House of Commons
Wednesday 3 December 2014
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
Support with high-quality flexible child care is key to enabling parents to stay in the work force and gain financial stability for their families. The UK Government are increasing the provision of tax-free child care from next year; the Welsh Government need to do their part in supporting working families in Wales.
Parents in Cardiff complain that they cannot access their free child care entitlement. They can only get a place if they apply for three hours a day, five days a week at a state-run nursery school, which is useless if they work. Given that that means that parents in Wales are worse off than those in England, will the Minister speak to Assembly Ministers to ensure that parents can access their entitlement to free child care places in a way that suits them and not the Labour council?
I pay tribute to the hon. Lady for her work in this area in a number of roles in Parliament. The UK Government have pressed authorities in England to be as flexible as possible and have structured their policies around flexibility to enable more people to get into work and to manage their daily lives better. I will happily pursue the matter with the Welsh Government on her behalf.
We have heard about problems in Cardiff, but of course there are problems with good and affordable child care throughout Wales. For example, in rural areas there is sometimes a 200% difference in the cost from one local authority to the next. Will the Minister do his best to ensure that the Welsh Government access funds, if they exist, for that purpose and that there is a proper dialogue on this subject?
The right hon. Gentleman makes an important point about the variation in child care costs. Stability has finally come to the marketplace. The Government’s £2,000 tax-free child care account will create greater flexibility, provide more choice to parents and hopefully contribute to driving down costs.
That is a step forward, but the Minister will be aware that good, affordable child care is key to economic development. He is probably also aware that in the UK we pay far more for child care than most other OECD countries—40.9% of the average wage compared with 18%. In Sweden, by contrast, the figure is 7.1%. Does he think that we have anything to learn from the Nordic countries in that regard?
It is important that we learn from wherever good practice is in place. The greater choice will help to drive down costs, but it is important that we provide the right level of care, and the quality of care is important. I have no doubt that the stronger role that parents have to play in exercising that choice will also drive up the quality of care.
Cross-border Health Treatment
The performance of the Welsh health service is the most pressing issue for the people of Wales at this time. My ministerial colleagues and I regularly raise concerns with the Welsh Government, including on the issue of cross-border services. It is essential that all patients, wherever they live, can access the very best health care that meets their needs.
Does my right hon. Friend agree that the Welsh Government should follow the UK Government’s example of commitment to the NHS by using the £70 million boost to its budget, which came about as a consequence of increased spending on health in England, on the Welsh NHS?
Decisions on how the Welsh Government use Barnett consequentials are a matter for them, but it is true that a great many people in Wales would be baffled, bemused and hugely disappointed if Welsh Ministers chose not to use every single penny of the £70 million that we have made available to them by protecting and increasing NHS budgets here at Westminster.
4. What recent discussions he has had with the Welsh Government on investment in transport infrastructure in Wales. (906356)
For too long, Wales has suffered from under-investment in infrastructure, so I am proud to be part of a Government who are putting that right. By working closely with the Welsh Government and providing additional economic resources, we have been able to set out a long-term vision for how first-class infrastructure will make Wales a more attractive place in which to invest, benefiting the people of Wales for generations to come.
I thank my right hon. Friend for his answer and commend him on his work in securing the valley lines electrification. Does he agree that this project will have a transformative effect on those communities that were often left behind by previous Labour Governments?
I thank my hon. Friend for his question and his kind remarks. He is absolutely right. It was precisely because we did not want to leave those valley communities behind that we worked so hard with the Welsh Government to secure the full electrification package, electrifying the great western line all the way through to Swansea, plus electrifying those valley lines, which, as he says, will have a transformative economic and social impact for many years to come.
The Welsh Government have published figures on proposed roads expenditure showing that spending per head of population in south-west Wales will be £89, whereas the figure will be £815 for south-east Wales. Carmarthenshire, Ceredigion and Swansea will not have a single penny spent on roads, which means that there will be no money for relief roads for Llandeilo, Ammanford and Pencader in my constituency, and nothing for upgrades to the link between Newcastle Emlyn and Carmarthen. Does the stitch up between the UK Government and the Welsh Government to spend all Wales’s new borrowing capacity on a new M4 relief road not mean that there will be no transport infrastructure for the rest of Wales?
With respect to the hon. Gentleman, he has got this wrong. A Plaid Cymru former Transport Minister in the Assembly championed the upgrade of the M4, but could not achieve it, because the money was not available. We are providing the resources for that upgrade. That does not mean that no other project can happen throughout Wales, however, and I agree with the hon. Gentleman that we want more infrastructure investment in west Wales; we share that objective.
Does the Secretary of State agree that the Government’s investment in redoubling the Stroud to Swindon railway line, plus the promised investment in the A417 roundabout, add up to much improved links between the midlands and north Wales, which will be excellent for trade, manufacturing and tourism?
