There is an issue, however, that faces the national health service: the deficit has widened to its highest level on record, waiting times are up and the NHS is in a critical condition. Hospital after hospital faces serious

16 Mar 2016 : Column 973

financial problems and is working out what to sell in order to balance its books. Our NHS should have the resources to concentrate on the health needs of the people; it should not have to get rid of resources in order to survive. The Public Accounts Committee reported only yesterday that NHS finances have

“deteriorated at a severe and rapid pace”.

I did not detect much in this Budget that is going to do much to resolve that crisis. The Chancellor has also cut public health budgets, mental health budgets and adult social care.

Earlier this month the Government forced through a £30 per week cut to disabled employment and support allowance claimants—[Interruption.]

Mr Deputy Speaker: Order. There are people having conversations on the Front Bench. If you need to have a conversation, I am sure there is plenty of room in the Tea Room for you.

Jeremy Corbyn: Last week we learned that 500,000 people will lose up to £150 per week due to cuts to personal independence payments. I simply ask the Chancellor: if he can finance his Budget giveaways to different sectors, why can he not fund the need for dignity for the disabled people of this country?

The Chancellor said in the autumn statement that he had protected police budgets, but Sir Andrew Dilnot confirms that there has been a decrease in the police grant, while 18,000 police officers have lost their jobs. As my hon. Friend the Member for Brent Central (Dawn Butler) pointed out in her question to the Prime Minister earlier, in order to cut down on dangerous crime against vulnerable individuals we need community policing and community police officers. Eighteen thousand of them losing their jobs does not help. This Government have failed on the police, the national health service, social care, housing and education.

Public investment lays the foundations for future growth, as the OECD, the International Monetary Fund and the G20 all recognise. The CBI and the TUC are crying out for more infrastructure investment. It is Labour that will invest in the future—in a high-technology, high-skill, high-wage economy.

The investment commitments that the Chancellor has made today are, of course, welcome, but they are belated and nowhere near the scale this country needs. People will rightly fear that this is just another press release on the road to the non-delivery of crucial projects.

The chronic under-investment—both public and private—presided over by this Chancellor means that the productivity gap between Britain and the rest of the G7 is the widest it has been for a generation. Without productivity growth, which has been revised down further today, we cannot hope to improve living standards. The Labour party backs a strategic state that understands that businesses, public services, innovators and workers combine together to create wealth and drive sustainable growth.

The Chancellor adopted a counter-productive fiscal rule. The Treasury Committee responded by saying that it was

“not convinced that the surplus rule is credible”,

16 Mar 2016 : Column 974

and it is right. The Chancellor is locking Britain into an even deeper cycle of low investment, low productivity and low ambition. We will be making the positive case for Britain to remain in the European Union and all the solidarity that can bring.

Over the past six years, the Chancellor has set targets on the deficit, on debt, on productivity, on manufacturing and construction, and on exports. He has failed them all and he is failing Britain.

There are huge opportunities for this country to build on the talent and efforts of everyone, but the Chancellor is more concerned about protecting vested interests. The price of failure is being borne by some of the most vulnerable in our society. The disabled are being robbed of up to £150 a week. Those are not the actions of a responsible statesperson; they are the actions of a cruel and callous Government who side with the wrong people and punish the most vulnerable and the poorest in our society.

The Chancellor was defeated when he tried to make tax credit cuts from next month by the House opposing them, and by Labour Members and Cross Benchers in the Lords. The continuation of austerity that he has confirmed today, particularly in the area of local government spending, is a political choice, not an economic necessity. It locks us into a continued cycle of economic failure and personal misery. The Labour party will not stand by while more poverty and inequality blight this country. We will oppose those damaging choices and make the case for an economy in which prosperity is shared by all.

Let us harness the optimism, the enthusiasm, the hope and the energy of young people. Let us not burden them with debts and unaffordable housing, low-wage jobs and zero-hours contracts, but instead act in an intergenerational way to give young people the opportunities and the chances they want to build a better, freer, more equal and more content Britain. The Chancellor has proved that he is utterly incapable of doing so with his Budget today.

2.1 pm

Mr Andrew Tyrie (Chichester) (Con): The Leader of the Opposition has made the most difficult speech of the parliamentary year. He is responding to a Budget that he has not seen. I have not seen it either, as a matter of fact. I would be interested to know whether he feels that that was the speech of a democratic socialist; I think it was. It was certainly spoken with great sincerity, but I wonder whether—he can nod and tell me whether he agrees or disagrees—he now accepts, as John Smith and Tony Blair did, that a capitalist economy, properly regulated, is the most powerful source of prosperity and growth yet invented.

Mark Garnier (Wyre Forest) (Con): Feel free to nod.

Mr Tyrie: I am not going to put the right hon. Gentleman under any pressure.

The Chancellor deserves a great deal of credit for the recovery, and I have said so before; so does the Prime Minister—he has just slipped out of the Chamber—who has backed the Chancellor, I think, for the most part. The last six years have been extremely difficult at times, and it is a defining achievement for the Government

16 Mar 2016 : Column 975

that they have led the country out of the worst crisis in modern history and that they are now stabilising the public finances, which looked, and indeed were, completely out of control in 2010. We should not forget the scale of the challenge that beset the then coalition Government.

The Chancellor has talked about storm clouds gathering. I think he called it a “cocktail of risks”, coming particularly from abroad. He is certainly right about that. Emerging markets are slowing down, capital markets are faltering and the eurozone is edging back towards a serious crisis. If all that is sustained, the UK economy is going to take a hit. Of course, as the Office for Budget Responsibility has pointed out, the uncertainty in the short term about the EU referendum will not help either. We have seen all that reflected in the OBR’s forecasts, particularly on productivity. The Chancellor is right to be extremely cautious.

If I get time, I will say something briefly about the fiscal rules, and their merits or otherwise; there are some problems with the fiscal rules. I will also say whether fiscal policy should be so frequently adjusted to take account of forecasts as a consequence. I might say something, if I get time, about the way in which Budget measures are advertised so far in advance, which I am not sure is at all helpful.

First, I want to answer one central criticism of the recovery that is now under way—we did not hear so much of that from the Leader of the Opposition, although there were hints of it from time to time—and that is the assertion that the UK is in the grip of an unsustainable debt-driven, consumption-led recovery. Frankly, the statistics do not support that. Of course, one might say that the statistics are not worth much, because they have come from the Office for National Statistics and other sources, and we have discovered that they are of very little merit. Sir Charlie Bean is trying to improve statistics. They are the only figures we have got, however, and on the basis of the figures we have got, that claim, which is certainly widely made, does not hold up.

Investment has contributed a third of the total growth since the depths of the recession in the middle of 2009, despite accounting for only one seventh of GDP in recent years; that is the figure for the past five years. Debt as a proportion of household income has remained well below crisis levels, and recently productivity and real wage growth, which are the hallmarks of a sustainable recovery, are also showing signs of a pick up—something that the Chancellor did not emphasise in his speech—so I do not think that that argument holds up. Even if it were true that the recovery was very uneven as a consequence, that is what I would expect. The bigger the shock—this was a very big shock, the biggest in modern economic history—the more uneven the recovery is likely to be. Growth returns only a result of a fundamental reallocation of capital after a major crisis and more efficient use of that capital in the places to which it goes.

That process, this time, has been made particularly difficult by a profound weakness of the banking system. Firms, especially small and medium-sized enterprises, appear unable to obtain the capital they need to invest and grow even now. Again, that is something that the Chancellor did not emphasise. Although it is true that the average rate of interest for new advances is not very high—around 4%—the total stock of outstanding loans to SMEs tells its own story. It is falling, and has been falling pretty steadily for several years, even though the

16 Mar 2016 : Column 976

economy is recovering. That suggests that SMEs are not able, perhaps because of some form of rationing, to get the money that they need to grow and to sustain economic activity. That is a question that we need to come back to in the context of banking reform. Above all, we need desperately to get much more banking competition into the SME market and into the retail banking market.

I said that I would query the fiscal rules, and I am going to do so, as indeed has the Treasury Committee in an earlier report. The Chancellor was able to show a good deal of flexibility when it mattered in the last Parliament. His fiscal rules provided him with a good deal of leeway to adjust policy in response to the euro crisis, which was a heck of a shock to adjust to. He recently imposed three new restrictions on himself. First, there is this new surplus rule. Then there is the ring-fencing of three quarters of public spending. Now we also have the tax lock, which prevents rises in VAT, national insurance and income tax, which collectively account for three quarters of tax revenue.

Making fiscal rules all began with the efforts of Tony Blair and the former right hon. Member for Kirkcaldy and Cowdenbeath to restore credibility to Labour’s economic policy in the 1990s. Since 1997—I have taken a look at the fiscal rules and if somebody wants me to go through them all, I will, but that will only delay the House—I have worked out that we have had six, so the average life of those fiscal rules has been three and a half years. I am afraid that the record of this Government and the coalition Government is no better than that of their predecessors; actually, it is somewhat worse. There is some merit in the Government’s giving guidance to markets and the public about their intentions, particularly their long-term and strategic intentions, but the rules have been presented, as their names suggest, as something far more permanent. They are called guarantees, rules, mandates, charters or pledges. Of course, as each one has been broken, it has not done much for the quality of politics and political discourse, and it has not done anything for economic credibility. The Government’s fiscal credibility does not derive from the rules or the mandates; it comes from the fact that they have tackled the deficit and have got it down from 10% to about 3% or a bit more.

Parties on both sides of the House now have fiscal rules. The new Labour shadow Chancellor—I do not think he is new Labour himself, but he is the recently appointed shadow Chancellor—has recently come up with one of his own. Both parties are at it, but I do not think the rules of either of them are offering much.

John Redwood (Wokingham) (Con): Is not one of the problems faced by any Government the fact that the so-called independent forecasts by the OBR and the Bank of England are always wrong and that they are always changing them? Those forecasts can have more of an impact on the Budget than common-sense judgments about where the economy is going, because we are always dealing with the errors of the OBR.

Mr Tyrie: That is exactly the point I was coming on to make. We have just seen that the Chancellor has been forced to adjust his short-term policy to take account of what the OBR is now saying. He has altered his plans of only four months ago, and so long as the rule remains in place, he will have to do so again after the next fiscal

16 Mar 2016 : Column 977

event. That is mainly why the Treasury Committee concluded—the Leader of the Opposition did not give the whole quote—that it was

“not convinced that the surplus rule is credible in its current form.”

There is merit in something that can give some guidance, but it must be something less than one of these cast-iron rules that turn out to be so brittle they get smashed the first time there is a problem.

There are the public expenditure rules. On public expenditure, the Government have ring-fenced about three quarters of public spending—health, schools, defence, international aid, pensions and child benefit. That is a heck of a lot. I will give an illustration of the effect of doing that. The Chancellor said that he needs to find only 50p in every £100, which I think he said will come mainly from value-for-money savings across the public spending framework. In fact, of course, three quarters of that framework is ring-fenced, so he really needs to get £2 in every £100 from the quarter from which he can raise it.

Then there is the tax rule. It says that the Government are committed, in law, not to increase VAT, income tax or national insurance contributions, which collectively amount to three quarters of Government revenue. I voted for that piece of declaratory legislation. I am not very keen on declaratory legislation, but I went through the Lobby for it. I must say, speaking personally—not on behalf of the Treasury Committee—that I would much rather have voted for legislation that prohibited Chancellors from tying their hands behind their backs in such a way, and I would like to limit hypothecation at the same time.

I will not detain the House for very much longer, except to say that the Budget measures will need very careful examination by the Treasury Committee. There is certainly quite a bit to examine, as there usually is every year. As the son of a shopkeeper, I cannot be anything but delighted to hear what has been said about class 2 national insurance contributions and small business rate relief. Although I will take a close look at that, it sounds as though that is exactly what is required. The reduction in corporation tax to 17% should not be underestimated. I would not mind betting that we will get some more revenue from that, quite independently of the anti-avoidance measures that are being pushed through.

The sugar tax has been limited to fizzy drinks and soft drinks. Speaking personally, if we are going to have a tax based on sugar, I wonder whether we should not consider widening that base in the longer run. After all, it is not just the sugar in drinks that is held to be harmful. Whether we always want to define tax bases on health grounds is another matter, but that bridge has been crossed now that such a levy has been introduced.

There are the cuts to the capital gains tax rates, the lifetime ISAs—they look very interesting and are certainly worth examining carefully—and of course the changes to income tax thresholds. There are quite a few other things, but those are the main ones for now. There is a lot for the Treasury Committee to examine with all this. We will get at it in the coming weeks and produce a report for consideration during the passage of the Finance Bill. There are quite a number of colleagues from the Committee in the Chamber at the moment.

