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Commons Chamber

Volume 572: debated on Tuesday 10 December 2013

House of Commons

Tuesday 10 December 2013

The House met at half-past Eleven o’clock

Prayers

[Mr Speaker in the Chair]

Order. Before I call the Clerk to read the title of the private Bill set down for consideration at this time, I must inform the House that there was an error on the Order Paper, which listed the wrong Bill. A corrigendum has been issued. The Clerk will now proceed to read the correct title of the private Bill set down for this day.

business before questions

humber bridge bill

Motion made, That the Lords amendments be now considered.

Oral Answers to Questions

Treasury

The Chancellor of the Exchequer was asked—

Average Earnings

1. What comparative assessment he has made of trends in the annual rates of inflation and growth in average earnings since May 2010. (901513)

Real average weekly earnings have fallen since 2010, owing to the previous Government’s financial legacy left to us. However, last year real household disposable income grew at its fastest pace since 2009. In its latest forecast, the Office for Budget Responsibility expects the growth of real household disposable income to accelerate in every year of the forecast period, reaching 2.6% in 2018.

Will the Minister confirm that the UK has suffered the second biggest fall in wages of any G20 country since this Government took office? Is that not a damning indictment of this Chancellor’s record over three wasted years?

If the hon. Lady wants to talk about the largest anything, perhaps she would agree with Paul Johnson, who said that wages have increased much less quickly than inflation. As I say, that is not surprising. We have had a great big recession. We had the biggest recession in 100 years. It would be astonishing if household incomes and earnings had not fallen.

Her Majesty’s Revenue and Customs liabilities table published in May shows that the number of people earning more than £1 million jumped from 13,000 in January to 18,000 after the Budget. Their combined income rose from £27 billion to more than £47 billion. Is that why April was the only month in which earnings rose above inflation?

That is a very interesting question. The hon. Gentleman will know that the OBR last week said that the only thing that would raise wages was increased productivity in the economy. That means more people creating more jobs and more growth in our economy. I would have thought the hon. Gentleman welcomed the fact that 2.7 million people have been taken out of income tax completely as a result of our changes and 25 million people are paying less income tax.

Does my hon. Friend agree that Opposition Members seem to misunderstand the fact that rises in the personal tax-free allowance are putting money back into the hands of the lowest earners? Does she agree further that the best way to raise people’s living standards is by creating new jobs and new growth in our economy?

My hon. Friend is, of course, right. The fall in living standards is a consequence of the economic crisis left to us, and the best way to deal with living standards is to deal with that economic crisis so that families can find work in a growing economy.

Does my hon. Friend agree that the reason we have had a big drop in living standards is that we had the largest drop in output since the second world war? As my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) says, we need to rebuild that output, as we are now doing, if we want to rebuild living standards.

My hon. Friend is right. As I said, Paul Johnson of the Institute for Fiscal Studies said:

“We’ve have had the biggest recession we’ve had in 100 years”.

It is hardly surprising that household incomes and wages have fallen. We recognise that times have been very tough for households and for businesses, but as my right hon. Friend the Chancellor’s autumn statement showed last week, we are on the right path to a responsible recovery now.

Does the Minister expect that after the autumn statement average earnings will keep pace with rising energy bills this winter?

What we have done in the autumn statement is to give £50 off energy bills. We are putting money in people’s pockets with the personal allowance, through capping rail fares, through the council tax freeze and with the fuel duty freeze. The hon. Gentleman has a cheek to talk about putting money in people’s pockets when the Government whom he supported left behind the economic crisis from which we are having to pick up the pieces.

I guess we have to take that as confirmation that the Minister does not expect average earnings to keep pace with rising energy bills this year. Is it not true that, despite the autumn statement, all we have seen is a policy that tinkers around the edges and means that energy companies will still see their profits rising as households continue to see their bills rising? When will she be on the side of households who are worried about heating their homes, and when will she support an energy price freeze and stop always defending the excessive profits of the big six energy companies?

The hon. Gentleman has clearly learned nothing. Does he realise that his energy policy is a complete con, that energy companies have already said that they would have to freeze investment, and that they would put prices up beforehand and afterwards? The Government are absolutely on the side of hard-working families and their household budgets, and we are putting £50 in their pockets now.

Under Labour. Therefore, it is a matter of catch-up before the Government can get the economy back on track.

My hon. Friend is right to say that wages and salaries suffered their fastest drop between 2007 and 2009, and that drop started in 2004, as the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) has already admitted. Interestingly, the shadow Chief Secretary to the Treasury could not answer the question about whether Labour’s calculation of wages and household disposable income includes the tax changes we have made, and therefore does not reflect the fact that we are putting more money into people’s pockets.

Rural Fuel Rebate

2. What progress he has made in extending the rural fuel rebate pilot scheme; and if he will make a statement. (901514)

I have been asked to reply on behalf of my right hon. Friend the Chancellor who is at ECOFIN in Brussels.

On 8 November, the Government launched a supplementary call for information that gave fuel retailers in remote areas a further opportunity to submit information to the Treasury as part of our plan to extend the fuel discount to mainland rural areas. That call for information closed on Friday, although we extended the deadline until yesterday for areas affected by the recent severe weather. We received information from a further 42 filling stations. We are analysing the data at the moment, and will make a full application to Brussels in January.

I thank my right hon. Friend for that reply, and for the helpful way his Department and officials have taken account of local factors that have led to such an upsurge in feedback. Does he agree that one of the real lessons of the previous discount scheme and its success is that, despite a lot of scepticism at home at a European level, when we engage positively and constructively with the European Commission—and do so punching our weight as the United Kingdom—we are much more likely to deliver the results our constituents need and want?

I wholeheartedly agree—as I usually do—with my right hon. Friend about that. It is a statement of fact that British leadership as a strong and committed member of the European Union is hugely to our country’s benefit. The scheme for communities in remote areas across the United Kingdom shows the benefits we get from positive engagement at European level, and that is the way we will take the proposal forward.

17. Does the right hon. Gentleman agree that those who will benefit from the rural fuel rebate scheme will also benefit from the Chancellor’s freeze on fuel duty? What benefits in pence per litre will that bring to rural people, compared with the Labour party’s plans? (901530)

It is noteworthy that no one from the Labour Benches wanted to comment on cutting fuel duty in remote and rural areas. I wholeheartedly agree with my right hon. Friend, and by the end of this Parliament, motorists will be paying 20p a litre less every time they fill up their tank than they would have paid had Labour’s fuel duty escalator been allowed to go forward.

Infrastructure Investment

Average annual investment in infrastructure has risen to £45 billion per year under this Government, compared with just £41 billion during the last five years of the previous Government. Last week we published an updated national infrastructure plan that set out our long-term plan for meeting those ambitions for the next decade and beyond. That included a pipeline of £375 billion-worth of projects, building on the announcements we made in June.

I thank the Chief Secretary for his answer. Does he agree that investing in strategic roads such as the A34 in my constituency can be key to unlocking vital growth and inward investment in priority sectors? Will he investigate the economic case for urgent investment in the A34?

I agree about the importance of the A34, which is why, through the national pinch-point programme announced in the 2011 autumn statement, we committed to a scheme to improve links between the A34 and the M40. Work on that scheme will start in March, and I am sure the hon. Lady will agree that it will make a significant difference to the economy in her part of the country.

Does the Chief Secretary agree that if we are to compete internationally it is essential that we build our infrastructure more quickly? Over the past decade or so, progress has been glacially slow. In my constituency, the A5-M1 link road was announced 10 years ago, in 2003, and a shovel has yet to hit the ground.