My hon. Friend makes his point extremely well. There is a broader point: infrastructure investment not necessarily inside Wales, but in border areas, benefits people and businesses across Wales. We should not be insular when considering infrastructure investment throughout the UK because it often delivers real benefits to all parts of Wales.
Tidal Lagoon Power in my constituency is mentioned in the national infrastructure plan. Will the Secretary of State join me in congratulating that important company on how it has worked with determination and grit to get the project through?
I echo the sentiments of the hon. Lady, who is a strong supporter of this important project. The quality of that company’s management, vision and business plan was precisely why I wanted the project to be included in the national infrastructure plan. It is also why I have been working hard with colleagues in the Treasury and the Department of Energy and Climate Change to get this potentially strategic project included in our long-term infrastructure plans.
In 2009 I managed to convince my right hon. Friend the Member for Neath (Mr Hain) to allow Denbighshire and Conwy into the objective 1 bid. Since then, those two counties have received about £500 million of EU funding. Will the Secretary of State congratulate the EU on that funding and recognise the danger to Wales of our pulling out of the EU?
The biggest danger to Wales, including north Wales, would be to abandon our clear long-term economic plan, which I know Labour Members are calling for. When I spent two days in north Wales on a business tour last week, I visited many Labour Members’ constituencies and saw just how dynamic the private sector is. Businesses in that sector are leading the economic recovery, so they are the ones that we should be saluting.
I commend my right hon. Friend on his commitment to the M4 relief road. The Severn bridge will link on to that relief road, so will he consider the importance of having a plan for when it returns to public ownership in approximately 2018?
My hon. Friend talks about an important issue that has been raised by Members on both sides of the House in recent months. I commend his work personally and that of his Select Committee on examining the impact of Severn bridge tolls on businesses and consumers in Wales. I share his concerns about the levels of the tolls. I want a long-term plan in place, so I look forward to discussing his ideas with him in more detail.
The Secretary of State says that his Government are investing in the electrification of the railways and building a prison, and now he talks about the tidal lagoon, but is not the reality that they have not yet spent a single penny on any of those projects? They have not laid a brick or a yard of electric rail. In fact, the situation is worse, because his Government have cut the Welsh capital budget by a quarter, and no amount of jam tomorrow can sweeten that unpalatable truth.
I am genuinely bemused by the hon. Lady’s question. Let us just remind ourselves that under the Labour Government no work was done to improve the M4, and not a single mile of railway line was electrified in Wales. We are cracking on with a long-term plan for infrastructure investment, and I am very proud to be part of a Government who are doing that.
I very much welcome what the Secretary of State said about electrification in south Wales, but will he turn his sights to the position in west Wales? Is he prepared to meet a delegation from the Traws Link Cymru group, which is campaigning to reopen the Aberystwyth to Carmarthen line? That would benefit our economy immeasurably and open up our part of the world generally. Is he prepared to push that agenda forward?
My hon. Friend is a strong voice for improving all transport connections in west and mid-Wales. We are seeing the largest investment in our railway infrastructure since Victorian times, and I want Wales to get the maximum benefit from that. I would very much welcome a meeting with the group that he has mentioned so that we can discuss further how we can make sure that west and mid-Wales benefit from rail infrastructure investment as much as anywhere else.
Cross-border Rail Services
The Wales Office has worked closely with the Department for Transport and the Welsh Government to resolve the dispute over funding for rail electrification. Electrification of the south Wales main line will bring significant journey time savings, an increase in capacity and a much improved passenger experience.
My constituents who use commuter services to places such as Bristol are increasingly frustrated by overcrowding and lack of capacity. Will the Minister make the point to the Department for Transport that the operator of the new First Great Western franchise must be able to meet demand for such services now, and anticipate future demand, which will only grow?
The hon. Lady has already made that important point to my right hon. Friend the Secretary of State for Wales. The Secretary of State for Transport has set a minimum service requirement based on the current level of services between south Wales and London, and I have no doubt but that the hon. Lady will be a feisty champion for ensuring that those local services remain.
I congratulate the Front-Bench team on securing great investment in the railways, particularly for cross-border services between England and Wales. They know that I have long supported improvement in those services. Will Ministers tell me what discussions they have had with either the Treasury or the Department for Transport on the possibility of Barnettising the investment in High Speed 2? That would make a great difference to investment in Wales.
What is missing from this failed economic plan is any rail strategy that deals with freight. The main corridor from the Republic of Ireland to Wales and England comes through north Wales. Will the Minister press the Treasury to ensure that we alleviate the problems on our roads, not by building motorways in marginals, but by building freight lines across England and Wales?
The hon. Gentleman makes an important point. Early in the new year, we plan a transport summit in north-east Wales to highlight businesses’ needs, and to ensure that business has the opportunity to make its case for electrification, so that the electrification taskforce of my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones), and the recommendations made to the Secretary of State, can be taken into account. Freight is of course an important part of that.