16 Mar 2016 : Column 978

We will score all the tax measures against whether they make the tax system simpler or more complex. We will reduce that assessment, on the basis of technical advice from the leading authorities in the field, to a number. Simplification is a mantra: everybody says we must have a simpler tax system, and every year Tolley’s tax guide expands. We must now, much more rigorously, start to create the conditions in which we can reverse that process. One of them is to flag up just how much more complex the tax system is becoming.

We will look carefully at the distributional impact of the measures. I regret that the Chancellor decided to change the basis of the assessment that the Government agreed to produce on the distributional effects. He originally, and very helpfully, published that in 2010, but he changed it in 2015, which I regret. We will look at that issue. Continuity of method, which he agreed to in evidence to us, is absolutely crucial.

Wes Streeting (Ilford North) (Lab): Will the right hon. Gentleman give way?

Mr Tyrie: I am about to wind up, but I will give way because the hon. Gentleman is a member of the Treasury Committee.

Wes Streeting: I am grateful to the Chairman of my Committee for giving way. He is talking about the distributional impact of the Budget. Does he not see it as a source of regret and deep concern that the biggest revenue raiser in this Red Book will be the cuts to personal independence payments for disabled people?

Mr Tyrie: The hon. Gentleman has had a chance to look at the Red Book, but I have not. We will certainly examine the merits or otherwise of that important remark. I will make sure that he gets an opportunity to make his points when we cross-examine witnesses during our evidence sessions.

We will take a close look at the remit letters for the Bank of England. It is often taken for granted, but a very great deal of power has been transferred from the Treasury to the Bank of England on key questions. It is not just about interest rates, but about much more than that, particularly with QE in place and the financial stability aspect as well. We will examine that very carefully, and it is extremely important that we do so. With that, and of course the work we are doing on the economic and financial costs and benefits of membership of the EU prior to the referendum, there will be a very great deal for the Treasury Committee to do.

Several hon. Members rose

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Before I call the SNP Front-Bench spokesman, I should tell everybody that the time limit after his speech will be 10 minutes.

2.17 pm

Stewart Hosie (Dundee East) (SNP): As with every Budget, there are some things to welcome. I welcome what the Chancellor said about the European Union. He will not be surprised to get help on that from SNP Members, because we also believe that we are better off

16 Mar 2016 : Column 979

in. I also welcome some of what he said about tax evasion and avoidance, and the abolition of class 2 NICs.

When it comes to the self-employed and contractors—people who, in many cases, are taking their first step in forming a new business—I would make the point that the Red Book suggests that there will be £765 million in extra tax due to travel and subsistence changes. It would have been far better to review that regime entirely rather than simply going ahead and doing that.

I welcome the oil and gas changes. The changes to the supplementary charge and petroleum revenue tax are very welcome. I was slightly disappointed by the lack of strategic direction, with no mention of exploration or production allowances, but I am sure discussions are ongoing. Likewise, I welcome the freeze on whisky duty and the freeze on fuel duty, for which we have been calling.

It is one of the small measures, but may I say that we very much welcome the additional money for school sports? I do not know what the Barnett consequentials of that will be, but it provides a useful opportunity for SNP Members to welcome the creation, in the past week, of the 150th school sport hub in Scotland, delivering the necessary additional sport for children.

I have a small point of disagreement with the Chancellor. He prayed in aid the leader of the Scottish branch of the Tory party, to cheers from many Members on his side of the House. It is probably worth noting that, last May, she led the Conservatives to their worst UK election result in 150 years.

The Chancellor rather skipped over his record in the last Parliament on debt, deficit and borrowing. We know he did not meet a single one of his targets. He told us that debt would fall as a share of GDP by 2014-15, that the current account would be in balance this year and that public sector net borrowing would be barely £20 billion. That, of course, did not happen. We warned at the time that debt would not begin to fall as a share of GDP until later, that the current account would not be back in the black until 2017-18, and that public sector net borrowing for this year would be about four times what he promised.

Our judgment is that much of the Chancellor’s failure came about because he strangled the lifeblood from the recovery by cutting too much too quickly, with little or no regard to the consequences—an error he set in stone with the fiscal charter, with its requirement to run a permanent surplus almost irrespective of economic conditions or the effect that cutting more than necessary would have on the prospects for the economy. We have had a very quick look, and we listened to what the Chancellor said, and the current account will not now be back in the black until 2018-19. The targets keep getting pushed back—more broken promises. Borrowing will still be higher in four years’ time than he promised it would be this year. That is the scale of the failure on the key economic metrics. Even in this Parliament, when he has continually been warned about repeating the mistakes of the past, he has done the same today—in many ways with a vengeance.

Capital expenditure is a mixed bag, and I will come on to that. I do not expect the Chancellor to listen to me, but he should listen to the IMF and the OECD. The IMF said that he had done enough to stabilise the

16 Mar 2016 : Column 980

Government’s finances—that is questionable—for them to embark on extra investment spending should GDP growth slow. He should take that advice. Only in February, the OECD told him it was revising down its GDP forecast for this year and recommended a commitment to raising public investment, which would boost demand while remaining on a fiscally sustainable path. We would have expected him to listen. We are glad that there is a very modest rise in capital expenditure over the forecast period, but it is actually marked down this year compared with the forecast we got in the autumn statement last winter. That is not consistent with what needs to be done, or with the advice received from others.

It is not all about broken promises on debt, deficit and borrowing. We now have a Chancellor who has done this many times—he has set about replicating the errors he made with his borrowing figures in his trade and export figures for this Parliament. He said previously that he expected to be able to deliver an almost certainly unachievable doubling of exports by 2020, but the OBR told him last year, at the time of the autumn statement, that he would fall short by £350 billion. We looked at the autumn statement, and the impact of net trade on GDP growth will be negative from 2016 through to 2020, and there will be a deficit in the balance of trade current account for the entire period. I am disappointed, because action can be taken. The impact of net trade on GDP growth is no better or worse in every single year of the new forecast period, and the balance of payments current account is actually worse in every single year, even compared with last autumn’s forecast. In the past week or so, we had confirmation of a £92 billion trade deficit and a £125 billion deficit in the trade in goods.

To be fair, those failings are not all the fault of the Chancellor. Some have been embedded in the UK economy for decades, whether on exports, support for innovation and manufacturing, or boosting productivity. They are all inextricably linked. In many ways Labour is the biggest culprit, having lost more than 1 million manufacturing jobs during their time in office—and that was before the recession. But it is the current Government’s failure to address those problems that is really troubling. We would have expected concerted action today on innovation, manufacturing, productivity and work with academia—all the things we are falling behind on internationally, which has led to decline. Manufacturing was 30% of the economy in the 1970s, and today it is 10%; it provided more than 20% of all jobs in the 1980s, and today it is 8%; and it went from more than a quarter of all business investment in the 1990s to barely 15% today.

The Chancellor will argue that some of the tax cuts will allow businesses to keep and invest more of their own money, and I hope that is true, but if he were serious, we should have seen an increase in the budget of the Department for Business, Innovation and Skills. Instead, we have seen the Department’s budget being marked down every single year. We would have seen an announcement on support for innovation, because we know that since 2010 the science budget has been frozen in cash terms, with a real-terms drop of 10%. By 2012, publicly funded science fell to less than 0.5% of GDP, and we can see nothing today that will take us off the bottom of the G8 heap.

John Redwood: Will the hon. Gentleman give way?

16 Mar 2016 : Column 981

Stewart Hosie: There are no interventions in this speech.

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The hon. Gentleman is able to give way if he wishes to do so. The rule is for the first two speeches, after which it is up to the Member speaking. It is up to Stewart Hosie whether he gives way.

Stewart Hosie: In that case, because it is the right hon. Gentleman, I will happily take the intervention.

John Redwood: I am very grateful. Is not the British problem not that we lack great universities, great ideas, great innovation, a large number of patents and a lot of start-ups, but a problem of getting smaller businesses to grow sufficiently and become big businesses that can export to France and Germany? How would the hon. Gentleman tackle that problem?

Stewart Hosie: That is indeed one of the substantial issues, which is why our Government in Scotland have delivered the small business pledge. In return for assistance from Scottish Government agencies, the pledge requires them to seek out and take export opportunities, and to innovate. We have delivered a £78 million fund for innovation to encourage 1,000 new inventions and to allow 1,200 businesses to liaise and work directly with academia. There are many practical ways to solve the problem that the right hon. Gentleman rightly identifies.

We will have to check the fine print about businesses that want to export, but in the Blue Book in the autumn, UKTI’s budget, after a slight rise for 2016-17, was cut by more than £20 million a year. Between 2018-19 and 2019-20, it will be flatlining in cash terms and falling again in real terms. We need to begin to tackle properly the underlying issue of poor productivity. From our perspective, that means delivering inclusive growth—essentially, a fairer and more equal society. We have seen the numbers, and we understand that it is not enough simply to grow the economy to fund public services. We must squeeze inequality out of the system to get the growth we need in the first place.

The Tories have never believed in that, and Labour failed on it for 13 years, and we have seen some of the mistakes repeated today. In the previous Parliament, discretionary consolidation—the balance of cuts and tax rises—went from a ratio of 4:1 to 9:1. What did we see today? Billions taken from people with disabilities, through changes to the personal independence payment, to fund an above-inflation increase in the 40p threshold. The 40p threshold did need to be addressed—I have said it for years—but to have an above-inflation rise while taking billions from the most disabled people in the country is disgraceful and economically wrong. The UK lost 9% of GDP growth due to rising inequality in the two decades from 1990, and the Chancellor is making the same mistakes again.

Some of the business measures that the Chancellor announced are to be welcomed. It was good that the Chancellor mentioned apprenticeships, but what he did not mention, of course, is that many firms—he should know this by now—already pay a 1.5% levy on payroll to the ECITB for training. The apprenticeship levy was

16 Mar 2016 : Column 982

simply an additional tax on jobs. I had hoped the Chancellor would reflect on the comments made following its introduction last year.

Likewise, the Chancellor told us last year that he was counting on a windfall of about £31 billion from the sale of banking, financial and commercial assets, but the OBR told us last year that it would be £24 billion, and there has been little change since then. Clearly, the Lloyds stock will still be privatised, and the Red Book refers, I think, to other sales, but there was absolutely nothing about an anticipated windfall, so it will be interesting to see whether he intends to sell off the family silver in a way that has gone unannounced today.

The Scottish Government’s ability to re-energise the Scottish economy cannot be hamstrung and hampered by decisions taken here. Before today’s statement, we expected that our discretionary budget this Parliament, taking into account the cuts already imposed, would be about £3.9 billion, or 12.5%, lower in real terms than it was in 2010. No matter what has been said, we expected capital spending to be £600 million lower in real terms than in 2010-11, and, based on the autumn statement, we expected that the departmental expenditure limits—DEL—budget would be increased by about 0.7% in cash terms, or a 1% real-terms reduction. We wait with interest to see what the number crunchers tell us the implications of the Budget will be.

This is all about political choices. We said at the election—and we hold to it—that a very modest, 0.5% real-terms increase in expenditure could have released money not just for investment but to make sure that those on benefits did not fall any further behind. That would have been a sensible, humane and productive thing to do, but the Chancellor and the Government have gone against that one more time. He might be able to sell it to some of his Back Benchers, but he has been unable to sell it in Scotland. I fear that that will continue to be the case.

2.31 pm

Nigel Mills (Amber Valley) (Con): It is a pleasure to be called so early in the debate. As I am trying to respond to a Budget without having as long to read it as I would normally expect, I now know how the Leader of the Opposition feels.

I welcome the many measures in the Budget that help hard-working people in Amber Valley. The further rise in the personal allowance is a welcome measure for which I have been campaigning for several years. We want someone living on the minimum wage—or the living wage, as it will be—to pay no income tax on their wages. The rise in the 40% tax band is also welcome and will help people who should never have been caught by that band—I think especially of one-earner families. I think we should aspire to increase the band still further.

I am happy about the slightly unexpected freeze in fuel duty. Many of us have been slowing preparing our constituents for a rise. I have been telling mine that perhaps the freezes are coming to an end, that it will have to increase and that this might be the year, so I welcome the freeze being continued, as fuel duty is a significant cost. The freeze will help families and small businesses to meet what is a significant bill.

