I wish to inform the House that I have selected for debate the amendment in the name of the Leader of the Opposition. Standing Order No. 33 provides that on the last day of the debate on the motion for an address to Her Majesty, the House may also vote on a second amendment selected by the Speaker. I have selected for that purpose the amendment in the name of Sir Menzies Campbell. The vote on that amendment will take place at the end of the debate after the amendment in the name of the Leader of the Opposition has been disposed of.
I beg to move, as an amendment to the Address, at the end of the Question to add:
‘but humbly regret that the Gracious Speech does not contain measures to address Britain’s declining productivity growth since 1997; deplore the absence of measures to give the UK the right skills to take advantage of new global opportunities; further regret the absence of strong and binding measures to tackle climate change and environmental degradation; condemn the absence of measures to ensure real improvements in the public services and greater value for money for taxpayers; and further regret the absence of measures in the Gracious Speech to tackle the pensions crisis to which Government policy has contributed.’.
Let me begin with a few words on the two Treasury Bills in the Queen’s Speech. Tomorrow, we debate the Investment Exchanges and Clearing Houses Bill. It is not for this House to decide who owns the London stock exchange, but it is for us to determine who regulates it. I am therefore pleased that, thanks to co-operation between us and our former Conservative colleague, the Financial Secretary, the Bill will pass through all its stages in the House tomorrow.
We also welcome the Chancellor’s admission that we need a Bill to, in the words of the Queen’s Speech,
“enhance confidence in Government statistics.”
That confidence is now non-existent, as a decade of spin and distortion has destroyed the integrity of Government information. We were sceptical when the Chancellor announced that he was going to make statistics independent. We did not believe that the man who taxes by stealth and hides debt off the Government’s balance sheet would really give up control. We were right to be sceptical, because the Bill published last week falls far short of what was promised. The Treasury claims to be establishing an independent statistics office, yet Ministers, not that independent office, will decide which statistics it can scrutinise and release. That is like putting the Sopranos in charge of the neighbourhood watch.
The Audit Commission says that the Treasury’s approach will
“only seek to generate low public trust in statistics and reinforce the perception of political interference in the production and publication of statistics.”
It is not too late for the Government to deliver what they first promised back in 1995, when the right hon. Member for Blackburn (Mr. Straw), who is now Leader of the House, spoke to the Royal Statistical Society. In a memorable speech, he said that the national statistical service
“should be placed at arms length to Ministers, on a similar basis to that of the National Audit Office, and should report principally to a powerful Committee of the Commons.”
We agree with the Leader of the House. That is what is needed, that is what the Government promised, and that is what they should deliver in the Bill.
Talking about failure to deliver, this debate is about the broader performance of the Government. Let me therefore welcome the clunking fist himself. The Prime Minister certainly has a way with an endorsement, does he not? It is amazing how, after all these years, the Chancellor still smiles as his friend gives him a hug and sticks the stiletto in.
To be fair to the Home Secretary, the Prime Minister’s spokesman went round afterwards saying that he was not necessarily backing the Chancellor. He said that “clunking” could have referred to any number of members of the Government, but let us just say that the Chancellor fits the description. Indeed, “clunking fist” is such a brilliant portrayal of the Chancellor’s methods and measures that if the Prime Minister does not mind, we shall also be using it, again and again. Our criticism of the clunking fist is not primarily about his character. We leave that to the likes of the Work and Pensions Secretary—or should I say the “soon to be out of work and collecting his pension” Secretary? I am glad that we could arrange the topics for this Queen’s Speech debate in such a way that he could be sitting here today, almost next to his friend the Chancellor.
Our criticism of the Chancellor is that he does not understand how to respond to the big changes shaping the future of our world. In an age of greater choice, he offers more overbearing control; in an age of greater freedom, he gives us more interference; and in an age of flexibility, his rigid belief in bigger government is out of date. In short, in an age that demands a light touch, he offers that clunking fist.
It was 10 years ago that the Chancellor set himself three central tasks: give Britain a more competitive economy, improve our public services and tackle entrenched poverty. On all three he has failed. Let us start with competitiveness and see what the clunking fist has done. He has hit us with higher tax and spending than Germany, when we should be sharing the proceeds of growth. He has clobbered business with £50 billion of regulation, when we should be liberating our economy to compete. He has smashed our pension system with his tax raid, when, with an ageing population, we should be encouraging people to save. Carbon emissions have risen, but the proportion of green taxes has fallen, when we should be shifting the tax burden from income to pollution.
Back in his pre-Budget report of 1998, the Chancellor described productivity growth as the
“fundamental yardstick of economic performance”.
Does he remember saying that? We do. That was the economic measure on which he wanted us to judge him. Productivity growth averaged 2.6 per cent. when he entered the Treasury, but now, as he leaves, it averages just 1.5 per cent. On his own fundamental yardstick, he has fundamentally failed.
I am grateful to the hon. Gentleman for giving way. Does he not agree that productivity growth can be a misleading statistic if taken on its own? A growing economy brings the most marginal factors of production into production, whereas a shrinking economy loses them; therefore, it is possible for an economy in recession to have higher average productivity at the margins than a growing economy. Is that not so, and why does the hon. Gentleman include that misleading quality in his amendment?
I am glad that the hon. Gentleman has confirmed that productivity growth has been disappointing. I was merely quoting the Chancellor of the Exchequer, who said in 1998 that productivity growth was a
“fundamental yardstick of economic performance”.
I was pointing out that it had fallen.
The hon. Gentleman is not the only member of the Labour party who is queuing up to criticise the Chancellor’s performance. The hon. Member for Birmingham, Edgbaston (Ms Stuart) said recently:
“We have excessive public spending, rising taxes and excessive micro-management.”
Derek Scott, the Prime Minister’s former chief economic adviser and great friend of the Chancellor, has said that there has been a
“furring up of economic arteries”—
I suppose that he is one Scot who will not be making it into the Chancellor’s Cabinet.
Now the country is living with the consequences. Unemployment is rising in Britain, when it is falling in most of our competitor countries, and real living standards throughout the country are falling. According to figures that the Government sneaked out this month, average earnings are not rising as fast as the current rate of inflation, and this is not a one-off. The Chartered Institute of Personnel and Development said last week that
“the squeeze on living standards will continue into next year.”
Falling living standards, rising unemployment, excessive micro-management and a less competitive economy—what an epitaph to the Chancellor’s decade at the Treasury.
It is Cheshire that I want to ask the hon. Gentleman about. Is he aware that in 1997, when the Conservatives lost office, the percentage of unemployment in patches of my constituency was still in the mid-teens? Is he aware that unemployment in my constituency is now around 2 per cent? Therefore, who is the failure?
I am sure that the hon. Gentleman will confirm that unemployment is now rising in Cheshire, as in the rest of the country. We have had the biggest rise in unemployment of any developed country in the world in the last year.
Let us consider the second great failure of this Chancellorship: public services. The question that haunts the Chancellor is how he could have spent so much and achieved so little. When he was shadow Chancellor, he said that the benchmark for a Government’s success is not how much they spend but how well they use their resources. Again, he has failed on his own benchmark. He has doubled the health service budget, but 60 hospitals face cutbacks, 106 community hospitals face closure and 20,000 front-line health jobs face the axe.
I will give way to the hon. Gentleman in a moment.
The Organisation for Economic Co-operation and Development says that the effect of higher health spending is less clear in Britain. The mortality rate for cancer and heart disease is declining but, it says, not faster than it was during the 1990s. Perhaps the hon. Member for Livingston (Mr. Devine) will confirm that.
I will make some progress.
On education spending, let us listen to the Select Committee on Education and Skills:
“The Government needs to take great care in making claims about the efficiency of increased investment in education…which the evidence cannot be proved to support.”
But, of course, the Chief Secretary put it best when he said bluntly that
“a lot of money has been spent but very little seems to have been achieved”.
Why is that? It is because the Chancellor broke his promise that not a penny would be spent unless it was accompanied by reform. He gave the spending Departments everything that they asked for, and got nothing in return. The Granita touch has never deserted him.
Now the Treasury is engaged in another comprehensive spending review. Let us consider some of the things that we think that the Chancellor should review. Let us review the centrepiece of this year’s Budget: what he called his pledge to raise future spending on state schools to today’s private school levels. Though cheered to the rafters by the lemmings on the Labour Benches, the Education and Skills Committee now says that the Chancellor’s Budget promise is “without substance”. The Institute for Fiscal Studies calls it “virtually meaningless”. Tackling poor education and skills is perhaps the greatest challenge facing our economy, and his policy is called “virtually meaningless”. It has gone from being a pledge to an aspiration, from a rabbit out of the hat on Budget day to a rabbit in the headlights of the spending review.
We have made it absolutely clear that we will properly fund public services, and that economic stability and investment in public services come before tax cuts.
Let us review another aspect of the Chancellor’s comprehensive spending review. I am delighted that the Home Secretary is in his place for this bit, because before he took office, the Chancellor took the extraordinary decision, a whole year before the rest of the spending review was completed, to freeze the Home Office budget in real terms. Only two years ago, the Chancellor stood at the Dispatch Box and said in his Budget statement:
“this would be exactly the wrong time, and contrary to the national interest, to freeze expenditure on the Home Office.”—[Official Report, 17 March 2004; Vol. 419, c. 333.]
Since then, we have had the London tube bombings, the foreign prisoner debacle and the admission that the Home Office is not fit for purpose. If it was the wrong time then, why is it the right time now? What could the reason possibly be for picking on the Home Secretary? I cannot imagine. He should not be freezing the Home Office budget; he should be freezing the assets of Abu Hamza instead of letting him flick through Homes and Gardens in his prison cell.
These piecemeal announcements on spending dribbled out of Budgets and pre-Budget reports—announcements that fall apart on closer examination—are the very opposite of what a comprehensive spending review was supposed to achieve. They are the opposite of what a Conservative Treasury will achieve: real value for money for the taxpayer, and government that grows more slowly than our economy. Of course, a proper comprehensive spending review would also have considered the Government’s progress on ending child poverty, which is the third issue that I want to discuss today.
No one doubts the Chancellor’s genuine desire to tackle child poverty, but surely we are entitled to ask why the number of people in severe poverty has risen by three quarters of a million under Labour. The answer is that the Chancellor has relied on just one blunt instrument: tax credits. Of course he refuses to answer any more questions on his tax credits in the House. He has gone 927 days without answering a single question on the subject. It is funny that he is always there to take the applause when he launches these schemes, and scuttles into hiding when they go wrong.
I am grateful to the hon. Gentleman. He has made great play—as the Tory party is currently doing—of wanting to tackle poverty, particularly child poverty. My constituents would be very interested in that. What possible help would the abolition of inheritance tax be to the poorest families in Britain?
Despite pressure from some of my colleagues, I am not pledging to abolish inheritance tax.
Let us continue the discussion about tax credits. Where must we turn to get Labour’s verdict on them? Not to the current Home Secretary; not to the last Home Secretary, who says he cannot work with people; no, we must turn to the Home Secretary before that, the right hon. Member for Sheffield, Brightside (Mr. Blunkett), who has just published his diaries.
I am not going to write my Budget for 2009 in 2006, but I can tell the right hon. Gentleman that, unlike the Chancellor of the Exchequer, I will not be breaking the promises that I make in opposition.
Let us return to the last Home Secretary but one. His book is not selling as well as he hoped it would, although I bought a copy. It is ranked 1,104th by Amazon. Still, that is 78,949 places higher than another stocking-filler that has just been published, “Moving Britain Forward: Selected Speeches”, by the Chancellor of the Exchequer. [Laughter.]
Actually, I rather enjoyed this book by the last Home Secretary but one. Here is an interesting diary entry for May 2003.
“The tax credit system is a shambles—such a shambles that I've had to help out one of my constituents financially… But what else can you do when the tax credit system is such a total mess?”
There we have it: the flagship of this Government—the single policy most closely associated with the Chancellor of the Exchequer—and a former Home Secretary describes it as a shambles.
I am sure that the hon. Gentleman will have his due place in them when they appear.
Yes, there were problems with the tax credit system. There are still problems with the tax credit system. But it has helped thousands of my poorest constituents to have some kind of decent income, and the hon. Gentleman’s sneering, condescending, patronising, offensive dismissal of poverty in this country is a disgrace to the House.
The right hon. Gentleman talks about being patronising!
Because of the way that they have been designed, the tax credits have undermined incentives to work. That is the finding of last month’s devastating joint study by the Institute for Fiscal Studies and the Joseph Rowntree Foundation: their report concludes that the indirect effect of the Chancellor’s policies might be to increase poverty. Such problems arise when one focuses on the symptoms, and not just the root causes: poor education, family breakdown, mental health issues.
Unlike the right hon. Member for Rotherham (Mr. MacShane), other Labour MPs are queuing up to disagree with their Government. The right hon. Member for Darlington (Mr. Milburn), who is not present for some reason, says that poverty has become more entrenched. The current Secretary of State for Education and Skills says that
“it is actually getting harder for people to escape poverty”.
That is right: after a decade of a Labour Government, a member of the Labour Cabinet admits that it is harder for people to escape poverty. What an epitaph to the life’s work of the Chancellor of the Exchequer that is—and what an indictment of his approach.
The last time we met, the Chancellor completely lost his cool in the Chamber and threw some papers at me. They were covered in handwriting and I have them with me. We sent them to a graphologist—to the principal of the London College of Graphology. I must confess that I was a bit of a sceptic about graphology, but I am impressed by the results. The graphologist says that the writer is not shy—I am sure that Members would agree with that—that the writer shows unreliable and poor judgment and was not in control of their emotions at the time of writing, and that there are signs that the writer can be evasive. It looks like the clunking fist is betrayed by his handwriting.
There is nothing that the Chancellor has been more evasive about than the coup he attempted against the Prime Minister earlier this autumn. Of course, he denies that; he wants us to believe that it was a complete coincidence that the chief assassin—the hon. Member for West Bromwich, East (Mr. Watson)—just happened to pop round to his house in Fife a couple of days earlier. He told us that all they did was sit down and watch a “Postman Pat” video together; it must have been the episode in which Pat kills the postmaster. [Interruption.] But the question that the country is asking is not: why is the Chancellor so disloyal to the Prime Minister? It is: why does he think he would be so different from the Prime Minister? [Interruption.]
The hon. Member for Glasgow, North-West (John Robertson) must be careful: he should not misbehave, as the Economic Secretary is looking for a new constituency.
Why does the Chancellor think that he would be so different from the current Prime Minister? After all, the Chancellor has been in charge of domestic policy for 10 years. The jobs that are being cut in the NHS are his cuts. The failing secondary schools are his failures. The shambolic tax credit system is his shambles. The pensions destroyed were destroyed by him. He is the clunking fist, and the country has had quite enough of the damage that he has done.
Is it not remarkable that in the Queen’s Speech debate on the economy, when we are supposed to be reviewing the economy over the past year and discussing its likely performance over the future year, the shadow Chancellor, the hon. Member for Tatton (Mr. Osborne), cannot begin to acknowledge the one central fact about British economic life: that we have had the longest period of sustained growth in the history of our country? That is something that no other country—not America, not France, not Germany—has had over the past 10 years, and it is something that no Conservative Government have ever been able to deliver. It is something that has not happened in the industrial history of our country. The shadow Chancellor would do better to quote to the House what he says to the business community when he speaks to it, which is that the Labour party has
“become in the public’s mind the party of economic competence.”
As this debate is about the economy, the shadow Chancellor should also acknowledge that not only have we had sustained growth in this country, but we have had the lowest level of inflation for 30 years, the lowest interest rates and mortgage rates—
The interest rate is 5 per cent. The hon. Gentleman might wish to stand up and tell us what were the interest rates under the last Conservative Government. If I remember rightly, the interest rate averaged 10 per cent. and it was 15 per cent. for more than one year. The average mortgage rates were 11 per cent.
Is it not time that this Chancellor took some responsibility for our failing economy? [Interruption.] Labour Members can mock, but unemployment in Shropshire has risen in the past 12 months by 36 per cent. Let us go back to 1979, when interest rates were at 22 per cent. under Labour. If we want to go back further, let us return to 1931 under Ramsay MacDonald, when interest rates were also high. When does it stop?
The hon. Gentleman talks about Britain’s failing economy. During the past year, the shadow Chancellor has said that the outlook for 2006 was gloomy and that the economy was slowing. He said that it had become the weakest in the developed world, that we were struggling to compete, and that we were “faltering”. Growth is higher than forecast—0.7 per cent. in the first, second and third quarters—and we will have growth higher than forecast this year. Indeed, while America is having to downgrade its growth estimates, Britain is seeing higher growth. The sooner the Conservative party stops talking down the British economy, which has been growing in a sustained way for the past 10 years, the better it will be for investment in this country.
If it is all going so swimmingly well, why is it reported this morning that one in five British companies is now considering relocating outside the United Kingdom because of increasingly uncompetitive taxation and new rafts of legislation?
The hon. Gentleman is reading from a survey of 89 companies. Let me tell Conservative Members what has actually happened since 1997. Some 389 companies have relocated their headquarters—national, European or global—to the United Kingdom, 56 have relocated to France, 39 have relocated to Germany and 35 have relocated to the Netherlands. Moreover, of the 389 companies coming to Britain, 30 were from Ireland. If Conservative Members really wanted to talk about the strength of the British economy, they would be saying what the right hon. Member for Wokingham (Mr. Redwood) says when he gives his presentations to the private sector. Does he not talk about “the lure” of Britain, and about Britain’s being a low-tax economy, when he gives his private presentations?
I would not give much for the right hon. Gentleman’s advice. At a presentation that he gave only a few months ago, he asked:
“What are the most attractive locations today?”
and spoke of
“The lure of the USA…of China…of India…of the UK.”
On the question of why companies want to come to Britain, he said:
“Places like Ireland, the UK, the USA, Hong Kong, Singapore attract because their tax rates for business are low.”
Let us be clear. The right hon. Member for Wokingham is chairman of the Conservative party’s economic competitiveness working party. He produces recommendations, including considering the use of vouchers—this is the answer to the shadow Chancellor’s point about the recommendation on poverty—in place of rights to public services. [Interruption.] I am happy to read it out to the right hon. Gentleman during the debate. Conservative Members will be very interested to learn that, at a time when we are discussing what has happened to Farepak, he has recommended that regulation for low-cost savings products should be removed if people do not want to sign up to such regulation.
The Chancellor is living in a fictitious world—he should wait to see the proper report. Of course, if people want good quality regulation, it should be there on their behalf, but what we do not want is the massive over-regulation that is now driving business out of this country.
This is a very important point, because it is about the future of the Conservative party. Did the right hon. Gentleman say, in his economic competitiveness group, that he wanted to produce plans for vouchers for public services, which the shadow Chancellor says they will not do? Did the right hon. Gentleman also say that if people wanted to sign up to no-regulation products in the financial services industry, they should be free to do so? The answer is yes. At the same time that Conservative, Liberal, nationalist and Labour Members are complaining about what has happened to Farepak, the right hon. Gentleman would remove the possibility of regulation.
The savings ratio in the US is negative, but the economy continues to grow—[Interruption.] The hon. Gentleman has to explain to us how removing protection from savings products would in any way liberate low-income users in our country. I was right—the hon. Gentleman is a member of the Cornerstone group of the Conservative party, which wants £40 billion-worth of tax cuts. It says that that is only 4 per cent. of GDP and we should not worry about it. It is only the cost of every school in the country, but that is the policy of the Cornerstone group of the Conservative party.