I agree very much with my hon. Friend, and that is why part of our national infrastructure plan last week included further improvements to the planning system for major infrastructure projects. The A5-M1 link road has been prioritised as a key project and I understand that funding was announced last year and work will start next spring.

Is the Chief Secretary aware that figures from the Office for National Statistics show that infrastructure work, since this Government came to power, has dropped by 15%? Given its importance as a motor for growth, why is he now planning to cut it yet again in 2015?

I gave the figures for investment in infrastructure in answer to my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood). We set them out in our national infrastructure plan and, what is more, with public and private investment taken together over the next decade or so, we have a pipeline of £375 billion-worth of projects. This is the first time that this country has had a serious long-term plan for investing in infrastructure. If the hon. Gentleman believes in the long-term health of the British economy, he should support our national infrastructure plan, not criticise it.

Can the Chief Secretary confirm that the cost of High Speed 2 has increased by £10 billion under this Government, and can he tell the House when he will get a grip on the costs of this huge infrastructure project?

I do not recognise those figures. Back in the spending round in June, I set a cap on the costs of HS2 at £42.6 billion. We intend that it will be delivered substantially under that budget. The question for Labour Members is whether they support this project or not. Frankly, given the enormous benefits it will provide for cities across the north, Labour Members should support the scheme, not constantly undermine it.

I welcome the Chancellor’s decision to establish the great eastern main line taskforce, so can my right hon. Friend give an assurance that in this era of record capital spending on infrastructure he will look favourably on investing in measures that the taskforce proposes?

I certainly will. I know that my hon. Friend has campaigned assiduously for this, as has my hon. Friend the Member for Norwich South (Simon Wright) and many other Members in that part of the country, and the ambition that the taskforce has set out is a good one. It is very much in keeping with the direction of travel in our national infrastructure plan, so I look forward with interest to the proposals from the taskforce and to taking them forward in due course.

I refer the Chief Secretary to the graph on page 6 of his new infrastructure plan, which looks like one of those dodgy “Labour can’t win here” graphics on a Lib Dem “Focus” leaflet. The graph apparently shows, as he has boasted this morning, that annual infrastructure investment is up under the coalition, but in the footnote it says that the Treasury had “challenges” putting the graph together and that the data are “not comparable” with the rest of the document. Will he agree to submit the figures to independent scrutiny by the UK Statistics Authority or the Office for Budget Responsibility?

After the shadow Chancellor’s performance last week, “Labour can’t win here” is a good description of the Chamber of the House of Commons.

Any Member of this House can submit statistics to the UK Statistics Authority, but I think that those statistics present an accurate picture of the level of overall infrastructure investment in this country. I welcome the strong interest that the right hon. Gentleman has shown in infrastructure and the commitment that he has made to taking these proposals forward. I wish that other members of his party showed a similarly constructive attitude.

Income Tax

This year 2.4 million low earners have been taken out of income tax since 2010. The number will increase further to 2.7 million next April, once the personal allowance reaches the £10,000 goal that we set in our election manifesto. By next year, the Government’s increases to the personal allowance will have reduced income tax bills by up to £705 a year for 26 million working people in this country.

The policy is important for a fairer society, and it incentivises work. Does my right hon. Friend share my aspiration to raise the tax threshold to £10,500 and achieve equality up to the age of 74, and, in due course, further increase the threshold for all age groups to incentivise both work and savings for lower and middle-income groups?

I very much share my hon. Friend’s ambition for this policy. We should consider a threshold of at least £10,500 in this Parliament, and that will be an objective of my Liberal Democrat party. It would be right for the age-related threshold and the main threshold, once they are aligned, to rise in tandem thereafter.

18. Does the Chief Secretary share the concerns of Citizens Advice that changes to the threshold are more than swamped by the changes to benefits in other areas? (901531)

No, I do not share that analysis. It ignores the fact that increases to the personal allowance, along with many of our reforms to the welfare system, increase substantially the incentives for people to go into work. The private sector has created a net 1.4 million jobs since 2010, so there are more job opportunities to go around too.

The Chancellor last week published evidence showing that his bold cuts to corporation tax more or less paid for themselves because of the extra economic activity they generated. Can a similar piece of work not be done to demonstrate that further cuts in income tax will also pay for themselves in a similar way?

What does the Chief Secretary intend to do to help low-paid workers who are below the tax threshold? They will not gain from a further increase in the tax threshold and have seen previous gains wiped out by the loss of tax credits. How will it help low-paid workers?

I intend to stick to our economic plan, which is leading to economic growth, job creation and a sustainable economic recovery matched by rising productivity. That is the only way to raise living standards and that is what we intend to do.

Does the deputy Chancellor agree that we make a lot of the number of people taken out of tax, but do not say enough on how everybody benefits from the personal allowance increase? It is effectively a cut in income tax.

I am grateful, as always, to my hon. Friend for his question. He is absolutely right: it is a huge cut in income tax. In fact, over the course of this Parliament and before we take any decisions on next year’s Budget, we are already committed to spending £38 billion to reduce the income tax of working people. That is a massive commitment from this Government to cut income tax for the working people of the United Kingdom.

Office for Budget Responsibility

The Chancellor receives representations on a wide range of matters, including on the role of the independent Office for Budget Responsibility.

Labour has called for the OBR charter to be amended so that it can independently audit the manifestos of political parties in the run up to elections. Will the Minister now support that proposal?

We are cautious about that because, as a Labour spokesman in the House of Lords said in 2010:

“the OBR should not become embroiled in political controversy.”

I understand that the Labour party is seeking ways to improve its economic credibility. I suggest that a better, more obvious approach would be to change the shadow Chancellor.

Does my hon. Friend agree that, while we are all indebted to the shadow Chancellor for this idea and so much more, the OBR is working well and should not become a political football or controversial?

My hon. Friend is absolutely right. The OBR is a very good change—one that I am pleased has finally won support across the House—and we do not want to jeopardise its credibility or reputation.

After those answers, we still do not know why the Chancellor is resisting our proposal to allow the OBR to audit all party spending and tax plans ahead of the general election. We know that in private the Chief Secretary agrees that it is a good idea, so what is the Chancellor so afraid of?

In 2010, the noble Lord Eatwell said that

“we on this side agree…to confine the activities of the OBR to consideration of the impact of government policies alone. I am sure it is right that the OBR should not become embroiled in political controversy.”—[Official Report, House of Lords, 8 November 2010; Vol. 722, c. 16-17.]

I think he made a reasonable point.

Pub Companies

The Government recognise the important role that pubs play in communities. To support them, we ended the beer duty escalator and reduced the tax on a pint of beer at Budget 2013. The Department for Business, Innovation and Skills is currently considering responses to its consultation on pub companies and their tenants. This includes the independent economic analysis of the impact on pub numbers and employment levels from London Economics. BIS intends to publish this analysis in due course.

The catastrophic effect of the financial engineering in the leased pubco model has been shown by the fact that one third of Punch and Enterprise pubs were disposed of in four years and that those two companies have more than £4 billion of debt. Considering the huge cost—hundreds of millions of pounds—both to the Treasury in lost tax and to the economy in money going abroad to foreign creditors, will the Treasury pledge today not to block attempts by BIS finally to introduce pubco reform, as was recommended by the Business, Innovation and Skills Committee?

We need to let BIS respond to the consultation—it received 7,000 responses online and more than 1,100 written responses. In the meantime, I am sure that the hon. Gentleman, like me, will welcome the fact that pubs will benefit from the national insurance contributions £2,000 allowance next year and all the moves on business rates announced last week, including the £1,000 discount, which will help pubs.