I also welcome the measures targeted at the east midlands: the aerospace grants worth £15 million for the east midlands, including £7 million for Rolls-Royce

16 Mar 2016 : Column 983

in Derby; the changes to Midlands Connect to place it on a statutory footing; the funding for the M1 improvements so we get a smart motorway right through the east midlands up to Yorkshire; and an investment fund for the midlands of up to £250 million to help small businesses grow. Those welcome measures show that the Government recognise the importance of the midlands and the east midlands to the UK economy. The east midlands had the highest productivity growth throughout the last Parliament.

I also welcome the changes to business rates, especially for small businesses, which will help the high street in my constituency. Business rates are a significant cost for small businesses, and the long-term certainty of a permanent lower rate, rather than the annual uncertainty—“Will this be the last time we benefit from an exemption?”—will really help.

One thing that was not announced in the Budget, of course, was a devolution deal for the east midlands, the north midlands—or whatever we have been calling it in recent weeks. The deals announced today are a model for how the east midlands can go forward. I want to see a powerful voice in the east midlands to ensure we get our fair share of spending investment, to make the case for the east midlands as a great place to invest and to show that we can compete with the west midlands and south Yorkshire. To those disappointed that the deal has not been announced, I say that we should rethink our proposals. It would make for a far better bid, if Nottinghamshire, Leicestershire and Derbyshire could join together and come up with a three-county proposal, much like the East Anglian one. It would be more coherent economically, have a better chance of getting buy-in from people across the east midlands and be more likely to succeed, because the area would be based around the airport and the new HS2 station and would have the M1 running through the middle, and it would fit the great synergies between three big cities and the surrounding areas. I urge those in local government trying to negotiate a deal to rethink what they are asking for and to go for a three-county proposal.

Mr Mark Prisk (Hertford and Stortford) (Con): Is my hon. Friend’s concern the lack of collaboration—or the weakness of collaboration—between the constituent areas or the lack of ambition? As we have seen in Birmingham and elsewhere, bold decisions are welcomed by Ministers.

Nigel Mills: The leaders of Nottinghamshire and Derbyshire have shown ambition in trying to find a deal that works outside the core cities, but there are always challenges, in areas where people do not all look to one city, in working out whether closer working or more competition is the right way forward. I think there is also a lack of trust in Derbyshire and a feeling that a Greater Nottingham bid would centralise too much in Nottinghamshire. A bid that covers three cities and three counties would look less focused on the biggest city and take a more strategic and sensible approach that could help the whole region to compete with neighbouring regions. To be fair, however, there has been a lot of ambition already to bring the counties together. We just need to find a situation that works. That we had to change the name from D2N2 to East Midlands and then to North Midlands suggests we have not got the geography right.

16 Mar 2016 : Column 984

I come to a couple of areas on which major changes have been announced. The first is the pensions system. The Chancellor announced some welcome changes in the Budget. I like the idea of the help to save scheme—we appear to have help for everything now—to give people on low incomes a 50% bonus if they can save a certain amount for two years or longer, and I like the idea of the lifetime ISA and making pension saving a bit more flexible so that people can save when they can and then, if they need to—if they want to buy a house or need to do some repairs, or if they fall out of work and want to live on their savings—draw down the money and put it back later. That sort of system is more flexible, is better suited to how people live and can help people to manage the ebbs and flows in their financial situation.

We need to stand back and ask, “What are we trying to do in using taxpayers’ money to help people save?” We are in the slightly strange situation of compelling people—generally those on low incomes—to enrol on to a pension scheme, hoping they do not opt out and then giving them roughly a 25% bonus from the Exchequer on what goes into that scheme. We have now produced another savings vehicle—help to save—whereby we give them a 50% bonus if they save a certain amount for a certain period. For some people on low incomes, it might be better to be enrolled on to the latter—they would have a more flexible savings pot with a bigger taxpayer-funded bonus—than a pension scheme that locks the money away for a long time, which has high charges and which they cannot use flexibly when they need to.

We ought to consider giving employers the choice of auto-enrolling people on to the lifetime ISA, which might be a more flexible and attractive solution for people on low wages—the ones generally in auto-enrolment—who we are trying to help to save and have the right savings at the right time in their lives. We are going in the right direction, but we need to make sure that what we are strongly encouraging—not compelling—people to do makes sense now that there are different vehicles on the market.

The pensions dashboard, which is hidden away in the Red Book, will be of great use in getting the industry to produce one place where people can go to see what they have in their pensions and savings. It will mean they can see what they can have in their retirement and what more they need. I welcome the move to make that happen. It has long been talked about, and we have to assume it can be done, given how IT is used these days. I look forward to seeing it happen.

I want to make a few remarks about the corporation tax changes. There are some welcome measures here to crack down on tax avoidance and evasion, and I hope they can all be made to work as effectively as they can. We can do more to give the public confidence that our large businesses are complying with tax requirements. My sense is that most of them do, and it is only a small proportion that go in for the aggressive avoidance that we cannot accept. I urge the Government to look at the idea of making large companies publish their corporation tax returns when they file their statutory accounts, so that we can actually see in some high-level way how much tax each company says it owes and how they have got from what is in their accounts to the cash tax bill.

16 Mar 2016 : Column 985

Given the amount of disclosures of their actual accounts we require from companies, this would not put much sensitive information in the public domain. The principle of taxpayer confidentiality applies to individuals but should not apply to large companies, which might disclose their income in any case. I believe this would bring greater confidence and it would show, I hope, that most of those companies are not doing anything that is not acceptable.

I welcome the changes to try to expand how withholding tax works on royalties. Our rules in that area have been somewhat outdated and they do not apply to all forms of royalty. Extending them to certain other payments and trying to ensure that we actually collect the tax has to make sense. We should be careful to draw this wide enough to ensure that we catch things such as know-how payments or payments for access to recipes or whatever else companies will try to say their payments are. If it is not a payment for a tangible service or product, it probably ought to fall in the royalty regime and the withholding tax ought to apply.

I am not entirely sure how we will get this through our tax treaty network or the EU interest in royalties directive without having to give zero rates to nearly everyone we pay royalties to. I guess the measures announced for how we deal with situations where royalties have flowed through a regime that we would accept into one about which we have concerns, particularly about how to ensure we collect the tax in those situations need to be worked through.

I welcome, too, the proposals to simplify loss release for companies that are having to spread them across a group of companies. Five years ago, I tabled an amendment to the Finance Bill to try to argue that the Government should look at a group tax return so that large groups would file one tax return for all their companies, rather than having to file many dozens. I thought that would

16 Mar 2016 : Column 986

help to tackle tax avoidance by taking away the scope for funding arrangements between those companies that do not have any economic effect. If we are to simplify how companies use losses, it would be easier to let them file one tax return to show their group profit, and have one loss offset, rather than try to find a way for a group to calculate these things in a strange way further confusing HMRC. I think HMRC will benefit from knowing exactly how much profit a group is declaring in one return, so that it can then be compared with real turnover.

The announced interest restrictions are a sensible idea. We have moved past a situation in which we can justify allowing large companies to borrow in the UK, claim tax relief for profits not earned here without paying tax and dividends that come back. We have to be careful to do this right. We have attracted a lot of head offices here by the generous exemption we chose to give. We do not want to lose them all, but we also do not want to make infrastructure spending far more expensive than it needs to be. That can justify high levels of interest; there is generally no income in the early days. I hope we can find an exemption to get right and for the private equity industry as well.

Royal Assent

Mr Deputy Speaker (Mr Lindsay Hoyle): I have to notify the House, in accordance with the Royal Assent Act 1967 that Her Majesty has signified her Royal Assent to the following Acts and Measures:

Supply and Appropriation (Anticipation and Adjustments) Act 2016

Charities (Protection of Social Investment) Act 2016

Childcare Act 2016

Education and Adoption Act 2016

Welfare Reform and Work Act 2016

Safeguarding and Clergy Discipline Measure 2016

Diocesan Stipends Funds (Amendment) Measure 2016

16 Mar 2016 : Column 987

Budget Resolutions and Economic Situation

Debate resumed.

2.43 pm

Michael Dugher (Barnsley East) (Lab): We all look forward to poring over the details of today’s Budget, particularly to see the distributional analysis and to wait to hear from the IFS. Experience has taught us that, when it comes to this Chancellor, the devil is almost certainly in the detail. The Chancellor spoke a lot in his statement today about his record, on which I would like to focus the majority of my remarks.

I welcome today’s overall fall in unemployment—we all do—but unemployment in my Barnsley East constituency is actually going up. It rose again today for the second month in a row, which is a matter of huge concern locally. It highlights the weakness of the economic recovery, the fundamental variations that are taking place in different parts of the country and it shows once again why more jobs are needed in areas such as mine.

In former coalfields, including my own area, there are still not enough jobs. The recent report of the Centre for Regional Economic and Social Research, “The state of the coalfields”, highlighted that there are approximately 50 jobs for every 100 residents of working age across the former coalfields. The Government’s own figures show that the employment rate in my Barnsley East constituency remains lower than the national average.

Indeed, the picture that the Chancellor painted today about what is happening in our economy will seem like a million miles away from the day-to-day realities of life for very many people, including in my constituency. Despite all the Chancellor’s boasts about the employment rate, and for all the palpable nonsense about a “northern powerhouse”, there are still huge discrepancies across the country.

According to the Resolution Foundation, in Yorkshire and Humber the employment rate increased by just 0.2% from the financial crash to 2015. That compares with 3.3% in London. Young people have been left behind, with the same figures showing that nationally the employment rate for 18 to 24-year-olds actually decreased by 3.5% over the same period.

What about the jobs that have come? Let us look at the reality behind some of the headline figures. The truth is the jobs that have come are too often insecure and are low paid. The number of zero-hours contracts is now at a record high, with more than 800,000 workers on a zero-hours contract for their main job. In 2010, there were 168,000 people on zero-hours contracts. The percentage of people on a zero-hours contracts with no guaranteed hours is higher in Yorkshire and the Humber than it is across the rest of the UK. Again, young people are hit hardest, with 38% of all 16 to 24-year-olds employed on a zero-hours contract. It is no wonder that this age group is not saving: they cannot get the hours, so they cannot get the money in to pay the bills. They are still struggling. If we look at today’s figures, we again find a significant rise in part-time working. How often do we knock on doors or talk to people at our surgeries and hear people saying, “I just cannot get the hours.”? They are struggling because of that.

Mr Prisk: Will the hon. Gentleman give way?

16 Mar 2016 : Column 988

Michael Dugher: I would like to make some progress, if the hon. Gentleman does not mind.

If the jobs that have come are more insecure, let us look at what has happened to living standards. According to the Resolution Foundation measure, there was an 8.9% fall in median pay for all employees between 2009 and 2015. For 22 to 29-year-olds, pay has fallen by 12% over the same period. Even using the Government’s own ONS figures, gross weekly pay for full-time workers in my constituency has actually fallen to £432.80 in 2015—a wage cut of more than £22 since 2010, and significantly below the national average.

We know that 29% of women earn less than the living wage, and the figure is 18% for male workers. We know that up to today, 81% of the savings made to the Treasury through the Chancellor’s tax and benefit changes since 2010 have come from women. According to the IFS analysis of the Chancellor’s last autumn statement, we know that when all of the tax and benefit changes are taken into consideration, 2.6 million working families will be on average £1,600 worse off by 2020.

Mr Prisk: Will the hon. Gentleman give way?

Michael Dugher: No, I am going to make some progress.

It tells us everything we need to know about this Government when they seek to redefine rather than reduce poverty. Three in 10 children in Barnsley East are living in poverty. How does that fit with “putting the next generation first”? Where under the previous Labour Government the number of children living in absolute poverty fell significantly, the number under this Government has risen significantly. That is why local campaigns in Barnsley, such as the one being led by my hon. Friend the Member for Barnsley Central (Dan Jarvis) on tackling child poverty, are so important.

We know that one of the biggest growth industries under this Chancellor has been in food banks. In 2010-11, just over 61,000 three-day emergency food packages were distributed to people in crisis across the country. Under this Chancellor in 2014-15, over 60,000 were distributed just in Yorkshire. The figure for the whole country is more than 1 million.

A bad situation is being made worse by the Chancellor’s approach to local government funding in particular. Not only is the Department for Communities and Local Government seen as a soft touch, but cuts for local government are presented as “cuts for town hall bosses”. Let me make clear what we are actually talking about. We are talking about cuts in social care, mental health and other vital local services. We are talking about jobs going, about cuts affecting libraries, museums and grassroots sport, and about cuts in support for fantastic organisations such as Barnsley Independent Alzheimers And Dementia Support, the local dementia charity of which I am a patron. We are also talking about cuts in Sure Start: we have lost more than 100 jobs in children’s centres in Barnsley because of this Government’s cuts.