Order. I am having some difficulty in hearing the Chancellor and the debate. Perhaps the House could quieten down a little.
Given the Chancellor’s interest in the views of Back Benchers, will he confirm whether he supports the call by the right hon. Member for Darlington (Mr. Milburn) for vouchers in the NHS or the call by the right hon. Member for North Tyneside (Mr. Byers) for the abolition of inheritance tax?
The answer is no, and I have made that absolutely clear. The hon. Gentleman might explain to me why at one and the same time he supports the third fiscal rule, which requires us to cut public expenditure by £16 billion or £17 billion this year and next year, and at the same time calls for more spending on roads, the health service and all round. At some point, the Conservative party will have to make up its mind. Either it is the party—
Well, I will give way once more and then I will have to make some progress, because I wish to expose the various positions in the Conservative party. I do not know which one the hon. Member for South-West Hertfordshire (Mr. Gauke) represents, but I will give way to him.
If the Chancellor does not agree with the right hon. Member for Darlington (Mr. Milburn) or the right hon. Member for North Tyneside (Mr. Byers), does he agree with the right hon. Member for Birkenhead (Mr. Field) who has said that in 1997 the Labour Government inherited one of the strongest pension provisions in Europe and now has one of the weakest?
The pensions Bill, which I thought had all-party support, will guarantee a rise in line with earnings in the next Parliament and will put the pensions system on a better footing. I expect that during the debate my right hon. Friend the Member for Birkenhead (Mr. Field) will explain his views on that Bill. However, I was right—the hon. Gentleman is a member of the No Turning Back group, so he does not want only £40 billion of tax cuts; he wants £50 billion of tax cuts. I have read the group’s document. At the same time, however, the hon. Gentleman, who should be grateful that unemployment is down 36 per cent. in his constituency, has called for more health spending. How can he, at one and the same time, support more spending on the health service and a £50 billion cut in taxation?
I must make progress. The one group of people who do not seem to have a policy on which they are prepared to pronounce are the Front Benchers of the Conservative party. They have been absolutely silent while all the party’s different policies have been exposed.
The main theme of the Queen’s Speech is the intention to build on the economic platform that we have created of stability and growth, and to look forward to the central challenges that we must meet as a nation. As a result of the Queen’s Speech, we will publish legislation on statistics, further education reform, welfare reform, and pensions—my right hon. Friend the Secretary of State for Work and Pensions will talk about that in detail later—and there will be a financial services Bill, too. In addition, today we are publishing our document on long-term challenges facing the British economy. What was remarkable about the shadow Chancellor’s speech was that none of those long-term challenges was addressed.
We will face the global terrorist challenge by enhancing security. We have doubled the security budget from £1 billion to £2 billion. [Interruption.] I am happy to give way, if any hon. Member can point out that that is not the case. Let us have no more talk about the Home Office budget. The security budget is doubling, and the Home Office budget is rising this year, next year, and the year after that, because we intend to meet our commitments to security.
The second challenge is how to meet the demands of global economic restructuring. We must do so by entrenching our stability. That is why the statistics Bill will continue the process that we started with the Bank of England and the competition authorities, and continued with industrial policy—the process of making policy independent of Government. We will out-innovate our competitors if we pursue the science, technology and skills strategy that we are putting forward.
We must meet the environmental challenge by taking action on climate change, hence the climate change Bill that we will discuss in the House. However, we must balance what we can do nationally and what we can do internationally. I should tell Opposition Members that the environmental challenge will require a degree of European co-operation, and that is no part of their policy at the moment. If we are to meet the challenges of the future, we must respond to rising individual aspirations and to the yearning in our communities for greater cohesion.
I will not give way. We take seriously the security needs of Britain and the issue of how to meet those needs through public expenditure. I can confirm not only that we have doubled the security budget, but that we are considering a single security budget. I can also confirm that we have spent £5 billion on Iraq and Afghanistan. To continue the support of our armed forces, I am making available extra money for operational needs. We are setting aside £24 million for the “Better Basra” project, and at least a further £100 million in reconstruction. We will expedite approval of any other desires that the Army has for necessary equipment if a similar operationally urgent need arises. I have said that there should be no hiding place for those who perpetrate terrorism, and there should be no hiding place for those who finance it, either.
I turn to the challenges of global economic restructuring. The Queen’s Speech legislation on further education reform, welfare reform, and statistics, as well as the document that we published today setting out the long-term challenges, are designed to make us better equipped, as a nation, for the challenges ahead. Asia is now producing more than Europe, and China alone produces half our computers, clothes and digital cameras. Even more challenging for the future is the prediction that China and India are likely to be responsible for half of the world’s growth in the next 10 years. There has been a 400 per cent. increase in the number of unskilled workers in the industrialised economy. China and India charge wage rates that are only 5 per cent. of those of the United Kingdom, and they are therefore making large numbers of the world’s unskilled workers unemployable or redundant. That is a major social, as well as economic, challenge, and that is why we have set up a number of reviews, led by prominent business men and women in this country.
Our challenge is to out-innovate our competitors, and to consider how to build on our commitment to science. That commitment has led us to double the science budget. The Gowers report will consider how Britain can become the leading intellectual property centre of the world. The Cooksey report will consider how we can bring private and public sectors together, so that we can take the lead in medical technology. In transport, where we are still paying the price for decades of under-investment under the Conservatives, Rod Eddington, former chief executive of British Airways, will advise on future priorities. Kate Barker, a member of the Monetary Policy Committee will produce her report on planning.
I turn to the skills needs of the economy. Allied to further education—[Interruption.] The Conservatives do not like talking about serious issues, such as the future of jobs and skills in our economy. We have made more progress towards full employment than any Government in recent years.
I tried to do my research before the debate and the figures that I have say that unemployment has fallen from 1,856 to 1,500—[Hon. Members: “Where?”] In Wellingborough. Perhaps the hon. Gentleman should look at the unemployment figures for his own constituency. He is of course a member of the No Turning Back group—[Hon. Members: “They’re everywhere.”] They are certainly everywhere on the Conservative Benches, and they want to cut taxation at a cost of £50 billion. The hon. Gentleman must benefit from the new deal, which is creating jobs in his constituency, yet he wants to abolish it. He must benefit from the additional 85,000 nurses and 30,000 doctors in the national health service. If the third fiscal rule were applied, we would be cutting that public expenditure. If the figures that I gave the hon. Gentleman are right—obviously I shall correct them if they are wrong—and unemployment has fallen from 1,856 to 1,500 since we came to power and is down 19 per cent., perhaps he might apologise to me.
It is interesting that I can give the hon. Gentleman figures for his constituency but he cannot give them to me.
When the Welfare Reform Bill and the Further Education and Training Bill go through the House of Commons, we shall also be considering the Leitch report on skills. Since 1997, we have trebled apprenticeships; through educational maintenance allowances, we have increased the number of people staying on at school to 300,000; and the national employer training programme is forecast to reach 350,000 employees. In addition, the Further Education and Training Bill will deliver accountability of further education colleges. It will borrow from the community colleges model in America and will mean that there is greater individual choice. At the same time, more money will be spent on learning and skills as a result of the record investment in further education colleges—[Interruption.] If the hon. Member for Wellingborough (Mr. Bone) has new figures on unemployment, I shall be happy to hear them.
The new deal has helped 3.6 million people to find jobs. It has helped 1.8 million people into work and 980,000 people—[Interruption.] What is the point of abolishing the new deal when it helps people to get jobs?
I turn now to the issues at the centre of any economic debate: tax and spending as a whole. In 1992, when I became shadow Chancellor, we decided that we must have discipline in our party about public spending commitments. We decided that no shadow Minister should make public spending commitments that were not approved, and that we would freeze public spending for the first two years of a Labour Government to achieve the stability necessary for the economy.
The Conservatives have adopted a fiscal rule that suggests that they would cut public spending by £17 billion this year and by £16 billion next year. If it were across the economic cycle, the figure would be even higher and nearer to the No Turning Back group’s £32 billion or £31 billion. I would like to read out some of the commitments made by the Conservatives on public spending.
The Conservative shadow Chancellor says that he wants stability and to keep spending low, yet there are promises of more money for the Home Office, more money for the police who should have higher basic salaries, more money for border police, more money for 24-hour security at ports, more money to invest in drug rehab, more money for what are called “relationship centres”, more money for roads, for voluntary bodies, for occupational therapists—and those are the commitments made only by the Leader of the Opposition. It sounds awfully like a Liberal party shopping list.
I have also looked into the Queen’s Speech debates and at the discipline that the shadow Chancellor has been able to exercise over his colleagues. We should remember that this is the party whose fiscal rule requires cuts in public expenditure, yet there is more money for the NHS promised by the health spokesman on 22 November, more money promised for the Home Office by the shadow Home Secretary on 23 November, more money from the shadow Transport Secretary on 23 November, more money demanded by the shadow Defence Secretary, the shadow children’s Minister, the shadow Energy Minister and the Opposition Whip. There is more money for hauliers and for rail, for example. Clearly, none has any discipline in respect of the commitments made and it is no use the shadow Chancellor press-releasing his commitment to stability if at the same time all his shadow Ministers are announcing that they have to spend more.
The Conservatives put up a website last week about borrowing and people getting into debt. It said that it might sound “boring”, but that people should remember to keep to their “spending budget”—and I suspect that that is what the Conservative party should be doing. The problem is that the Tories want to tell people who doubt their credentials that they are in favour of public services so they will spend more, but then they want to tell the No Turning Back and Cornerstone groups that they are in favour of tax cuts so they will spend less.
I am not giving way.
I have also looked at the first report of the Conservative public services policy group. It may have been undisciplined, but it was going to see the light in future. But no—there is more money promised for school federations, more money for expanding schools, more finance for social care, money to review prescription charges, more tax credits for carers, more incentives for insurance for care, the provision of more social housing, more money for community land ownership schemes and more money for housing associations.
In 1992, we decided as an Opposition that we would not make expensive commitments that we could not afford—[Interruption.] We decided—
On a point of order, Mr. Deputy Speaker. It may help the Chancellor to know that the figures have arrived in the hands of the hon. Member for Ipswich (Chris Mole). Is it in order for them to be passed from him to the hon. Member for Cardiff, West (Kevin Brennan) who is sitting behind the Chancellor and who is a Whip and acting as an unpaid Parliamentary Private Secretary tonight, and then to two other Parliamentary Private Secretaries behind the Chancellor?
Fortunately, I am not responsible for notes passed around the Chamber.
Order. I am sure that the House would wish the Chancellor to be able to clarify the point.
The figure is 1,856, reduced to 1,500. The hon. Member for Wellingborough must know that, in the first few months of a Labour Government, the growth rate of the economy and the employment creation through the new deal were such that we were getting people back to work incredibly quickly. [Interruption.] I am not going to apologise for giving the number of people unemployed in May 1997—1,850.
I have just listed all the Conservative party’s spending commitments, but what about all the tax commitments? One would think that the shadow Chancellor, having at one and the same time allowed spending commitments to grow even though he has the third fiscal rule, would be bearing down heavily on tax commitments, but what about the Forsyth commission, which he says sets the framework for the future? There are £21 billion of tax cuts in the Forsyth report. So there is a range from £21 billion to the Cornerstone group’s £40 billion and the No Turning Back group’s £50 billion, while the right hon. Member for Wokingham, who is chairman of the economic competitiveness group, suggests sums of even more than £50 billion. How do those figures add up?
Let me tell the House that I remember exactly what happened. I have the Conservatives’ election manifesto from 1992. What did they promise then? They said that they would bring stability. [Hon. Members: “More!”] They said that they would cut taxes; they said that they would raise spending; they said that they would lower spending as a share of national income. They said that all those things could happen at one and the same time. What did they call that in 1992? They called it sharing the proceeds of growth. They said that a dividend would be paid between tax cuts and spending rises.
The Conservatives are in favour of recycling. What we are seeing is the recycling of the 1992 promises. They talk about stability; they say that there will be tax cuts; they promise spending rises; they say that they will bear down on spending; and it ends up in what happened after 1992. It ends up not in tax cuts, but in 22 tax rises; it ends up not in spending rises, but in massive spending cuts; and it ends up in the shambles of an economic recession, with 15 per cent. interest rates, thousands losing their jobs, mortgage repossessions and negative equity.
Perhaps the House should be aware that, when the final humiliation came in 1992—[Interruption.] Conservative Members do not believe that it was a humiliation. Well, 15 per cent. interest rates were a humiliation. When the final humiliation came in 1992, who was standing next to Lord Lamont, the then Chancellor of the Exchequer? It was none other than the principal economic adviser, who is now the Leader of the Opposition. The Conservative party cannot face up to the country’s challenges. The Conservatives cannot face up to those challenges if they go for tax cuts, spending rises and no discipline. They cannot face up to the big challenges on education and training. They cannot face up to the big challenges on poverty and dealing with public services. They cannot face up to the big challenges on skills and the innovative future that our economy needs. The only party that can face up to the challenges is the Labour party and this Government.
Hon. Members: More!
Order. We must continue with the debate.
I first wish to focus on the second paragraph of the Queen’s Speech, which is about economic stability, and then on two of the big long-term issues that have been presaged by Sir Nick Stern’s report on climate change and by the Turner report on pensions, both of which have given rise to two important Bills and, indeed, to long-term policy.
When I made this speech last year, I started by congratulating the Conservative spokesman on having acceded to his new post. I note that he is receiving at least some good advice, because I see that quite a few of my policies and speeches appear in his after a short time lag. Most recently, my 10-point plan on debt reappeared as the Conservatives’ six-point plan on debt. I had been puzzled as to what was wrong with the other four points until I worked out that they all related to problems concerning mortgages and repossessions, which may be an area of policy over which the Conservatives wish to draw a veil.
My main point of difference with the shadow Chancellor at the moment relates to my lack of a sense of humour. I fail to appreciate what is hilarious about the Conservative website describing people who have got into debt as “feckless tossers”. I thought perhaps that, with my advancing years, the problem was that I had lost my schoolboy sense of humour. However, having tried the words out on various age cohorts including schoolboys, I realise that they do not see what is funny about them either.
As far as the Chancellor is concerned, I realise that the boxing metaphor is getting a little bit worn. He may recall in a way that is perhaps not terribly helpful to him that, before Lennox Lewis came along, British heavyweight boxers were notoriously ineffective. Indeed, they eventually earned the nickname of “horizontal heavyweights”. That is how they tended to appear on the canvas. However, after an hour of Punch and Judy politics, the Chancellor has shown a certain talent for that. Indeed, beating up Judy is something that he is a master of, but we now need to move on to a slightly more serious level. I apologise if I move into that vein.
I first wish to focus on the issue of economic stability. The obvious points are stark.
Most of us in the House, whatever our party, would agree that it would be foolish to rule out the option for ever, which I think is the right hon. Gentleman’s option. I am not sure that that fits with the views of those on the Conservative Front Bench.
Let me return to the issue of stability. The Chancellor is absolutely right—and this is a sensible place to start—to say that we are in a successful economy and that we should be proud of that. I have never quite understood why the Conservatives have such difficulty saying that and claiming some of the credit, rather than arguing that we are in a constant state of economic collapse. The British economy is in good shape and, as the International Monetary Fund said recently, our rate of growth is somewhat above the G7 average and certainly more stable. The issue is not whether that happens—it clearly is happening—but whether it can be sustained. The question is whether the growth that we have at the moment is sustainable or more similar to the experience that we had in the 1950s, which I grew up with as a teenager, when we also had more than a decade of stable growth, low unemployment and low inflation. However, we were building up imbalances in the economy and they eventually spilled over in the form of balance of payments crises. We cannot have them any more because we have a floating exchange rate.
None the less, serious imbalances are building up in the British economy and it will be a major challenge for the Chancellor and whoever succeeds him to deal with them. One of them relates to public expenditure, which is growing significantly faster than the British economy. We have no quarrel with the increase in public expenditure that has occurred—or much of it; much of it has been valuable—but there is an issue of sustainability. The other big challenge is that of personal debt.
On public expenditure, the Chancellor challenged the Conservative spokesman about some of his spending commitments, and he was right to do that. However, the Chancellor is also making major spending commitments that will be difficult to sustain over the difficult periods ahead. Public expenditure will not be able to grow much faster than the British economy over the next period.
I want to take the Chancellor over some of the spending commitments that the Government are entering into and challenge him to justify them. He started his speech by referring, I think with some pride, to the spending that the Government were undertaking on what he called security. That includes the war in Iraq. We have a different perspective on that, because we regard the £4 billion spent on that war as having been wasted. He may say, “That’s water under the bridge. Let’s look at the future.” Last weekend, the Chancellor committed the Government to spending an extra £100 million on reconstruction. One might say, “Fine. That’s good. Whatever our views on the war, surely we are in favour of reconstruction.” I am challenging that. I do not know whether the Chancellor is aware, but a few weeks ago, the Iraqi Government committed themselves to the latest big tranche of spending: a total of $40 billion, which is more than £20 billion, in reparation payments. That is Iraqi oil money. It is not being used for reconstruction or to raise standards for people in Iraq; it is being used to pay reparation for damage supposedly incurred in the first Gulf war. Much of it is going to Kuwait, not just for the damage that was inflicted by Saddam Hussein but for continuing penalty payments. Bizarrely, much of it is going to private companies such as Halliburton, Bechtel and even Kentucky Fried Chicken. They are being paid compensation for profits that they lost as a result of the first Gulf war. My question to the Chancellor is: why should the British Exchequer—the British taxpayer—be plugging holes in the Iraqi budget when the Iraqi Government are making those enormous, obscene payments? There is no justification.
Let me take another heading under the issue of security. The National Audit Office recently produced a compilation of defence estimates: the 20 biggest projects under the Ministry of Defence—20 big projects costing £20 billion. It was subsequently presented by Lord Drayson as a great success story. However, it emerged from the analysis that the projects were collectively £2.6 billion over-budget and cumulatively 36 years behind schedule. Clearly, if there is going to be a tightening of Government spending, some of that stuff will have to be looked at. We have argued, for example, that some of the third tranche of the Eurofighter project, which is estimated to cost £16 billion—although we do not really know, because the figures have been concealed under commercial secrecy—has to be scrapped. The Government are going to have to face up to that too. Sooner rather than later, we want an analysis of where that spending is going.
To take another set of spending commitments, I have recently been trying to trawl through parliamentary questions about what is happening in relation to Government computer projects. The projects currently in operation that I have had a reply about—about half—have a cumulative overrun of 47 years. The overrun costs are enormous. Much of that expenditure has to be analysed critically. We would question the usefulness of continuing to press ahead with the full NHS IT project at a time when the NHS budget is under a great deal of pressure.
We have had a debate about the principles of the ID cards scheme. The Home Secretary referred to it in his contribution to the debate on the Queen’s Speech. However, we need to ask questions about the costs and who will pay for the scheme. The Government have never properly answered that. It has always been understood that as long as the scheme was voluntary, it would be paid for by user charges. However, when the former Home Secretary, the right hon. Member for Norwich, South (Mr. Clarke), was in post, he indicated that when the scheme became compulsory—as it would in the next Parliament—it would be made free or would be heavily subsidised at a cost of somewhere between £5 billion and £20 billion. We have never had a proper explanation of where that money is going to come from, how it will be accounted for, or how it can be justified.