Although the south Wales to London line always attracts a great deal of publicity and concern in this Chamber, the Minister should not forget the importance of the Birmingham to Machynlleth line, which is fragile and often single track. Will the Government maintain their position that the line should, wherever possible, always be open?
I am grateful to my hon. Friend for his persistent interest in these sorts of matters in Wales. This is an important issue, not only for the Wales Office but for the Department for Transport. It is a subject in which the Welsh Government will also want to show an interest.
On the contrary, things have not gone quiet on north Wales electrification. My right hon. Friend the Secretary of State for Wales was in north-east and north-west Wales last week, championing the need for business to grow and make its case, so that when the Secretary of State for Transport makes his final judgments on the next round of investment, north Wales is at the forefront of his mind.
The Silk commission has proposed devolving the Wales and Borders rail franchise to the Welsh Assembly. That franchise includes services from Chester to Manchester, Chester to Warrington and Chester to Crewe. What action is my hon. Friend taking to make sure that services in England are not devolved to the Welsh Assembly?
The devolution of the electrification of the franchise is part of the electrification decisions that were taken for the valley lines and I am sure my hon. Friend will want to make a case for services that start and finish in England. The joint agreement between the Department for Transport and the Welsh Government continues, and my hon. Friend will no doubt want to make his views known.
Average Weekly Earnings
Salary levels are not where we would like them to be, but over the past year the earnings gap between Wales and the average for the UK as a whole has narrowed. Since 2010, average earnings in Wales have increased by more than the UK average, and Wales has seen the second largest increase of all the English regions and devolved nations.
The Wales Office already pays above the living wage. That is an important part of our policy, but it is a matter for employers. The best solution is to deliver a long-term economic plan so that employers can pay the living wage where possible. The greater competition that we see in the work force will help to drive wages even further.
That accusation about the management of the economy is not reflected in the fastest growing economy among the developed nations of the world, because this Government’s long-term economic plan is working. The hon. Gentleman talks of average increases in salary. The trends from 2010 to the present show that average weekly earnings in Wales have increased by 5%, compared with 3.9% across the whole of the UK.
My hon. Friend makes an important point. Whereas council tax in England has broadly been frozen, council tax in Wales has gone up by 13% in spite of additional funding being given to freeze it. If there was such a cost of living crisis as the Opposition claim, they would be pressing their colleagues in local authorities and in the Welsh Government to ensure that they do not increase council tax as they have.
Does the Tories’ much trumpeted economic plan not mean depressed earnings in Wales, generating lower taxes, and Government borrowing overshooting Labour’s planned target by more than £20 billion—the very deficit target luridly denounced by the Tories, who said it would bankrupt the country? Why does the Minister not apologise for this abysmal failure in the Government’s austerity strategy?
As the right hon. Gentleman was part of the previous Government, he should apologise for leaving Wales the poorest part of the United Kingdom. He should further apologise for the fact that wages fell at the sharpest rate between 2008 and 2009. The Government’s long-term economic plan is working for Wales, and wages are rising quicker in Wales than across the rest of the United Kingdom.
We will receive a statement from my right hon. Friend the Chancellor a little later which will cover the UK financial position, but I hope the hon. Gentleman, who is the shadow Secretary of State for Wales, will welcome the progress that the Government are making in reducing unemployment and in growing wages in Wales.
The Minister does not need to wait for the autumn statement, because the numbers are publicly available. Tax receipts in Wales have fallen by £2 billion since 2010, and benefit spending has gone up by £1.5 billion. That has piled an extra £6,000-worth of borrowing on every Welsh worker, and what have they got for it? They have got a twentyfold increase in food bank usage, the lowest wages in Wales and a cost of living crisis. The Tories have failed on the deficit, failed on the cost of living crisis, and they are failing in Wales once again.
The shadow Secretary of State has clearly got his facts wrong. The long-term economic plan is working for Wales. If there has been a reduction in tax receipts from Wales, it is because of our increase in the personal allowance, under which next year the average worker will pay less than £800 as a result, taking 155,000 people in Wales out of income tax altogether by next April.
When I became Secretary of State, I made resolving the dispute over funding for the electrification project my No. 1 priority. I have had many discussions with my right hon. Friend the Secretary of State for Transport in recent weeks, and I am delighted that we have settled a deal between the Department for Transport and the Welsh Government to deliver that important project.
Has the Secretary of State considered improving the frequency of trains after electrification? Two or three trains an hour on the valleys line to Cardiff would be a massive boost to my constituents in Ebbw Vale, Llanhillith and the surrounding valley towns.
The hon. Gentleman makes an important point. There are frequency issues on those lines, but he must recognise that decisions on the frequency of services will need to be taken by Welsh Ministers, because we are devolving the franchise to the Welsh Government as part of the electrification deal.