It is not as if the axe has fallen on local government in a fair or equal way. Under this Chancellor, the idea that we are “all in it together” is just a really, really bad joke. More than one in five neighbourhoods in the Barnsley council area are ranked in the top 10% of the most deprived in England, yet analysis of the Government’s

16 Mar 2016 : Column 989

own local government finance settlements—verified by SIGOMA, the special interest group of municipal authorities, a cross-party body that represents local authorities in urban areas—shows that from 2011-12 to 2016-17, Barnsley council’s spending power will be cut by more than 26%, whereas that of the Prime Minister’s local authority, Oxfordshire County Council, will be cut by only 10%, and that of the Chancellor’s local authority, Cheshire East council, by only 9%. Why should people in my constituency, an area with greater needs that is only a few miles from the south Yorkshire pit village where I was born, suffer bigger cuts than some of the most affluent areas in the country?

Why should women be hardest hit—women with children, and those who act as carers? Why should young people be held back? That is the reality, regardless of what the Chancellor said today. Does he not understand that every time he lets a young person down by allowing a children’s centre to close, it is not just a disaster for those young people and their working parents, but a disaster for the whole country? An opportunity denied to a young person means a talent wasted for the country. But of course the Chancellor does not understand that; if he did, he would have done something about it.

We heard a self-congratulatory victory roll from the Chancellor today, but it is clear that he is completely out of touch. This is a Chancellor who does not understand, or simply does not care about, the impact that his policies have on many people in very many parts of the country. The Chancellor talked a great deal about his record today, so let us be clear about it. His record is one of promises broken, his own targets missed, the lowest-paid working families worse off, the deliberate targeting of disabled people, young people let down, women hit hardest, the poorest parts of the country suffering the most, poverty deepening, and inequality widening. How on earth can that possibly accord with the nonsensical claim that this is a Government for working people?

If the picture that the Chancellor has painted in his Budget today seems a million miles away from the realities that many people face, that is because we have a Chancellor who lives in a world that is a million miles away from the realities that many people face.

2.53 pm

John Redwood (Wokingham) (Con): I remind the House that, in the Register of Members’ Financial Interests, I have declared that I advise an industrial and an investment company.

I support the main measures in the Budget, and the thrust of the Budget statement. I strongly welcome the tax reductions. I am very pleased that the Chancellor is making progress in implementing our promises to take more people out of income tax altogether, and to take people out of 40% tax when they are on relatively modest incomes in comparison with the costs of housing and living in many parts of the country. The more progress we can make in that regard, the better.

I am delighted that I, and others, made representations on behalf of the North Sea oil industry, that those representations have been well heard, and that substantial changes have been made. It is important for us to do all

16 Mar 2016 : Column 990

that we can to give that industry, which has been hit by the very low oil price, some momentum and some hope for the future. I am also very pleased about the capital gains tax changes, because I have campaigned for them for some time. I think we will find that they bring in more revenue, not less.

It is interesting to read the forecast in the Red Book that, by 2019-20, there will be a substantial increase in revenues from CGT at the lower rate, but there will be a period of no increases for two or three years. I find that a surprising profile, and I think it draws attention to an underlying problem. I do not think that the economic models and the tax forecasting system used by the Office for Budget Responsibility are fit for purpose. The OBR was obviously very wrong about the impact of the reduction in the 50p rate to 45p: there was a big surge in revenues which was not in the original forecast figures.

This is the background against which we meet today. Many of the changes that the Chancellor has had to make are simply a result of the OBR changing its mind over the very short period between the autumn statement and today, and deciding that the economic outlook is not as good as it thought it was at the end of last year. We have to ask why it has reached that conclusion.

John Pugh (Southport) (LD): Does the right hon. Gentleman think that the OBR has been any better at predicting the economy than the Treasury was before?

John Redwood: I do not think that there is very much difference. All economic forecasters experience difficulties in getting their forecasts right, but some of us are more humble about our expectations than these official forecasters. I think that the danger of having an official forecast is that too much credibility is given to it, and big decisions are then made on the back of it. When official forecasters are zinging the forecasts around every three or four months, it becomes difficult for any Chancellor to run a stable medium-term policy involving, for example, important spending items that matter a great deal to our constituents.

I urge the Chancellor to be a little more sceptical about the wisdom and virtue of the OBR forecasts. The one thing of which we can be sure is that, over the period during which we have had the OBR, it has always been wrong, but what is stunning is the degree of the error. The OBR itself kindly points that out to us on page 234 of its very readable book, saying that, on average, it has revised the underlying borrowing forecast by £46 billion for the review period in question on each occasion. Given that the figure is an average, it is clear that the forecast revision has been considerably higher. The OBR tends to make its biggest revisions in autumn statements, but it has given us quite a whopper on this occasion. When a Chancellor must face a £46 billion revision every time he has to do the sums, it makes the task of stable economic management much more difficult. This is one of those instances in which an idea that was intended to produce more stability has proved to be destabilising.

The same can be said, I am afraid, of the current Governor of the Bank of England. The Governor of the Bank of England is meant to provide stability and wisdom, but we have now heard four different mantras from this Governor about when interest rates are going to rise. That is a very important statistic, which informs the forecasts of the OBR.

16 Mar 2016 : Column 991

First of all, the Governor said that interest rates would probably go up when unemployment fell below 7%. When it tumbled rapidly below 7%, the Governor changed his mind. I am glad that he did, but the fact remains that he changed his mind. He then said that when real wages started to go up, interest rates would probably go up as well, and I am pleased to say that almost as soon as he had said it, they started to go up. Then he changed his mind, in that he had apparently not meant what he said.

The Governor then said that the turn of the year, 2015-16, would be a witching hour, when interest rates might have to go up. Well, we roared through the end of the year and the beginning of the new year, and they did not go up. Again, I was pleased about that, because I think it might have been unhelpful if they had. However, that shows that people and institutions who should be good at providing stability can be very destabilising and very misleading, and it is all noise that the Chancellor has to deal with.

The one good thing about all this is that when these ridiculous forecasts are made by the OBR and the Governor of the Bank of England that we would be worse off if we left the European Union, we can completely ignore them. We know that those people are always wrong about the things in which they are meant to specialise, so why should we believe what they say about something that is more important?

Graham Jones (Hyndburn) (Lab): Will the right hon. Gentleman illuminate us on the section of the Chancellor’s speech that dealt with the European Union? Will he share his thoughts with us?

John Redwood: I think that I am doing that now. The Chancellor quoted the OBR, and the one thing that I disagreed with profoundly in a very good Budget was the OBR’s forecast on what would happen with Brexit. [Laughter.] It is not funny. Labour Members might learn something if they listened. They have obviously closed their ears to any idea that an independent Britain could be rich, prosperous and free, but many of us think that we will be more rich, prosperous and free if we leave the EU.

Sammy Wilson (East Antrim) (DUP): Will the right hon. Gentleman give way?

John Redwood: I want to develop the argument a little more. As has already been pointed out, the forecast contains very worrying figures about the balance of payments deficit. And of course, were we to leave the EU, we would immediately have £10 billion at our disposal that we would no longer have to send abroad to be spent in rich countries on the continent. That is the net amount that goes to the continent. So our balance of payments would immediately improve by £10 billion a year if we did not have to make those contributions.

To cheer up Opposition Members even more, and to get them to change their vote, I can tell them that we and they would have the pleasure of spending £10 billion a year more in our own country—[Laughter.] Why is that funny? Why should not British taxpayers who have to pay £10 billion not have the advantage of spending it on things that they want instead of it being spent on new roads in France or Spain? I think my taxpayers

16 Mar 2016 : Column 992

want it to be spent here. That £10 billion a year could more than banish the austerity that Opposition Members claim has done some damage to our country. Looking at the figures, we can see that real public spending has gone up all the time under the coalition and the Conservative Government, but not by as much as it went up under previous Governments. If we had that £10 billion back to spend in the United Kingdom, we would have a better profile on public spending and on tax reductions.

Neil Carmichael (Stroud) (Con): Can my right hon. Friend be sure that any figure he quotes is accurate, given that he has just rubbished the OBR and the Bank of England? Presumably he has a list of other British institutions to which he would give the same treatment.

John Redwood: But of course. I have checked the Government’s very own net contribution figures, and it is very likely that they have got those figures right, because even the Government can count how much they have spent and how much they have had to give away to the rest of the European Union. That is the damage that is being done.

On the balance of payments, I would urge my right hon. Friends on the Front Bench to do more work on getting the balance of payments deficit down. Obviously, they will not all agree with me about taking the quick easy hit of getting our £10 billion back to make a big reduction in the deficit, but we need to understand that that deficit is entirely the result of an adverse goods trade with the rest of the European Union. We are in profit with the rest of the world and we are in profit in services, but we have a colossal manufacturing deficit with the rest of the EU. Some of that relates to the way in which France and Germany get round the EU rules to make sure that they can buy French or German product, whereas we in Britain apply the EU rules extremely fairly and end up buying a lot of foreign product from the continent.

It is also the case that the very dear energy that European policies require and enforce is doing a lot of damage to our steel industry, our ceramics industry and other high energy-using industries. It is a great tragedy that, despite higher domestic demand for steel, we are still unable always to use British steel in British public sector contracts. Surely we ought to have a fix to create more demand for our own domestic industries.

We also import massive amounts of timber, despite having a big state sector involvement in the timber industry in this country. Why cannot more be done to cut more of the timber we already have as a state resource to meet our domestic demand, along with replanting and extending the planting, given that many people would like more forests? Why cannot we have more managed timber, with the state having an influence over it? We could also do more with the tax system to encourage more private forestry. We have rather good growing conditions here, compared with some of the colder Nordic climates from which we import timber at the moment.

We also import energy, but we have no need to do so. We are an island of coal, oil and gas set in a sea of coal, oil and gas. We also have lots of natural renewables, particularly lots of potential water power. Why cannot we create an energy policy in which we do not need to

16 Mar 2016 : Column 993

rely on importing timber from Canada, electricity from France and energy from Norway?

I am pleased that the Budget is starting to tackle the issue of the oil industry offshore through tax changes. We need to do other work on that, and we also need to get on with gas extraction onshore. We will probably find further oil resources when we are prospecting for shale gas in the shale sands. We need to start bridging the gap on energy before it becomes even more damaging to our balance of payments.

Mr Prisk: On encouraging greater exports, would my right hon. Friend acknowledge that one of the challenges that small and medium-sized firms face is the availability and pricing of mid-sized capital to enable them to pursue longer-term export plans?

John Redwood: I am not sure that the cost of capital is a problem. The Government have already done certain things to try to deal with that through the investment bank and so forth. It is often the case that medium-sized companies probably need equity investment but are reluctant to give away control. That is a cultural issue that we have to deal with. Certainly for bigger companies there is nothing wrong with the long-term cost of borrowing if they have access to the bond market, because we have exceptionally low interest rates at the moment.

I am all in favour of the Government pressing on with large infrastructure projects if they make economic sense. The main ones that we need to reinforce are broadband and extra energy capacity. We are short not only of affordable energy but of energy of any kind. We do not want our economic recovery—which we have rightly been told is the fastest in the advanced world, on the historical and prospective figures—suddenly to come up against the constraint that there is not enough energy available to fuel the recovery.

3.5 pm

Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op): I expect the Chancellor had great hopes for today’s Budget announcement, but the backdrop to the Budget has not been good for him, with growth forecasts going down. Today he has set out a Budget that bets the bank on an uplift in 2019. I have not yet had a chance to go through the Red Book, but I bet that there is more hidden pain for many of my constituents in the depths of this Budget.

I want to touch on a couple of the Chancellor’s points that I broadly welcome. On tax changes, the Public Accounts Committee, which I chair, has looked closely at the issue of multinational tax avoidance. Only recently, we were looking at the issue of VAT avoidance on marketplace platforms. I therefore welcome the Chancellor’s announcement that these issues are finally going to be tackled. He has also announced that he is reducing corporation tax to attract more multinationals to this country. Despite his promises, however, it is not at all clear that multinationals will pay more tax.