My right hon. Friend the Member for Wentworth and Dearne (John Healey) and I did a lot of work in the last Government on the pub code, and I commend the hon. Member for Leeds North West (Greg Mulholland) for his work too. Why, after all this time, are the Government still dragging their feet on a matter that adds a great deal to the price of a pint for ordinary customers struggling with the cost of living?

That was a rather churlish response, given that this Government ended the beer duty escalator and cut 1p per pint earlier this year. As I have said, there have been an awful lot of responses to the consultation, and it will take time to work through them, but interestingly the figures show that slightly more free-of-tie pubs are closing than tied pubs—about 4.5% compared with 4.3%—so I suggest the hon. Gentleman waits for the Department’s response.

Social Housing

I pay tribute to my right hon. Friend for his contribution on the housing issue while a Minister in the Department for Communities and Local Government, particularly on helping to ensure that the £4.5 billion affordable homes programme is on track to deliver 170,000 new affordable homes by March 2015—100,000 are completed so far—and to fund an extra 165,000 houses over three years from 2015.

That is a remarkable contrast with Labour’s disgraceful approach, which got rid of those houses. Will my right hon. Friend assure me that highly successful arm’s length management organisations, such as Stockport Homes, which just opened the 4 millionth social home in the housing stock, will have an opportunity, under the Chancellor’s proposals, to build more social housing to meet the urgent need of my constituents?

My hon. Friend is absolutely right, and I congratulate Stockport Homes on its success—I think it was recently voted one of the best landlords in the country. The 4 millionth social home was part of the Government’s commitment to reverse the trend under Labour, where the social housing stock in this country fell by 421,000. Over the term of our housing plan, we will build at least 315,000 new social homes, and he will also have noted that in the autumn statement we announced an increase of £300 million in headroom under the housing revenue account precisely to allow local authorities to build more social homes in this country.

24. The Government have presided over the lowest level of house building since the 1920s—[Interruption.] Is it not clear that we need bold action to boost housing supply, especially social housing, and to deal with housing demand? (901537)

Order. Insofar as the Chief Secretary was having trouble hearing what the hon. Lady was saying, it was because of extreme and frankly discourteous noise from his own Benches, a fact of which I know the Government’s deputy Chief Whip will have taken full note.

Wherever the noise was coming from, I should say that, of course, house building and construction is important in every sector, social and private. That is why, in the autumn statement last week, we announced both the increase in the housing revenue account—something for which my party, the Liberal Democrats, has campaigned for some time—and the extra funding for large sites to unlock another 250,000 new homes in the private sector.

As well as supporting the building of social housing, will my right hon. Friend continue to support the right to buy, given that over 30,000 tenants have benefited from right to buy, including many in Harlow?

The right to buy is an important part of the coalition Government’s housing programme. It has been substantially improved by the commitment to one-for-one replacement for social housing when each house is sold. If that policy had been in place under the previous Government, we would not have seen a net loss of 421,000 social homes throughout their time in office.

Why is it that, over the last 18 months, 11,000 homes have been sold under right to buy, but fewer than 2,000 replacements have been started? That does not seem to me to be one-for-one replacement. How does the Minister explain it?

Order. I said a moment ago that the hon. Member for Rotherham (Sarah Champion) should be heard. The Chief Secretary similarly must be heard.

We have made a commitment to one-for-one replacement. Housing starts, under the planning system, cannot be started instantly, which is surely a lesson that the hon. Gentleman should have learned during his many years in this House. The commitment is there and every one of those homes sold will be replaced by a newly built home.

National Deficit

Last week the Office for Budget Responsibility forecast public sector net borrowing on an underlying basis to be £111 billion, or 7.3 per cent. of GDP in 2013-14, down from 11 per cent. of GDP in 2009-10, the highest deficit in our peacetime history. By 2018-19 the OBR forecasts that the UK will be running a small surplus.

I thank my hon. Friend for that terrific answer. Does he agree that calls to abandon the Government’s long-term economic plan and to borrow and spend more would mean higher taxes and mortgage rates going up for hard-working families in Suffolk Coastal?

When the Chancellor made all his cuts in his emergency Budget, he said that it was because he had to close the deficit by the end of this Parliament. We said that that would be a false economy and that it would not work. In the autumn statement, the Chancellor agreed with us. What do they have to say for themselves now?

I am not sure that the hon. Lady heard the Chancellor correctly if that is what she thinks he said. The reality is that we have to get the deficit down and we have gone through two years of great challenges in the economy. Our argument was that because of those challenges it was more difficult to get the deficit down. Labour argued that the economy could not grow while getting the deficit down. We were right; they were wrong.

The record deficit left by the last Labour Government was, in essence, a tax on the future opportunities of our children and grandchildren, denying them opportunities that our generation was able to have. Will my hon. Friend assure the House that he will not repeat the mistakes of the last Labour Government and that he will prioritise further reductions in the deficit so that our grandchildren can have the same futures that we have enjoyed?

My hon. Friend is absolutely right. It is irresponsible to future generations if we do not take action to reduce the deficit. The approach we had from the party—[Interruption.] The shadow Chancellor has just said that the deficit is going up. He has been saying that all along, and I am afraid he is just plain wrong.

In 2010, the Chancellor of the Exchequer told us that the deficit would be gone by 2015. Why should we believe him this time?

This is coming from the party that has opposed every single measure we have taken to reduce the deficit. If we had taken the approach that the Labour party advocated, we would have borrowed a further £200 billion. That is not responsible or fair on future generations; that would put our economy at risk.

Corporation Tax

11. If he will introduce limits on debt interest deductions used by private equity companies to reduce their corporation tax liabilities. (901524)

The UK tax system, as with those of most other OECD countries and in accordance with international accounting standards, gives reductions for interest as a business expense. The UK already has a variety of defences that protect against excessive interest deductions. These include the worldwide debt cap, transfer pricing rules, anti-arbitrage rules, unallowable purpose rules, distribution rules and withholding tax on interest under certain circumstances.

I thank the Minister for that extremely interesting answer. We all use Boots, but is he aware that Alliance Boots, which is now equity-owned, was funded by £9 billion of loans, which allowed it to write off £1 billion of corporation tax? There is now a complaint by War on Want and Change to Win at the OECD about the company breaking the OECD’s rules by engaging in self-dealing, which allowed the owner of the new company, Stefano Pessina, to make £400 million in profit. What will the Government do about that fraud, as well as the abuse of the taxpayer’s money?

I am not going to comment on individual cases, but as I have said, there are a number of protections in the UK system to stop abuse in this area. We have strengthened the capacity of Her Majesty’s Revenue and Customs, and it is also worth pointing out that the UK has led the way in the OECD’s work on base erosion and profit shifting, which is also looking at interest deductibility.

The previous Government left a system that encourages offshore ownership of UK business, with highly geared structures and foreign interest rates as high as 16%. Many countries limit allowable foreign interest deductions; will the UK look at doing the same?

Of course, we keep all these matters under review, but as I mentioned a moment ago, there are a number of protections in the UK tax system. However, we continue to monitor this area.

Financial Services

Following the failure of the previous Government’s tripartite system, this Government have created a new architecture for financial regulation. The Bank of England has responsibility for financial stability, and two new regulators—the Prudential Regulation Authority and the Financial Conduct Authority—have been set up with clear responsibilities for prudential and conduct regulation.

Good regulation can only enhance the vital contribution that financial services make to the employment, tax revenues and balance of payments of our country, but constituents of mine find that there is still insufficient protection for so-called non-sophisticated investors when they are sold products without sufficient explanation. What is the Financial Secretary doing to improve protection for customers and to ensure that the Financial Ombudsman Service is their champion?