My colleagues and I thought that the Prime Minister’s energy report, which was published by the Cabinet Office in 2003, was an admirable summary of all the issues involved in energy policy. It covered the ground well. Security of supply, energy poverty and the environmental cost were well balanced. The report came to the conclusion that new nuclear power was unnecessary. A year later the policy changed and we now have an open-ended commitment to supporting new nuclear power. Again, it is unclear how that will be funded. Much of it will happen through the charging policies of the electricity utilities. The Government appear to have entered into a new set of commitments in relation to decommissioning and, possibly, the acquisition of land for the new plants to be established. Again, that has to be factored into public expenditure.
The hon. Gentleman has raised several points about spending without telling us where the Liberals stand on them. For clarification, does he agree with the position adopted by his colleague Lord Garden, who indicated that he wanted the aircraft carriers to which the Government are committed to be built in the United States, rather than on Clydeside and elsewhere in the United Kingdom?
I am not familiar with the details of the argument about the contract for aircraft carriers, but we would want to ensure that it was dealt with properly and cost-effectively. They should be bought where the equipment is cheapest and fit for purpose, wherever that happens to be. There is no role for protectionism in this field, as the Government acknowledge. The hon. Gentleman also asks what we would cut. I have listed a series of areas of public spending that we would cut to finance our priorities.
Let me raise a topical matter. Last week, the question of Olympic costs was raised. There was all-party consensus on supporting the project on the basis of a set of cost estimates that was produced with the Olympic bid. Those estimates are proving to be hopelessly and wildly unrealistic and the considerable limitations in the project management skills of Mr. Ken Livingstone have been exposed. When the Chancellor signed up to an open-ended public liability commitment, as is required by the International Olympic Committee, why did he not check the costs? What is his estimate of the public liability and, especially, of the element of that liability that will fall on the national Exchequer? The Government have big questions to answer about those elements of public spending.
The hon. Gentleman mentioned an all-party agreement on the Olympics. He was not quite correct, because Scottish National Members pointed out those very flaws right at the beginning. I recall his leader shouting at us angrily for pressing the matter to a vote because of our concerns about the escalating costs of the Olympics.
Some of us expressed scepticism about the costs from the very beginning, but we wished to be constructive and wanted the Olympics to succeed. Clearly, however, we must be prudent about costs, although it is clear that the Government have not been.
Apart from public spending growth, the other element of unsustainability in the economy relates to personal debt. We have had a remarkable recent trend of consumer expenditure running ahead of the growth of the national economy in every single year. One of the consequences of that has been that the savings ratio has fallen from 10 per cent. to less than 5 per cent. A further consequence has been the substantial build-up of personal debt. The aggregate figure, which is about 150 per cent. of income, is the highest in the developed world by a long way and the highest in British history. Much of that has been necessitated by the enormous boom in house prices, with 85 per cent. of that debt secured against houses. Of course, much of the problem is a matter between private borrowers and private companies, rather than a matter for the Government, but the Government could and should be doing many things.
Over the years, the Government have talked about promoting generic financial advice, but very little has happened. They have talked about financial education, and although a little bit is happening as part of maths education, we have seen little else. There seemed to be possibilities for debt pooling, but that has not happened on any scale. We are now faced with a possible collapse in the insurance market for mortgages, which would expose many people to vast liabilities and possible repossession owing to the failure of the market. The Government should be focusing on those matters, but they are not.
In the last part of my speech, I wish to refer to big, long-term issues, which, if properly handled, could take us very far forward. The first such issue is the response to Stern. The Government were fortunate to have access to Nick Stern, who is probably one of the really outstanding economists in the world. His analysis is outstanding and recognised internationally. The Stern report came up with several clear conclusions: action is needed urgently; action is needed initially in the developed world; and we in this country have responsibility for sharing the lead on that action. In due course, we will have a system of internationally traded permits at the European and global levels, but in the meantime, national policy will largely focus on taxation. We have led the way in that debate, and the Conservatives are following, although it is unclear exactly what they are advocating.
We have a difference with the Government, however. It may be an artificial disagreement, but I hope that in the course of this debate it will be clarified. The Government have criticised us, and the Conservatives, for arguing for environmental taxes on the grounds that there is a fundamental incompatibility between raising taxes to change behaviour and raising taxes to raise revenue. I ask the Chancellor to reflect on something that I am sure he would consider a success, the climate change levy. The levy has undoubtedly had a significant effect in reducing carbon emissions; there are good independent academic studies to support that assertion. It has also raised in total about £4 billion in revenue, which has been fed back in tax cuts elsewhere. It seems an entirely sensible precedent, and I am at a loss to understand why the Government have such difficulty with the idea of applying that principle more widely.
I conclude with a few words on Turner and pensions. There is a broad consensus on the overriding architecture. We all accept that there has to be improvement in the basic system of state pensions and it has to be offset by delayed pension ages. We all agree that there needs to be a new system of state second pension provision with employer, employee and Government support. Our disagreements are partly about timing.
We take the view that it is unnecessary to depart from Turner’s recommendations. The Government seem to have brought forward by five years the later retirement age and postponed by five years the age at which people will be entitled to earnings linking with their pension. Of course there are costs involved in that, and there are tough choices to be made. We believe that the Government have ducked some of those tough choices in failing to deal, for example, with the issue of public sector pensions. We also disagree with the Government’s decision to depart from Turner’s conclusions in respect of women, or more generally the citizens’ chest for pensions.
The big philosophical disagreement, however, is about the role of means-testing. We take the view that the longer the postponement of the improved state pension, the greater the number of people who will be sucked into means-testing over a long period, and that will have very damaging economic consequences. The Government, and particularly the Secretary of State for Work and Pensions, of whom I have asked questions on this matter several times, believe that there is no significant disincentive effect from a marginal rate of tax and benefit withdrawal of 40 per cent., but we believe that there is. We find it very difficult to square the Government’s relative agnosticism on this question with their insistence that they must retain a system of 40 per cent. tax relief for high earners. If incentives work at the top end of the scale, why do they not work at the bottom? If incentives are important in saving for pensions, why are not the Government much more concerned about the damaging impact of means-testing?
The Chancellor will shortly have the opportunity to present his pre-Budget report. It could be an opportunity for crowing and displaying self-satisfaction, and he will be entitled to a certain measure of that, but I hope that, in the national interest and in the interest of his own credibility as Prime Minister, if that is what he becomes, he will start to acknowledge that there are very serious problems of imbalances in the British economy which will have to be addressed, and that there are big long-term challenges in environmental taxation and pensions policy which the Government are so far ducking.
I remind the House that there is a 15-minute limit on Back-Bench speeches and that applies from now.
Listening to the exchanges earlier, I could not help wondering what my constituents would make of them if they were listening. I was thinking in particular of two groups of my constituents: those who have been affected by the collapse of Farepak—I have at least 200 families in that position—and those who have seen their occupational pensions disappear in recent years and are looking for help to remedy that. I do not think that they would have been much cheered by some of the scenes that we saw earlier. It was difficult to be impressed by the shadow Chancellor, who gave a characteristically public school debating speech. He is not here, but my advice to him would be to adopt a rather different tone if he wants to be taken entirely seriously. He deserved the clunking demolition that the Chancellor delivered to him.
The Chancellor has said on a previous occasion that Farepak is a national disaster, and it is, in a variety of ways. It has also prompted all those who have been affected by the collapse of their occupational pensions to write. They say that although it is good that we are all getting exercised by Farepak, giving a day’s salary and participating in other campaigns to help the customers, and rightly so, what are we doing to help the tens of thousands of people who have lost all their occupational pensions through no fault of their own?
My answer is that we should help both groups of people; they are not alternatives. They expect the Government to do what they can to remedy the failings of the market.
Here again we see the instinctive temptation to make some instant political point that might help the general political case along. That is not what more than 100,000 people who have been affected by the removal of their occupational pensions want to hear. They want to hear something practical about what is going to be done.
Which would the hon. Gentleman regard as the more overtly political: making a statement, as did the Minister for Trade, that he would give up a day’s salary, or telling customers of Farepak—I am doing this with my constituents—that if their agents paid their subscription by credit card, they are likely to be protected under the Consumer Credit Act 1974 and can get their money back? Indeed, one of my constituents has already got more than £3,000 back.
People want to know how this could happen and what we are going to do about it.
I have a letter from a woman in my constituency who says that she is extremely pleased to hear what all of us are doing about Farepak. Like other hon. Members, I am trying to do some things locally as well as encouraging people to contribute to the national campaign. She writes:
“Since my last email to you, we have had very bad luck. My husband took action to salvage a small amount of money so that our three children aged one, eight and nine could at least have some presents. He worked day shifts and night sifts and even call-outs but sadly on Sunday 5 November he had an accident at work and was taken to hospital, where they attempted to save his finger. As you can see, he is unable to go back to work. I am now totally devastated and really have no choice but to tell my children that Christmas will have to be cancelled this year. I hope that the Farepak bosses and HBOS can sleep at night because I know I can’t with worry.”
The point of mentioning that is not that it is a case of individual hardship; there are thousands of such cases and thousands of families in this position. What they want to know is how a company could behave in that way. How could a company continue to take in money, knowing that it was going to go somewhere else? How could a bank have withdrawn support, knowing what the consequences would be? We have discovered in the past few days that a firm of administrators set up a premium rate telephone line so that it will make some money out of the people who phone up to find out what has happened to their money. How can that be?
I am not surprised that some people are saying that the Farepak episode has given us a glimpse at the unsavoury face of corporate life. It has given us a glimpse into a trend whereby some people in our society behave in ways that enable them to get extremely rich, while many are desperately poor. The gap between those two groups is getting ever greater. A disconnection, which is not only financial but moral, is setting in between a world of mega-greed, about which we seem to say little on occasions such as this, and a world of desperate poverty. The Farepak episode has drawn back the veil, enabling us to glimpse what kind of world this is. The Government are rightly asked by people who have suffered as a result of the collapse of Farepak to do all that they can to remedy this market failure.
Does the hon. Gentleman share my concern that many people lost a year’s-worth of savings? Given that very high personal debt levels and very low saving levels are involved, we need to do all we can to encourage people, particularly those with very low incomes, to save. This matter will have destroyed their confidence not only in Farepak, but in saving altogether.
One of the features of this episode is that we are dealing with people who have tried to do everything right. They have tried not to run up debts, including credit card debt, and have sought to save in the safest way possible. One lady said to me, “You may think it silly that I did not just put the money into the bank and get some interest on it, but I know that had I done so I would have taken that money during the year.” These are the people with whom we are dealing, and they are asking how companies, banks and administrators can behave in this way. Such people then ask Government what they are going to do about it, both in a rescue sense and, more broadly, in a compensatory and a regulatory sense.
This is one of the occasions when the rhetorical demand for less regulation suddenly meets the fact that a group of people has been the victim of the lack of regulation in an area and wants that area remedied. That is one group of people who would have expected more from today’s exchanges.
A second such group is made up of all those people, possibly numbering up to 120,000, who lost some or all of their occupational pension scheme when schemes wound up between 1997 and 2004. This case has now been exhaustively analysed by the parliamentary ombudsman, so we have no excuse for not knowing the facts. An inadequate regulatory framework enabled events to happen. People thought that the final salary pension schemes were safe, as they had been told endlessly.
Indeed, the previous Conservative Government took action after the Maxwell case, which affected some 30,000 people. At that time, we put together a compensation package that provided almost total compensation within weeks. After that case, the Pensions Act 1995 was enacted, setting in place a regulatory structure with minimal funding requirements and so on, which effectively told people, “Your final salary pension scheme is safe”. As the parliamentary ombudsman has shown us, official literature told people that that was the case. In fact, they were not safe, and thousands of people who did nothing wrong but believe the assurances they were given have lost the whole of their lifetime pension savings. Of course they ask, like the Farepak customers, “How could this have happened? We did everything right—we did everything that we were told to do. We were prudent. We saved—we invested in our pensions—and this has happened.” Of course they ask the Government to put together a compensation package, as happened in the case of Maxwell, and then want them to take steps, as they already have, to ensure that this does not happen again.
As I understand it, the Government have a twofold response on why they cannot do what is sought. First, they say, “It’s not entirely our responsibility.” The answer to that is that no one has said that it is entirely the responsibility of the Government—by that I mean the previous Government and this one—but the fact is that they put in place the regulatory framework within which such schemes operate, they said what would happen when they were wound up and what the order of priority was, they put in a minimum funding requirement, and they put out leaflets telling people that the schemes were safe, guaranteed and protected by law. It is therefore not surprising that people now say: “You have an obligation to do something about the collapse of these schemes and the collapse of our entire pension savings.”
The second argument that the Government use is that it would be extraordinarily expensive to provide a compensation package for those affected. I understand why they should say that—there is an argument about what the figure really is—but I do not want to be detained by that point. My point is that it is a curious argument that says that if the figure were less and fewer people were affected, it would not be so difficult to remedy the injustice, which the ombudsman found be at least partly a consequence of official maladministration. It is a curious argument that says that because the problem is serious and significantly affects large numbers of people it cannot be remedied, whereas if it were a smaller problem it could be remedied. That cannot be a tenable position to hold. I hope that the Government are still in discussions about this and that they will seek to build on the financial assistance scheme that they have already introduced in order to provide more effective assistance for these people, because whoever is culpable for what has happened, they certainly are not.
My constituents and others listening to the debate might feel more cheered by the way in which the Government are beginning seriously to engage with some of the long-term issues that transcend day-to-day knockabout party politics. That is particularly true of pensions policy, which has been dogged for decades by our inability to think other than in the short term or to think outside the box of normal tribal, adversarial party politics. That is why we have a pensions system of such complexity, with bits added on but no fundamental reform. There was a nice moment in the 1950s when the Labour party had proposed a comprehensive pensions scheme called the national superannuation scheme, causing the Macmillan Government to reflect on what to do in response. Macmillan wrote to his Ministers:
“In the long run we shall all be dead…So do not let us bother too much as long as we do not spend too much for the next two or three years.”
That is an entirely characteristic statement of what one might called the “nimto” tendency in British politics. We know about nimby, but this is “nimto”, or “not in my term of office”. However, some issues cannot be dealt with in that way, of which pensions are the key issue. One history of the politics of post-war pension policy, by Hugh Pemberton, says that
“the short-term horizons and adversarial nature of British politics are profoundly unsuited to crafting pensions policy.”
That has been the case, and the history of pensions in this country shows it.
Now, not only on the pensions front, but on many others—climate change is the other obvious example—we politicians are being asked to get outside the box of short-termism and adverserialism, and try to reach long-term agreement that will stick across generations. It goes against the grain and cuts against the culture, but it is something that we must do. I give the Government credit for establishing the Pensions Commission and the other reviews to try to enable us to deal with such issues in a rather more sensible and long-term way than we have done before. If we do that, we bring credit to ourselves and give this and future generations the kind of security that people look to us to provide.
I am a company director and a pension trustee, and I have declared my interests in the register.
This afternoon was a great missed opportunity. The Chancellor of the Exchequer had a fairly full House. He could have reported on his stewardship of the United Kingdom economy over the years. He could have explained why the Treasury wishes to sponsor legislation in the forthcoming Session. He could have taken us through the legislation that the other economic Departments are sponsoring, and he could have told us how he wished to tackle the obvious problems that we see around us in the British economy. Instead, he chose to be even more juvenile than he usually is. To summarise the Chancellor’s speech, it said that a number of Conservative Back Benchers had, over the months, called for various taxes to be reduced or abolished and that if we added all those up, it would amount to a lot of money—which, by some mystery, would be the first Budget of an incoming Chancellor of the Exchequer for the Conservative party.
Dream on, Chancellor of the Exchequer. My hon. Friend the shadow Chancellor has made it clear that he will not produce a shadow Budget until much nearer the general election. How wise he is. We have no idea how much worse the public accounts will be before we have the chance to govern the country again. We also believe that if the Chancellor becomes Prime Minister, he will need to delay a general election until 2010, so there is a lot more scope for him to debauch the public accounts. The Chancellor is driven to living in a make-believe world where any random comment by a Back Bencher or any aspiration by the Conservative party is wrongly reported as likely Government policy for 2010, which really does not do the House any good.
The right hon. Gentleman may come on to the fact that a number of shadow Ministers have made spending commitments during the Queen’s Speech debate. If those commitments are not misleading the public about what a Conservative Government would do, what is the purpose of making them? Those promises were made, but the right hon. Gentleman now says that no one should take them seriously. Tell the public that.
The sad truth of life, which the public understand but the hon. Gentleman does not, is that we have no power to do any of those things, and will probably continue not to have that power for another three years, because of the likely delay in the general election. My right hon. and hon. Friends on the Front Bench are quite entitled to give the Government advice about our priorities, and about what we would like more money spent on and what we would like less money spent on, and we do both of those things. We would like to save all the money on identity cards and unnecessary regional government, which we would like abolished. We would like far less bureaucracy and an end to the enormous controls over local government that cost more than £1 billion a year.
We therefore recommend spending reductions and some spending increases to this Government now. We do not want to have to equip our forces properly in 2010 because they were not properly equipped in 2006; we would like them to be properly equipped now. We are not talking about dealing with the spending crisis in the hospitals when we come in 2010; we are giving the Government advice to deal with it now. It is on their watch. They are wasting so much money that it would be quite possible to sort out those problems with inadequate spending in some areas, save more money in other areas and end up with better public accounts, if only they would learn how to spend money more wisely. I do not want to get involved in the political ping-pong that the Chancellor has decided should be the substance of today’s debate, as it frustrates the public and means that we do not discuss the real issues of how we collect money, how much money we collect and how we spend it.
That is a sensible question, and if the hon. Gentleman had been present for previous debates, he would already know the answer. I have told the Chancellor many times that I aim to report in the summer of 2007. I am delighted that the Chancellor already knows what will be in my report. He is ahead of me, as I have not yet decided what I and my committee will recommend on school choice, patient choice, health spending and the other issues that he thinks we will cover—we may or may not. I have already published a few ideas on the problems of this economy and why it is not as competitive as it should be.
Let us begin with the issue that always fascinates the Government most: taxation. The Chancellor is right that I gave a presentation a long time ago saying that Britain was still fairly tax-competitive. I went on to say that it was going in the wrong direction and becoming less tax-competitive. Were I giving such a presentation today, I would conclude that we are now not tax-competitive enough. How many more companies need to say that they are thinking of going offshore before the Chancellor and the Economic Secretary will do something? Have they considered what has happened in the case of Shell, which has decided to put everything into Holland? Do they realise that Holland, let alone Ireland, is now more tax-competitive than Britain? Will they understand that Ireland has been growing three times as quickly as the United Kingdom on this Chancellor’s watch? The main reason for that, which he does not wish to accept, is that Ireland has set much lower business tax rates, which have acted as a phenomenal magnet for inward investment into Ireland.
That is one possible conclusion, but I will produce a grown-up report, which shows where we will get revenue from, how much we will spend and so on. I have not completed all that work yet. I am guided and helped by my noble Friend Lord Forsyth, who has produced an excellent report setting out how he would propose to cut the headline rate of corporation tax and pay for some of that through changes to the allowance system, which could create a much fairer system for many companies. That is an interesting idea, which we shall evaluate.