What we really need is tax transparency, and I echo the comments by the hon. Member for Amber Valley (Nigel Mills) on that point. I also commend to the Chancellor the 10-minute rule Bill unveiled yesterday

16 Mar 2016 : Column 994

by my right hon. Friend the Member for Don Valley (Caroline Flint). We as citizens and Members of Parliament cannot tell whether we will secure more tax from multinationals unless we have more information. I commend that Bill to the House, not just because the Chancellor should, if he has any sense, be listening to my right hon. Friend, but because the whole of the cross-party Public Accounts Committee has looked into this matter in great detail and supports her proposal. The Bill proposes a small change that would be well worth implementing.

Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con): Does the hon. Lady agree that the Chancellor’s decision to reduce the ability for debt interest to be taken off corporation tax bills from 100% to 30%, which is the German level of interest reduction, is a good thing and should help us to make some of our larger multinationals and British companies pay more corporation tax?

Meg Hillier: That certainly looks like a step in the right direction, but my point is that we need to be able to see exactly what companies are doing. Transparency is the other side of that coin. I know that the hon. Lady broadly agrees with that position.

One thing that the Chancellor did not mention in his speech today was the national health service, which we know is in financial crisis. Only yesterday, the Public Accounts Committee’s report on acute hospital trusts was published, but two other inquiries have taken place since we held that hearing and they show the real deep-seated financial problems in the NHS. There is a £22 billion black hole ahead, and the financing of our health service is all the wrong way round. In our hearing, we uncovered the fact that hospitals are setting their structures, budgets and staffing to meet the financial settlement that is passed down to them by the Department of Health. Then, inevitably, they have to backfill to meet the growing needs of patients by, for example, employing far more temporary staff on higher rates. They are therefore struggling to maintain their budgets.

That is being exacerbated by the push five years ago by the Chancellor—the self-same man who was at the Dispatch Box today—for 4% efficiency savings year on year in the NHS which has now come home to roost. In 2014-15, our acute trusts had a net deficit of £843 million. More than three quarters of our acute trusts are in deficit this year. Great work is being done to try to bring that figure down, but promises that NHS Improvement will bring in efficiencies to resolve the problems within a year are over-optimistic. Even the head of NHS England told our Committee that that was too steep an efficiency saving. He said that around 1% to 2% might be the right amount.

It is time that we had a national conversation and reached an agreement about how we are to fund our NHS. It is not good enough for Chancellors to treat it like a political football. The matter must be resolved. Demand is growing, and yet we are expecting so-called efficiency savings, which are undeliverable. I am unconvinced that the NHS is on a secure footing for the future. My Committee will continue to look rigorously at that and will provide reports to the Chancellor and the Secretary of State for Health so that they get the message. I hope that they take our comments as seriously as we mean them.

16 Mar 2016 : Column 995

On education, we heard in a leak or trail for the Budget, which seems to be the common approach nowadays, that all schools in England will become academies. My borough of Hackney is no stranger to academies. When they were first unveiled, Hackney’s schools were among the worst in the country. I pay tribute to the Mayor of Hackney, Jules Pipe, who took what was on offer from the Government and turned it into something that realises the ambitions of Hackney’s young people. With the huge work of Hackney’s heads and teachers, our schools are now among the very best in the country.

In spite of our embracing academies, among other school models, they are not a simple solution. The structure is not what makes education good. We need good teaching and good leadership. That is what gets results. The constant recent changes to schools—curriculum change, structural change, funding change—mean more upheaval. Academy status is unsustainable in practice for small primary schools, which will force them into chains. That is a concern of not only the Public Accounts Committee, but the chief inspector of schools, Sir Michael Wilshaw, who has warned that academy chains are not a solution to the problem in their own right and can actually mask problems.

The Committee is also concerned about the many risks involved, particularly around accountability. For example, the Durand Academy has become a cause célèbre for how a lack of accountability can lead to bad management of the taxpayer pound. If a chain goes bust, that has a wider ripple effect. Even at this late stage, I ask the Secretary of State for Education to abandon this monolithic approach to school provision. It sounds like freedom of choice, but the Government are imposing a model that will absorb energy and take time away from the real issue: educating children for the future.

The Chancellor paraded his devolution credentials. I started my time in politics believing and have always believed that power should be devolved to and exercised by the most appropriate level. This is another area of concern for the Public Accounts Committee and I offer the Chancellor a word of caution. We need to follow the taxpayers’ money to ensure that they and Parliament know how it is being spent. As the money is devolved down the system, unless there are clear accountability frameworks and assurances from Government about how it is spent, that can provide a cover for waste and mismanagement. It can also be a cover for the Government’s underfunding of major regions of the country and major policy areas. For example, as health funding is devolved through devo-Manc, how do we know that the Government are giving enough money to Manchester to deliver healthcare for its people? How can we know that in any area of the UK? That is the problem, and it presents a challenge to the National Audit Office, a servant of Parliament, in helping us to do our job.

As for accountability, I visited Bristol with my hon. Friend the Member for Bristol South (Karin Smyth) and met the local enterprise partnership, an interesting body made up of many private sector individuals doing many good things in Bristol. The LEP covers five local authority areas, so if any projects fail in delivery, where does that risk fall? It falls on the council tax payers of each authority, not on the private sector partners who give up their time to try to support economic development in that area. I am not knocking people who want to contribute to the growth of their area, be they from the

16 Mar 2016 : Column 996

private sector, the public sector or wherever, but it is important to remember that taxpayers’ money is being spent and that it must be followed and well spent. Risk and accountability must be combined.

That brings me on to infrastructure. Again, the Chancellor paraded several measures, including Crossrail 2, which will be coming to my borough. I welcome the fact that the Hackney to Chelsea line will finally be delivered. However, on 1 January the Major Projects Authority merged with Infrastructure UK to create the Infrastructure and Projects Authority. The Public Accounts Committee has long been a champion of major project management, which is vital in the delivery of our future infrastructure. The MPA began to do a job on that, but if we do not have someone watching how projects are delivered, there is a big risk of waste along the way, particularly with long- running projects that can stretch across many Parliaments. The Public Accounts Committee has expressed its concern about the merger and worries that it represents a down- grading of project management over the importance of infrastructure development. While I want such development, I look to the Chief Secretary to the Treasury and urge him to watch the merger closely, because the MPA was an ally of the Treasury, the taxpayer and those of us with an interest in watching taxpayers’ money.

It does not pay to be poor under this Government. I represent one of the most divided authorities in the country. There is some great wealth, but a high level of poverty too. In reality, the Chancellor’s jobs growth relates to far too much low-wage, part-time work, which is just not enough to live on in Hackney, where the average house price is £500,000 and where private sector rents are soaring through the roof. Thanks to Government policy, even social housing will be out of the reach of many following the imposition of pay to stay and the bedroom tax on households that may have no financial resilience and uncertain work patterns, meaning that they may be in and out of claiming housing benefit. Such households can suddenly be hit by a tax on their extra bedroom of £14 a week, which can accumulate over time and cause real problems.

On childcare, many local childminders are finding that providing the places that the Government are requiring them to supply is unaffordable on the money that they are paying. Even when the Government say that they are helping, they are not helping many households in my borough.

Returning to education, the national funding review is important, but we must not cut funding to London schools and their pupils because those schools will then decline. We have seen success and must not jeopardise it. Bursaries for nursing students have been lost and we now have loans for further education, so the next rung of the ladder for the aspirant people at the bottom—they are aspirant in Hackney—has been knocked out by the Government, making getting on in life harder to reach. The Government must start ruling for the entire nation. It is a tale of two nations and this Budget simply underlines that.

3.17 pm

Geoffrey Clifton-Brown (The Cotswolds) (Con): I am delighted to have caught your eye, Madam Deputy Speaker, and to welcome my right hon. Friend the Chancellor’s Budget and some of the excellent things it contains. I want to pick out important two statistics.

16 Mar 2016 : Column 997

First, as of today, we have a record number of people in employment. Contrary to what is often said, 62.66% of that has come from the high-skilled sector, so we are creating high-skilled jobs in this country. Secondly, I welcome the fact that in this tax year we will again become the highest-growth country of all the world’s major economies. That is a significant achievement by my right hon. Friend.

Having spent many hours on the Select Committee on the High Speed Rail (London – West Midlands) Bill over the past year, I have become something of a convert to the Chancellor’s way of thinking about the merit of transport infrastructure projects that are good value for money. I welcome to the Front Bench the Minister of State, Department for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill), who is in charge of the HS2 project and who will be no doubt pilot the Bill through the House in an excellent manner next week.

If this country is to compete in the 21st century, it needs a 21st-century system of transport. Through HS2 and other transport infrastructure projects, such as Crossrail 2, which the hon. Member for Hackney South and Shoreditch (Meg Hillier) mentioned, and the trans-Pennine rail tunnel, we are easing the burden on our congested roads and building some serious national expertise in areas such as tunnelling. That has enabled us to undertake some projects that we would not have been able to do just a year or two ago. As we have seen with the Thames tideway project in London, we have been able to bring the cost of such major projects down considerably. Competitiveness is the key to a successful economy. We are constantly competing in the global marketplace, whether we like it or not, and the economic decisions that the Chancellor has taken today reflect that reality.

I welcome some of the announcements to simplify our tax system, although we could go further. I particular welcome the measures to abolish class 2 national insurance contributions. However, as income tax and national insurance revenues are slightly larger than the sum required to pay the entire benefits bill, national insurance is still a big burden, particularly for the low-paid. I welcome my right hon. Friend’s measures today to accelerate taking the low-paid out of the tax system, moving the threshold from £11,000 to £11,500 and then to our goal of £12,000.

I come to a slightly discordant note, so I hope my colleagues on the Front Bench will bear with me on it. The VAT system that the Government have inherited is overly complicated. We zero-rate flapjacks but not cereal bars. We zero-rate paper books but not e-books. It was considered a productive use of somebody’s energy to write into the Government’s VAT guidelines—this is true, as hon. Members will see if they go online—that VAT must be applied to gingerbread men covered in chocolate at the standard rate unless

“this amounts to no more than a couple of dots for eyes”.

As some Members in the Chamber will be old enough to recall, the standard rate when VAT was introduced, following the old purchase tax rules, was 8%. It was then increased to 25% for certain items under Denis Healey, and today we find it at 20%. I say to my Front-Bench colleagues that the whole VAT situation needs a thorough

16 Mar 2016 : Column 998

review. The problem is that we are governed by the rules of the EU, believe it or not, and the VAT sixth directive, which makes this very difficult. We need to have a conversation with those in Europe if the British people vote to remain in the EU, which I hope they will not.

I sincerely welcome measures in the Budget to make us more competitive, particularly the fact that the Chancellor is going to accelerate the reduction of corporation tax so that it will be reduced to 17% by 2020. That is a really useful measure. Interestingly, chart 1.11 in the Red Book shows that America’s corporation tax is 40%, so it is amazing that its businesses are as competitive as they are. However, it is clear that our corporation tax is not moving quickly enough to keep up with the rapidly changing global nature of modern corporations, and that is leading to perverse outcomes that generate public concern, such as Google’s recent announcement that it was paying only £130 million in back tax. I hope that the newly announced diverted profits tax will improve the situation. As has been said, a number of other measures in the Budget are there to improve the tax generated by some of our big corporations, and I hope that my right hon. Friend the Chancellor is right that those measures will generate £9 billion by the end of this Parliament.

We need to invest more to support small and medium-sized enterprises and encourage them to start exporting. The balance of payments figures in the Red Book are worrying. We could rethink how the Government support companies that want to export for the first time, especially given that we are reducing corporation tax. Bearing in mind that it probably costs a minimum of £50,000 for a company to consider exporting to a new market, we could give companies a complete break on corporation tax for any activity that relates to exporting for the first time. We need to rethink the role of UK Trade & Investment, as our approach is clearly not working. We are not getting enough small and medium-sized companies exporting, so we need to rethink its role under the new chief executive. In some years UKTI’s budget has increased whereas in other years it has reduced, and we need to give it a stable environment in which to operate.

I welcome the Chancellor’s announcement on broadband. The Government plan to invest so that superfast broadband covers 90% of the UK by early 2016 and 95% by December 2017. The trouble is that those are national averages, and rural constituencies such as mine have a disproportionate number of homes and businesses that are not getting a realistic broadband speed to deal with both their business and their leisure in the 21st century.

Mrs Trevelyan: We face a challenge on the universal service obligation, which has been committed to but which is currently weakly defined, and those of us who have constituents in very rural parts of England will struggle to see that commitment met. We need to continue to push the Chancellor and the Treasury to understand that a commitment will be required to make sure that every household in the UK has superfast broadband.