I spent two days in north Wales meeting business leaders and local authorities to talk about how we can drive up the quality of infrastructure in north Wales, and I can tell the hon. Gentleman that we have a long-term plan that will deliver the improvements for infrastructure in south Wales and north Wales too. [Interruption.]
Newport Investment Summit
The UK investment summit in Newport was another important opportunity to focus on all that is good about the Welsh economy at this time. I was proud to stand shoulder to shoulder with my right hon. Friend the Prime Minister, the First Minister of Wales and businesses in Wales to bang the drum for all that is great about our nation. During the summit I met numerous companies that are looking to invest or to expand their investment in Wales.
I am delighted to see the hon. Gentleman stand up and champion business investment in south Wales. He is exactly right that Newport, and the Celtic Manor in particular, provide a superb venue for not only international leaders’ summits, but inward investment conferences. It will be a key player as we look to regenerate and improve the economy of south Wales.
15. Business leaders have welcomed the introduction of the employment allowance, which reduces employers’ national insurance bills by up to £2,000 per annum. It has been taken up by 1,200 businesses and charities in Brecon and Radnorshire, but it is estimated that nearly 1,000 of all employers have not applied. What can the Government do to encourage further uptake of that important concession? (906367)
My hon. Friend is right. The employment allowance has been a huge success for small businesses up and down Wales. There is a responsibility not just on Government but on all of us as Members of Parliament to champion that project and to tell businesses in our own constituencies how they can benefit from the allowance.
14. It is clear that the successful investment summit in Newport brought in overseas investors and created jobs as part of the long-term economic plan. Does the Secretary of State agree that we should have a northern powerhouse investment summit—and if they like, the north Welsh can come too? (906366)
I recently discussed the provision of Welsh language services for universal credit with the welfare reform Minister, Lord Freud, who confirmed that the Department for Work and Pensions is making good progress with the development of the universal credit digital service. A meeting is scheduled with the Welsh language commissioner in the new year to discuss Welsh language provision for the live service.
I recently met the team delivering the service, who are doing a good job under difficult circumstances. They told me that the Welsh language version will not be available until after the English language version is available. Will the Minister find out why that is, and when it will happen?
My right hon. Friend the Secretary of State for Wales was there only last week when this issue was discussed at the Jobcentre Plus. I have also raised it with the DWP Minister. We are meeting the Welsh language commissioner to ensure that we develop a service that is appropriate and applicable, and that grows with the growth of universal credit across the whole of Wales.
The Prime Minister was asked—
I am sure the whole House will join me in paying tribute to the British embassy staff who were killed and injured in Kabul following the horrific bomb attack last week. Our thoughts are with their families and their friends at this time. We will not allow such inhumanity to deter us from building a stable future for the Afghan people. We have nothing but admiration for the staff of the embassy, British and Afghan, who work together, at great personal risk, to help achieve that.
This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House I shall have further such meetings later today.
I would like to associate myself and my constituents with the Prime Minister’s remarks about our brave staff, not just in the embassy in Kabul but, of course, across the world in very dangerous places.
The Prime Minister promised to balance the books by 2015 and to cut the debt. Despite punishing the poorest with cuts, the deficit has barely been touched, and borrowing has been greater in the last four years than it was in the previous 13. Does this country not desperately need a Labour Government?
On Monday morning at Norwich research park, I thought I heard the sound of a cuckoo, which was remarkable since we have not even reached Christmas, let alone spring. Does the Prime Minister agree that this may be further evidence of the strength of our long-term economic plan?
I was delighted to meet my hon. Friend and other Norwich MPs at Norwich research park to talk about the expansion of infrastructure in our country, and particularly the improvements that we are going to make to the A47, which will not just help Norwich and Norwich research park but help all of East Anglia right out to Lowestoft. I know how important it is to make sure that that important part of our country also benefits from our long-term economic plan.
I join the Prime Minister in paying tribute to the British embassy staff killed in the appalling terrorist attack in Kabul last week. It is a reminder of the danger that our embassy staff and military personnel still in Afghanistan face on a daily basis. All our thoughts are with the family and friends of those who died.
The Prime Minister said earlier this year:
“woe betide the politician that makes…big promises and then says ‘Oh, sorry, I didn’t really mean it.’”
Can he recall any time he might have done that?
Let me tell the right hon. Gentleman the promises we have kept. We promised to get the economy growing—it is the fastest growing in the G7. We promised to get unemployment down—we have created 1.8 million new jobs. We promised to make Britain a great place to start a business—there are 760,000 more businesses in this country. This Government are a Government who have made their commitments, kept their commitments and, as a result, have a plan that is working.
Come to think of it, the Prime Minister might have broken a big promise quite recently: immigration down to the tens of thousands—no ifs, no buts. What did he say in his contract with the British people? He said:
“If we do not deliver our side of the bargain, vote us out in five years’ time.”
