The Chancellor of the Exchequer was asked—
We have had positive gross domestic product numbers this morning, but the biggest single boost to the British economy this autumn would be a lasting resolution of the euro crisis. Such a resolution requires, among many other things, greater fiscal integration within the eurozone as it follows the remorseless logic of monetary union. We have made it clear that Britain will not be part of that fiscal integration, and that issues affecting Britain, such as the single market and financial services regulation, must continue to be decided at EU level.
If the Liberal Democrats had had their way, we would have joined the euro with disastrous consequences. Now, the liberal Conservatives are advising us to support fiscal union in the eurozone, which will lead to economic union and a single government. How does my right hon. Friend really feel about a policy undermining the system of democratic states in Europe that gave the continent peace for more than half a century?
Those who were against Britain joining the euro, including my hon. Friend and me, were against it partly because we felt that it would lead to greater fiscal integration. That was one of the arguments for keeping Britain out. There is a remorseless logic driving monetary union towards greater fiscal integration, but it is in Britain’s overwhelming economic national interest to have stability in the eurozone, so I think that that fiscal integration is part of what is required. Of course, we have to ensure that Britain’s interests are protected, that we are not part of that fiscal integration, and that issues such as the single market and financial regulation are conducted at the level of the 27.
We shall see the 17 members of the euro attempting to co-ordinate their budget policies better, and more mutual surveillance, with sanctions, for those who do not do what has been agreed. I have to say that the confusion, if there is any, is in Labour’s policy, because it is now holding open the prospect of membership of the euro, which would be the ultimate fiscal and monetary integration.
There is no doubt that the decision by the Greek Prime Minister has added to the instability and uncertainty in the eurozone. We can see that today. We are trying to create stability and certainty in the eurozone. Ultimately, it is up to the Greek people and the Greek political system to decide how they make their decisions, but I believe that it is extremely important for the eurozone to implement the package that it agreed last week. I said at the time that that was crucial, as did everyone else involved. We need to get on with it, sooner rather than later.
Is not the truth that the Chancellor cannot urge any real action in the eurozone because he is stuck with a failed plan that has resulted in our economy bumping along the bottom? It will take more than him wearing a high-visibility jacket on the rolling news to put that right.
As I was saying, this morning we had the news that our GDP is growing by 0.5%—[Hon. Members: “Ooh!”] Well, GDP fell by about 6% when Labour was in office and when the right hon. Member for Morley and Outwood (Ed Balls) was advising the last Prime Minister. If we look at growth in France or Germany, the most recent figures show that it was either negative or growing at about 0.1%. The instability in the eurozone and the uncertainty in the world are having an effect on all western economies at the moment, and we have to sort that out, but that is not an excuse for Britain not to deal with its problems, which were created by that lot sitting over there.
Will my right hon. Friend ensure, if he is not using our veto against more fiscal integration, that Britain gets something out of the deal? Do we not need the right to opt out of any past or future EU measure that could damage jobs and prosperity at home?
We have already extracted a price for the European Stability Mechanism treaty that the eurozone wants to put forward by getting ourselves out of the EU bail-out mechanism to which the last Government had committed us. We are working to keep the increase in the EU budget to a real freeze. In other words, we have, I think, proved in office that we can extract important concessions and in the case of the EU bail-out fund we have actually taken a power back to Britain. That will be the approach we take to future discussions and negotiations—putting Britain’s national interest first.
Why did the Chancellor’s statement last Thursday about economic governance in the eurozone fail to mention the most important missing ingredient—a strategy for jobs and growth? Was it an accident or was it deliberate? He has been telling us all summer that Britain is a safe haven, yet growth is weak, unemployment is rising and construction and manufacturing are both contracting. What kind of safe haven is that?
First, may I congratulate the hon. Gentleman on keeping his job in the clear-out of the Labour Treasury Front-Bench team—although on the basis of that question, I am not sure why he did? The whole purpose of our negotiations in Europe and the whole purpose of what we are doing at home is to stabilise the British economy and set it on a path of growth and jobs. We inherited a situation where unemployment had rocketed under the Labour Government and we had the deepest recession of any country in the world, apart from Japan. We are rescuing that situation, and it is reflected in the very low interest rates paid in this country in comparison with all those other countries.