Geoffrey Clifton-Brown: My hon. Friend has an even more rural constituency than I do, but we both have very rural constituencies, and she is spot on in what she says. We need to make sure that every house and every business gets a reasonable broadband speed as quickly as possible. I was coming on to say that we need to provide support for bespoke solutions, and I am sure

16 Mar 2016 : Column 999

that applies in her constituency, as it does in mine, where the Gigaclear contract, which was the first such contract in the country, will enable another 6,495 homes to have a reasonable broadband speed by 2017.

The Chancellor had a free shot about the EU, so I feel that I, as a humble Back Bencher, am entitled to have one, too. While I am talking about competitiveness, I must briefly mention our EU membership, as the issue has been receiving a small amount of attention lately. As a nation, we face a choice between remaining part of an institution that is fundamentally anti-competitive and is collapsing under the weight of its own bureaucracy, and seizing our own destiny and becoming a great trading nation once again, being fleet of foot, free of excessively burdensome regulation and able to make our own deals around the world.

As my right hon. Friend the Member for Wokingham (John Redwood) said, we will have an additional £10 billion net to spend if we leave. We will be part of a free and fair immigration system that allows us—this country, this Parliament—to attract and retain the best and brightest from countries such as India and China, without having to put in place arbitrary caps and restrictions simply to counteract the number of people coming from Europe, over which we currently have no control. Britain should be a place of equal opportunity for anyone who wants to come here with something to contribute, not simply a place for anyone who happens to reside in the EU. The recent EU deal with Turkey threatens to exacerbate the situation.

We live in uncertain times, as the OBR’s growth forecasts clearly show. The Chancellor has said that there are storm clouds gathering, both at home and abroad. The Government are right to push ahead with reducing the deficit. There are naysayers who tell us that a national deficit at 4% of GDP is sustainable, but I say to them that a national debt at 82% of GDP certainly is not. We inherited from the previous Government a rate that was higher than it had been at any time since the 1960s, so I welcome the measures taken in this Budget to reduce it to 74% of GDP by the end of this Parliament. Our debt interest payments alone are equal to the annual budget of the Ministry of Justice and the Home Office combined. Just imagine how much extra we would have to spend, or we could save on taxes, if we did not have to pay that debt. The high level of debt leaves us extremely vulnerable to global shocks that could put up interest rates. Serious efforts to tackle the deficit, so that we can start to bring down our debt, must be accompanied by a sustained effort to continue to reduce regulation, to simplify our outdated tax system, to reduce public expenditure, to get the best possible value for money, and to give us infrastructure fit for the 21st century and for one of the world’s best performing economies, if not the best performing.

3.28 pm

Chris Leslie (Nottingham East) (Lab/Co-op): I welcome the Chancellor’s steps today to discourage child sugar consumption. As there is a cross-party consensus on the need to take measures to prevent ill health, it is important that we welcome those steps.

As the stir in the media begins to dissolve over the next few hours, I suspect that many members of the public will spot some of the uglier measures and scarier facts in the Office for Budget Responsibility’s analysis

16 Mar 2016 : Column 1000

and in the Red Book. The Chancellor clouded many of his announcements in jargon—he goes a little bit faster over some passages in his Budgets. It is the downgrading of economic growth, though, that will be of the most profound importance to many of those commenting on the Budget today. To downgrade expected growth this year from 2.4% to just 2% is a real blow to the Chancellor’s credibility when it comes to delivering economic performance. He has downgraded those figures not only for this year, but for every single year of this Parliament, which has a major effect on a whole series of Budget assumptions.

We already know that the Chancellor took a gamble in the spending review before Christmas. He found £27 billion down the back of a sofa through a series of ONS reclassifications, and he banked on that money, spent a lot of it and committed it in a number of different ways. Now that the money has not materialised, he has had to make a series of adjustments, which we are only just managing to spot in the fine print of the Red Book. I have not had a chance to go through the full details, but it is interesting to make a note of those adjustments.

The Chief Secretary to the Treasury (Greg Hands): I thank the former shadow Chancellor for giving way. I wonder whether he is remembering his days as a senior adviser to Gordon Brown. Surely he must know that the forecasts are now all done independently by the OBR. It is only sensible for the Treasury and the Chancellor to react to those independent forecasts, but to try to shoot the forecaster is fundamentally to misunderstand the nature of the Office for Budget Responsibility.

Chris Leslie: Oh dear, oh dear—a bad workman always blames his tools. It is interesting that the Chief Secretary to the Treasury does not fess up to the big changes that have been made with the raids on public sector pensions. Some £2 billion will be taken from public service workers across this country—that was not really emphasised in the Chancellor’s speech. A whopping £6 billion, or 60% of the £10 billion surplus that the Chancellor is still claiming will be achieved, will go on all sorts of shuffles in when corporation tax is paid. That will potentially be very disruptive to businesses and firms across the country.

On the economic forecast, there is a problem not just with growth but with productivity. Despite the fact that the Chancellor has published productivity plans, it is stark to see how productivity has been significantly downgraded in the OBR document. On page 46, we see that, whereas in 2010 real productivity had 21.9% of potential, it has now fallen to 14.4% of potential—a massive faltering of Britain’s performance on productivity. Although the Chancellor has paid lip service to that issue, he has consistently failed to orientate his Budget measures around those economic necessities.

We also need to look at what has been happening to earnings in this country. Again, the growth in average earnings is downgraded not just this year but for every year of this Parliament. Page 91 of the OBR document paints a gory picture of what is happening to average earnings. Of course, that economic outlook has an effect on the numbers in the tax and spending decisions that the Chancellor has to make.

Let us look at what the Chancellor has had to do to try to keep his promises. He is trying his best to stay on course to deliver a surplus at end of this Parliament,

16 Mar 2016 : Column 1001

but he has already had to admit that he has broken his promise on the welfare cap, and today he has admitted that he is breaking his promise on the national debt. Public sector net debt is up every year in the forecast for this Parliament—a theme that runs through the whole Budget statement. The heroic assumption that the Chancellor is still going to get that £10 billion surplus at the end of the Parliament feels implausible not just to me but to many of the economic commentators who are analysing the Budget statement. As I have said, that surplus is predicated on a £2 billion raid on public service pensions and the £6 billion shuffle in when corporation tax will be realised.

Then we get to some of the other changes that the Chancellor has decided to make. He did not really dwell on this very much, but cutting capital gains tax from 28% to 20% is a phenomenal giveaway to the very wealthiest people in this country. It applies not to residential properties but to those who have an accretion of capital wealth. Their tax will come down significantly, with a giveaway next year of £630 million. In the same year, he will take £590 million—from where? From the disabled—from the personal independence payment section of the social security budget. That is a straight transfer from those in most need to the very wealthiest in society—a tycoon tax cut, as I think it will be known as the days go by and people realise what has been announced in the Budget.

There are other spending cuts in the small print of the Red Book. Poor old local government services, particularly in areas where not a lot of Conservative party members reside—you might be surprised at my cynicism, Madam Deputy Speaker. Local government services received £10.8 billion of funding this year, but that will be cut by a third to just £6.2 billion in the last year of this Parliament. Just imagine the effect on libraries, leisure services, housing, social services and social care. Of course the Government will say that local councils can put up council tax, but they should not think that local residents will not place that council tax increase entirely on the Chancellor’s shoulders. They are the ones who have to pay the price for the cut in local services.

The transport budget will be cut from £2 billion to £1.8 billion by the end of this Parliament. How on earth will that help with the productivity issues we have to address? I have talked about the clear problems that emerge from the OBR Blue Book, and transport is one of the most important areas of infrastructure spend, ensuring that people can get from A to B and that goods and services can flow to markets. All those obstacles and impediments to business will be made worse by the Chancellor’s attitude to transport.

The OBR goes on to say that this era of cuts and Tory austerity will continue not only for this Parliament—never mind the previous Parliament—but will bleed well into the next Parliament. The OBR says that to achieve the surplus they want, the Government need a much bigger cut in current departmental spending of £8.1 billion in 2020-21, compared with the £1.8 billion that they have to cut in 2019-20. There are all sorts of statistical shifts and shuffles going on, all revolving around the Chancellor’s target, and what is that about? Not just the Chancellor’s European referendum anxieties

16 Mar 2016 : Column 1002

but the leadership challenge from the Mayor of London. Everything in this Budget has revolved around the Chancellor’s political predicament.

We have a Budget that exposes many of the anxieties people have had about this Chancellor’s attitude. It is eminently political, with all sorts of shuffles that do not really have anything to do with the best interests of the economy. With growth down, debt up, productivity faltering, implausible surplus forecasts and a tycoon tax cut—a capital gains tax giveaway paid for by disability independence payments—it is not a Budget of which Government Members should be proud.

3.37 pm

Andrea Jenkyns (Morley and Outwood) (Con): With today’s Budget, the Chancellor has shown once again that this Government are on the side of the people of the United Kingdom. This is a Budget that puts the next generation first. It is a Budget of opportunity. We are creating a climate that allows our businesses to thrive, our children to have the best education and reach their potential, and people to keep more of their own money and plan for their own future.

The Budget brings excellent news for small businesses, which are the bedrock of our economy and our communities. The businesses in my constituency will be thrilled to hear that we are cutting their taxes. Thanks to the announcements made by the Chancellor this afternoon, small business rate relief has doubled, and the maximum threshold for relief has been increased from £12,000 to £15,000. This means that many businesses in Morley and Outwood will now never pay business rates ever again. The Government will also raise the threshold for the higher rate of business rates from £18,000 to £51,000, meaning that 250,000 small businesses in the UK will get a tax cut on their business rates bill.

We are cutting corporation tax further to 17% from 2020, which will support job creation, benefiting more than 1 million firms across the country, many of which will be located in my constituency. To boost enterprise, we have announced that we are also cutting the basic rate of capital gains tax to 10% and the higher rate to 20%, which will improve investment in business. We are reforming stamp duty on commercial properties, resulting in a tax break for small firms. This will remove the distortions in the property market and make it easier for small firms that want to move to bigger premises. As a result, 90% of transactions will have their tax bill cut or stay the same. It is excellent news that the Chancellor has decided to simplify and modernise business taxes, and that is essential in ensuring that we have a tax system that is competitive but fair. I am certain that my constituents will be pleased to hear that we are also modernising our tax rules, to close loopholes that have allowed far too many international companies to reduce their tax burdens to close to zero.

Karin Smyth (Bristol South) (Lab): Will the hon. Lady give way?

Andrea Jenkyns: I am sorry; I will move on.

I have worked in schools as a music teacher, so education is very important to me. Improving our schools so that our children get the best education in life is essential, and the opening up of opportunities for young people is a subject that is close to my heart. The reforms announced today are excellent and will give every young

16 Mar 2016 : Column 1003

person the chance to succeed. In my constituency we have some excellent academies—Morley, Outwood and Woodkirk, to name but a few. That is why I am delighted to hear that we are providing more money, so that by 2020 every school in England will have become an academy or be in the process of conversion. We are going to shine a particular focus on performance in the north and look at the case for teaching some form of maths to 18 for all pupils. We are introducing a national fair funding formula, from which 90% of schools will benefit, and ensuring that we will see those benefits by the end of this Parliament.

What is important to me is that we will invest £20 million a year into new funding of the northern powerhouse schools strategy. That new funding will ensure that rapid action is taken to tackle unacceptable divides that have seen educational progress in some parts of the north lag behind the rest of the country for too long. In support of that, Sir Nick Weller will lead the preparation of a report into transforming education across the northern powerhouse.

The difficult choices made by this Government mean that we are now able to make decisions that benefit everybody, beginning by raising the tax-free allowance so that more people can keep what they earn. For the sixth consecutive year, drivers will see historically low prices at the pumps maintained, thanks to the Chancellor’s decision to continue the freeze on fuel duty, which has done so much to relieve the burden on families and businesses. As the Chancellor said, that landmark decision will save the average motorist £70 a year, which is a significant amount for families. In constituencies like mine, which have seen an historical under-investment in public transport, cars are a vital lifeline. This cut in duty will make it easy for my constituents to get around, to go to work and to shop, and I welcome it wholeheartedly.

For far too long, previous Governments neglected investment in the north. By contrast, under this Government, this Chancellor is making good on his promises to pump investment into the northern powerhouse, which will see historic improvements to our transport links. The M62, which passes through the heart of my constituency, is to be upgraded to a four-lane smart motorway. So often I talk to constituents who get stuck in the horrendous traffic that builds up on the M62, and my team commute down the road every day. I am totally behind the measures to unclog that vital link.