When he said it, did he mean it?
Yes, and we have cut immigration from outside the EU by 24%. With immigration, every single step we have taken in the past four years was opposed by the Labour party. What did they do for 13 years in government? They put immigration up as a deliberate act of policy. This Government made promises to our pensioners—promises kept; promises on our NHS—promises kept; and above all, a promise to turn our economy around from the mess left by those two on the Front Bench.
So the Prime Minister did mean it: throw him out because he broke his promise. What he ought to be saying, but dare not say, is that he made a solemn promise, and he broke it.
Let us turn to another one of those big, solemn promises. This is what he said to the nurses’ conference just before the last election:
“I want to tell you what we’re not going to do: there will be no more of those pointless reorganisations that aim for change but instead bring chaos.”
When he said it, did he mean it?
What we have done is seen more doctors, more nurses, more patients treated, but if we are on promises, I have a little list. I have a list of the right hon. Gentleman’s promises. Right, here we go. Mr Speaker, he promised—[Interruption.] However long it takes. I have all day, and I can tell you, I am looking forward to what is coming next, and I think he will be too. He promised detailed plans for a graduate tax. Where is it? He promised an alternative spending review. That was in 2010. Where is that? He promised he would tell us the list of business people he had dinner with in 2011. Where is that one? He promised to stand up to the unions on public sector pay. When has he ever done that? He promised he would not let the unions run the Labour party, and they run it more than ever.
What the Prime Minister ought to be saying, but dare not, is that he made a solemn promise of no top-down reorganisation of the NHS, and he broke that promise.
Let us turn to his promise on living standards. The 2010 Conservative manifesto made this big promise of
“an economy where…our standard of living...rises steadily.”
When he said it, did he mean it?
Twenty-six million people have had their taxes cut, and 3 million of the poorest people have been taken out of income tax altogether. The minimum wage has been increased for the first time since the right hon. Gentleman’s great recession. Now, people who have been in work for a year are seeing a 4% increase in their pay. They bankrupted our economy. We know that “Mrs Brown’s Boys” was a comedy; “Mr Brown’s Boys” was a tragedy.
The Prime Minister has obviously recently been visiting the David Mellor school of charm. What he ought to be saying, but dare not, is that he made a solemn promise to improve living standards and he has broken it.
What about his biggest promise of all, which was on the deficit? In October 2010, he promised:
“In five years’ time, we will have balanced the books.”
When he said it, did he mean it?
We promised to cut the deficit. It is down by a third. In a moment or two, we will see the progress that has been made. Obviously, I cannot reveal what is in the Chancellor’s autumn statement, as that would not be proper, but I make this prediction—[Interruption.]
I simply make this prediction: in a moment or two, the right hon. Gentleman will be looking as awkward as when he ate that bacon sandwich. [Interruption.] Oh yes!
If we are talking about predictions, let us remember the right hon. Gentleman’s predictions. He said that our policy would lead to the disappearance of 1 million jobs—wrong. He said that it was a fantasy that the private sector would create the jobs—wrong. [Hon. Members: “Wrong!”] He said that we would choke off jobs and growth—[Hon. Members: “Wrong!”] The Opposition told us that there would be a lost decade, that there would be a double-dip recession and that there would be 1 million more people unemployed. They have been wrong on every single economic issue.
The Prime Minister has failed every test he set himself. The thing about this Prime Minister is that he has turned breaking promises into an art form. As the election approaches, the thing the British people know about this Prime Minister is that when he says it, he does not mean it.
What a contrast: this is a Prime Minister and this is a Government who have turned our economy around, sorted out our public finances and got the economy growing. No one in this country will ever forget that the Opposition are the people who sold the gold, who broke the economy and who bankrupted the nation; and still they sit there, completely hopeless and unelectable.
Q2. The city of York is truly benefiting from the Government’s northern-led economic plan. The Government are rightly investing in transport infrastructure across Yorkshire. With that in mind, will the Prime Minister meet me and a delegation of local businesses to discuss their campaign to dual York’s northern ring road, which, given the high levels of congestion, is seen as a serious barrier to further economic growth in our city? (906404)
My hon. Friend is absolutely right. I know what a problem that road can be. Infrastructure investment does unlock growth. That is why, on Monday, we announced the biggest roads programme in a generation, including £2.3 billion for major roads in Yorkshire and the north-east. I am very happy to arrange a meeting between him and the Secretary of State for Transport to discuss the matter. He will know that we have substantial plans to upgrade the Hopgrove junction, where traffic from the northern ring road gets on to the A64. We believe that that will make a real difference.