The independent Office for Budget Responsibility published its forecast for unemployment in March. Unemployment is a serious problem for the UK, with about 1 million people continuously on out-of-work benefits for more than a decade. This Government have introduced a number of reforms to the welfare system, including the Work programme—the biggest single payment-by-results employment programme this country has ever seen, which is expected to help 2.4 million claimants over the next seven years.
The Chief Secretary should stop being so complacent about long-term unemployment. The truth is that this Government are spending more to keep people on the dole and they are losing income from tax revenues that would otherwise be paid on income tax and VAT. Is it not time that the Government adopted a plan for jobs and growth to get the economy moving again? The right hon. Gentleman could do worse than adopt Labour’s five-point plan for economic growth and avoid the spectre of stagflation for years to come.
I am not sure that Labour’s five-point plan would help the British economy, given that it involves spending an extra £20-odd billion, putting at risk the fiscal credibility that is so important to maintaining employment in this country. Nor do I think the hon. Gentleman should be so critical of the Work programme, which after all is designed to tackle the legacy of 1 million people who have been out of work for more than 10 years—a legacy for which his party is responsible.
Is it not true that the increase in unemployment caused by the comprehensive spending review is a heavy burden both for the individuals and the families concerned and for the economy? What does the Minister say to the fact that the Government have had to borrow £46 billion more this year than they were planning to borrow?
The right hon. Gentleman is absolutely right that unemployment is a heavy burden for any individual or any family. We inherited from Labour the largest budget deficit this country has ever seen. It was incumbent on this coalition Government when we came into office to take the action necessary, otherwise we would have found ourselves in a position that many other European countries face, which would have been a great deal worse for the very people the right hon. Gentleman claims to be concerned about.
One of the key weapons in tackling youth unemployment is the use of apprenticeships, so will my right hon. Friend join me in welcoming the news that in Staffordshire Moorlands the number of apprentices has gone up from 480 in 2009-10 to 760 last year—an increase of 60%?
After this morning’s encouraging news, does my right hon. Friend accept that one way of maximising employment is to give people the right to have flexible employment if that is what they wish? Given that the coalition agreement pledged to give people the right to request flexible employment, can he report on progress in implementing that commitment?
My right hon. Friend is correct, and it is a great shame that Labour Members sneer at the economic growth that has been reported today. As my right hon. Friend says, flexible employment is an important part of that growth. We set out plans in our coalition agreement, and we have announced proposals to implement them by the end of the current Parliament.
I must say that I find the Chief Secretary’s answers incredibly complacent. Given that unemployment is at a 17-year high and long-term youth unemployment has risen by more than 60% since the start of the year, we all know what impact the Chancellor’s policies have had on unemployment. Instead of being complacent, will the Government support calls for them to repeat the bankers’ bonus tax in order to create 100,000 extra youth jobs and to introduce a national insurance holiday for small businesses taking on new workers? That is what Labour has proposed in its five-point plan. We need policies that will get the economy moving again and reduce unemployment, thus reducing the deficit. When will the Government act?
The hon. Lady’s position would have more credibility if she recognised the fact that youth unemployment rose during Labour’s time in office, as did long-term unemployment. As for her proposal for a bonus tax, that was written off by the last Chancellor of the Exchequer, who said that it could not work. She should listen to her own colleagues first.
Tax Avoidance and Evasion
We have made it clear that tax evasion is both illegal and immoral, and that this Government will not tolerate it. We are increasing the number of staff at Her Majesty’s Revenue and Customs who are dedicated to tackling tax evasion and tax avoidance to 2,500. We also aim to increase the amount of tax collected by £7 billion, and, unlike the last Government, we have concluded a treaty with Switzerland to get back the money that individuals should have paid here in the United Kingdom.
I have been contacted by a fair number of constituents who have expressed concern about tax avoidance. I welcome many of the measures that the Government have introduced to tackle this unfairness. Is the scope of the recent tax avoidance agreement between our Government and the Swiss likely to include cases in which tax is not paid by individuals who are tax-exiled in Switzerland, such as the widely reported case of Mr Andrew Rosenfeld?
Give him a job!
The Chancellor will remember, in his first Budget, fixing a target for debt
“to place our fiscal credibility beyond doubt”. —[Official Report, 22 June 2010; Vol. 512, c. 167.]