The increase in taxation in Ireland has been phenomenal, and the super-fast growth of the Irish economy stimulated by lower business tax rates has been the main factor. I have not heard any other possible explanation from the Government. It is some four or five months since I first raised the issue, and there is still no official Government position on why Ireland’s growth has been three times that of the United Kingdom. Nor is there any answer to my supplementary question: why does Scotland do so badly, only growing at 13.5 per cent. under this Chancellor between 1998 and 2004, compared with 20 per cent. growth for the UK and 61 per cent. for Ireland? That seems to show that the current Chancellor’s model of heavy public spending and public sector dependence in Scotland, which he seems to like so much, is particularly bad for the Scottish people. As we see in the parliamentary Labour party, many of Scotland’s most talented people come to England in search of better jobs.
Public sector size is an issue, which the right hon. Gentleman should take on board. It is useful to bear in mind that were the Scottish oil and gas sector included in GDP, the public sector would account for only 41 per cent. of GDP, not 51 per cent. With regard to tax, does he agree that if the rumours are to be believed and Northern Ireland is to have a reduced corporation tax rate, offering that to one part of the UK and not the others would blow a hole in the Government’s argument that it is not a useful measure?
I am delighted if the Government now think that Northern Ireland should have that lower corporation tax rate to compete with southern Ireland, but I want it for the whole United Kingdom. If it makes sense for Northern Ireland, surely it would make sense for the UK as a whole.
That is a possibility, although the Minister must understand that I study such matters carefully before committing my name to a particular recommendation. But the case is now very clear, and he and the Chancellor ought to be studying it and coming up with an answer, because they have the opportunity to do something. It is a fact of life that some very large companies are thinking of going offshore. One or two have already done so. Ireland is beating us very easily, and is now a richer country per head than the United Kingdom as a result of the Chancellor’s watch. The Chancellor needs to come up with an answer for why we are so slow—particularly in Scotland and western and northern England—compared with Ireland, and what he is going to do about it.
Perhaps my right hon. Friend agrees with me that the Financial Secretary needs to listen more to his new friends in the City, where I believe he is undertaking a prawn cocktail offensive. According to a report by the Investment Management Association and KPMG, since 1995 the increase in funds raised in Ireland has been double that in the United Kingdom. Why?
It is obvious that a more lightly taxed and better-regulated area—which I think southern Ireland now is, in some respects—will do much better. That is a simple example, which the Government ought to study and act on very quickly.
There are many other areas in which the Chancellor seems now to accept that work needs to be done. The Prime Minister has a strategy unit studying all this, and we are told that the Chancellor’s own reports are imminent. Why has it taken almost 10 years for the Government to realise that we have a transport crisis in this country? It is no good their saying that there was not enough investment in the railways 35 years ago. There has not been enough investment in any kind of transport for the last decade. It was this Government who cancelled the road schemes. It is this Government who have come up with no new main rail scheme at all: they merely finished off the channel link that we had already introduced. It is this Government who have not come up with any new tube line, unlike the last Conservative Government, who initiated a major new line. Absolutely nothing has been happening on this Government’s watch in terms of major investment in transport.
I think the Government have now realised, after nine years or more, that our big problem is a shortage of transport of all kinds. It is no good taking the route suggested by the Deputy Prime Minister, who said that the problem could be dealt with by our switching modes—making it very difficult for people to drive around in their cars and vans, so that they would go shopping by train and transport their goods as rail freight. Given that the railways account for only about 6 per cent. of journey miles undertaken, even if the Government could double their size that would deal with only a couple of years’ increase in travel in a strongly growing economy. The Government must realise that while we need more railway capacity, we also need much more road capacity. If the Government wish to be serious about reducing carbon emissions, they must understand that making traffic flow more swiftly is a way of doing that. The main problem of carbon emissions for road transport is the number of cars, lorries and vans that are stuck in traffic jams, thus creating a great deal more pollution.
Another problem is that the Government heap regulation upon regulation on our poor economy. That is why the trend rate of growth in productivity and output per head is slowing under this Government: the extra burdens of tax and regulation are proving too great. It is why we have lost more than a million manufacturing jobs on the Chancellor’s watch so far. The Chancellor never bothers to tell the House about that figure, although he used to be very interested in manufacturing job losses when he was in opposition. He always told us that he would follow a policy that changed all that, but in many ways his record is far worse than that of previous Governments, with over a million jobs gone and all those interventions—all the extra regulation and taxation—getting in the way of manufacturers’ ability to flourish and expand their businesses here.
Of course we need a major deregulation programme, but all we ever get from the Government are statements of good will and good intention. We are told that they will act at some point, but I believe that since the Prime Minister announced his initiative a further 5,000 regulations have been added to the statute book. I do not suppose the Minister can recall the names of any of the regulations that the Government have struck off, so few and so unimportant were they. We need the Government to do something like what the Dutch have done. They have in place, and working very effectively, a system of cutting the regulatory burden imposed by each Department year on year by setting targets.
Normally this Government, under this Chancellor, love targets. The Treasury loves anything that enables it to put its fingers into the pies of other Departments, so why does it not take on this task, and set regulatory budgets, which will lead to a decline in regulatory costs year after year? So much regulation achieves the opposite of what it sets out to achieve. So much of it produces very little in the way of benefit compared with the enormous cost that it imposes.
On the energy problem, I do not know when the Government will respond to the obvious pain of the heavy energy-using industries, whose representatives have been coming to this House for many months to lobby MPs of all political persuasions. The price of energy in Britain is far too expensive compared with places such as Holland, let alone lower wage areas of the world. That is why we are losing big new investments such as that in extra steel capacity. Such investors would rather go to a place like Holland where the gas supplies are more reliable and the price is a lot cheaper than here in the United Kingdom.
On this Government’s watch, we have in terms of energy gone from being a relatively low-cost country to being a high-cost and uncertain supply country. On this Government’s watch, we have had no proper response on how they will fill the gap as and when the nuclear power stations have to be retired, and as the easy supplies from our sector of the North sea dwindle or no longer meet the requirements of our gas-using industries, homes and offices.
We desperately need policy now from this Government on energy, but all we have had is a weak statement of intent and an expression of the wish to consult and have another public debate on the nuclear issue. We are beyond the point where we need a debate; we are at the point where we need regulatory decisions and other decisions from the Government, and ways in which the private sector can then get on and make the necessary investments.
I suspect that the Economic Secretary to the Treasury is already thinking that he can now add up some figures to show that what is wanted is more railway investment, more road investment and more energy investment and that that can all be put down to the public sector. But please will those on the Treasury Bench be a little less juvenile on this occasion? Most, if not all, of that investment could be put in through private sector activity. We know that people want to spend more on transport. We see them spending fortunes on private transport. They spend a great deal on new vans, new cars and new lorries because they feel that that is the only option that they have for many of their journeys and business tasks. They are prepared to spend, but the Government have to grant the planning permissions, create the framework and provide the rules for infrastructure investment, because infrastructure is important, and there is a need for it to extend across the country, which obviously affects interests around the country.
Investment in energy should come wholly from the private sector. Why is that not happening at present? Because the Government are not giving a certain sound on the trumpet in respect of how the rules will be worked out, what the pricing mechanisms will be, which planning permissions will be available and which technologies are favoured. It is up to the Government to make clearer sounds, and private investment will then follow.
One of the very few positive moments in the Chancellor’s speech came when he said that he was going to tell us something about improving skills in Britain, but he then went off on yet another rant about some statement made by some Conservative Back Bencher, which obviously fascinated him rather more. It would have been good to have heard from the Chancellor about what he is going to do about the 5.3 million people on benefits, many of whom would like, or need, jobs. We know about the unemployed; we have already heard in this debate about the plight of the unemployed and rising unemployment. But there are many other people, such as those on single-parent benefit and disability benefit, who would like jobs of a kind, and who could make a contribution, but they are not managing to get those jobs.
We are told that the Government wish to do something about that. What are they going to do about it? Ten years on, have they yet found the magic key to the door? Will they do something to improve the quality and attractiveness of vocational skills? Will they get rid of some of the awful bureaucracy that stands between the employer and the potential student and the vocational training course? Will they do more to strengthen the vocational strand for 14 to 16-year-olds in schools? A few schools are doing well—as is one in my constituency—but others have not copied what they do or followed on from that.
When will the Government do more to help higher education? We have some very fine universities in this country, and they remain high up in the world league tables, but the Chancellor must have noticed that Harvard is getting into a league of its own, given the amount of money it raises and its success not only in attracting money, but in investing that money very well. I suspect we in Britain need to freshen-up the range of tax reliefs to private donors to universities, because we need to strengthen the voluntary principle and the endowment funding of our universities; that is falling a long way behind the levels of private endowment that the leading US institutions enjoy.
Why does that matter? It matters because if people want to have a top university, they have to be able to pay top dollar to get the best brains to become faculty members. If they wish to have a top university, they need to attract the most talented students from anywhere in the world, and some of them come from very poor families, and if they can offer bursaries, scholarships, travel grants and so forth, that helps to attract such talent.
Will the Chancellor also have a word with the Home Office about such people’s access to visas? Genuine students have difficulties in getting visas to enter our country, which puts them off and means that they would rather go to the United States of America. For example, there can be difficulties in them getting a visa for one year of working after they have graduated in Britain—because they wish to get the experience as well as the academic qualification—before they go home, where they wish to go. The Government could take an interest in practical measures and in doing something, if they were not spending all their time reading Conservative websites and Back-Bench Conservative Members’ speeches.
We find it very flattering that everything we say is of such enormous significance. But the Government must understand that they are, believe it or not, the Government. They are responsible for the lack of transport capacity, the lack of energy capacity and the lack of tax competitiveness that is now getting worse in this country, as well as for the over-burdensome regulation, and for the lack of good vocational skills programmes, which could get many of those millions who are currently not in the work force back into that.
It was a pleasure to listen to the grown-up speech of the right hon. Member for Wokingham (Mr. Redwood), which was much better than the childish rant of the shadow Chancellor, the hon. Member for Tatton (Mr. Osborne). I do not know what has come over the right hon. Gentleman, but I think that he should be brought back to the Front Bench to make a serious contribution, rather than remain stuck on the Back Benches. I also enjoyed the contribution of my hon. Friend the Member for Cannock Chase (Dr. Wright), and I might refer to some of the things that he said later.
I shall not pick up on all the points made by the right hon. Member for Wokingham, but I wish to raise certain matters. It is stated in the second paragraph of the Queen’s Speech:
“A stable economy is the foundation of a fair and prosperous society. My Government will continue to maintain low inflation, sound public finances and high employment.”
The Chancellor should be commended for doing that over the past decade. The Queen’s Speech also states that the Government will try
“to help the most vulnerable members of society.”
That is, in a sense, why I rise to speak.
It is clear that some of the issues that I wish to raise are Department of Trade and Industry issues, but I notice that no DTI day has been allocated in the Queen’s Speech debate. I hope, however, that the Chancellor has much influence on that and other parts of the Government, and that he will have even more in the very near future.
Regardless of what is said in the course of all the yah-boo politics, and in all the factional bids for this power or that power or for spending on this or on that, people I talk to in the part of the country that I come from and elsewhere recognise that we have had a stable and growing economy over the past decade, whereas there have been some heavy storms in other parts of the world, and there has been a difficult period for the European Union when the euro did not take off as it should have and we did not get the growth that we expected. The Chancellor has seen all of that through, as well as problems that arose in other economies, and our economy has continued to grow.
The economy in my constituency is such that people are not rushing abroad. INEOS, the largest privately owned company in the UK, has bought the olefins and derivatives business of BP and it has now committed itself to spending £60 million on what is probably the world’s largest biofuels plant, in Grangemouth. That will be a flagship venture for many others in low-carbon technologies.
The hon. Gentleman mentions the investment in that bioplant, which is to be greatly welcomed, but obviously there were specific skills and technology in the plant in that area which it was possible to bid for, so the circumstances are slightly different from those in most parts of Scotland. Notwithstanding what he said at the beginning of his speech, does he agree that over the past 10 years the growth rate in the UK has been about 2.9 per cent., while growth in Scotland has been only about 2 per cent.? He cannot be proud of a 30 per cent. gap in growth between Scotland and the UK over the entire watch of this Government.
I have to disagree with my hon. Friend—I shall call him my hon. Friend because I know that his motives in this regard are good—because he is not correct. He must admit that Scotland is a much more attractive part of the United Kingdom to live in than most others. Although the south-east has a growing economy, there is congestion and young people working in professions such as teaching and social services and in the more minor professions, which do not pay the large wages that the City pays, cannot afford to buy a house. In Scotland, however, we have got the balance right and growth has been steady. There are people in my constituency who are in work, education or higher education and were not when the Conservatives were in power. That slow, steady growth has meant that we have not had the boom and bust in the housing market that England experienced. We should be proud of what has been achieved. I know that my hon. Friend thinks that independence for Scotland would mean a new start and that things would be completely different, but, as an economist, I disagree. The parameters of this growth are based on a United Kingdom economy, not on a small economy and country of 5 million people, most of whose large companies are located elsewhere.
What could threaten our economic stability is the confusion generated by the Conservatives. They are sending out various messages—cuts of £20 million, £30 million, or £50 million; no cuts; get out of the European Union; stay in the European Union—that could create instability. Let them adopt a grown-up approach and take the issues on board. Let us have a serious debate, unlike what we heard earlier in response to the Chancellor’s speech; that way, we might make some progress. People can see, however, that the economy is on a stable trajectory, and that it is not threatened by the confusion that marks the Conservative party’s policy.
I always remember an admonition that is credited to a much higher moral source than me. The Bible says, “If you do this to these the littlest of my children, you do this unto me.” I do not think that “littlest” means just children. People often say that that passage is about kids, but it is about those who are devoid of power, wealth or income. Correspondence that I have received shows that the Department for Work and Pensions is not willing to prevent housing departments from seizing people’s benefits to pay for housing arrears, thereby causing the downward spiral into poverty that occurs when people lose their jobs and cannot keep up their payments. Indeed, in some cases people cannot even make the relevant claim. We need to intervene and to do something about the problem. The blind, for example, cannot claim the higher rate mobility allowance. A personal assistant of mine who suffered from retinitis pigmentosa went blind. That he could be denied higher rate mobility allowance, which would have enabled him to get around, is a joke. We are not taking this issue sufficiently seriously.
It is a question of redistribution, and in that regard I want to raise a number of issues: the national minimum wage and tips, the working time directive, the temporary workers directive, and the treatment of UK pensioners living overseas. If I have time, I shall also discuss Farepak. As Members know, I tabled a ten-minute Bill on the national minimum wage. All those whom I spoke to said that they did not know that when we add a service charge in a restaurant when paying by credit card or cheque, it does not go to the person who served us. By law, it belongs to the proprietor. The reality is that regulation 31(1)(e) of the National Minimum Wage Regulations 1999, which were passed by this Labour Government, says that any money paid through the payroll—be it a gratuity, a service charge or a cover charge—counts toward the minimum wage. I have asked the Prime Minister about this issue and spoken to the DTI and the Low Pay Commission, but they will not amend the regulation.
What really offends me is that the Inland Revenue has yet again sent out form E24 (2006)—in fact, it was incorrectly sent out as form E24 (2005)—which effectively tells employers to put such tips through the payroll, so that they can be charged to the minimum wage. It also says that if a tronc—in other words, a kitty—is paid through the payroll, that counts toward the minimum wage too. I have been to restaurants in Glasgow and in London with very expensive charges. Their menus state that there is a voluntary 12.5 per cent. charge, which goes to the workers. When I quietly asked those workers about that, they said, “Yes, it does—and it is part of, not on top of, our minimum wage.” I want this Labour Government to do something for labour—for the least well paid in this economy, who are living on the minimum wage and who often work very long hours. Their proprietors are paying their wages with their tips. It is up to this Government to show that they are a Labour Government and that they do care for “the littlest” in our society. They must change regulation 31(1)(e) and close that loophole.
Once again, we have failed to get an agreement on the working time directive at European level. The UK was told by other countries that we have to name the day when 48 hours means 48 hours. The Minister with responsibility for such issues tried to do a deal on 60 or 65 hours. It is time that our Government accepted that we are the black sheep of the family in Europe on this issue; it is we who are holding back agreement on the working time directive. It is time that they gave a date—
It is the role of the Government to protect people from exploitation and to look after their health. Such a provision works in the rest of Europe. Many Opposition Members have intervened today to tell us about what is working well in other parts of Europe. In my view, a 48-hour week is a very long week, and a 65-hour week is not acceptable. Because we did not name the day when we will implement the 48-hour regulation, we could not get agreement on the Jaeger ruling. People who have stood down from their duties but who are on call have to be paid; however, 23 of the 25 EU countries are breaking that rule because we could not reach agreement on the Jaeger ruling. We could not do so because we would not accept a date for the introduction of the 48-hour regulation.
The temporary workers directive protects people who work for agencies. Currently, British workers are being laid off and taken back on as agency workers, with no right to holidays, sickness pay or a pension, or they are being replaced by agency workers from the eight countries who joined the EU during the last round of enlargement. An agency worker is not an employee: they are not employed by the agency or by the company in question. Sixteen EU countries already have a rule that recognises that those who are “employed” by an agency are indeed that agency’s employee, and they get proper sickness benefit, holiday pay and pension. It is us, along with three other EU countries, who are holding back implementation of this directive. I do not have to tell the Minister—he used to work for the TUC—about the Warwick agreement. We—this Labour party and Government—said that we would speedily implement that agreement, but it has been held up for four years.
I was distressed to read in “Success at Work: Protecting Vulnerable Workers, Supporting Good Employers”—it is the Government’s own document—that the Government believe that the labour market’s current needs are being met, and that there is no need for further legislation in this area. How does that fit in with the Warwick agreement, which said that we would help to implement the temporary workers directive? As Chairman of the European Scrutiny Committee, I know that we are one of the four countries in the EU preventing implementation of that directive. It is time that we did something about this issue.
I turn to the treatment of UK pensioners overseas. There are 970,000 ex-pat pensioners, 520,000 of whom had their pensions frozen at the level that applied when they left the UK, or when they received their pension, if they were of pensionable age. The other 450,000 had fully contributed, fully paid-up, index-linked pensions. The situation that I am describing arises only in certain countries: Australia, Canada, Malaysia, New Zealand, South Africa, Zimbabwe and most other Commonwealth countries. People who have moved to the USA, Israel, the Philippines—people often go to such places because they are regarded as tax havens— Austria, Barbados, Belgium, Bermuda, Cyprus, the Czech Republic, Turkey and what was Yugoslavia get their uprating. However, those who have moved to the Commonwealth countries that I named do not. That is intolerable.
The complaint is that we cannot afford to pay that uprating—that it would cost £400 million per annum. According to analysis by the British Australian Pensioner Association, conducted through the Government Actuary, in 2005-06 the national insurance fund had received overpayments in excess of £4.34 billion. According to the forecast, in 2020 the surplus will be £60.64 billion.
That is a very perceptive intervention. In a tit-for-tat response, Australia has now withdrawn its support. I have a constituent in the odd position of having lived here for some time and earned some pension, but who lived for 20 years in Australia and earned some pension there. He comes back to this country and finds that he will not receive his Australian pension because we started a tit-for-tat war with Commonwealth countries by denying pensioners the inflation uprating. If we have any morality or Labour principles, we should look after the people who paid into the national insurance system over a long lifetime of work in this country.