We are implementing the Smith commission. That is what we believe should be implemented. The Chancellor will set out our position on Northern Ireland in a moment or two. Let us be absolutely clear about the big differences between Northern Ireland and Scotland: Northern Ireland has a land border with the Republic and had all the difficulties and troubles—
Q3. Fifty-six years ago, Simon Wingfield Digby, the then hon. Member for West Dorset, made the first plea for improvements to the A303 in this House. Thanks to the Government’s careful management of the economy, the Prime Minister was once again warmly welcomed in Wiltshire this week to announce the £1.3 billion investment in the tunnel under Stonehenge. Will he reassure the people of the south-west that we will not have to wait another 56 years for it to be delivered? (906405)
I can certainly make that commitment. I was one of a number of people who made their way to Stonehenge this week to see how important this tunnel will be. It will be at least 1.8 miles and is part of an overall plan to create that expressway all the way between the M3 and M5 and down into Cornwall, to ensure that we improve that vital road network. As for Stonehenge, the tunnel will ensure that this extraordinary monument has the setting and attention it deserves.
Q4. A Haslingden constituent, 20-year-old Sophie Lancaster, was brutally murdered in 2007, kicked to death in a park by a group of males simply for being part of a sub-culture—a goth. She was a victim of hate crime, and the implications of that tragedy continue today. Will the Prime Minister meet the Sophie Lancaster Foundation to see its excellent work, and do everything he can to ensure the clear message that there are no exceptions to hate crime? (906406)
This week 40 banks and building societies issued a joint declaration to deal with the multimillion pound crimes of vishing and courier fraud, when people are called by criminals posing as police officers or bank employees and asked to hand over bank cards and pin numbers to assist fraud inquiries. I have worked with Age UK, the Alzheimer’s Society, and call blocker manufacturers to build a scheme to protect the most vulnerable in society from that crime, but Ministers at the Department for Culture, Media and Sport are too busy to discuss it. It seems that they are able to block my nuisance calls, so will the Prime Minister help the vulnerable to do the same?
Q5. The 2010 Conservative manifesto promised an economy in which not just our standard of living, but everyone’s quality of life would rise steadily and sustainably. Why in the last year have wages grown by the smallest amount since records began? (906407)
I am delighted that after four and a half years, the Labour party finally wants to debate the economy at Prime Minister’s questions. This is a golden day for us; it means we can talk about the 1.8 million jobs created and the fact that those who have been in work for a year are seeing their pay go up by 4%. It means that we can talk about how we have lifted the threshold for the basic rate of income tax to £10,500, and taken 3 million people out of tax. All those things are helping to ensure that millions more of our countrymen and women have the dignity and security of a job, and the ability to provide for their families. That is what is happening in Britain; the economy has been turned round from the disastrous situation left by the Labour party, and that is something the whole country can be proud of.
May I commend to my right hon. Friend the debate in Westminster Hall this morning, which was kicked off by my hon. Friend the Member for Meon Valley (George Hollingbery), on the catastrophic decline of sea bass stocks across northern Europe? We heard that successive Governments have been trying to persuade the EU for decades to address that problem. Will the Prime Minister undertake to put the Government’s entire weight into addressing the collapse of sea bass stocks when considering European Union fisheries policy this month?
My hon. Friend raises an important point about sea bass stocks but also about fish stocks more broadly. Under this Government there have been improvements in the way that fisheries policies work in the EU, with a greater level of devolution. We need to keep pushing that forward to ensure that our fisheries and stocks can recover, as that is the only way to ensure a long-term, sustainable industry.
This Government have had to borrow a lot of money because we inherited the biggest budget deficit in the world. [Interruption.] Yes, it was 11% of our GDP when we came to government. We have already cut it by a third, and we will hear in a moment or two how we are now getting on. I would like to highlight something the shadow Chancellor said this week. He said that he would be tough on the deficit and tough on the causes of the deficit. As he is one of the causes of the deficit, I think we have just found the first ever example of political masosadism. [Interruption.]
Thank you, Mr Speaker.
I would like to thank the Prime Minister sincerely for all the help he has given to all Shropshire MPs in securing our direct train service to Shrewsbury, which starts later this month. It is a vital boost for tourism and inward business investment in Shropshire. Will he take advantage of our now being connected to London, and visit Shrewsbury and the wonderful new university we are creating in our beautiful town?
I look forward to the opportunity of visiting Shrewsbury if I can.
Let me be clear: I meant to say ‘masochism’. I am sorry, Mr Speaker. Normally I say that the shadow Chancellor likes to dish it out but cannot take it, but after this quote I think he obviously quite likes taking it as well. So there we are. [Laughter.] We have learned a lot of interesting things today.
What is happening in Shrewsbury is magnificent. There have been improvements to 400 stations across the country, including Kings Cross.