That target was for debt to be reduced by the end of the Parliament, but, according to figures from the Office for Budget Responsibility, it depends on economic growth of 2.8%. How far below 2.8% must growth fall for the Chancellor’s fiscal mandate and his fiscal credibility to be shot to pieces?
Tackling tax evasion and avoidance—to which the question refers—will help us to reduce both the deficit and the debt. We have the fiscal mandate and the debt target. That has been independently verified by the Office for Budget Responsibility—which is in marked contrast to the situation when the right hon. Gentleman was in the Cabinet—and on 29 November it will provide its update.
Although we are all in favour of dealing with tax avoidance and evasion, are not some of the heavy-handed tactics used by HMRC to collect tax, including the imposition of late-payment penalties under the Labour Government, helping to stifle some growth in small and medium-sized businesses? Will the Chancellor examine the position to ensure that HMRC is being fair?
Of course we always want HMRC to approach things in a proportionate manner, and it certainly handles large companies and their tax bills better than it did several years ago. However, we must collect the tax that is owed. That is a very important principle at any time, and it is particularly important at a time when we are all having to make difficult decisions in our attempts to reduce the budget deficit. We will not tolerate tax evasion, and we do apply penalties to people who do not pay their tax on time.
The Chancellor is talking a good game, and yesterday the Exchequer Secretary announced the establishment of an “affluent unit” to tackle tax avoidance. For the sake of clarity, I should add that that is not a pet name for the Tory Front Bench, but a department in HMRC. However, the £900 million is not new money. It is not additional, and nor are the 200 staff. Is not the reality that the Government are more interested in offering tax breaks to the wealthiest than in tackling tax avoidance?
This is the Government who have introduced additional charges for long-staying non-doms; Labour had 13 years in which to do that, but they did not. This is the Government who have concluded a tax treaty with Switzerland; the previous Government had an opportunity to do that—[Interruption.] Well, this is what a Europe Minister in the last Government said:
“Swiss…deal offered to HMG…more than decade ago but GB turned it down thus losing billions in revenue”.
They had 13 years to deal with tax avoidance and evasion. We are dealing with it now, while they must account for their new general election strategist.
The Office for Budget Responsibility published its unemployment forecasts in March 2011, taking full account of announcements at Budget 2011, but it does not publish forecasts by gender. The Government are committed to tackling unemployment and helping support women into work. The hon. Lady will be aware that female employment has remained broadly steady since the start of 2008. Employment among women aged 25 to 64 is up more than 100,000 since the start of 2008, and has risen by 15,000 in the last three months.
I have a number of things to say to the hon. Lady, none of which would include any personal questions, of course.
I can assure the hon. Lady that the Government are reducing the deficit fairly, and I would point out in particular that we are taking 1.1 million of the lowest-paid workers out of tax entirely, and the majority of them are women. She will welcome that as much as I do. Furthermore, she should know that unemployment rose to its level of 30% under her party’s Government.[Official Report, 3 November 2011, Vol. 534, c. 6MC.]
May I genuinely welcome the hon. Lady to her new post? I have no doubt that we will have many exchanges across the Chamber, and I hope we will focus on policy.
Back in May, the Minister claimed that the Government’s approach to the economy was working because there were 14 fewer unemployed claimants in her constituency. What is she saying now that women’s unemployment in the UK has risen to its highest rate since 1988, and, more importantly, what is she going to do about it?
I will tell the hon. Lady what I am certainly going to do about it, which is join the rest of this Government in working on welfare reform, tax reform, child care reform and many other measures that will take women’s unemployment down from its record level, where her Government left it.
The estimate is that the structural deficit for this year will be 5.3% of GDP, which is down from the record 8.9% in the last year of the previous Government, with it having been the highest in the G7 before the crisis. Of course, these estimates are now provided independently by the Office for Budget Responsibility, rather than being fiddled by the close advisers of the Chancellor and the Prime Minister, as used to happen.
We are bringing the deficit down from the record levels that we inherited, which has in part provided stability in the financial markets for sterling and our interest rates. That has been absolutely crucial, as we can see in the very high interest rates faced by not just Greece and Portugal, but now even by countries such as Italy and France, which face significantly higher interest rates than we do. That is of course a huge boost to the British economy.
This morning’s GDP numbers are a positive step, but of course the British economy has a difficult road to travel from the very high debts—the record debts—that we inherited. That is made more difficult by the international situation, as people can plainly see today, but we are determined to make that journey to the growth and prosperity that this country was so lacking under the previous Government.