I have done a lot of work on the Farepak scandal and I have been advised by a senior banker from the City. I have looked at the accounts of European Home Retail and many questions arise. I note that a senior Treasury Minister has said that he does not understand why people use savings clubs like Farepak. He would not say that if he had grown up in the urban community in which I did, which had something called a menoge—a corruption of the phrase “ménage à vingt”—which was an arrangement between 20 people. My grandmother ran them. Poor people would put their money in trust to one person, and every 20 weeks they got a chance to spend it. That is how I got my school uniforms when I was younger. Those people did not trust banks and they did not feel that they would be able to go the month without spending the money on food for the family, but they had to have some form of saving for Christmas or other occasions—like the Farepak victims. People were used to trusting arrangements to which they paid their money without receiving interest. The menoges were collective, supportive clubs, and the savings clubs grew out of them.
Does the hon. Gentleman agree that the Government must show the same level of generosity and big-heartedness that many individuals and communities and some financial institutions have shown in donating to the emergency relief fund by match-funding it when it closes this week?
I totally disagree. The money lost is not the responsibility of the Government. There are some questions about the Government’s responsibility for allowing the company to continue to trade when it was clearly not even able to maintain its membership of the association that would have guaranteed people’s money. The horse bolted down the road while the Financial Services Authority’s stableman was asleep at the door. The FSA is great at introducing regulations after a crisis has occurred.
The scandal would not have happened if the Conservative Government had not abolished section 332 of the Companies Act 1948, which would have prevented the company from being able to trade—[Interruption.] Hon. Members can look it up. If that provision had not been removed, the company would not have been able to trade.
Rather than appointing Brian Pomeroy, the chair of the financial inclusion task force, to consider why people use such savings clubs, we should appoint Suzy Hall, who is recognised as the spokesperson and organiser of the Unfairpak.co.uk campaign. She spoke at a meeting in Falkirk on Sunday, organised by the council, which I attended.
The most pressing issue is helping the Farepak victims. The suggestion by Findel plc, which bought out Farepak and Kleeneze, is that all the top 350 companies in Britain should give £50,000, which would put £17.5 million into the fund. Opposition Members who have some influence should talk to some of their friends in the City about that.
Every assistance should also be given to the inquiry by the Department of Trade and Industry. We should also have an urgent inquiry by the Treasury Committee into EHR, Farepak and Kleeneze and their banking arrangements. That inquiry should subpoena and question on camera Hugh McMillan, the head of credit risk at HBOS, Alistair Webster, the main executive, Eddie Morrison, who is responsible for relationship banking, and Peter Cummings, to whom they all report. They should be asked what happened to the money that Farepak savers put in. I put that question to Mr. O’Riordan from the bank when I met him. I asked whether that money went through EHR to keep Kleeneze running so that it could be sold off as a going concern and the money returned to HBOS. Those people must answer those questions before a Select Committee.
Order. I showed some latitude to the hon. Gentleman because, although the terms of the amendment are quite wide, they were being stretched a long way to include the latter part of his remarks. I say that for the benefit of the House as a whole. Hon. Members must have regard not to the Queen’s Speech as a whole, but to the amendment on the Order Paper.
I congratulate the hon. Member for Linlithgow and East Falkirk (Michael Connarty) on the thoughtful way in which he tackled the issue of poverty. I appreciate the way in which his personal and constituency experiences informed his comments.
With your permission, Mr. Deputy Speaker, I wish to address my remarks to an issue that the Chancellor of the Exchequer has called the central challenge for Government and his Department—the funding and financing of terrorist activity. I took the liberty earlier of checking with the Clerk to the Table Office to ensure that my comments on this subject would fall within the precincts of the amendment, and I was assured that I was at liberty to discuss some specific questions. The Chancellor also stressed in his own remarks the importance of dealing with terrorist funding and financing as part of the Treasury’s basket of responsibilities.
On 10 October, the Chancellor said that it was
“upon meeting and overcoming the challenge of global terrorism that all else we value depends”.
In his speech on that date he outlined the Treasury’s role as the lead Department for our security. He specifically mentioned that the Treasury would have two responsibilities—interdicting terrorist financing and tackling the forces that encourage the separatism, extremism and isolation on which terrorism thrives.
In his speech, the Chancellor congratulated himself on
“the most comprehensive and expeditious asset freeze the Treasury has ever undertaken”.
But what exactly has the Treasury been able to seize from those suspected of involvement in terrorist activity? The true figure, as revealed following patient detective work by my hon. Friend the Member for Sevenoaks (Mr. Fallon), amounts to only £476,000 since 2002. That figure compares with some $200 million frozen by the American authorities. The Treasury’s effort is tiny by comparison. Its dragnet has caught minnows, not sharks. It has also had significant holes in it. As my hon. Friend the Member for Chipping Barnet (Mrs. Villiers) pointed out, Abu Hamza—now, happily, convicted of terrorist offences—whose assets were supposed to have been frozen, was able to transfer ownership of his home to his son, allowing his family to play the property market. How could Abu Hamza do that? It was because of a loophole that the Government had failed to address. The initial order, introduced in 2001, froze only funds, not assets. No change was made in that order until last month, just as the news of Abu Hamza’s situation was breaking in the newspapers. The loophole existed for four years and allowed someone convicted of terrorist offences to play the property market with public money.
Another area of profound concern was reported in The Sunday Telegraph yesterday. The European Union has stepped in to prevent the details of bank transfers being released to the US authorities when they fear that those transfers may materially affect terrorist activity. The European Union has ruled that privacy must come before security, but it will allow those same bank transfers to be scrutinised for taxation purposes. The Chancellor, in his speech on 10 October, stressed that he and Hank Paulson, the US Treasury Secretary, would take proactive steps to ensure that no regulation came between us and our security. Why are those EU regulations still in place, despite the Chancellor’s brave words? In those three specific areas, the Treasury has not dealt effectively with terrorist financing, despite the Chancellor’s putting the subject at the centre of his pattern of activities for the year.
In his speech, the Chancellor raised other real concerns about the way in which terrorism thrives as a result of the activity of extremist organisations. In a speech to the Foreign Policy Centre earlier this year, the Prime Minister pointed out that the threat that we face is not just physical but ideological. That ideological threat is rooted in the particular twisting of Islam known as Islamism, which has been propagated by organisations such as the Muslim Brotherhood. That organisation has a UK branch known as the Muslim Association of Britain, and it is the UK branch of the organisation known in the Palestinian territories as Hamas. However, there has been no effective scrutiny by the Government or the Treasury of the Muslim Association of Britain’s activities or funding.
Crucially, the Muslim Association of Britain and its most prominent spokesman, Dr. Azzam Tamimi, now run the Finsbury Park mosque for which Sheikh Abu Hamza was previously responsible. Abu Hamza may be behind bars, and his assets may, at last, have been effectively frozen, but the mosque from which he preached hatred is now under the control of a man who was responsible for praising suicide bombing, and who has said that the state of Israel will eventually be destroyed and replaced by an Islamic state. The Government allowed that to happen on their watch, and they also allowed the Muslim Association of Britain to play a key role in the Government’s own watchdog body for mosques, the Mosques and Imams National Advisory Board. How can we accept the Government’s claims that they take terrorism seriously when they are putting foxes in charge of the chicken coop?
I mentioned Hamas. Following brave reporting by John Ware, the investigative reporter who works for “Panorama”, one charity in this country was identified as having direct links with Hamas and terrorist fundraising. That charity is Interpal, which had been investigated by the Charity Commission. However, John Ware’s report revealed new, troubling details, including the fact that one of Interpal’s trustees, Mr. Ibrahim Hewitt, was appointed by the Government to their “Preventing Extremism Together” taskforce. Mr. Ware and others have asked the Charity Commission to look again at Interpal’s operation, and the operation of other charities that are linked with terrorism.
We await a comprehensive report—the Chancellor has promised it three times, but he has still not delivered it—that assesses the way in which charities have been used as a shield to promote terrorist financing and fundraising. Will the Minister ensure that, when the report is eventually published, the Charity Commission is given new powers to investigate proactively groups that spread terror and proselytise for extremism, under the cloak of charitable activity?
To be fair to the Government, two charities have been interdicted following action by the Treasury: Sanabel and al-Haramain. Those two charities are significant, because both are Saudi-based. In the United States Senate, the senior senator for New York, the democrat Charles Schumer, pointed out that Saudi-sponsored activity was responsible for the hijacking of moderate Islam and the spread of fundamentalist doctrine in schools, mosques and prisons. In a submission to the US Senate, Steven Emerson has pointed out the way in which organisations use the cloak of charitable activity to proselytise for an extremist agenda. In many cases, they choose to work through the direct funding of mosques.
There are some 1,600 mosques in Britain, most of them exemplary houses of instruction that provide spiritual nourishment to our fellow citizens, and that teach them in a tradition that all of us would think admirable. However, there are mosques—some with direct relationships with Saudi Arabia—that do not cleave to the moderate mainstream path taken by the majority of British Muslims. I shall mention two of them. One subject of concern is the East London mosque, which is one of the largest in Britain. Its president, Dr. Muhammad Abdul Bari, is the chairman of the Muslim Council of Britain, but the speaker invited to open the mosque, Sheikh al-Sudais, had preached sermons in his native Saudi Arabia in which he described Jewish people as pigs and monkeys. He has called Hindus idol-worshippers to whom it would be wrong to speak sweetly. That is an example of Saudi influence raising profound concerns.
An even more profound concern arises in connection with the plans, in east London, for the erection of the largest mosque—indeed, the largest house of worship—in the country. It is intended to accommodate between 40,000 and 70,000 worshippers, and it is estimated that it will cost between £100 million and £300 million. The mosque, which is being built by an organisation called Tablighi Jamaat, raises profound concerns, not least because that organisation has been described by French intelligence as an “antechamber of fundamentalism”. Two of the 7/7 bombers had direct links with the Tablighi Jamaat mosque in Dewsbury. Richard Reid, the shoe-bomber, had links with the organisation, as did John Walker Lindh, the so-called American Taliban. How can an organisation that, according to the Charity Commission, records an income of just £500,000 a year, afford to build a mosque that will cost anything between £100 million and £300 million?
It is my contention that we need a thorough and bipartisan investigation by the House into the foreign funding of extremism in this country. We can learn a lot from the United States, and the way in which the Senate used its investigative tools to work out exactly how a noble religion is being subverted by extremists. I am sure that the Chancellor is sincere in his determination to combat terrorism and root out the extremism that sustains it, but unless he shows a greater degree of urgency in dealing with the problem, and a greater attention to detail when matters are brought before Ministers, and unless he empowers the Charity Commission and other agencies to use proactive investigatory powers, I am afraid that we will always be on the back foot in one of the most vital battles of our time.
By contrast with the hon. Member for Surrey Heath (Michael Gove), in this Queen’s Speech debate I want to contest the terms of our debate on security. I will talk about economic elements affecting security and insecurity in communities such as mine. I want to discuss whether the new, independent statistical system will give us a new entry point into issues such as the massive demographic change in poorer parts of urban communities. That change is driven by movements of people, especially A8 European nationals. My comments will be in contrast to the calibration of the security agenda in the Queen’s Speech, which is driven by the terror agenda, migration, and issues to do with criminality.
Anyone who went to my constituency and asked about security and insecurity would get stuck into three issues straight away. The first is housing insecurity and pressures on the demand for low-cost social housing units. The second is labour market insecurities, and in particular the perceived race to the bottom caused by the deregulation of labour markets, and driven by patterns of migration. The third is access to quality health care, partly as a consequence of primary care cuts. However, the overriding element contributing to insecurity is the community’s inability to comprehend the sheer velocity of change caused by patterns of migration to our borough. That raises big issues of public policy, resource allocation and the economics of the Queen’s Speech, as set out today.
I am interested in the independent statistical system, and I am keen to raise a few issues on class, migration and race. I regularly ask the Office for National Statistics what the population of my borough is, and it regularly tells me that it is 164,000, and has been since 2001. Our borough has the lowest-cost housing in Greater London, and as a consequence it exerts a magnetic pull, in terms of migration within the city’s boundaries. In addition—this is a classic hallmark of patterns of migration to cities—migrant communities have moved into the lowest-cost housing market in search of low-cost housing. The cumulative effect is that the population is growing dramatically, but that occurs off the radar of public policy-making, which remains attached to an increasingly out-of-date census formula.
The only statistical series that begin to catch such movements of people are the education rolls. From 2003 until 2005-06, the story shows that the white population in our community was dropping by about 3 or 4 per cent. a year. If there was a pro rata effect across the whole borough, whose population is between 160,000 and 170,000, the change in ethnicity—from white, indigenous English to black African families—would be between 4,000 and 5,000. Analysis of the education rolls shows an expansion in the head count of the population, too.
There are massive movements of people in terms of both the qualitative make-up of the community and the total head count, yet the state is attached to a census formula that gives a completely different picture of the communities we represent. That has huge implications in communities such as mine, where there are enduring inequalities in health and access to public services, as well as long-term legacies owing to poverty and social immobility. The population is growing faster in real terms than the state is refinancing public services. As a consequence, we can make a strong case that things are in decline in real terms, because the social wage is in decline, especially when analysed alongside the effects of patterns of migration and labour market deregulation.
It will be interesting to see whether the independent statistical system will be able to grapple with such issues in future. I realise that there are the beginnings of a central locus of analysis in relation to the future comprehensive spending review, but I want to throw out a few questions about how we can reconcile that with the real-time demographic picture, especially in the poorer urban communities that take the strain of massive population flows. How can we adjust public policy making so that we go with the grain of those movements rather than simply offering diminishing returns in our understanding of, and investment in, those communities, because of the increasing rupture between the formal apparatus of state decision making and the reality of population flows?
ONS analysis shows that the rate of population growth at present is the fastest since the 1960s, despite residents leaving at record levels. By June 2005, the population of the UK was about 60.2 million; in the preceding year, growth was 0.6 per cent., or 375,000 net. In cities such as London, the poorest communities take the strain of such increases. The global challenge in respect of migration posed in the Queen’s Speech is to deal with those issues in a public policy agenda that explicitly tries to confront patterns of inequality and the problems of social cohesion. Only on the basis of modern, real-time demography can we begin to deal with such issues through investment in education or health, or helping local authorities in their strategy for managing changes in the community to ensure social cohesion.
I shall give some examples of the effects of labour market movements to show why such policies would be important in helping communities such as mine. As I said, there has been a massive change in the qualitative make-up of the population, as well as the total number. Many new residents are employed by employment agencies, which has caused real pressures at the bottom of the labour market. At one of my surgeries a few weeks ago, the first case involved some residents who came to see me about east European gang workers being paid £15 a day on a public contract. As that is substantially below the minimum wage, they were rightly concerned about the consequential effects on broader labour market conditions in the area.
The fifth case involved a roofer whose hourly wage rate had dropped £2.50 in six months. The penultimate case that night was a guy who wanted to know what I could do about the shed opposite his house. I found out that the person had put a cooker in the shed at the bottom of his garden and rented it out to eight east European guys who were hot-bedding in it. They were in a labour gang employed on contracts in the local community.
I raise those issues to show how demographic movements have consequential effects on other forms of economic activity in communities such as mine, especially in the labour market. Putting that alongside the consumption of public services can create real, material tensions in respect of the allocation of resources and labour market competition in some of the more challenging parts of cities such as London.
Such material conditions account for part of the rise of the far right, which seeks to pit community against community. However, the real issue is whether a mature debate on the Queen’s Speech and the Government’s economic strategy can actually build a real-time demographic picture of communities such as mine, and offer both resource allocation solutions that anticipate population movements and a labour market strategy that stops the contemporary race to the bottom, which creates and fuels real tensions.
When my hon. Friend the Member for Linlithgow and East Falkirk talked about the temporary workers directive and raised concerns about the blocking minority in Brussels, he was right on the money. The type of policy remedy that I suggested is critical to supply different footings for the labour market economy to neutralise the seductive messages of the far right, which argues that competition at the bottom of the labour market is racialising the community owing to the threat posed by A8 migrants. I am, of course, aware of some of the debates in the European Community about the 12-month threshold, but such policy initiatives are critical if the Government are to be proactive in choking off the downward pressures at the bottom of the labour market, which fuel difficulties and tensions in communities such as mine, creating a breeding-ground for political extremism.
I appreciate that the hon. Gentleman’s constituency has a different social make-up from mine, but in my constituency there are severe labour shortages, especially in lower-paid jobs in agriculture, which would be hard to fill were we not to have migrant workers from the newer parts of the EU. Prices would rise and productivity would fall if they were no longer able to work in my area. There are social tensions, but how can we address them without losing economic benefits?
I am not arguing against migration; I am trying to stimulate debate about the role of the state in helping communities to adjust, especially those that take disproportionate strain because they have the longest legacies of poverty and inequality.
The issues are difficult, especially given the velocity of change over the past couple of years, but it cannot be beyond the collective wit of the state to provide remedies—if we acknowledge the issues in the first place. That returns us to questions about the statistical material on which public policy responses are built and the use of contemporary census data to develop a picture that allows us to build appropriate policy remedies for the modern cities and communities that we represent. I do not know whether that is feasible or possible, especially given the sheer speed of change in areas such as mine in global cities such as London, where population movement is extraordinary. I simply raise the issues to inform debate when we discuss the remit of the statistical machinery—the issues it is trying to confront and the solutions it is trying to provide. That is not necessarily beyond the capacity of the state, even though I do not underestimate the significance of the problems.
We have to be prepared to deal with the problems and confront some of the material conditions, such as the concerns in my community that demographic changes are occurring in a zero-sum game in terms of resource allocation. Unless we can create a more positive-sum environment and remove material concerns about resource allocation, we shall not be able materially to deal with the far right causes that are so profound in communities such as mine. I wanted to raise those issues so that we can return to them at a later date.
It is a genuine pleasure to follow the hon. Member for Dagenham (Jon Cruddas). From earlier exchanges in a different context this year, I well know the knowledge and insight that he brings to his own area, particularly in respect of the pernicious activities of the far right. That was acknowledged recently when one of The Spectator awards went in his direction, largely because of the quality of insight and personal courage that he brought to his activities, which was very much on display again this evening. As he has had one happy competitive moment of late, who knows, he might have another in due course. We shall watch with interest and wish him well. That, however, is certainly outwith the remit of the Queen’s Speech, so I shall not stray on to it.
As I listened to the opening exchanges with the Chancellor earlier this afternoon, I reflected on the fact that what has generally been regarded as a not overly heavy Queen’s Speech this year leaves a fair amount of flexibility for changes at the top of the Government during this parliamentary Session. My mind could not help but go back to discussions that the Prime Minister and I have had, at his behest, over the past few years. The Prime Minister tried to dissuade me from Liberal Democrat support for a referendum on the single European currency, which he thought was a daft idea. When that was put on the shelf, he tried to dissuade me from Liberal Democrat support for a referendum on the proposed new European constitution. At that time, I was told, there was no way either Schröder or Chirac would touch such proposition with a bargepole, yet, lo and behold, a few weeks later they did.
It was pointed out that advance announcements from the Government were destabilising as they led to paralysis. The irony was that the Prime Minister’s somewhat premature decision on the night of the Hartlepool by-election to tell the country that he did not intend to be around, even if he won the general election, itself generated a fair amount of paralysis, which will be overcome only when the change takes place.
In the context of that transition, I want to put one or two pleas to the likely next head of the Government, the present Chancellor, in the light of the proposals in the Queen’s Speech. We hope that he will look at a few things afresh if he takes over the helm of government, not least the social justice agenda.