My hon. Friend is right to highlight the contribution of the financial sector. Last year it paid over £60 billion in taxes and employs over 1 million people throughout the country. Where consumer detriment occurs, the Financial Ombudsman Service provides a valuable service, providing swift resolution to complaints, but of course we must stop consumer resolution occurring in the first place. That is why we have created a new regulator—the FCA, a regulator with real teeth.

23. Will the Financial Secretary commit to looking more at financial services on the high street—I speak of high-cost credit—and to looking at more than just imposing a cap, including such business practices as no affordability checks, encouraging roll-overs and advertising aimed at the most vulnerable in our communities? (901536)

I agree with the hon. Gentleman: he is right to raise this important issue. I am sure that, like me, he will welcome the action we have already taken to transfer regulation from the Office of Fair Trading to the FCA and the consultation the FCA is holding on new rules, including on continuous payment authorities, roll-overs, advertising and strict affordability checks.

What view should be taken of banks with a record of misbehaviour that are now promising their shareholders that they are considering moving their domicile away from Britain because they fear that the regulatory proposals by Vickers will limit their freedom to misbehave in the future?

The action we have taken on the back of the report issued by the Independent Commission on Banking is the right one, and I think it will be very hard indeed for the banks to try to avoid the new regulations and the new structure of banking that we are bringing in.

The Minister will be aware of the scandalous behaviour highlighted in the Tomlinson report, in which RBS was alleged to have bankrupted customers in order to seize their assets. What action does he intend to take, first, to obtain redress for those affected and, secondly, to regulate the banks so that this does not happen again? Will he assure us that any discussions on this matter will include Ulster bank, which it has been alleged was at the head of queue when it comes to such behaviour?

The hon. Gentleman raises an important issue. He will know that the Tomlinson report is independent—it is not a Government report—but the Government and the FCA are taking it very seriously. The report raises some very serious allegations. The FCA has already committed to look carefully into them and if they are proven, it will take appropriate action.

With the Government now in chaos over the banking Bill, with one U-turn following another, does the Minister agree that Labour was right all along to insist on a tougher licensing regime for senior bankers? Why were the Government so keen to resist Labour’s amendments, only to be defeated?

I have to say that I do not recognise the description that the hon. Lady has attached to the banking Bill. When she refers to Labour being right all along on banking regulation, perhaps she is referring to the changes that Labour made 13 years ago, which my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), then shadow Chancellor, described at the time as “a field day” for “spivs and crooks”.

Bank Bonuses

In September, the Government launched a legal challenge to specific remuneration rules under the EU capital requirements directive IV. These rules, rushed through without any assessment of their impact, will undermine the significant progress we have made to align remuneration with risk by pushing up fixed remuneration rather than pushing it down. In our view, regulating remuneration in this way goes beyond what is permitted under the EU treaty.

I am grateful to the Minister for his answer, but does he not agree that rather than using taxpayers’ money to protect the incomes of investment bankers earning more than £1 million per annum, that money would be better spent on enforcing our minimum wage legislation?

I am not going to take any lectures from the Labour party on bankers’ bonuses. Under Labour, bankers’ bonuses went up fivefold and peaked at £11.5 billion in 2007-08. At the very same time, the Labour Government were using taxpayers’ money to carry out the world’s biggest banking bail-out. Last year, the bonuses were down 85%.

Given what Robert Peston has described as the “stupendous mismanagement” of the Co-operative bank, which has exposed creditors to huge losses, does the Financial Secretary agree that no bonuses should be paid at that bank, and that anybody who has received bonuses or benefits from it should consider paying them back?

I agree with my hon. Friend. I understand that the Co-op bank has made donations to at least three members of the shadow Treasury team. It has been reported that the shadow Chancellor used his £50,000 donation from the Co-op group last year to hire a speaker—

Order. That has absolutely nothing to do with the Minister’s responsibility for a proposed cap on bank bonuses. I think he probably knew that; if he did not, he certainly does now.

Wage Trends

Last year, UK take-home pay was the highest in the G7 and the third highest in the OECD. The best way of raising living standards is to deal with the economic crisis so that families can find work in a growing economy.

The United Kingdom now has the highest rate of inflation in the European Union, and has suffered the second largest fall in wages in the G20 since the Government took office. In my constituency, women’s gross average weekly wages have fallen by £12.30 a week since May 2010. Is this a deliberate attack on wages by the Government, or is the Chancellor simply incompetent?

I find it unbelievable that the hon. Gentleman really has the gall to stand up and ask that question. I wonder whether he agrees with his right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne), who said:

“From 2004 onwards, beneath the miraculous arc of rising average incomes, families on ‘median incomes’—millions of workers grafting as small employers, sales assistants, cashiers, construction and factory workers—were feeling the strain...people were working just as hard as ever—but were not getting on”.

That was happening under a Labour Government.

Does the Minister agree that the real achievement of this Government has been the improvement in education, skills and the provision of engineers—among others—so that we can raise wages as a result of real growth in the economy?

I entirely agree with the hon. Gentleman. As the Office for Budget Responsibility has said,

“Productivity growth is the only sustainable source of real income growth in the long term”.

If we do not have a skilled work force, employers will not come here and therefore will not be employing people, which means that we will not experience the increase in productivity that would feed through into higher wages.

22. I am bitterly disappointed by the Chief Secretary’s response to my hon. Friend the Member for Edinburgh East (Sheila Gilmore). He basically said that people on low wages were being written off. [Interruption.] If the Chief Secretary checks Hansard tomorrow, he will see that. In my area, wages are 24% lower than the national average. These people do not qualify for the— (901535)

My apologies, Mr Speaker. The question to the Minister is this: what additional support can her Government give people in low-wage economy areas?

I do not recognise the hon. Gentleman’s description of the Chief Secretary, who would never say such a thing. Coming from a member of the party that abolished the 10p tax rate, which most benefited low-paid workers, that is a real nerve. I repeat that people on the minimum wage have already seen their income tax halved under this Government. With our policies of free school meals, fuel duty and council tax freezes, and increases in child care allowance and the personal allowance threshold, we are doing all that we can to help people on low incomes. However, the most important thing is to get the economy growing so that wages can rise.

Youth Employment

The number of young people receiving jobseeker’s allowance is 93,000 lower than in May 2010, and youth unemployment is falling, although the Government recognise that more can be done. As my right hon. Friend the Chancellor announced last week, we are abolishing employers national insurance contributions for those aged under 21, funding jobcentres to help 16 and 17-year-olds who are not at school to find work with training, and piloting a new mandatory skills scheme for jobseekers aged between 18 and 21 who do not have qualifications in basic maths and English.

Is my hon. Friend aware that in Warwick the number of young people who are not in education, employment or training has almost halved in the last three years, from 4.6% in 2010 to 2.8% in 2013? That is a move in the right direction, but what other steps are being taken to reduce the number of NEETs and increase the number of young people in work and training?

I congratulate my hon. Friend. I am sure that the fall is a result of much work in his constituency, doubtless led by him. He is a doughty champion of his constituents.

The Government are also investing in apprenticeships. Over half a million more are being created, including 20,000 more high-level apprenticeships, as was announced last week. The Youth Contract is helping up to half a million young people to take up employment and education opportunities, and in the three months since September the number of 18 to 24-year-olds in employment rose by 46,000. We know that there is more to be done, but things are moving in the right direction.

Topical Questions

The Chief Secretary seems to be spending most of his time feathering his own nest in his constituency, but can he take some time out from that important work to confirm that energy bills will go up by more than £50 and that energy companies, who are making fat profits, will not pay one penny to reduce bills?

I can confirm to the House that the action the Government are taking will ensure there is £50 off people’s bills this year. That is as a result of serious-minded work to ensure we reduce the pressure the Government are putting on people’s bills. That includes taking the warm homes discount, which helps 2 million low-income people in this country, on to the Government’s balance sheet. That is the right option, compared with the complete con that unfortunately is still being peddled by the Opposition.