Social Impact Bonds
Important work is going on within both the social investment sector and government to develop and test social impact bond models, and we meet regularly with colleagues to discuss the progress that the Government are making in growing the social investment market, including through social impact bonds.
My right hon. Friend will be well aware of the exciting potential that social impact bonds have, not only in offering financial support for the third sector, but in securing genuine savings for the Government. Will he or one of his Ministers meet me and representatives from the Social Finance investment bank to explore ways in which the Treasury can help to maximise the potential of this nascent financial instrument?
The hon. Gentleman is absolutely right about the enormous potential of this sector, and I congratulate him on his work and the close interest he has taken in this subject. The Exchequer Secretary to the Treasury would be very happy to meet both him and representatives of the Social Finance investment bank.
7. What recent estimate he has made of the level of central Government debt. (77448)
The Office for National Statistics publishes central Government debt figures monthly. The latest figures released on 21 October gave central Government gross debt as £1.2 trillion or 77.6% of GDP in September. The Government use public sector net debt for their fiscal targets. That figure is also published by the ONS, and it was £966 billion or 62.6% of GDP last month.
I thank my hon. Friend for that response. This country continues to bear a huge burden of private finance initiative debt. The Government have made important progress in improving the cost and operation of PFI over the past 18 months. Does he share my view, and that of many of my colleagues, that more can be done to secure a fair deal on PFI, while securing investment in our infrastructure?
My hon. Friend has campaigned tirelessly on this matter. As he knows, the Government have improved the assurance and approval arrangements for PFI, and the transparency. We are seeking to obtain £1.5 billion of savings on existing stock of PFI contracts, and we will of course continue to work hard to improve the situation.
In 1945, Britain had higher Government debt than now and the Government of that time did not impose cuts but ran a full-employment economy and there was rapid growth. Is it not time that the Government took a leaf out of Labour’s book in relation to running the economy?
May I just make the point about the 1945 Government that they were running surpluses from 1948 onwards? If memory serves, the debt in 1945 was 232% of GDP and by 1951 it was 178% of GDP, so they brought debt down. That is not a bad thing to do and this Government want to do it, whereas the Labour party wants to put debt up.
Given the increase in debt caused by the lower growth rates and the impact that that is likely to have on the Government’s deficit reduction plan, what impact does the Minister believe that will have on the United Kingdom’s credit rating? Does he believe that steps need to be taken to inject growth into the economy?
It is worth pointing out what Standard & Poor said recently when it confirmed our triple A credit rating. It said that if we abandoned our fiscal plans—if we borrowed more—that credit rating would be at risk. The best way of keeping our triple A rating is by sticking to the plan.
The Government are committed to supporting green growth, as is demonstrated by the green investment bank, which was allocated £3 billion in the spending review, by the carbon price floor, which is designed to drive investment in low-carbon power generation, and by the green deal, which supports households and businesses in increasing their energy efficiency at no up-front cost.
May I, too, extend a very warm welcome to my hon. Friend the Economic Secretary?
In the Budget, the Chancellor pledged to consider incentives to encourage take-up of the green deal. One idea is to have a stamp duty particularly for the least energy-efficient homes. How does my hon. Friend intend to advance those incentives and is she prepared to meet me and industry representatives to find a way forward with the Chancellor’s incentives?
May I take this opportunity to thank my hon. Friend and others for their kind words regarding my role?
As I have mentioned, the green deal is a key part of supporting such green growth and the Government are taking a range of actions to help people to gain control of their household energy bills. I certainly note my hon. Friend’s suggestion and I am happy to meet him to discuss options within public finance constraints.
May I also welcome the new Minister to her post? She will be aware of the importance to the UK economy of energy-intensive industries such as the steel, chemicals and ceramics industries. German competitors in such industries are benefiting from rebates worth more than €5 billion a year; will she consult the Chancellor and make sure that the pre-Budget report includes a special package of measures for those industries so that rising energy costs do not simply result in jobs being exported abroad?
National Insurance Holiday
As of 25 October 2011, Her Majesty’s Revenue and Customs had received 8,761 successful applications for the national insurance contributions holiday. A breakdown of information by constituency on the amounts claimed and jobs supported for the first year of the scheme will be published shortly in a factsheet in the House of Commons Library.
