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Volume 547: debated on Wednesday 27 June 2012

This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

My hon. Friend makes a very important point. We have been discussing this issue for 100 years, and it really is time to make progress. The truth of the matter is that there are opponents of Lords reform in every party—in the Conservative party, in the Labour party and in the Liberal Democrats in the other place—but there is a majority in this House for a mainly elected House of Lords, and I believe that there is a majority for that in the country. However, if those who support Lords reform do not get out there and back it, it will not happen—that is the crucial point. It is absolutely hopeless—in life and in politics—to do what the Leader of the Opposition is doing: saying that he is in favour of it and he is also against it. It is hopeless.

The Prime Minister said on 11 April:

“I will defend every part of that Budget. I worked on it very closely with the Chancellor of the Exchequer line by line.”

What went wrong?

The fuel duty increase was a Labour tax rise—[Hon. Members: “U-turn!”] It cannot be a U-turn to get rid of a Labour tax increase. They put in place 12 fuel duty increases in government, they left behind six increases in fuel duty, and I am proud of the fact that we are dealing with them.

Then it was all part of a seamless political strategy. Unfortunately, they forgot to tell the Transport Secretary, who went out and defended the increase; they forgot to tell the Cabinet in the morning, although the Chancellor briefed it on the economic situation; and they forgot to tell their own Back Benchers, and sent them out to defend the old policy. Let us call it what it is: another case of panic at the pumps. Month after month, every time Labour Members have proposed putting more money in people’s pockets to get the economy moving, the Prime Minister has denounced the policy as irresponsible, yet yesterday the Chancellor said that this was about doing precisely that. Why does not the Prime Minister admit it—plan A has failed?

Does the right hon. Gentleman support stopping the fuel increase? Yes? Then why not get up and congratulate the Government on being on the side of the motorist and the people who work hard and do the right thing? That is who we are helping. Ever since we came to office, we have been defusing Labour’s tax bombshell. We defused their jobs tax and their increases in council tax, and we have defused their increases in fuel tax. Labour Members should be congratulating us on being on the side of those who work hard and do the right thing.

I am afraid it is back to the bunker after that answer. Even on this Government’s own measure of success, borrowing went up yesterday. No wonder they want to change the exam system—the Chancellor cannot get the maths right. Can the Prime Minister confirm that the reason this Government have had to borrow £3 billion more than this time last year is that tax revenues are down and the costs of economic failure are going up? It is all the result of double-dip recession made in Downing street.

So on fuel tax, the right hon. Gentleman is against it, though he is in favour of it, and on borrowing, he thinks it is too high but he wants to put it up. I think it is back to school.

I know the Prime Minister finds the shadow Chancellor irritating, but it was the shadow Chancellor who called for the fuel duty cut before he did it. The Government are not just economically incompetent; they are unfair as well. The right hon. Gentleman has made six U-turns, but not on two particular decisions in his Budget—the tax cut for millionaires, paid for by the tax rise on pensioners. He says he has been listening to the electorate. What feedback has he had on those two particular proposals?

On the shadow Chancellor, he is the man who put the fuel tax increase into the Budget in the first place. What we have been doing is getting rid of Labour’s tax increases. The Leader of the Opposition asks me about the top rate of tax. I think it is wrong to have a top rate of tax that is higher than that of France, Germany or Italy. For 13 years of a Labour Government in which he served, the top rate of tax was 40p. The top rate of tax is now going to be 45p. Again, I think a “Thank you” would be in order.

The Prime Minister claims to be part of the way in which the decision on the fuel tax was made. The Chancellor hid away yesterday, refusing to defend the decision. No wonder—[Interruption.] The Chancellor yesterday sent out the Economic Secretary to do all the interviews on the issue. It is no wonder the hon. Member for Mid Bedfordshire (Nadine Dorries) said this:

“I…didn’t see Newsnight, however, if Osborne sent Chloe on…he is a coward as well as arrogant.”

So there is no change on the tax cut for millionaires. Does not the Prime Minister realise that what people hate about this Government is the double standards when they say that tax avoidance is immoral but it is okay, when so many people are struggling to get by, to give a tax cut to millionaires, including the millionaires in the Cabinet?

The Leader of the Opposition says that the Chancellor was hiding away. The Chancellor was announcing the tax reduction from the Dispatch Box. I know that the House of Commons does not always get reported, but my right hon. Friend was here making the announcement and, I have to say, completely wrong-footing the shadow Chancellor. What we have heard today from the Leader of the Opposition is a whole series of arguments about process—process about the House of Lords, where he is wrong on the substance; process about the economy, where he is wrong on the substance; process about the deficit, when he wants to put the borrowing up. Absolutely hopeless.