T3. Will the Financial Secretary provide any more detail on last week’s announcement that the Government will later this month provide payment for people who bought pre-September 1992 with-profits annuities from Equitable Life? (901540)

At Budget 2013 the Chancellor announced that the Government would make ex gratia payment to Equitable Life with-profits annuitants who were excluded from the Equitable Life payment scheme because their annuity began before September ’92. Thanks to the legislation this Government have brought forward, we are now ready to make those payments. Today, I can confirm that over 9,000 people will receive lump-sum payments of £5,000 each next week, before Christmas, and a further 450 in receipt of pension credit will receive an additional £5,000 each.

On Thursday the Chancellor claimed in this House that living standards are rising, on Friday the Institute for Fiscal Studies said that living standards are falling, so who is right?

First, may I say what a great pleasure it is for those on this side of the House to see the shadow Chancellor in his place, and may I join him in condemning the unattributable briefing against him from the people behind him—something that never happened in his day?

The whole reason millions of Britons—[Interruption.]

Order. At the moment I cannot hear the Chief Secretary’s reply, but I intend to do so, however long it takes; it is very straightforward.

I would like you to be able to hear it as well, Mr Speaker.

The whole reason millions of Britons are under financial pressure is that Labour’s economic mess cost every household in this country £3,000. Because our plan is working, we can cut income tax, we can cut fuel duty, we can put the triple-lock on pensions, we can freeze council tax and we can take money off people’s energy bills. The only way to raise people’s living standards in this country is to have a sustainable economic recovery.

The right hon. Gentleman is as bad as the Chancellor. Why can he not admit the truth: this Government’s economic policy is not working for working people? That is the truth. This is what the IFS said after the autumn statement—[Interruption.] Members on the Government Benches do not want to hear it. People are worse off under the Tories; that is the truth. Here is what the IFS said:

“real median household incomes will be substantially lower in 2015-16 than in 2009-10.”

And where is the Chancellor? He is in Brussels, where the Government are taking legal action to stop a cap on bank bonuses. How out of touch can they get? Let me ask the Chief Secretary: are the Liberal Democrats really right behind the Conservatives on this one, too—on stopping the bank bonus cap?

I know that the shadow Chancellor has made one change since last week. He has appointed a new special adviser on hand gestures: Greg Dyke. [Interruption.] That is the gesture the shadow Chancellor’s colleagues are making every time they hear him in this House of Commons. The fact is that the Liberal Democrats, as part of this coalition Government, are delivering a sustainable economic recovery. We are part of a Government who are delivering £700 for every single working person in this country and who are delivering a proactive approach in the European Union, including by ensuring that the integrity of the European treaties is maintained, and that is what this legal action is all about.

T4. I welcome the Chief Secretary to the Treasury’s ambitious plans for capital investment for a stronger economy that were set out last week. He will have heard me urging the Prime Minister to make up for the previous Government’s failure to rebuild Wiltshire college’s Chippenham campus. Could my right hon. Friend see his way clear to making that investment, so as to equip our young people with the skills that will enable them to get on in life? (901541)

I know how important that project is for the college that my hon. Friend mentions. I can confirm that the Skills Funding Agency has told the college that it is prepared to make grant funding available for the project, subject to some additional assurances being received. Those assurances are being sought this week, and the agency hopes to respond to the college by the end of this week.

T2. Housing costs represent one of the biggest pressures on the cost of living, and a new study by Oxford Economics suggests that, by 2020, house prices will have risen by 35% and rents by 39%. What are the Government going to do about that? (901539)

I know that the hon. Lady takes a close interest in these matters, and she will have seen the Office for Budget Responsibility’s forecasts, which suggest that even by the end of the forecast period, house prices in this country will be below their level at the peak of the financial crisis in real terms. The action we are taking includes the large-scale investment in affordable housing that I described earlier, which will help people with those problems.

T6. Will the Minister update the House on the support that the Government are giving to small businesses? (901543)

We are committed to ensuring that small and medium-sized enterprises have the access to finance that they need, and we were pleased with the recent announcement by the Bank of England and the Treasury on refocusing the funding for lending scheme on to SMEs from next year. My right hon. Friend will also know that, in the autumn statement, we announced further improvements in the lending appeals process and a consultation on requiring banks to share more information on SME lending.

T5. What assessment has the Chief Secretary to the Treasury made of the relationship between consistently falling real wages and the rapid growth of zero-hours contracts? (901542)

As the hon. Gentleman knows, the Secretary of State for Business, Innovation and Skills has been acting on zero-hours contracts; it is a subject that is currently under review in his Department. I have made a strong assessment of the connection between sustainable economic growth of the kind that this Government are delivering and the availability of jobs in the private sector, 1.4 million of which have been created since 2010.

T7. Given that the autumn statement contained further encouragement for companies to get involved in shale gas production through lower taxes, is there any chance of the Government giving further encouragement to local communities to accept the shale gas industry by offering somewhat more than the 1% that is now on the table? (901544)

My hon. Friend makes an important point. The shale gas industry has the potential to bring jobs and growth to communities across the country. In addition, the industry will give £100,000 to communities in which fracking is taking place, as well as 1% of all production revenues. However, we will of course listen to any suggestions from my hon. Friend about how that regime could be improved.

Does the Chief Secretary to the Treasury accept that, since the financial crash, productivity in the UK has fallen 5% but has gone up 8% in the United States, and that lending to business is down 13% and lending to mortgages is at 2008 levels? What is he doing about this? It is too little, too late.

The hon. Gentleman is right in his description of the fall in productivity in this country. That is related to the fact that this country was hit the hardest of almost any country in the world by the financial crisis, precisely because of the unpreparedness of his party. On the whole, however, the fact that a significant number of jobs have been created in our economy in recent years, even at the cost of falling productivity, represents a preferable balance from a welfare point of view.

T8. Businesses across the country will welcome the news that rate rises are to be capped at 2% and that small businesses will receive a £1,000 discount on their rate bills. Independent retailers in my market towns of Stratford, Henley-in-Arden, Shipston-on-Stour and Studley have been lobbying me on that. How many businesses nationwide will benefit from that, and how much will they save in total? (901545)

We estimate that about 300,000 shops, pubs and restaurants in England will benefit from the £1,000 business rates discount, and that in aggregate the measures announced in the autumn statement will save businesses around £1 billion in business rates, although the amounts will of course vary from business to business.

The Chief Secretary might like to reflect on the very poor answer he gave my right hon. Friend the Member for Wentworth and Dearne (John Healey) earlier, because I have in front of me Office for National Statistics Table 1A, which clearly shows that infrastructure construction output to September 2013 has fallen by 15%. What went wrong, or is he seriously disagreeing with the Office for National Statistics?

What this—[Interruption.] The hon. Member for Islwyn (Chris Evans) should pipe down. What this Government recognise is that infrastructure relies on both public and private sector investment. The Labour party seems to have forgotten that the private sector is involved in delivering infrastructure. Total infrastructure investment in this country is higher in this Parliament than it was in the last.

T9. Individuals, households and businesses in my constituency must live within their means. Does the Chief Secretary agree that that is exactly what Governments need to do and that one of the reasons for our current budget deficit is the fact that the previous Government did not run a surplus in the good years? (901546)

I wholeheartedly agree with my hon. Friend that Governments must live within their means. It is because the previous Labour Government did not do so that we have had to make so many difficult decisions to get this country back on the right track, which is what we are doing.