There has been overall acknowledgement in some of the less heated moments of today’s debate that over a remarkable decade in office and fairly benign macroeconomic circumstances, some credit is due to the Chancellor for helping to influence that—
Certainly not; I am very happy where I am.
Leaving aside the small issue of the colossal cost of Iraq—I do not intend to address that this evening, having done so only recently—the Chancellor has been spared, as we have been spared, some of the big economic shocks that derailed previous Labour and Conservative Governments. Yes, the oil price has been a difficulty, but we have not had a devaluation. Yes, conflict has cost the country a great deal of money, but overall the economy has been quite benign, comparatively speaking, and quite successful. Against that backdrop, we can have a sensible debate, even if I notice that Lord Rees-Mogg has turned his attention in his column today to what we do when there is a collapse in the housing market. I have not studied his article in detail, but if that is the force of his argument and if he is predicting that, the Chancellor can probably be well assured—given the predictive qualities of that column over many years on many issues—that it is not going to happen.
Given the quite encouraging economic backdrops and the Chancellor’s good intentions for social justice—I do not deny his good intentions on these broad policy strata—there have nevertheless been many disappointments. Without any shadow of a doubt, one such is the continuing problem of tuition fees and the disincentive effect that common sense suggests it must be having on the aspirations of some young people from lower income backgrounds who want to go on to tertiary education. What I find so ironic is that even when Ministers have justified their policy for England and Wales, they have readily acknowledged that they have not begun to attack the broader funding dilemmas of the UK university sector as a whole, which were well touched on by the chairman of the Conservative policy review, the right hon. Member for Wokingham (Mr. Redwood). It seems to me that we are not solving the big problem, while loading in many disincentives for people who cannot be helped. I hope that in the different devolved context, the Chancellor might yet come to see the merits of the policy in Scotland. Indeed, my party colleagues are now pledging in the context of next May’s elections to take the more generous policy even further forward, as it acts well.
My second plea relates to some of the ironies of social policy affecting our older citizens. The demography is such that we know that we now have a more active older citizenry, yet the complexities of the operation of pension policy and tax and benefits policy mean that the physical well-being and good will of old people is not being utilised as much as it could be. As we look to developments in social policy for the rest of this Parliament, I hope that we will take account of the opportunities that exist. It seems a shame that greater social flexibility does not lead to more flexibility whereby older people in their 50s and 60s may dip in and out of the labour market. Perhaps they no longer want or have to work full-time, but want to work part-time without the system operating against their interests. Much more could be done.
Over a number of years, Government and parliamentary rhetoric from all parties has seemed to encourage use of the experience that older people bring to the labour market, but what else are we doing? We seem to be presiding over the wholesale demolition of local sub-post offices, and for which group of people does that cause the most anxiety? What disincentive is that for active citizens who do not have the access that they would wish to enjoy to a wide range of services? More imaginative policies could help, but they are not adequately dealt with in the Queen’s Speech.
At the other end of the age spectrum, the Government have pledged to look again at the system of child support. I am sure that we are all often or occasionally asked the question of what vote we most regret having cast during our time in Parliament. In my case, it is a vote that I never cast—none of us did. There was an all-party agreement that the principle behind the establishment of the Child Support Agency was a good one. Without any rigour being brought to bear on the matter, we ended up with something that entered into the realms of retrospection and became more of a cash cow for the Treasury, rather than tackling what it was supposed to tackle—the social injustice of, mainly, men not being around and failing to live up to their financial responsibilities to the women and children whom they had probably walked away from. It was a terrible error in which all three UK parties were complicit, and it has gone on under successive Governments.
I hope that the problem can be tackled more successfully this year, although, as we have argued for a number of years, it is hard to understand how meaningful reform of the CSA, so long as it continues to be structured as the CSA, will lead to the solution that we all want. Would it not be better to put it properly within the Inland Revenue system, rather than continuing with a free-standing agency that no amount of tampering and tinkering can improve? Perhaps the Minister could indicate in his reply just where the Government’s thinking is up to, because even the Government have begun to allude to the fact that they might want to scrap the CSA completely. I do not know what the detail of the proposal in the Queen’s Speech will prove to be.
The Liberal Democrats have suggested placing responsibility for the collection of child maintenance with the Inland Revenue on many occasions, but is not the problem that the Inland Revenue, as currently structured with the pay-as-you-earn system, does not have a way to attribute individual payments in-year to an individual and can reconcile those payments only at the end of the financial year?
The hon. Gentleman is quite right. That is one of the first things that we have run into in developing our policy over the years. However, two layman judgments have always weighed on my mind when considering the problem. First, for God’s sake, nothing could be worse than what we have at the moment, as we all know from our constituency surgery experience. Secondly, with computerisation and integration available, although there are problems, surely it cannot be beyond the wit of civil servants and Ministers to find a way to reconcile such things, so that payments can be worked out properly later. Perhaps that is a triumph of hope over experience—perhaps I am the eternal optimist in such things—but we can do an awful lot better than we have been doing over the past few years.
I want to make a further point about the argument that the Chancellor was addressing in his remarks on the purpose and the ends of fair taxation and expenditure. I do not think that in our political debate we should be embarrassed into shying away from the principle, as I see it, that a tax system should be progressive and that we should not resile from redistribution as a genuine and authentic aim of such a tax system—provided, of course, that we are in favour of a society in which those who are able to be entrepreneurial, to take risks and to generate considerable wealth are not held back and the state does not forget through the tax system those who do not find themselves in that position.
My final point relates simply to pensions, which have been referred to during the debate, and wider environmental and energy matters, about which the Chancellor spoke. There is no doubt in my mind that we must contrast the way in which the Government have gone about pension reform—by setting up something under Adair Turner that carried conviction and credibility and that helped to begin to sow the seeds of all-party consensus that probably even a couple of years ago would have seemed like a mission impossible—with the way in which our future energy needs, particularly the civil nuclear role, has been handled, with no proper independent evaluation and no sense of confidence in how the issue is to be taken forward. In fact, in a rather unexpected speech to the CBI annual conference dinner, the Prime Minister more or less said that he had made up his mind and that that was essentially it.
I do not know how, within one Government, there can be such a good example of a complex policy that goes beyond party politics being carried forward sensibly, while an issue that also fits all those difficulties is bounced in a way that ends up satisfying no one. That is why, with the likely transition at the top of the Government when this pause in normal political proceedings ends, I hope that we shall revisit some of the big issues and opportunities that, with the underpinning of a fairly benign economy—under this Government or a successor Government—we can do so much more about in achieving the socially just society to which we all aspire.
I am most grateful for this opportunity to contribute to the Queen’s Speech debate. May I say what a pleasure it is to follow the right hon. Member for Ross, Skye and Lochaber (Mr. Kennedy), who gave a wide-ranging speech in his usual witty and charming manner? I will concentrate much more narrowly on tackling climate change while maintaining our competitiveness. Those two things are often presented as conflicting and contradictory, but I hope to show that we can achieve both.
Something that astonished me about the Opposition amendment was the statement that they
“regret the absence of strong and binding measures to tackle climate change and environmental degradation”.
It seems to me that arguably one of the most important measures in the Gracious Speech is the climate change Bill. Nothing could contrast more starkly than the weighty Stern report as the fashion-statement approach to environmental issues displayed by Opposition Members. The report is obviously right to begin with a statement of the ethical and scientific basis of the problems, but no one has really said such things more clearly or more precisely than John Locke in 1690:
“Each man is entitled to the fruits of his labour, as long as as much and as good is left for the next.”
On science, the Stern report has made it very clear that we are now up against an exceptionally tight timetable. We have only 10 to 15 years to stabilise and reduce emissions. That is particularly important in my constituency. At the rural end of my constituency in Upper Teesdale, unique biodiversity exists that has survived from the last ice age. Plants such as the spring gentian only grow in the north Pennines area of outstanding natural beauty. Those plants and that biodiversity will be completely destroyed by global warming. It is, of course, worth noting that while humans might have strategies for mitigation and adaptation, animals cannot be expected to have strategies for adaptation.
On the vexed issue of targets, which have been much discussed, it is quite clear that annual targets to reduce emissions are not practical. I understand that five-year targets have been proposed because they tie in very neatly with the Kyoto machinery, but we have now taken to holding four-year Parliaments, so it seems to me that, to achieve proper accountability, we need to have three to four-year targets for our climate change objectives.
Those of us who are concerned about the environment are frequently portrayed as romantic impossibilists, but Stern has shown that there is an economic case for action. At the other end of my constituency in Bishop Auckland, we have a manufacturing base that is already changing shape and showing how a new green model for the economy can operate. We have a monthly farmers’ market in Barnard Castle, where people can buy and eat local and seasonal food without the burden of air miles. We have the Farmway farmers’ co-operative, which is the first link in the supply chain for biofuels that goes through to Teesside. The Glaxo plant, which is the most energy efficient one in the world, has two windmills to supply its electricity. CAA Roofing has developed a new solar wall system to trap the sun’s heat for buildings. Teescraft Engineering is considering constructing wind turbines. Thorn Lighting has just decided to build a completely new plant. It has a research and development programme with Durham university for low organic lighting. That will involve the biggest change in the way that we light our houses since the invention of the light bulb. All those examples show that greening the economy can create new jobs.
The Government’s policy of supporting science and encouraging links between industry and academia is absolutely vital. The Chancellor’s announcement of the energy technologies institute is one of the most forward-looking policies that we could have. We need to do more to simplify planning and building regulations, to reform the tax system and to provide one-stop advice. But the examples demonstrate that a cross-government approach is vital to ensuring that objectives lead to action.
When we look across the board at the competitiveness of the economy, we need to consider those sectors with high energy use where the picture is obviously trickier. There are two examples in my constituency: a glass recycling plant, Potters-Ballotini, and Wienerberger’s Eldon brickworks. Both have had serious problems in the past two years because of high energy prices. In fact, both have had to close furnaces for several months at a time. Excellent chapters in the Stern report look at how we should address the needs of heavy industry. Table 11A is quite compendious and sets out statistics for UK production sectors in 123 different areas and shows that glass and bricks are 10 times more carbon intensive than the financial sector. However, I do not take the lesson from that that everybody can or should become a banker.
The position of heavily energy intensive industries is a clear demonstration of the need for an internationally co-ordinated approach to climate change. There will be no environmental benefit if relatively efficient UK plant moves overseas where environmental standards are lower and from which transport costs are high. The Stern report suggests international trading agreements by sector, and I agree. Obviously, we do not want to impede major technological progress such as that by Thorn Lighting that I described earlier, but exporting all our heavy industry is unlikely to be the best environmental solution.
Despite the 574 pages of the Stern report, there are further pieces of analysis that it would be helpful for us to have. The first is a comparison across the countries of the Organisation for Economic Co-operation and Development of carbon intensity disaggregated by sector. Only with that can we set demanding and realistic targets. At the moment, the UK scores well overall, but that is because of the big contribution made by the City of London. However, we should not use that to have, for example, a relatively inefficient household sector.
The debate about annual targets has been fully aired and the argument against them is that there would be too many blips and ups and downs. The weather could have an impact. That is why I would like targets to be set on a three to four-year basis.
Analysis of the impact on the exchange rate would also be helpful. When we got North sea oil, we thought that that was tremendous, but some problems were created because the exchange rate shot up. There is a risk that the exchange rate could also shoot up because this country is relatively carbon efficient.
One interesting idea that is being floated in Europe relates to a proposal on how to deal with international free-riders. There must be real incentives at an international level for countries to co-operate. It is worth our while considering introducing, or threatening to introduce, penalties on those who refuse to join proper carbon trading schemes. In effect, the proposal is for an extension of the generalised system of preferences that ties trade preferences to standards for labour and human rights.
We must face the fact that, whatever ideological or sentimental attachments people have to the current regimes, we have not so far been successful in getting all the large emitters to co-operate responsibly at the international level. Now we are on a much tighter timetable than we were previously. That also highlights the need for the international institutional machinery that tackles the environment to have the same status as the World Trade Organisation.
The second policy instrument that is vital for heavy industry and our overall success in meeting our climate change objectives is a proper costing of transport—aviation, marine and freight. We must include the external costs of transport, and this is not just about kiwi fruit. Such a costing will also affect the relative competitiveness of heavy industry across the world and it will change the current bias against local production.
The aspect of transport that is most discussed at the moment is aviation and the phenomenon of cheap flights. Those of us who argue that that should be tackled are often criticised as if we were saying that people on low incomes should not have proper summer holidays. Of course, that is not true at all. We need to knock that myth on the head now. Last year, 10 per cent. of flights were taken by people in the bottom 25 per cent. of the income distribution table, but the top 25 per cent. of the population took, on average, six return flights a year. That is completely unsustainable. We cannot carry on with a situation in which people begin to get the idea that it is their right to have six return flights a year.
I want, however, to end on a more positive note. Putting a proper price on carbon will have similar effect on the economy to the significant oil price rises of the 1970s and 1980s.
My hon. Friend is making a very fine speech; I agree with what she says. Does she accept that massive investment in rail freight would make a serious difference given that rail freight produces one twelfth of the emissions of road freight?
What my hon. Friend says makes complete sense. We need to reinvest in public transport, which is why the Bill mentioned in the Gracious Speech that will extend the rights of old age pensioners to free bus travel is also a helpful contribution.
As I was saying, we need to put a proper price on carbon, and the effect will be similar to the oil prices hikes of the 1970s and 1980s. At first, when they occurred, everyone felt that they would be a complete disaster. However, in the end, the western economies benefited significantly and became far more efficient.
In 1990, I was sent by what is now the Department for International Development to Prague to advise the transitional Government in Czechoslovakia on its energy crisis. It was facing a situation rather like the one in Ukraine last year. I found an economy that had been protected from the real costs of energy. It was hopelessly sluggish and old fashioned. Forests were dying because of acid rain and every building that one went into—whether a private home or an office—was completely stifling. There were no thermostats, so one could not switch the heating off. Industry also used out-of-date stock. By introducing proper energy pricing, all that has changed. The Czech and Slovak Republics now have dynamic economies. They are growing modern democracies and full participants in the European Union.
Being green is often a synonym for being naive and perhaps rather foolish. However, I hope that, with the Government’s programme of action set out in this Queen’s Speech, being green will, in fact, be about the rejuvenation of the British economy.
It is a great pleasure to have an opportunity to speak in today’s debate. In particular, I would like to address the rather topical issue of our taxation system and the relationship it has with productivity. I say that it is topical in part because of the report produced by the CBI this morning. The survey looked at business’s attitude to taxation in this country. I am afraid that the picture is not a happy one. According to the survey, 70 per cent. of senior business men who responded believe that the UK is a poorer international business location than it was in 2001. Some 75 per cent. say that the corporate tax regime is worse than it was in 2001 and 19 per cent. of UK companies are considering moving their headquarters abroad, as my hon. Friend the Member for Sevenoaks (Mr. Fallon) mentioned earlier today.
In 2000, we had the 10th highest corporation tax rate among the Organisation for Economic Co-operation and Development countries. It is now the 18th highest. However, rates—particularly corporation tax rates—are not the be all and end all of taxation. It is the habit of the Government, and of the Chancellor in particular, to quote the fact that corporation tax rates have fallen since 1997. That ignores two points. According to a recent World Bank report corporation tax constitutes, on average, only 36 per cent. of the total amount paid by businesses. These things have to be looked at relatively. There was a time, say in 1997, when our business taxation rates were lower than the OECD average, but that is no longer the case, because our competitors are cutting taxes whereas we are going in the other direction. That is why we are rapidly approaching the point where the tax burden in this country will be greater than that in Germany. That puts us at a competitive disadvantage, at least compared with where we were only a few years ago.
As I mentioned earlier, rates are only one aspect of taxation; there is also tax complexity. The Government have a poor record in that area and there is nothing in the Queen’s Speech as such that will address that. We wait to see whether the Finance Bill in this parliamentary Session will attempt to address it.
Returning to the CBI survey, 95 per cent. of business people say that the tax system should be simplified. That hardly comes as a surprise. However, the external experts have been damning when it comes to the position that we face in this country. KPMG said:
“The general trend for the UK’s tax system in recent years has been towards more complexity and less certainty, which is gradually making the UK a less competitive location for industry”.
The British Chambers of Commerce said:
“It is clear that the system has become progressively more complex over a number of years, driven by the relentless increase in tax legislation…The complexity of the tax system has a real impact on UK firms’ ability to compete in an increasingly competitive market”.
The Chartered Institute of Taxation follows in a similar vein:
“Over the past several years there has been a series of waves of complex ill thought out tax legislation that purports to counteract tax avoidance but, in practice, goes much further than that…Certainly the UK’s competitive position has been undermined.”
It is always difficult to quantify complexity, but there are one or two rough and ready measures that are worth looking at. One is the length of handbooks. In 1997, Tolley’s Yellow Tax Handbook of the British tax code was 4,555 pages long; it is now 9,841. In a report published a week or so ago, the World Bank noticed that, among the major economies, only India has a longer tax code than the UK.
Another rough and ready measure is Finance Acts. I say this with some feeling having served on the Committee on the previous Finance Bill—[Hon. Members: “Hear, hear.”] I am grateful for those comments, which I hope will be recorded in Hansard. One hears stories from the old hands about how they stayed up all night considering Finance Bills in the 1980s. Those Finance Bills were only 157 pages long.
As a result of Farepak’s collapse, hundreds of thousands of hard-working families have, in effect, seen Christmas cancelled. Is the hon. Gentleman aware that the Labour Government of 1948 introduced the Companies Bill, section 332 of which would have protected those families? However, the Act of 1985, which he is making light comment on, destroyed the right of those people to get their money back.
First, I think that the hon. Gentleman is referring to the Companies Act 1985. I am referring to Finance Acts. Secondly, the sympathy of us all goes out to those who have suffered under Farepak—I am sure that he would agree that this is not a party political point—but the Government have been in place for nine years, so if there is a fault with the legislation, which I am not necessarily saying that there is, those remarks should be directed to his own Front-Bench team. I was trying to make the point that Finance Bills have grown in length substantially. Between 2000 and 2005, they were 481 pages long.
The third assessment of complexity involves looking at the World Economic Forum, which produces a rating on these matters. Looking at the UK’s global competitiveness on tax complexity, in 2004-05—not that long ago—it was 48th, but within a year it had moved to 67th. Again, there is an element of too much complexity. It is worth noting that the survey undertaken by the tax reform commission, which was commissioned by my hon. Friend the shadow Chancellor, showed that 60 per cent. of businesses are increasing spending on tax planning at the moment. Some 78 per cent. said that the level of tax complexity has increased in the past five years.
There is a further issue with complexity. There are obviously the compliance costs and so on. The major concern is unpredictability and instability. When we look at the developing world and think about how it can develop further, most people consider issues such as property rights, certainty within the taxation system and so on. We do not face anything like the problems that exist in some developing world countries, but the economic point remains the same. It is bad for an economy to have an arbitrary, unpredictable taxation system. Business needs confidence to invest and the taxation system can undermine that confidence.
Various elements make up the concerns with regard to unpredictability. First, there is the extent of the changes, to which I referred earlier. When we have large Finance Bills and there are substantial changes to taxation, year on year, that causes concern. There is also concern about the sheer level of complexity. It is difficult for businesses, even when advised by highly skilled advisers, to know what their tax liabilities are.