As I say, we will be updating the House with all those details shortly, but there are 1,600 or so businesses in the north-west region that are benefiting from it. I visited one of them not far from her constituency a few weeks ago which was very appreciative of the scheme. Where the scheme is available, I encourage hon. Members to highlight it to their constituents.
We looked at auto-enrolment but one of the difficulties was the fact that it would have been years before we could have put it fully in place and we wanted to move quickly to have the scheme in operation. It is important that we highlight the scheme and make sure that publicity is available and that businesses are aware of it. The businesses that I have met that have taken up the scheme are very appreciative of it and it helps them in those difficult first few months.
Eurostat publishes GDP growth data on all EU member states. These data show the UK economy growing in the most recent three quarters. The IMF’s latest forecast shows the UK economy growing this year, and growing faster than the economies of France, Germany and Italy next year.
When we embarked on the economic course that the Government have set, Ministers told us that because they were tackling the deficit aggressively, there would be a surge of private sector confidence—and, therefore, investment and jobs. Many people agreed with them. Now that we know that expectation was mistaken, surely there must be a change of course.
Every reputable international organisation that talks about what is happening in the UK economy now recognises that the Government need to stick to the course, rather than throwing away the valuable credibility that we have gained as a consequence of tackling the mess left behind by the previous Government.
It is remarkable, is it not, that when the Leader of the Opposition was asked whether a Labour Government would join the euro, his answer was:
“It depends how long I’m prime minister for.”
This Government have closed down the euro preparations that the Labour party set up, and that is why I think that we have taken the right decision to stay out of the euro and tackle our debt and deficit problems. That is why we have low interest rates, which help strengthen the recovery in this country.
The 2011 Budget announced a £200 million package of support, including 100,000 work experience opportunities for young people, skills training, guaranteed interviews and progression into apprenticeships. This is in addition to the £7.6 billion that we are investing in education and training for 16 to 19-year-olds this year and the £1.4 billion that we are investing in apprenticeships. Young people will also benefit from priority access to the Work programme, which started in June.
What my constituents want is action rather than words, especially on youth unemployment, which stands at nearly 10% in Halifax. When will the Government take real measures to get young people into work and contributing to the economy and society in a positive way?
As I said in my answer, we are introducing more apprenticeships, and young people will have priority in the Work programme. The hon. Lady highlights youth unemployment in Halifax. The last estimate showed that it increased by 0.6% from June 2010 to March 2011—but I also have to point out that from 2004 to 2010, youth unemployment increased by 8.5% in Halifax.
Does the Minister share my concern that even during the boom years youth unemployment rose? Will he join me in commending the work placement scheme in Haverhill in my constituency? The work programme and the new flexibility at the jobcentre means that young people can be put into work placements, and more than half of those put in placements end up getting a permanent job.
The International Monetary Fund and the OECD regularly hold frank bilateral discussions with each member country. When Christine Lagarde, the managing director of the IMF, visited London in September, she stated:
“In the United Kingdom strong fiscal consolidation is essential to restore debt sustainability, given the UK’s very high structural budget deficit and large financial sector relative to GDP.”
Angel Gurria, secretary-general of the OECD, said yesterday of the UK:
“You were successful. You cleared the markets. The package was credible…The markets never discuss the quality of the rating of the UK.”
That is a consequence of the actions this Government have taken to tackle the mess left behind by the previous Government.
Is it not accepted now by the international community that the announcement by the Chancellor a year ago that he would cut half a million public sector jobs led directly to a reduction in consumer demand, and that it has reduced private sector investment and growth and led to an increase in deficit predictions?
The hon. Gentleman should recognise that the action that this Government have taken has earned the endorsement of the IMF and the OECD. That is why we have the low interest rates the economy needs. The Opposition talk about a plan B, but that would actually increase the budget deficit and the interest rates that this country would have to pay.
Job Creation (Private Sector)
In Budget 2011 the Government put in place a wide range of measures to support job creation, including supporting business growth by aiming to create the most competitive tax system in the G20, and helping to ensure that it always pays to work, by increasing the personal allowance.
I would like to add my welcome to my hon. Friend at the Dispatch Box.
Having run two small businesses, I understand the pressures that small businesses in South Thanet face. How much less will we tax small businesses in the coming years as a result of our tax cuts and the national insurance freeze?