Her Majesty’s Exchequer and the Republic of Ireland’s Revenue services lose hundreds of millions of pounds every year as a result of fuel fraud. When will the Government, in partnership with the Republic of Ireland, implement a new fuel marker to frustrate the criminals engaged in that theft?

The hon. Gentleman will know that we have been working hard on that. I recently visited Northern Ireland to see for myself the impact that a new fuel marker would have on the illicit trade. The rebate of fuel marker group has completed its analysis and made its recommendations, and the respective revenue authorities expect to make an announcement shortly. I shall ensure that he is kept up to date.

T10. Trojans sports club in my constituency is a brilliant example of a multi-sports club that encourages participation in a wide range of sports. What steps is my hon. Friend taking to help multi-sports clubs, which sometimes feel disadvantaged compared with single-sports clubs? (901547)

The Government want to support all sports clubs and encourage as many people as possible to participate in grass-roots sports, which is why we recently announced changes to the community amateur sports clubs regime that we hope will benefit up to 40,000 sports clubs in this country. I hope that the club in my hon. Friend’s constituency will take advantage of that. One of the best things we have done is extend corporate gift aid so that local businesses that donate to sports clubs will be able to offset their donations against their corporation tax bill, which I hope will make a real difference to their income.

I ask the Chief Secretary to ponder the fact that when I talk with my constituents, the thing they always talk about first is, “Housing, housing, housing.” When are we going to give young people, and increasingly older people, the chance that many of us in this House have had to get their own homes, because we are not building enough houses? He knows that is true—get on with it.

In many ways I agree with the hon. Gentleman. My constituents say exactly the same thing to me. That is why we are reforming the planning system to enable housing to be built more quickly, why we are increasing substantially the number of social homes in this country, compared with his party’s lamentable record, and why we have introduced the Help to Buy scheme to help people who cannot afford a large deposit to get on the housing ladder, all of which is leading to new houses being built in this country.

Narrow measures of money show that there has been no significant growth in the money supply. However, broader measures, such as the Divisia money measure, show that there has been a significant and sharp increase since late 2011. Does that concern the Treasury, and can my hon. Friend assure the House that the monetary authorities are not cooking up yet another credit-induced boom?

My hon. Friend is well versed in these matters and makes a significant contribution to the debate on monetary policy. He will know, therefore, that monetary policy is determined by the independent Bank of England, but I will ensure that Governor Carney is made aware of his concerns.

The World Bank and the independent TEEB—the Economics of Ecosystems and Biodiversity—report both state that 7% of global GDP could be lost by the devaluation of natural capital by 2050. Will the Government investigate what percentage of UK GDP is being lost through the depletion of natural capital?

The hon. Gentleman makes an incredibly important point. We in the Treasury and this Government have been examining the issue of natural capital, which we have taken forward in a way that previous Governments have not. I will certainly get the Minister responsible to reply in more detail on the specific point that the hon. Gentleman raises, because it is very important.

In the autumn statement, in addition to very welcome changes to tax and spending in relation to housing, the Government announced a proposal to look at local authorities’ opportunities to develop much more public sector housing. How soon will that initiative see the light of day?

I am grateful to my right hon. Friend, who has been a doughty campaigner on these issues for many years. I am sure that he welcomes the increase in housing revenue account headroom for which local authorities will be able to bid to build more houses. We have also undertaken to carry out a wider review of this issue, and I will set out the terms and the process for that in the coming weeks.

Universal Credit

(Urgent Question): To ask the Secretary of State for Work and Pensions if he will make a statement on universal credit.

This is a major and challenging reform which will transform the welfare state in Britain for the better, ultimately accounting for some £70 billion of benefit spending each year, with 3 million people better off.

Rightly for a programme of this scale, the Government’s priority has been, and continues to be, its safe and secure delivery. This has been demonstrated throughout our approach to date, which started with the successful launch of the pathfinder in April 2013 and has continued with the controlled expansion of universal credit, starting as planned in October 2013 and running through to spring 2014. What is more, we are already pushing ahead with the cultural and business change required as part of universal credit. We are retraining 25,000 Jobcentre Plus advisers while implementing digital jobcentres and rolling out the new claimant commitment, which is now on track to be in place in half of all jobcentres by the end of the year, and across the country by the spring.

Yesterday I announced and discussed at length with the Work and Pensions Committee our plans for the next stage of implementing universal credit, following my Department’s work over recent months with the Government Digital Service to assess delivery options. That work has explored the use of the latest digital technologies and assessed the utility of the work we have done to date—[Interruption.]

Order. The Secretary of State is well able to make himself heard, and he is doing so, but it is frankly discourteous, when he is giving a statement to the House, for it to be peppered with constant heckling. Members will have the chance to question the right hon. Gentleman, but please do him the courtesy of hearing what he has to say.

The conclusions of this work were set out yesterday. First, as part of the wider transformation in developing digital services, the Department will further develop the work started by the GDS to test and implement an enhanced digital service. This will be capable of delivering the full scope of universal credit and make provision for all claimant types.

Meanwhile, we will expand our current service and develop functionality so that from next summer we progressively start to take claims for universal credit from couples and, in the autumn, from families. Once safely tested in the 10 live universal credit areas, we will expand the roll-out to cover the north-west of England. This will enable us to learn from the live running of universal credit at scale and for more claimant types, including the more vulnerable and the more complex, while extending to more people the positive benefits of universal credit.

It is important to note that the information that we are getting back from the pathfinder tells that 90%—I stress, 90%—of people are claiming universal credit online and that 78% are confident about their ability to budget with monthly payments. It also tells us— [Interruption.] I know that Labour Members do not want to hear about this, because they have been wrong on welfare reform from day one. The majority of people who are on the programme tell us that it pays to work, with 65% to 70% reporting that universal credit offers better work incentives than jobseeker’s allowance and is less complex—upheld by the 65% who agreed that it was easier to understand their obligations as a result.

As we progress with the future delivery of this flagship programme, we will continue the same careful approach—test, learn, implement—as it is rolled out through the regions. On this basis—[Interruption.] Actually, I am going to pick this point up. The shadow Chancellor is sitting on the Opposition Front Bench. I will tell you, Mr Speaker, what we will not do: we will not take any lessons from the party that rolled out tax credits early. It rushed the delivery of tax credits, which cost £5 billion immediately and 400,000 people suffered directly as a result.

Once we have closed down the new claims, we will test, learn and implement—unlike Labour when it rolled out its information technology programmes. The new claims to the legacy benefits that universal credit replaced have been closed down, with the vast majority of the remaining legacy case load moving to universal credit during 2016 and into 2017. Final decisions on these elements of the programme will be informed by the development of the enhanced digital solution.

On 5 September, the Secretary of State told the House:

“We will deliver this in time and in budget”.—[Official Report, 5 September 2013; Vol. 567, c. 472.]

On 14 October, he said:

“Universal credit will roll out very well and it will be on time and within budget.”—[Official Report, 14 October 2013; Vol. 568, c. 429.]

And just last month, on 18 November, he said that

“universal credit will roll out and deliver exactly as we said it would.”—[Official Report, 18 November 2013; Vol. 570, c. 947.]

The Secretary of State must answer these questions. How on earth can this be on time when in November 2011 he said that

“all new applications for existing benefits and credits will be entirely phased out by April 2014”,

but we now learn that this milestone will be reached only in 2016? Will the Secretary of State confirm that this is a delay of two years? Will he also confirm that, even by 2017, 700,000 people will not be on universal credit?

How can the Secretary of State say that universal credit will be on budget when, even by his own admission, £40.1 million is being written off on IT costs? What budget heading was that under? The Secretary of State also revealed yesterday that another £90 million will be written off by 2018. Does this mean an additional IT system is having to be built?

