiny and put our own house in order. Five years later, our economy is strong, but the storm clouds are gathering again. Our response to this new challenge is clear. We act now so we do not pay later.

This is our Conservative Budget. One that reaches a surplus so the next generation does not have to pay our debts. One that reforms our tax system so the next

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generation inherits a strong economy. One that takes the imaginative steps so the next generation is better educated. One that takes bold decisions so that our children grow up fit and healthy.

This is a Budget that gets the investors investing, savers saving, businesses doing business, so that we build for working people a low-tax, enterprise Britain, secure at home, strong in the world. I commend to the House a Budget that puts the next generation first.

Hon. Members: Hear, hear.

provisional collection of taxes

Motion made, and Question put forthwith (Standing order No. 51(2)),

That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—

(a) Stamp duty land tax (calculating tax on non-residential and mixed transactions) (Motion no. 45.)

(b) Tobacco products duty (rates) (Motion no. 62.)

(c) Alcoholic liquor duties (rates) (Motion no. 63.)— (Mr Osborne.)

Question agreed to.

Mr Deputy Speaker (Mr Lindsay Hoyle): I shall now call upon the Chancellor of the Exchequer to move the motion entitled “Amendment of the Law”, and it is on this motion that the debate will take place today and on succeeding days. The Questions on this motion, and on the remaining motions, will be put at the end of Budget debate, on Tuesday 22 March.

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Budget Resolutions and Economic Situation

amendment of the law

Motion made, and Question proposed,

That,—

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

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

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

(b) for refunding an amount of tax;

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

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

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

1.39 pm

Jeremy Corbyn (Islington North) (Lab): The Budget the Chancellor has just delivered is actually the culmination of six years of his failures. It is a Budget—[Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. This corner of the Chamber by the Chair is not some kind of fairground attraction. We expect courtesy from both sides of the House whoever is speaking. I want to hear the Leader of the Opposition and, as I said before, I know that the public in this country want to hear what the Opposition have to say as well.

Jeremy Corbyn: Thank you, Mr Deputy Speaker.

It is a recovery built on sand and a Budget of failure. The Chancellor has failed on the budget deficit, failed on debt, failed on investment, failed on productivity, failed on the trade deficit, failed on the welfare cap and failed to tackle inequality in this country. Today he has announced that growth is revised down last year, this year and every year he has forecast. Business investment is revised down and Government investment is revised down. It is a very good thing that the Chancellor is blaming the last Government—he was the Chancellor in the last Government.

This Budget has unfairness at its very core, paid for by those who can least afford it. The Chancellor could not have made his priorities clearer. While half a million people with disabilities are losing over £1 billion in personal independence payments, corporation tax is being cut and billions handed out in tax cuts to the very wealthy.

The Chancellor has said that he has to be judged on his record and by the tests he set himself. Six years ago, he promised a balanced structural current budget by 2015. It is now 2016—there is still no balanced budget. In 2010, he and the Prime Minister claimed, “We’re all in it together.” The Chancellor promised this House that the richest would

“pay more than the poorest, not just in terms of cash but as a proportion of income as well.”—[Official Report, 22 June 2010; Vol. 512, c. 179.]

So let me tell him how that has turned out. The Institute for Fiscal Studies—an independent organisation—found

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that “the poorest have” suffered “the greatest proportionate losses.” The Prime Minister told us recently that he was delivering “a strong economy” and “a sound plan”—but strong for who? Strong to support who, and sound for who, when 80% of the public spending cuts have fallen on women in our society? This Budget could have been a chance to demonstrate a real commitment to fairness and equality; yet again, the Chancellor has failed.

Five years ago—they were great words—the Chancellor promised

“a Britain carried aloft by the march of the makers”—[Official Report, 22 March 2011; Vol. 525, c. 966.]

Soaring rhetoric, yet despite the resilience, ingenuity and hard work of manufacturers, the manufacturing sector is now smaller that it was eight years ago. Last year, he told the Conservative conference, “We are the builders”, but ever since then the construction industry has been stagnating. This is the record of a Conservative Chancellor who has failed to balance the books, failed to balance out the pain and failed to rebalance our economy. It is no wonder that his close friend, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), is complaining that

“we were told for the next seven years things were looking great. Within one month of that forecast, we’re now being told that things are difficult”.

The gulf between what the Conservative Government expect from the wealthiest and what they demand from ordinary British taxpayers could not be greater. The “mate’s rates” deals for big corporations on tax deals is something they will be for ever remembered for. This is a Chancellor who has produced a Budget for hedge fund managers more than for small businesses. This is a Government—[Interruption.]

Mr Deputy Speaker: Mr Williamson—I do not know what it is but you always want to catch my attention. Let me assure you—you have got my attention, so let us make sure you do not get it again.

Jeremy Corbyn: Thank you, Mr Deputy Speaker.

This is a Government who stood by as the steel industry bled. Skills, output and thousands of very skilled jobs have been lost, and communities ruined and damaged, by the inaction of the Government. The Chancellor set himself a £1 trillion export target; it is going to be missed by a lot more than a country mile. Instead of trade fuelling growth, as he promised, it is now holding back growth. He talked of the northern powerhouse. We now discover that 97% of the senior staff in the northern powerhouse have been outsourced to London—to the south. For all his talk of the northern powerhouse, the north-east accounts for less than 1% of Government infrastructure pipeline projects in construction. For all his rhetoric, there has been systematic under-investment in the north.