Q7. The Prime Minister said that his economic policy would eradicate the deficit in this Parliament. All he can claim today is that after four years it came down by a third, but in the past few months it has been going up. Will he accept that the big fall in real wages since the election is a large part of the explanation for why his economic policy has fallen so far short on its central objective? (906409)
After four years of never mentioning the deficit and opposing every single spending cut we have had to make, there seems to have been a Damascus-like conversion—Labour Members are all suddenly interested in the deficit. Let me give the right hon. Gentleman a bit of a lesson. Yes, we have had to make very difficult decisions, cutting some Government Departments and some by as much as 20%, but every single decision was opposed by the Labour party. In terms of what is happening on wages, as I have just said, the recent figures out show that people who have been in work for more than a year are seeing pay increases of 4%. We are helping everyone in work by cutting their taxes. In the end, the only way to raise living standards sustainably is to grow the economy, create jobs and cut taxes— three things we are doing; three things Labour would never do.
Q8. This morning, more people went to work than ever before in the history of our nation. Is the Prime Minister aware that in Dover and Deal unemployment has fallen by 37%, thanks to our welfare reforms and thanks to our long-term economic plan? Why would we ever return to where we were less than five short years ago? (906410)
My hon. Friend is absolutely right. In Dover, the claimant count is down by 24% since the election. Across the south-east, the number of people employed is up by almost a quarter of a million. We have record levels of employment. Anyone getting a job is someone else who has the security and stability to provide for their family. At the same time as this increase in employment, we have also seen the pay gap between men and women, particularly under 40, reduced to its lowest ever level. We are seeing a strong and solid recovery. As the Chancellor will explain in a moment, there is no room for complacency. We have to stick to the long-term economic plan and deliver it.
Oh yes I can. We inherited the biggest budget deficit in Britain’s peacetime history. The Labour party had the longest and deepest recession in a century. That was what we were delivered. Since then, we have turned the economy round; we have 2 million private sector jobs; we have cut the deficit; 760,000 more businesses are operating in our country; and we have the fastest-growing economy of any G7 or major European country. That is an economic record that no Labour Government could ever match.
Q9. Droitwich Spa boxing academy, run entirely by volunteers, trains talented boxers and provides a highly valued community resource, turning round the lives of many disruptive and troubled young people. It is a shining example of the big society. Does the Prime Minister understand my deep concern that the blinkered decision of Her Majesty’s Revenue and Customs to insist on a draconian interpretation of the VAT rules for its new building will result in the academy’s closure? (906411)
First, I know of the important job done by the Droitwich Spa boxing academy, which is run entirely by volunteers, and I know how hard my hon. Friend works for his constituents. We will look carefully at this case. As he might know, unfortunately the zero rating of VAT on construction services is limited and does not apply to buildings used as sports clubs, but HMRC is willing to discuss with the owners flexible arrangements for paying the VAT through its time to pay scheme. I will ensure that discussions take place rapidly between him and HMRC to see what can be done.
Q10. Cancer waits for no one and, with fast-growing cancers in particular, time is of the essence. The cancer treatment target in England has been missed for nine months and more than 15,000 patients are waiting more than two months to start treatment. Does this not prove, yet again, that you cannot trust the Tories with the NHS? (906412)
I share the hon. Lady’s concern about how rapid our cancer treatment must be, which is why I am proud that under this Government an extra 460,000 people per year are getting cancer treatment, are getting referrals. There are about seven key cancer targets, and we are meeting all but one of them. That is quite a contrast with Wales, where the Labour party has been in control for the last four years and where it has not met a cancer target since 2008.
Following the threat of a legal challenge, NHS England has scrapped its processes for approving drugs for rare conditions, which is affecting 200 children in the country, including six-year-old Sam, in my constituency, who has Morquio. Will the Prime Minister today instruct the Health Secretary to re-establish the highly specialised commissioning service so that we can approve these drugs and ensure that children get the drugs they need immediately, before a new process is put in place?
I am happy to discuss that issue with the Health Secretary. As the hon. Gentleman knows, we have a procedure for licensing drugs and, for cancer drugs, we have the additional benefits of the cancer drugs fund, but I am happy to discuss his point with the Health Secretary.
To sum up, the Labour party’s approach seems to be this: “We created an enormous problem, and we have come here today to complain that you have not cleared it up fast enough.” That is the extent of Labour Members’ intellectual analysis of Britain’s problems—it is quite ridiculous, given that Labour left us with the biggest budget deficit since the war. We have started to get on top of it, and we will make more progress.
Given the record number of small businesses today in Chiswick, Brentford, Isleworth and Hounslow; given that small and medium-sized businesses represent 99% of the business community; and given that Saturday is small business Saturday, will my right hon. Friend join me in encouraging everyone to shop small and shop local on Saturday, and will he make small businesses a priority in our long-term economic plan?