The reset exercise began in February. On 18 November, the Secretary of State still claimed that there would be no delay to universal credit. At what point did he learn that there would be a delay of two years?

The underlying problem is surely that the Secretary of State has not resolved key policy decisions before spending hundreds of millions of pounds of taxpayers’ money on an IT system.

One of the issues that has a fundamental impact on whether people are better off in work is free school meals; so which recipients of universal credit will get free school meals—some, none or all?

The Secretary of State is in denial. Doubtless, he will deny that he is in denial in a moment’s time. But we all know that until he fesses up, no one will have any confidence in his management of this programme. It is no surprise that a source close to the Chancellor says:

“There are some ministers who improve in office and others, like IDS, who show that they are just not up to it”.

Let me deal with a couple of the points raised by the hon. Lady. I said all along, and I repeat, that this programme essentially is going to be on time. By 2017, some 6.5 million people will be on the programme, receiving the benefits.

Let me deal with the hon. Lady’s comments about what is written down and what is written off. For somebody who was supposed to have been working for the Bank at one point, she does not seem to know the difference between equipment of no use that is being written off and equipment—this is the case in any company over a period of time—that is written down each year. That is exactly right. If she drives a motor car, I wonder whether she has noticed that, over a period of years, its value actually depreciates. Perhaps she has not; perhaps she is still trying to sell the car for the same value she bought it for.

The reality is very simple. Let us take the legacy systems right now. The legacy computer systems that are working were written down years ago, but they are still delivering value to the Government by delivering benefits. Maybe the hon. Lady needs a teach-in about the difference between written-off equipment and written-down equipment.

I want to deal with one other point that is quite clear and is the reality. We have been clear—[Interruption.]

Order. Mr Irranca-Davies, you have a beautiful voice, with very mellifluous tones. One disadvantage for you is that when it is loud, I can very easily hear it—some miles off, I think. We need to hear a bit less of it for the time being.

We do not take any lessons from the Opposition about computer failure: the tax credit system crashed, the health system crashed and they lost billions and billions of pounds while the shadow Chancellor was at the right hand of the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown).

I might also say that although the Opposition have asked an urgent question on universal credit today, the truth is that they are themselves in denial about the legacy of welfare failure they left us. Welfare spending increased by 60% in real terms under the previous Government—£3,000 a year for every household in Britain. More than £170 billion was spent on tax credits alone. There were 5 million on out-of-work benefits, and nearly a quarter of working-age people were economically inactive.

This Government have already saved £11 billion on the welfare bill, £48 billion over this Parliament. The Office for Budget Responsibility has confirmed that welfare bills will fall in real terms to below the level at which we received them. Employment is up by more than 1 million. More households are now in work than ever before, with the lowest proportion of children living in workless households since records began. Child poverty is at its lowest level since the 1990s, and pensioner poverty is at its lowest for almost 30 years.

Is not a phased roll-out of the new universal credit system far better than incurring the £2.8 billion of waste through fraud, error and overpayment incurred by the previous Government in their tax credit system?

My hon. Friend is absolutely right. The Opposition want to talk about universal credit, but the reality is that, unlike tax credits, it will roll out without damaging a single person, and it will also deliver massive benefits, under control by our test, learn and implement approach. The waste that we inherited was the waste of people who did not listen, rushed programmes and implemented them badly.

The Secretary of State promised that universal credit would be digital by default—it isn’t; he promised that all new claims would be on universal credit by May 2014—they won’t; and he then promised that 10 areas would be assessing the simplest claims by the end of October—they aren’t; so why should anyone believe him when he says that the delivery of universal credit is now on track?

The proof of this will be as we roll out the programme. I say to the Chair of the Select Committee that we intervened early when there were problems. We did not let this programme roll out so that anybody was damaged, unlike the Government whom she served, who rushed IT programmes into service, damaged vast numbers of people and wasted a huge amount of money. I wonder whether the Chair of the Work and Pensions Committee ever asked the shadow Chancellor or the previous Prime Minister why they did that.

Will the Secretary of State confirm that he has seen the Public Accounts Committee report of 7 November and will take notice of its recommendations, which should be helpful in executing this vital project?

I can tell my hon. Friend that all the recommendations have already been implemented. They were drawn from our own reports internally—both the red team report that I instigated and the PricewaterhouseCoopers report—and all these changes have been made. This roll-out programme bears complete authority on the basis of that.

Yesterday, the Secretary of State claimed that 700,000 people would now not be expected to join universal credit by 2017 because he was having a rethink and wanted to introduce things more slowly for vulnerable claimants. However, on 18 November—three weeks ago—he said to my hon. Friend the Member for Aberdeen South (Dame Anne Begg):

“As I said to the hon. Lady when I appeared in front of her Committee in July, we have been very clear that we would roll out universal credit on the plan and programme already set out.”—[Official Report, 18 November 2013; Vol. 570, c. 946.]

Which is it?

The funny thing about the Opposition is that they do not know what they want. They say that they support universal credit—[Interruption.]

Order. I know that there are strong views on this matter, but the House must calm down. Courtesy is necessary on both sides. Let us hear the Secretary of State.

Do the Opposition want us to rush out universal credit, as they did with tax credits, or do they want us to take our time to implement it correctly? The reason we are not moving the support group and the work-related activity group on from employment and support allowance is that they are very vulnerable. We want to take our time so that those who are on those benefits are brought on to universal credit carefully. It seems that the hon. Lady’s party wants to rush those people on as fast as possible, rather like what it did with tax credits.

Order. The hon. Gentleman is asking a question. Mr Leslie, you are chuntering extremely noisily from a sedentary position. You might be purporting to help the Secretary of State, but I do not think that he feels any need of your help and, at this stage, neither do I.

Is it not the case that under the last Government, 1.4 million people spent a decade out of work on benefits and 2.6 million people spent five years out of work on benefits? Is it not also the case that universal credit will get people out of dependency and back into work, that it will eliminate the poverty trap, and that 90% of people on benefits will be on universal credit by the end of 2016?

My hon. Friend is absolutely right. Universal credit is worth doing properly because of the benefits it brings to so many people. Just in case he does not remember, although the Opposition say that they support it, they voted against it. We will take no lessons from them because of the chaos, mess and cost that they left for us in the welfare system. We are having to pick up the details of that and put them right. We are doing that every day.

The Secretary of State says that he has read and implemented the report of the Public Accounts Committee, which confirmed that the Department

“only reported good news and denied the problems”.

Unfortunately, we have seen no change today. A specific recommendation of the report was that the Government should urgently carry out an impairment review into the value of the IT assets that had been written down as a result of ineffectualness. As he has confirmed today that the recommendations have all been implemented, will he tell us what that value was according to his own impairment review?

The Department has carried out probably the most exhaustive impairment review. It is now being signed off by the National Audit Office. I gave the figures to the Work and Pensions Committee yesterday. The total write-off figure was £40.1 million. We should bear it in mind that Opposition Front Benchers have been running around saying that hundreds and hundreds of millions of pounds will be written off. They will not be. That will be in the published accounts today.

May I remind the Secretary of State that when he came to office, it was possible for claimants, on returning to work, to lose 96p of every £1 that they earned? The prize for his universal credit system is to make work pay. It is not only Government Members who will support him for sticking with it, but those who are seeking to return to work, because it will help to make work pay.

In more than 10 years in government, the last lot never did a thing to improve the quality of life for those who were seeking work. So far, we have more people in work and we have systems of change that will improve the quality of life of those who are disabled and those who are on sickness benefit. Universal credit will complete that process. It is no surprise to me that the Opposition have nothing to say on welfare reform, but want to nit-pick away about this programme.