This is about an economic plan that is failing, and it is about the unfairness of this Government. The Prime Minister talks about the tax affairs of Jimmy Carr, but he is giving a tax cut to millionaires of £40,000 a year across this country, including in his own Cabinet. When it comes to tax, it is obviously one rule for the comedians on the stage and another rule for the comedians in the Cabinet. The Prime Minister has spent the past week blundering into the tax affairs of Jimmy Carr, his Budget unravelling, his economic plan failing. From the country’s point of view, it is a shambles. From his point of view, it is just another week at the office.

I am not at all surprised that the right hon. Gentleman is touchy about the issue of tax avoidance, because who have they just voted to the top of the list of the national executive committee? Ken Livingstone. It is this Government who are cracking down on aggressive and illegal tax avoidance and tax evasion, and it is the Opposition who are voting for them.

The International Development Committee spent last week in Afghanistan and would pay tribute to the dedication of our armed forces and civil servants working under very difficult conditions. At the Tokyo conference next month, will the Prime Minister reassure the people of Afghanistan that although troop drawdown will end in 2014, advice, support and development assistance will continue for years beyond that, so Afghanistan can become a functioning state that delivers for its people?

My right hon. Friend makes an important point. He talks about our armed services, and today is the day that we encourage people who serve to wear their uniform to work—not something that Members of this House can do, but none the less we should remember all those who serve our country, whether in the reserves or the regular forces.

On the issue of support for Afghanistan, we have already announced that we will continue with the generous level of aid and development support that we are giving to Afghanistan after 2015—we have very much been leading the charge on that—as well as helping to fund the build-up of the Afghan national security forces between now and 2015.

Q2. What is the moral difference between celebrities avoiding tax and a Cabinet of millionaires cutting tax to benefit themselves? (113859)

Perhaps the best way to answer that question is to quote the hon. Lady’s own leader, who at the launch of his local election campaign said:

“Tax avoidance is a terrible thing. It must be cracked down on.”

That, I thought, was the official position of the Labour party. It should be thanking us for getting on and doing just that.

Q3. I welcome the decision not to increase fuel duty. Does the Prime Minister think that this shows hard-pressed families and businesses that we mean business about refuelling growth? (113860)

My hon. Friend is absolutely right. It is this Government who have taken 2 million of the lowest paid people out of income tax, frozen the council tax, got rid of Labour’s job tax and repeatedly dealt with fuel duty, so it is 10p less than it would be under the plans left to us by the last Labour Government.

Q4. Can we return to the theme of practicalities and tax avoidance? One way in which the Prime Minister could put an end to aggressive tax avoidance schemes is to legislate for a general anti-avoidance principle, not a general rule. Will he make one more U-turn and back up his expression of public outrage with real action and legislate for a general anti-avoidance principle? (113861)

Legislating on a general anti-avoidance rule is exactly what we are doing, exactly what Labour did not do for 13 years, and I look forward to welcoming the hon. Gentleman into our Division Lobby.

Q5. Unemployment in my constituency has reduced by 5.7% in the last year as a result of this Government’s work to reduce unemployment and make sure that we are focusing on the right things to deliver economic growth, unlike the Opposition who have no innovative solution to the economic issue. [Interruption.] Additional growth will come from new businesses. [Interruption.] What are the Government doing to encourage teaching enterprise in schools to nurture the next generation of entrepreneurs? (113862)

It is quite clear that the Opposition just want to shout down anyone who wants to talk up what is happening in our economy. In the last quarter we saw 200,000 new private sector jobs, which was more than four times the rate of growth that we saw in terms of the decline in the public sector. We are seeing a rebalancing of our economy, and 2011 was a record year for the creation of new small businesses in our country, and on this side of the House at least we are in favour of encouraging that.

The coalition agreement stated that the Government would introduce a House business committee by the third year of this Parliament. Will the Prime Minister therefore confirm to the House that he will introduce it within the next 12 months?

We are looking carefully at this issue. Let me just say to the right hon. Gentleman, who has served as a Minister and a Back-Bench MP, that this Government, by introducing the Back-Bench days and Back-Bench business, have already made one of the most fundamental reforms of this place. Back-Bench Members are able to determine both the time and subject of debate, something that never happened under 13 years of the Labour Government.