Across the country, local authorities—councils—are facing massive problems, with a 79% cut in their funding. Every library that has been closed, every elderly person left without proper care, and every swimming pool with reduced opening hours or closed altogether is a direct result of the Government underfunding our local authorities and councils.

Far from presiding over good-quality employment, he is the Chancellor who has presided over under- employment and insecurity, with nearly—[Interruption.]

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Mr Deputy Speaker: Order. Certain people are testing my patience, so just think what your constituents are thinking out there as well. I want to hear the Leader of the Opposition and I expect you to hear the Leader of the Opposition. If you do not want to hear him, I am sure the Tea Room awaits. Perhaps there will be a phone call for Mr Hoare if he keeps shouting.

Jeremy Corbyn: Thank you, Mr Deputy Speaker.

Security comes from knowing what your income is and knowing where your job is. If you are one of those nearly 1 million people on a zero-hours contract, you do not know what your income is: you do not have that security. We have the highest levels of in-work poverty on record and the largest number of people without security. They need regular wages that can end poverty and can bring about real security in their lives. Logically, low-paid jobs do not bring in the tax revenues that the Chancellor tells us he needs to balance his books. Household borrowing is once again being relied on to drive growth. Risky unsecured lending is growing at its fastest rate for the past eight years, and that is clearly not sustainable.

The renewables industry is vital to the future of our economy and our planet—indeed, our whole existence. It has been targeted for cuts, with thousands of jobs lost in the solar panel production industry. The Prime Minister, as we discussed earlier at Prime Minister’s Question Time, promised “the greenest Government ever”—here again, an abject failure. Science spending is also down, by £1 billion compared with 2010.

Home ownership is down under this Conservative Government. A whole generation is locked out of any prospect of owning their own home. This is the Chancellor who believes that a starter home costing £450,000 is affordable. It might be for some of his friends and for some Conservative Members, but not for those people who are trying to save for a deposit because they cannot get any other kind of house.

We have heard promises of garden cities before. Two years ago, the Chancellor pledged a garden city of 15,000 homes in Ebbsfleet, and many cheered that. His Ministers have been very busy ever since then—they have made 30 Ebbsfleet announcements, and they have managed to build 368 homes in Ebbsfleet. That is 12 homes for every press release. We obviously need a vast increase in press releases in order to get any homes built in Ebbsfleet, or indeed anywhere else.

While we welcome the money that will be put forward to tackle homelessness, it is the product of under-investment, underfunding of local authorities, not building enough council housing and not regulating the private rented sector. That is what has led to this crisis. We need to tackle the issue of homelessness by saying that everybody in our society deserves a safe roof over their head.

Child poverty is forecast to rise every year in this Parliament. What a damning indictment of this Government, and what a contrast to the last Labour Government, who managed to lift almost 1 million children out of poverty.

Eighty-one per cent of the tax increases and benefit cuts are falling on women, and the 19% gender pay gap persists. Despite the Chancellor’s protestations, it is a serious indictment that women are generally paid less than men for doing broadly similar work. It will require a Labour Government to address that.

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The Government’s own social mobility commissioner said that

“there is a growing sense…that Britain’s best days are behind us rather than ahead”,

as the next generation expects to be worse off than the last. The Chancellor might have said a great deal about young people, but he failed to say anything about the debt levels that so many former students have; the high rents that young people have to pay; the lower levels of wages that young people get; and the sense of injustice and insecurity that so many young people in this country face and feel every day. It will again require a Labour Government to harness the enthusiasms, talent and energy of the young people of this country.

Investing in public services is vital to people’s wellbeing—I think we are all agreed on that, or at least I hope we are—yet every time the Chancellor fails, he cuts services, cuts jobs, sells assets and further privatises. That was very clear when we looked at the effects of the floods last year. Flood defences were cut by 27%. People’s homes in Yorkshire, Lancashire and Cumbria were ruined because of his Government’s neglect of river basin management and the flood defences that are so necessary.

Obviously, we welcome any money that is now going into flood defences, but I hope that that money will also be accompanied by a reversal of the cuts in the fire service that make it so difficult for our brilliant firefighters to protect people in their homes, and a reversal of the cuts in the Environment Agency that make it so hard for those brilliant engineers to protect our towns and cities, and for those local government workers who performed so brilliantly during the crisis in December and January in those areas that were flooded.

Our education service invests in people. It is a vital motor for the future wealth of this country, so why has there been a 35% drop in the adult skills budget under this Government? People surely need the opportunity to learn, and they should not have to go into debt in order to develop skills from which we as a community entirely benefit.

On the Chancellor’s announcement yesterday, there is not a shred of evidence to suggest that turning schools into academies boosts performance. There is nothing in the Budget to deal with the real issues of teacher shortage, the school place crisis and ballooning class sizes.

The Chancellor spoke at length about the issue of ill health among young children and the way in which sugar is consumed at such grotesque levels in society. I agree with him and welcome what he said. I am sure he will join me in welcoming the work done by many Members, including my right hon. Friend the Member for Leicester East (Keith Vaz), and by Jamie Oliver in helping to deal with the dreadful situation with children’s health. If we as a society cannot protect our children from high levels of sugar and all that goes with that, including later health crises of cancer and diabetes, we as a House will have failed the nation. I support the Chancellor’s proposals on sugar, and I hope all other Members do, too.