My understanding is that, compared with the plans of the previous Government, businesses will pay £3 billion less in employer national insurance contributions and more than £1 billion less in corporation tax, as a result of changes announced in Budget 2010.
Small businesses have been frequent attenders at my regular Friday surgeries, and they tell me that business is hard. Now that the hon. Lady’s party’s Chancellor has presided over the slowest economic recovery since the first world war, will she explain to small businesses in Wirral how they are supposed to get out of this mess?
This has been one of the deepest recessions on record, and it is no wonder that times are very hard for people. The hon. Lady must take note of the fact that overall, more than two jobs have been created in the private sector for every one lost in the public sector, which is very clear progress on what her Government left behind.
Regional Growth Fund
16. What recent discussions he has had with the Secretary of State for Business, Innovation and Skills on funding for the regional growth fund. (77457)
I regularly discuss the regional growth fund with the Secretary of State for Business, Innovation and Skills. Yesterday we announced the outcome of round two of the fund. In total we expect the regional growth fund to support more than 325,000 jobs in the private sector over the next three years.
Teesside has not yet received any of its promised RGF funding. The Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk) says that is down to due diligence, which takes an average of between four and six weeks. No one doubts the need for due diligence, but how much is the Chancellor charging businesses that receive RGF funding for seven months of due diligence limbo?
The hon. Gentleman will be aware that well over half the projects that were given funding in round 1 are under way, mostly with the private sector funding to start with; the public sector funding will come in later. But I should have thought he would want to welcome the fact that two specific round 2 bids were successful in Middlesbrough in the round that we announced yesterday.
17. What recent assessment he has made of the potential effect on household spending of an increase in interest rates. (77458)
The Bank of England is responsible for monetary policy, as my hon. Friend knows, and setting the bank rate to meet its inflation target. Action by this Government in the comprehensive spending review and the Budget put the public finances on a sustainable footing and has supported low and stable interest rates. The higher interest rates seen in other countries highlight the risks when financial markets lose confidence in a Government.
I shall, by reference to correspondence, that my hon. Friend will be well able to delve into, between the Chancellor and the Governor of the Bank of England, but I note at this point that the Government believe that low and stable medium-term inflation is a prerequisite for economic growth, and that is what drives our policy.
The core purpose of the Treasury is to ensure the stability of the economy, promote growth and employment, reform banking and manage the public finances so that Britain lives within her means.
Will one of the Treasury Ministers confirm that public sector workers who work part-time earning less than £15,000 will still pay the 3% income tax? Is this fair, and should not the Government negotiate in good faith, and not simply try to ram this through?
The Chief Secretary will shortly set out the full details of our pension offer to the public sector. When people see it, they will see that it is fair to the public sector—people in the public sector will get a much more generous pension than is available in almost any part of the private sector—but it is also fair to the taxpayers. It is, of course, based on the work of John Hutton, a former Labour Pensions Secretary.
T3. Labour-controlled Blackburn with Darwen council has abandoned pensioners and schoolchildren in my constituency because of a £10,000 bus cut, but it can still find £94,500 to fund trade union officials. Does my right hon. Friend think it is right that the taxpayer picks up the tab for trade union officials? (77467)
In central Government we have announced that we are reducing the facility time, as it is called, in the civil service because we do not think it is fair that taxpayers should be paying for so many full-time trade union officials. Obviously, it is up to Blackburn with Darwen council to decide how it spends its council tax payers’ money, but from what my hon. Friend is telling me, it does not look as if the council is spending it particularly well.
Today’s figures have shown that the British economy has grown over the past 12 months, since the Chancellor’s spending review, by just 0.5%, and Treasury officials have apparently admitted to the BBC this afternoon that the economy is now set to worsen. The IMF says that if the British economy continues to undershoot, the Chancellor should change course to boost growth and jobs. How much longer does the country have to wait before the Chancellor will finally listen?
I welcome the right hon. Gentleman back from America. We missed him in our debates last week—even though, by some coincidence, the tone of the debate markedly improved. We have been keeping an eye on what he was saying while he was in America. This is what he told American television: “What the world needs are balanced plans on deficit reduction, and you can’t duck that.” In America he has to say that so that he is not laughed out of the TV studio. Here he not only ducks deficit reduction; he runs away from it. We are clearing up the mess that he left when he was running Britain’s economic policy for 13 years.