There is also a concern about extra powers for Her Majesty’s Revenue and Customs. I am thinking in particular of a recent consultation document about additional powers. PricewaterhouseCoopers, for example, has made representations to the Treasury to say that it recognises the advantages of harmonising and modernising the powers of HMRC. However, it says that while harmonisation and modernisation are one thing,
“taking the most extreme of the powers of the two former Departments”—
by which it means the Inland Revenue and Customs and Excise—
“to create a set of powers that are far more extensive than either of the predecessor sets of powers, is something quite different and which needs to be properly justified”.
There is no doubt from the tone of the submission made by PWC that it is sceptical about that. There is also a concern—again, I can see it in documentation from PWC—about too much discretion for HMRC. It raises the concern that the Revenue was often able to manage legislation by means of such devices as frequently asked questions. That creates difficulty for business. There is no doubt that there is increasing evidence that the relationship between businesses and HMRC is deteriorating.
I have no doubt that tax evasion must be tackled—the Government are right to try to do so—but the balance must be right. I am worried that the increased complexity that is being weighed on business is having a serious impact on it, partly due to a lack of certainty. Support for the view that businesses lack certainty in the tax system comes from today’s CBI survey, which shows that 23 per cent. of the business people who responded said that the way in which their company’s tax returns had been treated had declined since the creation of HMRC. Something is going wrong with the relationship between businesses and HMRC when that is happening. The Queen’s Speech contained no measures to address such concerns.
It is by no means inevitable that tax complexity should be weighed on tax complexity, although that appears to be the direction in which we are going. We should consider examples from overseas, such as from the Republic of Ireland, Australia, New Zealand and the Netherlands, where there has been simplification. Those countries have looked at abolishing reliefs and lowering the actual rate.
The Government could have considered procedural points and set out their conclusions in the Queen’s Speech. The tax reform commission that my party set up examined ways in which there could be pre-Budget consultation on tax measures. It also considered the establishment of an office of tax simplification and the possibility of Finance Bills being examined by a Joint Committee to make use of some of the expertise of the House of Lords. I do not particularly advocate the last proposal because it would give rise to constitutional concerns, but we should use greater expertise to try to tackle the situation, because complexity and uncertainty are creating a great deal of worries.
I have mentioned before, including during the consideration of last Session’s Finance Bill, the impact on our tax law of decisions taken by the European Union and, specifically, the judgments of the European Court of Justice. Last week, the ECJ pulled back on excise duties. There was a great deal of publicity about the rate of excise duty that should be charged when a person from the UK ordered alcohol or cigarettes from Latvia using the internet. Against the advice of the advocates-general, the ECJ concluded that the UK rate should apply in that case. Despite the easy temptation to make remarks about cheap booze in the run-up to Christmas, I was greatly relieved that such a judgment was reached.
Concerns have arisen about occasions on which the ECJ has waded into areas in such a way as to attack the whole integrity of the UK taxation system, especially with regard to the way in which corporation tax group relief has worked. In many respects, the ECJ is more a political body than a judicial body. Many of its judgments seem to reflect its ultimate political objective of ever closer union, as is seen from its decisions on taxation and other matters. The ECJ is also political in that it seems to have an awareness of the political pressures in member states and thus treads carefully at times—perhaps last week’s decision on excise duties was an example of that.
I am worried that there is a two-stage process. The ECJ makes it difficult for any member state to raise revenue in the way in which it would like. It is not a huge jump to go from that on to the next step of suggesting that that could be dealt with through greater harmonisation and a common tax base, as I believe Mr. László Kovács will propose at a meeting of Finance Ministers tomorrow. I am worried that the integrity of the system is being attacked at the first level and that the solution produced at the second level is essentially one of European Union tax law. That would be wrong for a number of reasons. It would further weaken any competitive advantage that we have in the UK and it would take taxation out of the democratic forum in such a way that our electorate would no longer have a say.
I know that the Financial Secretary has heard me make similar speeches before, but I say again that I am worried that the ECJ is, to some extent, a political body so that I can increase political awareness of my concerns. I hope that the House will send out the message that it does not like our taxation system being attacked by judgments of the European Court of Justice, and I am grateful to have had the opportunity to make that point again.
Productivity is a hugely important issue in this country. We need to address the situation because recent years’ productivity growth figures have not been good. The taxation system is one element of the problem, because the competitive advantages that this country built up throughout the 1980s and into the 1990s have gradually been diminished. There is no doubt that economic policies have an effect for a long time after they have been implemented. When the Chancellor was boasting about unemployment figures to my hon. Friend the Member for Wellingborough (Mr. Bone), I was struck that he resorted to saying that his achievements on unemployment tended to have taken place between May and October 1997. I cannot help thinking that the previous Government might have had something to do with that success, although I hope that I am not making a claim that is too hard to back up.
Many economic decisions have long-lasting effects, although they are not always immediate. Long-term harm is being done to our country through our business tax system and we are no longer as competitive as we were. If we do not address the situation in this Session or soon, we will face problems.
It is a great pleasure to speak in the debate and a particular pleasure to follow the speech made by the hon. Member for South-West Hertfordshire (Mr. Gauke). We heard, as usual, a thoughtful and detailed contribution from someone for whom I have developed a great deal of respect since we were elected last year. I want to focus on three matters: the second paragraph of the Queen’s Speech, which paid tribute to the stability that the Government’s management of the economy has delivered; a couple of the Bills cited in the Queen’s Speech; and several of the points made by the shadow Chancellor and his colleagues.
First, on the stability of the economy, the macro-economic framework introduced by the Government has delivered growth of 26 per cent. in the nine years since 1997, compared with 15 per cent. in the nine years before 1997. Historically low mortgage rates have cut costs for the average homeowner by about £4,000 a year. Employment is at a record rate of 29 million, which is up 2.5 million since 1997. More people in my constituency are in work than at any point in our history.
Despite those dramatic improvements, one can still see the legacy of the industrial and economic restructuring of the early 1980s, when the industries on which the black country’s prosperity had been based experienced decline. When I left school in the early 1980s, Dudley had high unemployment and some 3,300 young people had been out of work for more than six months. Today, the equivalent figure is just a few hundred, although I want all young people to be in work or training. More than 1,000 youngsters are better off through the new deal.
As we consider the next stage of our area’s economic development, I am pleased that the Queen’s Speech showed that we will maintain our focus on training, because skills are a crucial component of a dynamic economy. We must ensure that young people have the skills that they and the labour market need; that is particularly important for an area such as Dudley because it is the only way that those without work will be able to share in this country’s prosperity. It is also, crucially, the only way my area will be able to attract the high-wage, high-skill jobs of the future.
Secondly, having been one of those MPs who called on the Government to introduce a climate change Bill in the Queen’s Speech, I am pleased that such a Bill was announced. Climate change is not only the biggest long-term threat that we face, but a great economic opportunity for areas such as mine. We need to look at how we can help manufacturers of the new green technologies—solar panels, energy-efficient boilers and wind turbines—to locate in former manufacturing areas such as the one that I represent.
Thirdly, I want to welcome the proposals in the Queen’s Speech to enable more people to move off benefit and give them the support that they need to return to work. Last week, the Opposition discussed how to deal with the problem of the poorest 10 per cent. in society. It was the latest in a long series of eye-catching initiatives to show how much the Opposition have changed. I disagree with those who say that the Opposition do not believe in anything or that they have no policies. On the contrary, it is precisely because of what they believe, because of their values, that their policies cannot work.
Let us take last week’s announcement. In his very first interview following the announcement the hon. Member for Bury St. Edmunds (Mr. Ruffley), the spokesman on welfare reform, said that the solution was not “jacking up benefits” but
“more active civil citizenship and social enterprise.”
I am as big a supporter of the voluntary sector and the social enterprise movement as anyone, and I recognise the much bigger role that they can play alongside an empowering and enabling public sector. But earlier today the shadow Chancellor attacked the Government’s record on child poverty. We have tough targets to cut child poverty, but he says that they are just an aspiration, and the Opposition fought us every step of the way on those targets. They say that tax credits are a waste of money and that child support should be cut. That is because, whatever they say about the responsibility that we all have to act together collectively as a community, they will not, as a matter of ideology, do what is necessary to deliver social justice and open up opportunity to all. That is why they say that they want to tackle poverty but condemn the increases in public spending needed to tackle it as “fiscal irresponsibility”.
As we heard earlier, the Conservatives have announced the so-called proceeds of growth rule, which, whatever they say, commits them to cutting public spending year in, year out. The right hon. Member for Wokingham (Mr. Redwood) complained earlier that we had not spent enough on transport infrastructure, but the Leader of the Opposition himself admitted that their policy is to spend less. He said:
“As that money comes in let’s share that between additional public spending and reductions in taxes. That is a dramatic difference. It would be dramatically different after five years of a Conservative Government.”
If that rule were in place now, spending would be £17 billion lower than the Government’s plans set out in the Queen’s Speech, and lower still in future.
The Conservatives’ tax report, which was also mentioned earlier, was commissioned by the shadow Chancellor and described by him as the framework for policy. Its authors went further and called for £21 billion of unfunded tax cuts. Those, if implemented, would undermine the stability of the economy mentioned in the Queen’s Speech and repeat the mistakes of the past. It is impossible to argue that savings could be made on that scale without hitting hard-working low and middle income families by cutting deep into tax credits and the new deal. Perhaps that is why the Leader of the Opposition said that he wanted to replace public services for the poor with
“a profound increase in voluntary and community support.”
It is the same old ideology of a small state and spending cuts, leaving the vulnerable relying on charity.
Of course it is important to work against the causes of poverty and to invest in skills and education. That is what this Government are trying to do, and that is what would be damaged by the Opposition’s plans to cut £17 billion, £21 billion or whatever it is from public spending.
When the Conservative party was in power in my constituency I worked in a primary care psychiatric unit. Unemployment was over 20 per cent.—that was real poverty. Working in the unit, I watched GPs prescribing anti-depressants such as Valium to people. If they could have prescribed a job, those people would not have been anywhere near the health service.
My hon. Friend gives an eloquent description of the poverty that his constituents and those in the rest of the country had to endure during 18 years of Conservative Government, which, whatever they say about poverty today, is never condemned by Opposition Members.
In a few moments.
The Queen’s Speech and the response of the hon. Member for Tatton (Mr. Osborne) have made it clear that the dividing line at the next election will be between progressives on this side of the House, who believe in rights and responsibilities and in strong communities supported by an enabling Government, with a strengthened voluntary sector to guarantee fairness and justice to all, and the unchanged Conservatives, who do not accept that there is collective responsibility and would cut spending, leaving the vulnerable with less support and charities stepping in to fill the gap.
The Conservatives will not commit themselves to increasing tax credits to help the low and middle income majority in Britain. Instead the shadow Chancellor’s top priority is abolishing stamp duty on share deals and handing out a £1 billion bung for those hard-pressed merchant bankers struggling to get by.
Just at the point at which boosting skills has become more important than ever, the Conservatives want to abolish the new deal. Last week, they offered warm words to people with personal debt problems. The right hon. Member for Wokingham did not want earlier to discuss the work of the economic competitiveness policy group, which he chairs, but my understanding is that is has published plans to abolish consumer protection for mortgages, pensions, insurance and credit cards.
I am not.
I do not know whether my hon. Friend saw that ITN today showed correspondence from Farepak to Halifax Bank of Scotland before the share price collapsed. Farepak asked HBOS to ring-fence the money involved in this unregulated field. Sadly, HBOS wrote back saying that they would not ring-fence the money. Although HBOS may not have a legal responsibility to the individuals who have lost money, it has two days before the fund closes to shoulder its moral responsibility. Surely that is a good example of an industry in which we need more regulation. Does my hon. Friend agree?
I shall be brief in my response. I pay tribute to my hon. Friend for all the work that he and other Members have done on Farepak. What the whole debacle shows is that the poorest people in our society need more protection, not less.
Time and again, as in the amendment on the Order Paper, the Opposition use moderate, compassionate language to mask traditional Tory positions. They said that the test of their economic and social policy is
“how it helps the least advantaged in our society…the bottom 10 per cent.”
That is fine, but let us apply that test to a few policies that they have proposed.
The shadow Chancellor was challenged today on the Opposition’s plans to abolish stamp duty on share transactions. That would be worth precisely nothing to the poorest people in our society, but would be worth hundreds of millions of pounds to the richest. He was also asked about his plans to abolish inheritance tax. Again, that would be worth absolutely nothing to the poorest people in our society but worth hundreds of millions of pounds to the richest.
I concede that allowing income tax allowance to be transferred between married couples is a bit better and not quite so regressive. Here a massive 3 per cent. of the benefit would go to the poorest 10 per cent. of families, but 1.2 million of the poorest couples would not gain a single penny. If we take together the proposals for a higher income tax allowance, a new 20p basic rate and the removal of tax credits from higher rate taxpayers, only a third of the poorest quarter of households would see any benefit at all; two thirds would not gain a penny. But every single household in the richest quarter benefits; most of them would be more than £1,000 a year better off.
These are all Conservative proposals and every single one of them fails their own test; they benefit the richest most and the poorest least. The same old policies: tax cuts for the few, paid for by spending cuts that affect us all.
In today’s debate, the supposedly new Conservatives are talking about helping families work hard to balance work and family life, but they voted against increased maternity leave and maternity pay. They talk about skills—
I am inordinately grateful to the hon. Gentleman for giving way. I am a great admirer of him and of his intellect, and it seems a pity that it has been bent this evening to entirely partisan ends. Can he give me the benefit of that intellect now? Why, under this Government, has the number of people who are at 40 per cent. of median income or less increased? Why are the very poorest in our society more numerous after ten years of the Labour Government?
It is partly a result of rising incomes across society as a whole, over which the Government have presided. If we look at the incomes of the poorest families—the hon. Gentleman is referring to them—their incomes have risen as well as a result of the tax credits, minimum wage, new deal and all the other measures that he and his colleagues have fought and voted against every single step of the way.
The Conservatives talk about public services but they still want to cut them. They claim that they are committed to tackling poverty but their top priority, as we have seen, is a tax break for City traders. On all these issues, there is not a single centre-ground policy, which shows that for the Conservatives, change is entirely cosmetic. Strip away the rhetoric about change and every speech makes it clear. They do not give the details, and they will not say exactly which bits of the so-called “big state” they want to cut back. But if we look beyond the positioning, the Tories are still committed to the same old spending cuts.
We should stop welcoming these supposed changes with nods of approval; we should start showing that there is absolutely no change at all. That will be the Tories’ problem. Election success in his country is determined by who the public trust and who they think has the best answers to the future challenges. When we contrast the Tories’ proposals, as we have tonight, with the new ideas from the Chancellor and his colleagues as set out in the Queen’s Speech, it is clear that it is the Government who are coming up with the coherent ideas on the other new policy challenges of welfare to work, the economy and skills, climate change and public service reform.
I had intended to concentrate on the work and pensions aspects of the Queen’s Speech but, before doing so, I would like to make a few comments on the economic aspects.
I noted that the Chancellor mentioned a cost of £5 billion for operations in Iraq and Afghanistan and he repeated, in a slightly different form, the assurance made by the Prime Minister some weeks ago that troops in the field would get whatever equipment they required. The problem is that troops from my constituency, from 45 Commando, are currently operating in Afghanistan and there have been reports that they are not getting all the equipment they require. There is a disconnect between what is being said in this country and what is happening on the ground. Whatever we may feel about individual operations, we would all agree that troops fighting those operations should get the equipment they need. The Government need to look seriously at this and make sure that these troops and others get the equipment they require.
On climate change, I was interested in what the hon. Member for Bishop Auckland (Helen Goodman) said and agreed with much of it. Like the hon. Member for Dudley, North (Mr. Austin), I took part in the campaign ably organised by Friends of the Earth for a climate change Bill in the Queen’s Speech. I, too, was pleased to see that such a Bill was included, although one got the impression that it was stuck in at the last minute because of the huge build-up of support for it. It has not been particularly well thought out; indeed we have yet to see the detail of the Bill. The only thing that the Prime Minister has said so far about it is that there will not be annual targets because they are not practical. I disagree; it is important that we look at annual targets because they give a measure of how we are progressing on climate change.
It is not beyond the wit of parliamentary draftsmen to build in a fail-safe mechanism for unforeseen circumstances, which we all accept can occur in any one year, that balances them out overall.
The most depressing thing about the debate on the proposed Bill is that it seems to have centred so far entirely on the question of taxation: what will be taxed, how it will be taxed and who will be taxed more. Tackling climate change must go much wider than that; it must encompass all areas of Government. If we get bogged down in arguments about taxation only, the people out there who are very concerned about climate change and want to do their bit will be turned off. There are very difficult issues, but we must look at other ways of tackling climate change, and not just through taxation.
For example, there are many ways we can look at how government works. In many areas of rural Scotland—I am sure that the same applies in rural England—services have been centralised, which means that people have to travel much more and emissions increase. This has gone on for some years in hospitals, schools and other areas. If the Government are serious about tackling climate change, we must look at reversing that process and making sure that services are near the people who wish to use them, which will reduce the amount of carbon that is required.
I notice that the hon. Member for Blaydon (Mr. Anderson) is here and I know how passionately he feels about the coal industry. Tax incentives can play an important role. If we give tax incentives to carbon sequestration, that will give business the encouragement to invest in carbon capture, which will support our dying coal industry.
I entirely agree. I was not making the case that there should be no tax incentives, but the debate must go wider than tax. Coke sequestration is a good example. Mitsui Babcock, or Doosan Babcock as it is about to be, which is based in Renfrew, is a world leader in this field and has been putting the machinery into Chinese coal plants. Many of the new plants in China, despite what we are told, are sequestrating carbon and making a real attempt to try to come to terms with some of the climate change agenda. We need to think outside the box; all areas of Government need to think about how we tackle climate change.
Interesting figures were released over the summer that showed that in many rural areas the carbon footprint was higher than in urban areas. The probable reason for that is that in rural areas we rely on motor cars much more because there is no alternative. We need to look at that—we cannot have a one-size-fits-all tax on motor cars and fuel—and the impact on different areas. There have to be trade-offs.
When we talk about air miles, we must take certain things into account. Many of us are keen on fair trade goods, but many such goods travel a great distance to get to our shops. We must balance the carbon emissions of the producers of those goods against the carbon emissions of getting the goods to the markets. Serious issues need to be examined, and we need to consider rebalancing all that, rather than looking only at taxes.
Energy is a huge issue in Scotland. I have talked on many occasions in this House about the need to examine transmission charges. Under the scheme generated by Ofgem—no pun intended—transmission charges on wind farms in the north of Scotland are much greater than any that would result from a generation facility being built in the south of England. That means that there is a disincentive for many renewable energy developments, not only wind farms but tidal facilities and, possibly, some of the coal plants, depending on where they are built. We must examine that, and how to have an energy system that delivers to our towns and cities while taking advantage of renewables. That matter should also come under the climate change Bill. I am not a supporter of nuclear power, and I do not see it as an answer. There are things that we can do on transmission charges that will begin to answer the energy equation.
I move on to the work and pensions aspect of the Queen’s Speech, particularly the Child Support Agency. If I heard the right hon. Member for Ross, Skye and Lochaber (Mr. Kennedy) correctly, he said that the Treasury regarded it as a cash cow when it was introduced. That seems to have been a serious miscalculation, as it has become a cash drain on the Treasury since.