The implementation of universal credit has been a complete fiasco right from the start. Given the delays that there have already been and the clear indication from the Scottish Government that they would halt the roll-out in Scotland in the event of a yes vote in next year’s referendum, will the Secretary of State suspend the roll-out of universal credit to allow the people of Scotland to deliver their verdict?

I have heard what the Scottish National party has said. All I would say is that it is in complete denial about the cost of welfare and pensions. The reality is that it will not be able to afford the pensions bill with Scotland’s demographic make-up, and welfare alone will cost it a large amount of money. I do not know where it thinks it will get the money from if Scotland breaks free from the United Kingdom.

The people of Somerset think that it is the mark of a statesman to take a deliberative and intelligent approach to these problems, and not to rush the process in a typical socialist fashion. I wonder whether my right hon. Friend agrees with me that his critics have forgotten to read their Bible and do not remember the line on motes and beams. Although there may be the tiniest specks in his proposals, there was a veritable forest in their IT suggestions.

I always do my level best to agree with my hon. Friend. He talks common sense whenever he rises to his feet and today is no different.

How confident is the Secretary of State that the system will be able to deal with people who live in such unusual circumstances as being in a couple or having children?

The system will roll out for all the complicated groups right the way through until we have 6.5 million on it. There were some reports in today’s papers that were wrong. The pathfinder rolled out to singles to begin with. Next it goes on to couples, then to couples with children, then we bring in the more complicated groups and then we bring in the tax credit group. I simply say to the hon. Lady that she needs to understand the difference between an approach that rolls something out at every stage and learns from it, and the approach that Labour took on tax credits, which was to rush them in and see them fail.

Does the Secretary of State agree that any short-term costs and delays in simplifying the welfare system are completely and utterly outweighed by the long-term benefits for taxpayers and claimants?

The Work and Pensions Committee, right from the beginning of the introduction of universal credit, has warned the Secretary of State that this is one of the most complex systems to be introduced. Consistently, the Secretary of State has reassured the Select Committee and this House that everything is fine. We now know that he has failed to meet every single one of the targets that he assured us he would meet. The issue is not the people on these Benches or on the Benches opposite; the issue is our constituents who will be dependent on universal credit. The Secretary of State should stand at the Dispatch Box, apologise for the anxiety in which he has placed our constituents and try to give a straight answer to a very simple question, but that answer must be verifiable. When will universal credit be introduced for all relevant claimants?

To deal with the first part of what the hon. Lady said, the reason we are proceeding like this—testing, learning and then implementing—is to ensure that nobody so far has been damaged at all by the changes brought in under universal credit. I repeat again that I learned my lesson from the last Government, who rolled out tax credits in a rush, all at once. The system crashed, £5 billion was lost and 400,000 people were damaged. The then Prime Minister, Mr Blair, had to go out and apologise publicly for the mess they had got in. I am saying today that we will roll this out and 6.5 million people will be on the system by 2017.

The Secretary of State has the wholehearted support of those on the Government Benches because his reforms are the most beneficial reforms to the welfare system since its inception. The Labour party in government, across the whole of their Departments in 13 years, blew £25 billion on failed IT systems. Does not history therefore suggest that the best way to proceed with IT projects of the important kind that my right hon. Friend is engaged with is to do it patiently and gradually, and not to rush our fences?

My hon. Friend is right. The way we have chosen to do this is to ensure that we test, learn and implement as we go along. This is exactly how we are rolling out the other programmes of change on disability living allowance and the personal independence payment, on the Child Maintenance and Enforcement Commission, and on the cap, all of which are now bringing benefits to many people throughout the country. The previous Government wasted £13 billion on the NHS computer system and £500 million on the Child Support Agency mess, including £120 million on the rescue scheme which was later scrapped. The benefits processing replacement programme, which some of those on the Opposition Benches were responsible for, was axed after £140 million of waste.

Does the Secretary of State think he has the confidence of Treasury Ministers, given that as my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Secretary of State, told him, a Minister close to the Chancellor told The Times this morning:

“There are some ministers who improve in office”,

and there are those, like the Secretary of State,

“who show they are just not up to it”?

[Interruption.] No answer was given. How can a project of this scale be taken forward without the Secretary of State having the confidence of the Treasury?

Such programmes are highly complex, involving many hundreds, if not thousands, of man-years of work—probably more complex than delivering the Olympics. Given that the Opposition apparently support the programme’s objectives, does the Secretary of State understand why they have spent the past three quarters of an hour undermining the project team?

My hon. Friend again raises the point that the Opposition talk a lot about supporting universal credit but they voted against it. They have nothing to say about welfare reform. That is the problem. Up till now, they have failed on welfare reform. They are known as the welfare party because they have opposed everything that we have brought in. We will save more than £40 billion over this Parliament. They have opposed everything, which would cost them an extra £40 billion if they were to get into power.

Given the shambles that exists here in Britain in relation to the implementation of universal credit, why are the Government so intent on imposing this unfair welfare system in Northern Ireland, where levels of disadvantage are higher, the cost of living is higher, and jobs, including new jobs, are particularly scarce?

Welfare reform would benefit Northern Ireland as much as it is benefiting the UK. I suggest that the hon. Lady and her colleagues get on and implement it.

Will my right hon. Friend confirm to the House that universal credit will save £100 million in 2014-15 and £200 million in 2015-16? Will he also confirm that universal credit is currently handling complicated cases?

My hon. Friend will see from the published accounts that the National Audit Office agrees that the proposed roll-out, which will go ahead, will in every single year save money, ultimately to the Exchequer. The point that is being made is that the net value of the asset of £152 million that we have will deliver huge benefits to the public and huge savings to the Government.

Did the Secretary of State or any of his Ministers try to apply pressure to any member of the Public Accounts Committee in the formulation of its report on the implementation of universal credit?

Fraud, error and overpayment led to £2.8 billion being wasted during the introduction of tax credits by the previous Government. Has my right hon. Friend made an assessment of how much has been lost during the phased introduction of universal credit to fraud, error and overpayment?

There is no money lost to fraud, error and overpayment under the universal credit system. As we roll it out, the system itself will save a huge amount in fraud and error on the current system, which is a mess. The level of overpayments and clawbacks of tax credits every single year is a scandal; the scandal is that the policy and the programme left to us by the Opposition, which has been failing every year, is costing huge sums of money.

The Secretary of State has been very keen to talk about what the previous Government did, but he is in charge now and he was in charge of one of the worst possible procurement processes in government. He has not yet told the House what will happen to the employment support group. It is batted off into the long grass. They are a very vulnerable group of people. Will they have to live through a similar shambles when he comes up with a solution for them?

Quite the contrary; I have made it very clear that by 2016 universal credit will be the benefit that people go on when they apply for employment and support allowance. The people who were on it—we know them as the stock—are the most vulnerable. [Interruption.] Well, that is the term used—those are people who are on the benefit at present. [Interruption.] How pathetic is that? The Opposition used the term themselves when they were in government, and now they try to pretend that they have discovered a new way of referring to such people. Those who are on employment and support allowance will be migrated to universal credit over a period so that we can bring them in safely, securely and to their benefit. Would the hon. Lady want us to rush them in, or does she think we ought to take care over how we do it?

The mission of universal credit has always been to make work pay. I have never entirely understood what it is about that principle that the Opposition find so distasteful. Many of my constituents constantly remind me of the problem that they have under the current system. Surely all Members should be backing the roll-out of universal credit. Today we have heard that there are some problems, that they are being tackled and that the size of the gain is enormous. Will my right hon. Friend confirm for everyone, but particularly for Opposition Members, who seem so opposed to universal credit, what the total economic gain to the people of this country will be over the next 10 years?