It is not just the roads that are being kick-started. The new High Speed 3 link from Manchester to Leeds will cut journey times for people from my constituency to travel between the two cities. I look forward to seeing more detailed proposals for the route and stations for that link, which will be a welcome boost to the economy in Yorkshire and the north-west. Britain is a nation of builders. The north is the beating heart of Britain’s industry and I am proud that the north will be building once more.

The Chancellor is also supporting our communities through the landmark decision to freeze duty on beers, spirits and most ciders. I know that residents in my constituency will welcome that this weekend, when they visit the annual Morley cricket club beer festival. As the Budget document tells us, changes to beer duty have already protected 19,000 jobs, and these further changes will continue to support our brilliant breweries.

16 Mar 2016 : Column 1004

That will protect our local pubs, which are so often the heart of the community, and support the Scotch whisky industry.

Whereas some Members on the Opposition side of the House want to divide us along our internal borders, this Government are committed to supporting one nation, with measures that will benefit the whole country.

Graham Jones: Will the hon. Lady try to explain or give her version of the section of the Chancellor’s speech regarding the EU?

Andrea Jenkyns: A very good question. I am very supportive of what the Government have done. After all, it is the first time in 40 years that we are getting this referendum. I think that is all that matters. We have put it in the British public’s hands to decide on the future.

The floods over Christmas and at the start of the year were devastating to so many people, homes and businesses across the country. My constituency was lucky; we escaped major damage, with most of the affected areas being farmers’ fields. However, I am delighted that the Government have committed more money to our flood defences, including £35 million of new funding for phase 2 of the Leeds flood alleviation scheme. Leeds was hard hit in the recent floods. Many of my residents commute there every day, so that is welcome news. Thanks to our strong economic recovery, we have the tools available to help those affected by the floods.

We found out yesterday that the shadow Chancellor had previously listed his great influences as Marx, Lenin and Trotsky. With a new musical about the Leader of the Opposition coming out next month, I hoped he would not be singing the same tune. Unfortunately, it looks as though the Opposition are more of a tragedy than a comedy. The response from the Leader of the Opposition to the Chancellor’s statement confirmed that the Labour party should never be trusted with the nation’s finances. He said that we were not on the side of small businesses, yet we delivered tax cuts. He criticised the reduction of corporate tax rates, yet that will help businesses to grow and invest more into the economy, helping working people and the country as a whole and creating more jobs. Where the Government are setting out a clear plan for the future of the British economy, the Opposition are stuck in a Marxist dream-world where economic realities do not apply. They should never be given the opportunity to hold the levers of power again.

This is a Budget of opportunity—[Interruption.]

Madam Deputy Speaker (Mrs Eleanor Laing): Order. There seems to be a lot of noise for no apparent reason. If people are having conversations, they should not be having them here in the Chamber. If they want to intervene on the hon. Lady or challenge her, they should do that. This is about the debate, not about other things.

Andrea Jenkyns: Thank you, Madam Deputy Speaker.

This is a Budget of opportunity, giving young people in our schools the opportunity to succeed, and giving businesses the opportunity to grow and prosper. The northern powerhouse and investment in the region will help us provide new jobs. Our planning laws will be reformed, which will give people the opportunity to own their own home. The Conservatives are the right party to take us into a positive future, with a strong

16 Mar 2016 : Column 1005

economy and a budget surplus. For the first time in over four decades we are letting the British people decide on our future through the EU referendum. I am proud to be a Conservative and I commend the Chancellor on his Budget.

3.46 pm

Pat Glass (North West Durham) (Lab): I want to speak today about tax avoidance and its impact on the UK economy and on the economies of the developing world. In this I follow the hon. Member for Amber Valley (Nigel Mills), who spoke earlier, and my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier). I hope that between us we will be the beginning of a chorus that is so loud that the Chancellor will not be able to ignore it.

I welcome the Chancellor’s announcement today about closing tax loopholes for big companies, but without transparency this will make little difference to a tax avoidance industry that is out of control here and across the globe. This Government and other western Governments around the world are presiding over a global economy in which inequality has reached crisis point, and today’s Budget will not make that any better. Oxfam’s “An Economy For the 1%” report tells us that the richest 1% now have more wealth than the rest of the world combined, that power and privilege are being used to skew the economic system to increase the gap between the richest and the rest, and that a global network of tax havens across the world, including here in the UK and in our Crown dependencies and overseas territories, contributes to the richest being able to hide $7.6 trillion, which is contributing to cuts in public expenditure here and across the world. Here in the UK that means longer NHS waiting lists, teacher shortages and decreasing levels of care for the elderly and frail, and it means that the poorest living in the developing world see every penny of international development funding wiped out by what is, in effect, stolen from them in tax avoidance.

Meg Hillier: Does my hon. Friend think it is an interesting contrast that the US chief executive of Google was paid a salary package of bonuses, shares and so on worth about £130 million, and Google’s tax settlement with HMRC for a 10-year period was around the same amount?

Pat Glass: Yes, and I doubt whether he even sees the irony. I watched that session of the Select Committee. What I recall is that he could not even tell us what his salary was—it was so large, and it was made up of so many different kinds of dividends and so on, that he had no idea what his salary was.

There are 62 individuals who now have the same wealth as the poorest 3.5 billion people in the world. Those same 62 people have seen their wealth increase by $542 billion since 2010, while the poorest 3.5 billion people have seen their wealth fall by $l trillion over the same period. Those in the poorest 10% of the world’s population have seen their income rise by just $3 a year over five years, whereas 62 of the world’s richest people have seen their income rise by $500 billion over the same period.

16 Mar 2016 : Column 1006

As is always the case when we are talking about who is rich or poor, it is women who are at the bottom. Some 53 of the world’s richest people are men, and the countries with the largest inequalities have seen the gender gap widen in terms of not only income, but health, education, labour market participation and representation.

The current system of tax havens, with what has become an industry of tax avoidance across the globe, damages our economy in this country and economies across the world, and it needs to be addressed and closed down. It is absolutely clear that trickle-down economics does not work, except for the richest 1%, in which case it works beautifully for them and their mega-rich pals.

The Government’s view that low taxes for the richest individuals and for companies are somehow good for the rest of us is just plain wrong. If the Googles of this world, and the Vodafones, Starbucks, Amazons and the rest, paid their taxes properly, like the millions of hard-working people who understand that paying taxes is the cost of living in a civilised society, we could wipe out the deficit in the UK, and the poorest across the world could begin to see improvements in their grindingly poor lives.

Channel 4 revealed this year that Barclays, which had signed up to the banking code on taxation and therefore promised not to engage in tax avoidance, actually employed a range of tax avoidance schemes to dodge an estimated half a billion pounds in tax in the UK alone last year. That is the worst kind of hypocrisy.

When the bank’s tax avoidance practices were reported on by Channel 4, Barclays responded that it had

“voluntarily disclosed to HMRC in a spirit of…transparency that it had repurchased some of its debt in a tax efficient manner.”

Will the Chancellor’s announcements today change that? Without transparency in the system, I doubt it. Presumably, Barclays made that declaration fully understanding that its actions would result in fewer doctors, fewer nurses, fewer teachers and cuts for the poorest and most vulnerable in this country.

Boots the chemist, which earns every penny of its income in the UK, moved its headquarters from Nottingham to Zurich to avoid paying any tax in this country. Quite frankly, that should be illegal. I doubt very much whether, without transparency in the system, anything the Chancellor said today will change that, bring the Boots headquarters back to this country or make Boots pay its tax here.

Companies that are household names in the UK now routinely use a technique called transfer pricing, trading goods and services internally—within a network of the same multinational company’s subsidiaries, each of which is in a different jurisdiction—to avoid paying tax. Without transparency and routine, mandatory reporting, that will not change, even after what we have seen in today’s Budget.

When companies are caught out and their practices are highlighted, as happened recently with Facebook, they simply reach a sweetheart deal with HMRC, paying a tiny, tiny proportion of the tax they owe, while announcing to the world what good citizens they are because they now pay their tax.

Yesterday, Oxfam published a report called “Ending the Era of Tax Havens: Why the UK government must lead the way”, which pointed out that tax havens are at the heart of the inequality crisis, enabling corporations and wealthy individuals to dodge paying their share of tax. Oxfam analysed 200 of the world’s biggest companies

16 Mar 2016 : Column 1007

and found that nine out of 10 have a presence in at least one tax haven, with corporate investment in those tax havens in 2014 almost four times bigger than it was 10 years ago. Tax avoidance in our largest companies has become routine and obscene, and it is growing.

Tax havens are estimated to cost poor countries at least $170 billion in lost tax revenues every year. They fuel the inequality crisis, leaving poor countries without the funds they need and effectively wiping out the benefits of any international development funding those countries receive. If we are to address that, the Government must require multinational companies to make country-by-country reports publicly available for each country in which they operate. The Government must also support efforts at European and international level to achieve that standard globally. That has not happened in today’s Budget.

Geoffrey Clifton-Brown: I have great sympathy, as I mentioned in my speech, with the point about the avoidance of corporation tax by large corporations. Does the hon. Lady not agree that the real damage is in poor countries, where these corporations get away with paying no corporation tax whatever, while we are, at the same time, giving these countries foreign aid? We need to tackle this issue internationally, through the OECD, the G7 and the G20, which is exactly what the Chancellor has been trying to do.

Pat Glass: I agreed with everything the hon. Gentleman said until he said that this is “exactly what the Chancellor has been trying to do”, because unless there is mandatory reporting, and it is transparent, it will not make any difference.

The Government need to ensure that the mechanisms for public country-by-country reporting benefit developing countries as well as the UK. We did not see that in today’s Budget. The Government must require the UK Crown dependencies and overseas territories to set clear timetables for public registries of beneficial ownership. After all, the Prime Minister promised this three years ago at the UK’s G7 summit in Lough Erne and has failed to deliver it, and again it is not in today’s Budget.

We cannot call ourselves decent people and cannot claim to be a decent country if we stand by and allow the inequalities that exist between the rich and the poor to grow. The British people understand the unfairness of the current situation, and they want it to change. They understand that despite opportunities such as today’s Budget to address some of this, the Chancellor has chosen not to do so. This country, and this world, is not short of wealth, and it makes no economic, political or moral sense to allow the current obscene situation to continue. It is wrong that 62 people have more wealth than the poorest 3.5 billion people on this planet, wrong that companies operating in the UK routinely avoid paying the tax they owe, and wrong that the Government and the Chancellor seem content to allow this to continue.

3.56 pm

Neil Carmichael (Stroud) (Con): It is a great pleasure to speak in this important debate, not least because it covers two important subjects that I find of great interest—Europe and education. I intend to address them both.

16 Mar 2016 : Column 1008

First, let us canter through some of the statistics in the context of the changes that the Chancellor announced. The global economy is going through a very problematic period of adjustment. That has significant impacts on our own performance, and those are driving down some of the more ambitious assumptions made previously. That is why the OBR is so important. My right hon. Friend the Member for Wokingham (John Redwood) said that the OBR had been wrong on a scale of about £45 billion per year on anticipated debt. If we contrast that with the £8.5 billion that we pay to the European Union in net contributions, we see that it is a different scale of issue. However, that does not undermine the function of the OBR because it has to measure changes over a wide variety of different statistics, and does so remarkably well. We should salute that. We should also note that the Office for National Statistics is just as good at making predictions.

The Chancellor mentioned productivity—rightly, because that goes to the heart of the issue. He said that productivity growth is slackening. In this country we need even more productivity growth than we are seeing now because our deficit with other countries who are our competitors is quite significant. For example, the OECD says that we are 28% less productive than the Germans. That makes a difference when we set about exporting. If we are that different from the German economy in terms of productivity, then we are going to struggle with being competitive. We have to stop complaining about UKTI and stop worrying about what people are doing to us, and start recognising that we have to narrow this productivity gap.

The second point about productivity is that it matters in relation to life fulfilment, tackling poverty and so on, because the brutal fact is that if we are more productive through having greater skills and better deployment of training, we will get higher salaries and better wages. Through driving productivity increases in our economy, we will end poverty on the scale that has been mentioned today. That is our challenge, and it is a must-do. I am really pleased that the Chancellor is embedding it in this Budget. He has done so by addressing education, which I will turn to now.

More academies equals better schools. That is something that I believe and, I think, something that we will easily prove.

Meg Hillier: As the hon. Gentleman is probably aware, the Public Accounts Committee recently held a hearing on teacher training. We discovered that, after an eight-week course—sometimes it did not even last eight weeks—a staggering number of teachers who had not been qualified to teach certain subjects to a higher level qualified to teach them to our students and young people. Does he not think it is more important to sort out having qualified teachers in the classroom than to force every school into academy status?