I am afraid people watching this will think that was a deeply complacent answer. Today’s figures mean that the Chancellor’s figures for growth will be downgraded. They will undershoot the OECD and the IMF growth forecast as well. He tried to blame the eurozone, but the fact is that our recovery was choked off a year ago. Families watching this programme and struggling with their bills, businesses on the edge and young people losing their jobs will all think the Chancellor is completely out of touch. Why does he not understand that if we are to get the deficit down, the country needs a plan for growth and jobs, and it needs it now? How much longer will we have to put up with this prevarication before it is too late, and the Chancellor finally acts?
The GDP numbers showed this morning that the British economy is growing, and that is positive news. But of course we have a difficult journey to take, from the deepest recession of our lifetimes and the biggest banking crisis in British history, which the right hon. Gentleman presided over when the Labour party was in government—and it is made more difficult by what is happening elsewhere in the world. [Interruption.] Of course that is the case, which is why the growth figures in the British economy are similar to the growth figures in the American economy, or the French economy, or the German economy.
The right hon. Gentleman shakes his head, but in 2011 the British economy has grown at exactly the same rate as the United States economy. It has taken a completely different course from the one that he suggested as shadow Chancellor and yet it has the same growth, which shows that what we are doing is bringing stability to the British economy. Frankly, for him to get up every week and say that we need a deficit reduction plan, but not to give us any details, shows how hopelessly out of touch he is.
What the Greek Prime Minister has apparently offered the Greek people is a referendum on difficult decisions required to get the budget deficit down. That is what he is talking about. We talked about these things in advance of a general election. Two parties here talked about those difficult decisions. We got elected, we are in government and we are now doing it, and we are recovering from the deep mess that the Labour party left us in.
T2. Will the Chancellor intervene to prevent directors’ pay from increasing by another 49% this year? Or if he is not willing to intervene, will he at least explain to those suffering cuts in pay and the loss of their jobs, just how we are all in this together? (77466)
I have made it very clear, and the Prime Minister has made it very clear, that at all levels of society people have to be mindful of the current economic situation, and that includes highly paid directors and people working for the financial services. Bonuses are significantly lower than they were under the Government whom the hon. Gentleman supported, and we are also introducing measures to encourage transparency in pay, and to give shareholders greater control over executive pay as well.
T5. Is my right hon. Friend aware of the TaxPayers Alliance’s excellent report published last week on abolishing national insurance and merging national insurance with income tax? Does he believe that the merger of national insurance and income tax would be a good way to simplify tax in the way that he promised, and will he make it happen? (77469)
My hon. Friend will be aware that the Government are looking into merging the operation of national insurance contributions and income tax. We are actively looking at ways in which we can make the tax system more transparent and simpler to understand, and we will be saying more on that subject shortly.
The FSB, like many other business organisations, has supported what we have done to try to get the deficit down—and of course it also welcomes the fact that not only did we reverse the increase that the Labour Government planned in the small companies rate, but we have also been able to reduce the small companies rate and freeze business rates for another year.
T6. Does the Minister agree that new plans for the Government to lend directly to small businesses and start-ups through credit easing will be beneficial to the economy and will create more jobs? Will the Minister also give me examples of how that will be put into practice? (77470)
I do agree with my hon. Friend. We will set out more details of our credit easing plan in the autumn statement later this month, but it is a mark of the Government that we are prepared to think differently and intelligently about how we can use such mechanisms precisely to get small businesses going in this country.
T9. Youth unemployment now stands at a shocking 34% in Tameside and 23% in Stockport. Is not the right thing to do to listen to Labour’s five-point jobs plan, get the bank bonus tax reinstated and invest in 100,000 jobs for young people? (77473)
In his pitch for a job, the hon. Gentleman failed to mention that youth unemployment rose by more than 40% under the Labour Government. There is complete amnesia about the fact that 16 months ago they left this country with high unemployment, a high budget deficit, the deepest recession this country has seen in the last 100 years, and the biggest banking crisis in our history.
T7. Some of the most needy children in the Vale of Glamorgan and across the UK will benefit from today onwards from the Government’s junior ISA. That presents an opportunity to return to a culture of savings among families. What plans have the Government to develop that further? (77471)
We have indeed announced today the launch of the junior ISA, which will enable many millions of parents to save for their children up to £3,600 a year tax free. It should help more than 6 million children who will be eligible for it immediately and many more as they are born and grow up. It is all about trying to foster a savings culture after the age of irresponsibility and the culture of debt that we saw over the past decade.