There is no doubt that root-and-branch reform of the CSA is necessary and that the proposals in the Queen’s Speech are very welcome. All hon. Members will have filing cabinets full of cases relating to the CSA and will have torn their hair out trying to get solutions to seemingly intractable problems. The proposals on the CSA so far raise as many questions as they answer, because there is a lack of detail about what will take the CSA’s place and how the transfer to the new system will be handled. I raise the point because I am fearful that if we do not get the detail right, we will just put another serious problem in place of the one that we have. We need to get this right. People have suffered from the CSA for many years, and we must put something in its place that works and delivers as it is supposed to.
One of the proposals is to allow parties to enter into voluntary agreements, which is welcome as it would remove some of the contentious roadblocks to progress, but it is vital that the system for dealing with such agreements is robust and fair. I have raised this point several times with the Secretary of State for Work and Pensions during questions and have still to get answers about how this will work.
Before the CSA’s creation, there was a system in Scotland, at least, where parties could negotiate an agreement through their respective solicitors. It could then be registered on the books of council and session and would thereafter have the same force as a court decree. That was important because it allowed many issues to be sorted out in a reasonable and amicable way, but this ceased to be possible after the CSA’s introduction. I invite the Ministers responsible to tell us whether it is envisaged that a new agreement will act in the same way.
I know that many Ministers seem to have a downer on lawyers. I should declare an interest as a non-practising solicitor and member of the Law Society of Scotland, but the reason it was important to have solicitors’ involvement was to ensure that each party received proper legal advice on their rights. It is not absolutely necessary for such advice to be given by solicitors in any new system, but it is essential that such agreements are entered into only after each party has had the opportunity to be fully advised on their rights; otherwise it could become a minefield and as bad as the existing system. Is the legislation intended to allow for a system whereby advice must be given prior to entering into the agreement?
The next problem relates to a question that will inevitably arise, and which has plagued the CSA: what happens when there is a significant change in the circumstances of one of the parties to an agreement? It is essential that there is a process to allow a renegotiation or amendment to the agreement in those circumstances, just as there was, at least theoretically, in child support cases. I would be interested to know the Minister’s thinking on this point. Does he envisage that there should be matters that come before a court, some sort of extra-judicial system or the replacement of the agency? Such matters might be technical, but they are important.
I have previously raised the enforceability of such agreements with the Secretary of State and have yet to receive an answer, so I shall try again to get one by asking the Minister to address the question whether these agreements will be enforceable in the same manner as a court decree or decision of the CSA. This is an important point because inevitably some parties will not live up to the terms of an agreement that they have entered into.
The second problem on enforceability relates to cross-border enforceability. I have encountered problems in some cases because child support has not been pursued because a party due to make payment has left the country. Even in cases where there is a treaty allowing the enforcement of decrees, it would seem that it has not been possible to enforce some child support orders. I urge the Minister, as I have previously urged the Secretary of State, to examine whether these agreements could have the same validity as a court order and be enforced in the same manner.
I am dreadfully sorry that the hon. Gentleman, a Scottish MP, does not understand that there is already a separate Scottish legal system and cross-border enforcement in the same way as there has to be cross-border enforcement in respect of any other nation. The problem he mentions does not arise, and I am sorry that he does not understand that. I thought that as a Scottish Member, he might know that there was a Scottish legal system, even in Dundee.
May I refer the hon. Member for Angus (Mr. Weir) to an extremely good report produced in the previous Parliament by the Select Committee on Work and Pensions? I do not say that just because I was on that Committee, whose Chair was the former hon. Member for Roxburgh and Berwickshire.
The report answered a number of the questions that the hon. Member for Angus raises, as well as the question about someone trying to get out of the country—there was a bar on anyone who did not make payment. They could not get out of the country because they had to come back to the third party, which was not solicitors—I would like to keep out of that matter—but the Government.
That is not what happened in practice in the many cases that I have been involved in.
The other major plank in the work and pensions proposals is pension reform. The vision of the Scottish National party and Plaid Cymru is different from that of the Government. On pensions, the Government have taken the route of suggesting—I would hardly class this as a promise—that it might be possible to restore the link between pensions and earnings, but that we all need to work for longer. The problem with that approach is that it does nothing to make up for the fact that pensions have fallen further and further behind since the link between pensions and earnings was first broken by the Conservatives. Restoring the link at some future date will not deal with that, which is why we have proposed a citizen’s pension as the way forward.
No. In our policy paper “A Secure Retirement for All”, we set out our proposals and the reasons we believe a citizen’s pension was the way forward. The subsequent Turner report and the Government’s response have not changed that view; we believe that it remains the best way forward. I am sure that the Government would point out all that they have done for pensions, yet too many continue to live in poverty. Rocketing energy prices are wiping out the benefit of the winter fuel allowance. The Minister at questions earlier confirmed that there were not plans to change the winter fuel allowance, despite the rocketing energy prices.
The current pensions system based on labour market participation translates poverty during working lives into poverty in old age. Current Government policies to tackle the unfair position of women and carers are far too timid, and they should have the courage to take the bold step of true reform and provide a state pension that delivers for all our pensioners. The state must provide all pensioners with a decent minimum income in retirement and take real steps to ameliorate the regressive effects of private pensions for those on lower incomes.
I have taken a lot of interventions.
A citizen’s pension would ensure that all our pensioners are lifted out of poverty and have a decent basic pension on which to build. It would tackle the problem of disincentive under the current pension credit system. It could be made affordable by utilising the amounts currently paid in basic state pension and pension credit and by reforming the system of tax relief on private pensions. There is no evidence that the current system of pension tax relief encourages private savings; indeed, it costs a fortune as it is massively geared to the better off. Turner pointed out that it costs about £12 billion, with another £8 billion in national insurance relief. That is a massive subsidy to private pensions instead of using taxpayers’ money to provide a proper state pension. Worse still, more than half of the total cost of tax relief on private pension contributions is received by the richest 10 per cent. of the population.
It is high time that the tax relief system was reformed to become much more progressive and transparent and, in particular, to encourage low and moderate income earners to save for retirement and reward those who do so. Instead of doing that, the Government seem intent on raising the state retirement age, which will have a disproportionate impact on the poor and in areas where people have lower life expectancy. For example, a man in Glasgow has a life expectancy of 69.3 years, compared with more than 80 for a man in Kensington. Clearly, the Glasgow man will seriously lose out if the pension age is increased. To be fair, Lord Turner recognised the problem and suggested that pension credit should continue to be paid at 65, but the Government rejected that in their response, which said that they would consider it nearer the relevant time. The evidence on life expectancy already exists, and one has to ask what they think is the relevant time given that they have already decided to raise the retirement age.
I am pleased to be able to speak in this part of the debate on the Queen’s Speech.
I was interested in the comments made by the hon. Member for Angus (Mr. Weir). Let me offer a word of caution to him and to other hon. Members who have spoken about the Child Support Agency. As we all know from our advice surgeries, it is true that for many people the CSA has become a bureaucratic nightmare, but there was not a golden age before the CSA when justice was provided to women who had been abandoned by their partners—it is usually women who are left holding the baby. They had to go to court, and for most that was not affordable or feasible. Moreover, there was virtually no way in which the then Department of Health and Social Security could recoup any of the funds that went out to support lone parents and their children, who should have been properly supported by somebody in work. I hope that the forthcoming Bill will take matters forward. People should not think that there was a golden age; it never existed and women and their children had a nightmare time.
Yes, but the difficulties that women faced before the CSA was set up often went unrecognised, while the difficulties that arose afterwards are all too well known because they arrive in our advice surgeries.
Several hon. Members seem to assume that the benign economic climate that we have enjoyed dropped down out of a tree into our laps, whereas it was entirely due to the policies that this Labour Government have pursued since 1997.
Let me give a specific example. The hon. Member for Wellingborough (Mr. Bone)—I was about to call him my hon. Friend because he is one of my neighbours—mentioned unemployment figures. Those started to come down very quickly because the windfall tax on privatised utilities went into the new deal, which the Conservatives have opposed consistently right down the line. The new deal has been very successful in getting people, particularly lone parents, into work and, for the first time, turning around the figures for lone parents out of work so that an increasing number are now in work. Even the hon. Member for Runnymede and Weybridge (Mr. Hammond) would have to accept that at this stage of the Tory Government we had already had a catastrophic recession and were heading for a second one. Against that background, some of the statistics looked good. The figures on productivity and public services looked good at a time when grass cutters had to be paid only £1.20 an hour because they could be shipped up from Kent into London to work for rates that no one else would work for. The Conservatives have never really boasted about this, but even the statistics on international development looked good because the amount given was a proportion of gross national income at a time when GNI was going down rather than up. Nevertheless, I urge my hon. Friend the Economic Secretary not to think that it is worth having a massive recession just to improve some statistics to which the Conservatives like to turn.
My constituents have enjoyed an amount of security and stability as a result of the sound economy. People tend to take it for granted that they have been able to pay their mortgages, while those with small businesses have been able to manage them. Yes, they have slightly more complex tax forms, but that goes with people having tax credits and other proper support mechanisms that have been delivered by the Government and have kept people out of poverty.
The pensions system is another aspect of long-term security that we must ensure that we get right. The welcome proposals heralded in the Queen’s Speech will be extremely important for my constituents. When I first became an MP, I held special advice surgeries in pensioners’ sheltered housing estates where I was confronted by elderly women who were destitute—the amounts that they were living on were unspeakable. Most of them had worked for most of their adult lives and perceived that they had had two jobs because they had been looking after families as well. I remember getting a letter from a lady who berated me for comments that I had made about child care. She said: “That is complete rubbish. People should look after their own children, as my husband and I always did. I stayed at home while he worked, and when he came home he looked after the children and I went out to work.” She had been working for all her adult life but still did not get a pension because the hours did not fit, she had paid the married women’s stamp, and so on. I am glad that my hon. Friend the Minister for Pensions Reform is here. His proposals to deal with pensioner poverty among women are extremely important and will be welcome to people in my constituency. I also congratulate the Fawcett Society on the campaign that it has run and the lobbies and information that it has provided in taking the issue forward.
Women pensioners have faced particular problems and have been hit in many different ways. First, they do not get the state pension. That is why I have always disagreed with those who say that we should simply increase the basic state pension because that is what pensioners need. Only 17 per cent. of women who work get the full state pension. It has always been clear that index-linking the state pension and compensating people for what they lost after the Tories broke the earnings link is not the way forward because it would not tackle the problems that women face. In addition, a disproportionate number of women have not had occupational pensions or they have not been sizeable. On average, men will get £103 a week from their occupational pension while women will get only £17. That is a telling figure, because occupational pensions have always been the bedrock of our successful pension arrangements in this country. However, because women will disproportionately work for smaller employers, who might not have had an occupational pension scheme, or will work shorter hours, they will not have that pension provision to back them up.
The other finding from research is that women will tend to save for their children, instead of for their retirements. That is quite an obvious point when one thinks about one’s own experience and what one does with one’s own money. It has been found that although women might make pension provision, once their children come along they either spend their money on what their children need straight away or if they do put money by, they put it by for their children instead of for their pensions.
For those reasons, women have ended up in a particular position in terms of pensions; although that does not take into account all the things that people perhaps know much more about, such as career breaks to look after children or elderly people, part-time work and so on. The Government were absolutely right to go for the minimum income guarantee and the pension credit at the early stages.
Before the Chancellor became the Chancellor, he made a big to-do about ending means-testing. As soon as he became Chancellor, he failed to live up to his pledge. Surely the hon. Lady will recognise that many pensioners are not collecting their due because they find the means-testing process incredibly demeaning.
The Conservative party was very cruel to pensioners in running that nonsense about means-testing. The means test and the assessments that people have to undertake for pension credit are two completely different animals. People who went through the means-testing process know exactly how humiliating and degrading it was, but the process for claiming the pension credit was completely different. People could do it over the phone and talk it through.
I shall give way to the hon. Gentleman in a minute.
Before I started campaigning with pensioners on claiming the pension credit, I got some friends of mine who are pensioners to go through it for themselves, to see whether it worked. The process did work—they could fill the forms in over the phone and they got the forms back, which was light years away from what had been done previously.
Some people do not take the process up. I agree that that is an issue, just as it is an issue with the child trust fund. However, the figures for success show that the pension credit helps 1.9 million pensioners, of whom, significantly, 1.3 million are women. That is because it targets—[Interruption.]
Order. We are getting continuous sedentary comments from those on the Front Benches, which simply disrupts the debate, and I am not going to have any more of that.
I thank my hon. Friend for giving way. I agree with her that there is an issue if people are not claiming benefits to which they are entitled, such as the pension credit. I commend her for the work that she has done in encouraging her constituents to claim it, but does she agree that part of the problem lies with people such as the hon. Member for Braintree, who wander round telling pensioners how difficult it is to claim such benefits, how the means test is a scandal and that it is impossible for them to get the money that they are owed? Would it not be much better if he, like my hon. Friend, spent his time encouraging his constituents to get what they are owed, instead of dissuading them from claiming it?
I want to be clear that I understand what the hon. Lady is saying. The Chancellor said in 1994:
“I want the next Labour Government to achieve…an elimination of the massive means testing now imposed upon the elderly”.
Is she trying to make a qualitative distinction between means-testing before the Chancellor and means-testing under him?
The old means test was an unpleasant and undignified process, but the means of claiming benefits that people have to claim was very straight forward. I am sure that the hon. Gentleman would not propose a blanket high level of pensions throughout the whole community, as that would be completely wrong. Targeting the money where it was most needed was absolutely the right thing to deal with the problem of ending pensioner poverty and, although I do not have the statistics on that written on this piece of paper, they are extremely good.
I am glad that the proposals that are coming forward will not be about the universal or citizen’s pension. That is the Liberal Democrats’ proposal, although the Scottish National party also referred to it. Although superficially it looks attractive because everybody receives it, there are two objections. The obvious one is cost. I understand that to do what is wanted—that is, to get a universal pension up to the pension credit level—would account for some £60 billion a year by 2050. The second problem is to do with a deeply ingrained sense of justice among my constituents that if people make more effort, that should be recognised. It is important to keep that, albeit with a contributory principle, although one that is not quite as onerous as what we have now. Although I was initially attracted to the idea of a universal pension, it is right that we should retain a pensions process that recognises the contributions that people have made during their working lives, be that at home, through caring or in work.
I also welcome the proposed improvements to home responsibilities protection and the fact that more women will have much longer full-time working records when that is introduced. Some of the problems that women have faced previously because of the restrictions on part-time work—partly because they could not get child care, as they can now—will, I hope, have worked their way out of the system.
Finally, I ask my hon. Friend the Minister for Pensions Reform please to ensure that he addresses the problem of building women’s confidence in pensions when those proposals are brought forward. A lot of women paid the national insurance stamp all their working lives, but received nothing. They took out private pension plans because they did not have occupational plans, but those plans were mis-sold. Women have also seen the state earnings-related pension scheme widow’s pension largely disappear through changes that were made. It is important that women have the sense that if they pay into the system, it will pay out to them as well, and that it is worth putting money into their pension, so that they can see it as something for them, not just for their husbands or their partners.
Apart from that, I look forward to seeing the proposals online, because they will address a burning sense of injustice that many of my constituents feel about the lack of pensions for them.
I have enjoyed this debate, from the thoughtful, measured contributions of the Back Benchers to the shallow, knockabout stuff that we heard at the beginning from the two Front Benchers. This has been a good, enjoyable debate. Some people have objected to the Punch and Judy or knockabout stuff that we heard at the very beginning. However, if we cannot score political points in this House, there is hardly anywhere else that we can score them, so I have no great objection. People should not be surprised either, because the Prime Minister has promised us that we will get that sort of debate. He has told us that the Chancellor will at some stage deliver a great “clunking fist” to the jaw of the Leader of the Opposition. Listening to the Chancellor’s laboured, ponderous response to the shadow Chancellor today, however, he did not strike me as much of a Muhammad Ali. Certainly, there was not much evidence of dancing like a butterfly or stinging like a bee. Perhaps—who knows—the knock-out blow will come at some stage.
I am in a unique position. Since neither of the two main political parties is a rival to my party in Northern Ireland, as they do not stand for election there, I do not need to get involved in their economic squabbling. I just want to make some observations about the economy in Northern Ireland and the content of the Queen’s Speech.
Although the Democratic Unionist party believes in devolution for Northern Ireland, we must and do accept that a significant change in the economy has taken place under direct rule. In my constituency, for example, unemployment is now down to 4 per cent., the lowest it has ever been, and the growth rate in Northern Ireland is the highest of any region in the United Kingdom. I must be careful with Government-supplied statistics, as I notice that the Queen’s Speech mentions legislation to enhance confidence in those, implying that there is not too much confidence, but anecdotal and visual evidence such as new building cannot but lead one to accept that there has been an improvement in the economy—
As my hon. Friend suggests, that progress has accelerated since the DUP became the largest party in 2003. We do not even control the place yet—we are not in government—so let us just wait until March, June or whenever, and we might see a difference.
There are real concerns about the Northern Ireland economy, however, which is why we support the amendment. The economy will require a structural shift away from the public sector, on which we are heavily dependent, to the private sector. The Government have said that, local parties believe that and local business men want that. If there is to be that movement, however, the right conditions must be in place. Given the changes already introduced under direct rule, such as the review of public administration and cuts in the number of quangos, councils and bodies controlling health and education, people will need to be redeployed quickly from the public sector into the private sector. For that to happen, certain conditions will have to be met.
First, Northern Ireland must become competitive. As we have heard, the competitiveness of the United Kingdom as a whole has dropped from fourth to 10th in the world. As we share a land boundary with the Irish Republic, which has had rapid growth, it is important that we have the right economic conditions. I was glad to hear the right hon. Member for Wokingham (Mr. Redwood) indicate that one of the changes required was to reduce the level of corporation tax. The level of taxation, including stealth taxes and so on, has never been higher in the United Kingdom. That is one of the reasons for our decreased competitiveness.
Several Labour Members have talked about the threat to the environment, and it is significant that that argument has appeared just when the Chancellor is running out of stealth taxes and must find a new excuse to get us to open our wallets and pay more. The threat of freezing or drowning—or frying, if we are talking about global warming—seems to be the Chancellor’s next ploy to get his hands in our pockets. It is essential that we have a low tax base.
Absolutely not. I was about to say that I support the comments of the right hon. Member for Wokingham, who, I am glad to say, has not fallen under the spell of Polly Toynbee, as some of his colleagues seem to have done. He was arguing for a low tax base for the United Kingdom economy as a whole, as that is believed to be one way of attracting and keeping industry in the United Kingdom. If Northern Ireland is to be the guinea pig, of course, we would welcome that. The Government seem to be willing to use Northern Ireland as a guinea pig for many other kinds of taxes. We will provide the testing ground for a new council tax, so we would be more than happy to test the effects of a new corporation tax.
The hon. Gentleman suggests powerfully that a low-tax economy is a successful economy, and that the way to achieve competitiveness is to have low taxes. Why, then, are some of the highest taxes in Europe paid in the Scandinavian countries, which have successful economies and high economic growth? Is there some mistake?
Does the hon. Gentleman accept that one of the reasons for such strong growth in the Irish economy is massive fiscal transfers from the European Union? Something like 5 per cent. of its economy is due entirely to those transfers. When they stop, Ireland may have a bit more of a problem.
Of course, those massive transfers were intended for the development of Ireland’s infrastructure, such as roads, to which I shall refer in a moment. Companies were attracted to come to and stay in the Republic, however, by a tax regime that enables them to keep more of their profits.