Neil Carmichael: I could not agree more with my fellow Select Committee Chair. That is obviously a priority, but that does not mean that it is not also important to have good schools that are led well by headteachers who are focused on the right culture, standards and quality staff. We should have more academies and make sure that they operate in a well-structured multi-academy trust.

Pat Glass rose

16 Mar 2016 : Column 1009

Neil Carmichael: I think I have set the cat among the pigeons. Go for it.

Pat Glass: The hon. Gentleman knows as well as I do that, when we both sat on the Education Committee, we saw no evidence whatsoever—believe me, we looked for it—that academies improved standards more than maintained schools.

Neil Carmichael: That was a year ago, when there were fewer academies. Now, 80% of academies are good or outstanding, which is a really impressive signal. We need to make sure that academies join up in multi-academy trusts.

Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): Will the hon. Gentleman give way?

Neil Carmichael: No, I will keep going now. I am really excited about the idea of including university technology colleges in MATs, because that will give greater choice. The Government have already allowed sixth-form colleges to be included in MATs. We need economies of scale in sixth-form provision, and increasing the number of MATs will do just that.

It is a scandal that, according to a national mathematics charity, 78% of our adult population do not reach level 2 maths. That is not acceptable and it is absolutely right that maths should be taught as a compulsory subject up to the age of 18. I have frequently said that we should have a national baccalaureate to do just that, and I urge the Government to point out to Sir Adrian Smith that that would be at least one way of making sure that 16 to 18-year-olds are taught maths. I remind the House that we are the only country in the western world in which maths is not a statutory subject up to the age of 18. That is not acceptable.

I know that this is of no interest to the Scottish nationalists, but the Government have rightly decided to make sure that our schools have fairer funding. When I was a member of the all-party parliamentary group on Yorkshire and northern Lincolnshire, I was not surprised that there were concerns about Yorkshire schools and that people wanted a commission to improve them, because there are a large number of coastal and rural schools. Such schools often suffer most with regard to funding, so it is absolutely right for the Government to tackle that.

I salute and welcome the decision taken on sugary drinks. I am also very pleased that the money from that tax will go towards encouraging more sports participation. My Education Committee will look at that in detail.

I want to mention three other issues before I move on to Europe. First, I think that devolution is a really good thing and I am really pleased that so many cities and counties are considering mayoral solutions. I think that is the way forward. Any structure considering devolution must ensure that it has the right accountability and governance system in place. That is what the Government seek to achieve. I hope that my own county of Gloucestershire—the entire county; I do not want anything to be chopped off—will be a successful devolved power with a suitable governance structure. That is the way to harness business, education and other public services, make sure that the planning system is consistent with the overall interests of the county, and deliver for the people. That is how we can really make a difference, and this Budget helps that process.

16 Mar 2016 : Column 1010

It is absolutely right that we continue to invest in infrastructure. I think the key thing is to signal a plan for investment that businesses can look to with some certainty and know that it is happening, so that they can start thinking about the people they need to recruit and the resources that they need. A common complaint of organisations such as the Institution of Civil Engineers is that we do not have the planning capacity to make the decisions that we should be making ahead of starting a project. Forward planning in infrastructure projects is absolutely great, and the Budget does that to some extent, although I think that more could be done.

I am really pleased to see that business rates are being changed so that smaller businesses will simply be exempted. That is good news for a constituency such as mine, where we have a large number of small businesses, many of them in the retail sector. Many are starting to develop really interesting technologies that have huge potential and that will get somewhere if they are given a proper chance. The changes in business rates are really very good.

Back to the European Union. We have to accept that the OBR is right to point out that if we leave the world’s largest single market at a stroke—that is effectively what article 50 will do—we will cause a huge amount of disruption to investment and trade. If anyone thinks that signing 66 new free trade agreements will be easy, quick or comprehensive, they are wrong. As we saw with the discussion about Canada, if we replicated the position of Canada, our situation would not be helpful in terms of motor cars or financial services. That is not a solution.

We should also remind ourselves that proportionally, Norway pays about the same as we do to be in the single market, with no control over anything and no special dispensation over any aspect of the single market. We complain about paying the same amount, per ratio, as Norway, yet right now we have influence. What does that influence do? It effectively created the single market in the 1980s and has expanded it now, and it will continue to ensure that Britain has a leadership role in the European Union, where we can forge a stronger, better place for trade and extend beyond the European Union. The idea that we are in the European Union and that therefore can go nowhere else is utter nonsense. Germans export to China. The Netherlands beat us when it comes to exports to India. We, not Europe, really have to think about where we export and how we do it, and about the productivity issue that I have raised.

Those are the economic reasons for staying in Europe, and I will largely confine myself to them. I am interested, too, in the fact that Mark Carney, the Governor of the Bank of England, has taken the time to consider the implications if we decide to leave. He has recognised that there would be difficulties in our banking system if that were to be the case, and he has taken pre-emptive action. That is a signal that we are taking a risk by considering leaving the European Union. Instead, we should make up our minds and stay in. From then on, we should use our power in the European Union and beyond to shape a Union that represents our interests, deals with more competition, forges more trade links and gives people in Europe as a whole more security—for their own safety and national safety—and economic opportunities. That is why it is important to remain in the European Union, and that is why the OBR, the Bank of England, the CBI and, plainly, the Chancellor of the Exchequer think that we should do so.

16 Mar 2016 : Column 1011

Several hon. Members rose

Madam Deputy Speaker (Mrs Eleanor Laing): Order. We have plenty of time for this debate, but, to make sure that everyone has a fair chance to speak, I am going to reduce the time limit to nine minutes.

4.9 pm

Sammy Wilson (East Antrim) (DUP): May I first welcome a number of measures in the Budget? The rise in income tax thresholds is important for those in work who wish to keep their income and spend it as they, rather than the Government, see fit. The changes for savers are also important, especially for those on lower incomes and perhaps those who are self-employed, given the incentives. I would however point out that although the Government have presented some of the changes as important, especially the lifetime ISAs and the help for low-income savers, many people will still struggle to put aside the money for such initiatives. The change in business rates is important for small businesses that are struggling, especially in town centres, as are the promises to deal with tax avoidance. However, we have heard such promises before, and, very often, nothing has come of them.

Chris Stephens (Glasgow South West) (SNP): Is the hon. Gentleman not concerned, as I am, that the whole tax-avoidance strategy is rhetoric, rather than reality, given that HMRC wants to close 90% of its offices, some of which are in Northern Ireland?

Sammy Wilson: There has to be a connect between the promises that the Government make and the ability to deliver on them, whether through legislative changes or, indeed, through having the resources to deal with the issues.

The Northern Ireland Executive will benefit, from Barnett consequentials, to the tune of about £220 million over the comprehensive spending review period. Many people will welcome the fact that £5 million has been set aside to establish an air ambulance in Northern Ireland, for which we have called for a long time.

I want to deal with two areas. I will start where the hon. Member for Stroud (Neil Carmichael) finished, with the Chancellor’s references to the European Union. I notice that the Chancellor made fairly scant reference to it in his statement. Indeed, I think many people were probably surprised about that, given the way in which the Government have tried to drive this issue. On the other hand, I am not surprised, because what does he really have to say about retaining membership of the EU?

The Chancellor talks about struggling with the budget deficit and with the public finances, yet he is quite happy to give £10 billion a year to the EU. In the EU, the money is often so badly spent that its accounts are qualified every year. Such money goes on fraudulent activities; it disappears into black holes; it goes on vanity projects—[Interruption.] I notice that some of the most vociferous supporters of giving public funds to the EU are from the Labour party, while its Members are complaining about cuts in services for their own constituents.

The other point that the Chancellor has to address is that, although he will give £6 billion to companies in corporation tax cuts, he will, over the same period, take £7 billion more off them in environmental levies, most of which are driven by European directives. On the

16 Mar 2016 : Column 1012

one hand he is giving money to businesses, and on the other, European directives ensure that he has to take it from them.

The hon. Member for Stroud got it wrong when he mentioned what the OBR has said about leaving the EU. The OBR has not been definite that certain things would happen. Indeed, its report says that leaving the EU “could usher in” uncertainty, “could have negative” impacts and

“might result in greater volatility in financial…markets”.

That is also what the Chancellor said. The ironic thing is that he had no sooner uttered his comments about threatening and slaughtering jobs, investment and everything else than, in his very next sentence, he pointed out that since the autumn statement—we have had all the uncertainty about the referendum and the fact that the United Kingdom might vote to leave the EU—the Government had

“created…150,000 more jobs than the OBR expected.”

There is all this volatility and uncertainty, yet in the face of a referendum businesses are not reflecting uncertainty or fear. Indeed, according to the Chancellor they are creating 150,000 more jobs than the OBR expected.

Neil Carmichael: I just wondered whether the hon. Gentleman was aware that 80% of businesses in Northern Ireland want to stay in the European Union.

Sammy Wilson: Of course, it depends on what survey we look at. Large firms benefit from the lobbying power they have to restrict innovation and the entry of small firms into markets. Small businesses are buried under regulations and strangled by the red tape that emanates from Europe.

The Chancellor carefully avoided talking too much about our membership of the EU, because there is not a good story to tell on that in budgetary terms. I notice that, so intent is he in ensuring that attention is not drawn to it, EU transactions are included with others in chart 1 of the executive summary—he does not want to highlight the exact amount of money we pay into the EU.

The second issue I want to deal with is inequality across the United Kingdom and across sectors of the population. Growth forecasts have been reduced for a whole range of reasons. Some of those reasons are outside the control of the Chancellor, but some are not. One way to improve growth is to borrow money for infrastructure projects. I find it inconceivable that the Government talk about not letting the level of debt go up when there are good infrastructure projects that would give a good rate of return. They are quite happy for debt to go up to finance consumer spending, which has been the main driver of growth. I would rather see growth driven by spending on infrastructure projects that increase productivity and give a return that generates tax revenues in the future, rather than putting individuals in jeopardy if there happens to be an increase in interest rates.

Greg Mulholland (Leeds North West) (LD): Will the hon. Gentleman give way?

Sammy Wilson: I will not give way, if the hon. Gentleman does not mind, because I do not think I will get an extra minute.

16 Mar 2016 : Column 1013

We know from experience that when the growth forecast goes down the regions of the United Kingdom—Northern Ireland, the north-east, the north-west and Scotland—tend to experience the greatest impact. The figures in the Budget statement show growth rates for Northern Ireland to be half of those for London. Indeed, there are only two regions of the United Kingdom that exceeded the average growth in the past four years: London and the south-east. All other areas did not experience the same rate of growth. There is a strong case for saying that infrastructure investment could help to stimulate the economy in those other areas, so I am disappointed that not more infrastructure projects were announced in the Budget.

When funding is made available for research and innovation, I hope places such as Northern Ireland will not be excluded. Queen’s University Belfast’s excellent research has been a driver of growth and innovation for many businesses, helping them to get into export markets.

On inequality within income groups, the Government cannot ignore the fact that we are increasingly in danger of becoming a two-nation state. At the bottom of society, there are those without hope. Even the tax cut that means some of them will pay no income tax at all will benefit me as well as lower income groups. There needs to be a greater focus on people who find themselves without the skills, hope or income they need to do the day-to-day things they are required to do.

When I see the resources being devoted to a cut in capital gains tax, as opposed to those being taken away from people who are on, and cannot escape, benefits because of disability and so on, it illustrates to me how the Government have a long way to go and much thinking to do when it comes to dealing with those who are less fortunate and at the lower income end of the spectrum. It is they who need a leg up and more resources devoted to them.

4.20 pm

David Rutley (Macclesfield) (Con): It is an honour to follow the hon. Member for East Antrim (Sammy Wilson), who spoke with characteristic passion and commitment to his constituents.

I follow other Members who have welcomed the new sugar levy announced today. I have long campaigned hard to make sure we tackle public health challenges, particularly those facing young people and children. Individuals who get a chance to look at the sugar smart app will see how much sugar is in so many of the products we and our children consume. The levy is a positive step forward.

Jim Shannon (Strangford) (DUP): I am pleased to hear that the hon. Gentleman welcomes the sugar tax, as do I. I have long felt we should introduce it. The Chancellor referred to the next generation and the £27 billion we could save. The levy will bring savings to the NHS, change people’s attitudes and address levels of obesity. Does the hon. Gentleman agree that if ever there was a good reason for a sugar tax, that is it?