T10. I can assure the Chancellor of the Exchequer that I am not looking for a job—unlike many of my constituents. He talked earlier about fiscal integration. Does he agree that the possibility of a differential rate of corporation tax within the United Kingdom contains severe dangers? (77474)
As the hon. Gentleman well knows, we are consulting on the possibility of introducing a different corporation tax rate in Northern Ireland, reflecting the fact that the Irish Republic has a much lower corporation tax rate. The consultation is ongoing, and we are of course in discussions with the Northern Ireland Executive. We are clear that Northern Ireland would have to bear the cost of that in forgone revenues, and an important part of the discussions will be working out what exactly those forgone revenues would be.
I am concerned by reports that the Government are considering breaking with the 20-year convention of uprating pensions and benefits by the September inflation figure, now that the CPI has come in at 5.2%. Does the Chancellor recognise that it would be unfair to change the rules of the game suddenly, hurting vulnerable pensioners and disabled people in the process?
We are absolutely committed to the triple lock that we introduced on pensions so that they rise by CPI, earnings or 2.5%, whichever is greater. That is one of the really significant achievements of this Government, which two parties came together to create, and I think that it is something we can be very proud of.
May I tell the Chancellor that what is happening in the economy reminds me very much of the havoc and destruction caused by the Thatcher Government in the 1980s, with mass unemployment and poverty? Is it not perfectly understandable why many people are protesting against the sheer injustice, including those who are protesting, and rightly so, outside St Paul’s?
Again, there is absolutely no recognition that the Government the hon. Gentleman supported presided over the second deepest recession in the entire world. What is the Opposition’s explanation for that? Why was Britain so badly affected? Why was the British economy so unbalanced? Why had the gap between the rich and the poor grown? Why had manufacturing halved as a share of GDP? They have absolutely no answers on Labour’s record in office.
I am very pleased that we were able to announce that additional enterprise zone for my hon. Friend’s constituents, which reflects the fact that the cut in the US defence budget had an impact on BAE Systems. I am glad that we were able to move quickly to create an enterprise zone, not only in the north-west but in east Yorkshire, to take into account the impact of that decision.
We inherited the highest—[Interruption.] The Opposition do not want to hear this. We inherited the highest budget deficit in Britain’s peacetime history. That budget deficit is now coming down, and that has contributed to financial stability in this country, in marked contrast with what we see on our television screens around Europe.
Will my right hon. Friend pass on the message to the Deputy Prime Minister, with his accusations that Conservatives who advocate repatriation and renegotiation are committing economic suicide, that we are facing not only a disastrous two-tier Europe, but now also a two-tier Government?
Of course I do not agree with my hon. Friend on this occasion. The coalition Government have been able to get Britain out of the European Union bail-out that we found ourselves in when we came to office. We have been able to keep the budget increases down—again, in marked contrast with what we found on coming into office. We must now have some serious negotiations to make sure that Britain’s interests are protected in Europe, as the remorseless logic of monetary union—I am sure that he accepts this—leads to greater fiscal integration among eurozone countries. That is the reality of the situation facing us, and I think Britain under this Government will be able to negotiate well in our national interest.
The CBI has been absolutely staunch in its defence of our deficit reduction plan, and says that it is crucial for business confidence. If the shadow Chancellor wants to make proposals to increase spending and borrowing, which he is perfectly entitled to do, why does he not also make proposals to cut Government spending and to get the budget deficit down? He talks about providing a medium-term deficit reduction plan, but we have not heard one single line item of it.
Whatever one thinks of the tactics of those who are camping outside St Paul’s and in the middle of my constituency, one issue that they are raising that resonates with the British public is the feeling that people are not paying their fair share of tax. Will my right hon. Friend update us on what progress we are making across the House, particularly on lifetime loans—disguised remuneration?
My hon. Friend raises a good point. At a time like this, people want to make sure that everyone pays their fair share of tax. We have taken action on the situation in Switzerland and on long-stay non-doms, but he raises a third point about disguised remuneration. That is a way in which people, often in financial services, get away with a much lower rate of tax. Guess who in the House voted against that action? The Labour party.