I absolutely agree with my hon. Friend. We now see a record number of small businesses in our country—a total increase of 760,000 over this Parliament. Small business Saturday is an excellent event, by which we can boost small businesses and draw attention to the work they do. We will kick-start this event on Friday with a small business fair in Downing street. Now is a good moment to make sure that small businesses are benefiting from all the changes that we have made, such as the cut in the jobs tax of £2,000 for businesses and charities, the abolition of national insurance contributions for under-21-year-olds when they employ them, the doubling of the small business rate relief and, of course, the cutting of corporation tax for small business as well. This Government have a very strong record for saying to small business, “We respect what you do in creating the jobs, the wealth and the prosperity that our country needs”.
Q12. Skelmersdale in my constituency is the second largest town in the north-west without a railway station—a station that would bring social and economic benefits to the town, as we have heard happened in Shrewsbury. As the Prime Minister is in spending mood, albeit a little bit further south, I wonder whether he could give the people of Skelmersdale an early Christmas present with the promise of a railway station. (906414)
I am very happy to look at what the hon. Lady says. What we are seeing are more railway lines opening, more stations opening and more railways being electrified. In the entire period of the last Labour Government, I think they electrified just 13 miles of track—an absolutely pathetic record for a Government who had 13 years to do something about it. We now have the biggest road programme since the 1970s, the biggest rail investment programme since the Victorians and, under this Government, stations, lines and electrification are all taking place.
Q13. Will my right hon. Friend meet me to help get more beds for Hereford hospital? Will he send a Minister to meet the magnificent staff and, possibly, Welsh patients who have acquired addresses in England so that they can access life-saving cancer care drugs that are not available under the Labour-run Welsh NHS? (906415)
I am sure my hon. Friend will welcome the £2 billion for the NHS in England, which the Chancellor announced at the weekend. That money will go directly to the front line. Obviously, we want to see continued improvements at the Hereford hospital. There are pressures from people from Wales crossing the border and wanting to use services in England. That is why it is so important that the Welsh NHS has the improvements that we have been talking about. As to meetings and visits to my hon. Friend’s hospital, I will look very carefully at what we can do to help.
Q14. Cutting net migration to tens of thousands, reducing spending on welfare and, yes, eradicating the deficit by the end of this Parliament formed the triple crown of the Prime Minister’s promises to the British people. How does it feel as Prime Minister when you are once, twice, three times a failure? (906416)
I will tell the hon. Gentleman how it feels to lead a Government who have created 2 million private sector jobs. I will tell him how it feels to lead a Government who have turned round the British economy, and I will tell him how it feels to have an economy in Britain in which businesses right around the world want to invest. That is the record of this Government: recovering from the complete shambles and mess that the hon. Gentleman left when he was part of the previous Government.
As he may well remember, the Prime Minister experienced this summer the congestion regularly faced by my constituents at junction 9 of the M3 motorway. May I thank him on behalf of the people I represent for the comprehensive package of improvements announced by the Transport Secretary earlier this week? Does he share my view that my constituents can benefit from this kind of investment only because we have a taken the decisions to get our economy in a place that we can?
My hon. Friend is absolutely right, and I know about the importance of the M3 improvements that he mentions. The fact is that all these things—whether it be improving our road network, investing in our NHS, building new railway stations and electrifying railway lines—can be done only if we have a successful and growing economy, a long-term economic plan and a demonstration that the public finances are under control. With this Chancellor and with this Government, we have all of those things in place. That is why we have been able over the previous days to talk about improving our NHS, investing in our transport infrastructure, building the flood defences that this country needs and putting in place all the infrastructure—whether it be ports, airports or energy—that a modern economy needs in order to sustain a level of growth that can deliver the prosperity and security that the British people deserve.
Q15. In the past four years the NHS has spent more than £5 billion on agency staff, about 20% of which will have gone into the pockets of the agencies rather than those of NHS staff. How many full-time permanent nurses would that have paid for? (906417)
What we have in the NHS under this Government are £1,300 extra nurses and 8,300 extra doctors, and because we have cut the bureaucracy, we have managed to remove 21,000 bureaucrats. No one wants to see extensive use of agency staff. All well-run hospitals will have fewer agency staff and more permanent staff: that is what is happening under this Government.
Four years ago, in the first autumn statement of this Parliament, I presented the accounts of an economy in crisis. Today, in the last autumn statement of this Parliament, I present a forecast which shows that the United Kingdom is the fastest growing major economy in the world. Back then, Britain was on the brink. Today, against a difficult global backdrop, I can report higher growth, lower unemployment, falling inflation, and a deficit that is falling too. Today, the deficit is half what we inherited. Our long-term economic plan is working.
Now, Britain faces a choice. Do we squander the economic security that we have gained, and go back to the disastrous decisions on spending, borrowing and welfare that got us into this mess, or do we finish the job, and go on building the secure economy that works for everyone? I say: we stay the course. We stay on course for prosperity.
Today, we do not shy away from the problems that remain unresolved in the British economy. Although the deficit is falling, it remains too high, so the measures that I announce today are not a net giveaway, but actually tighten the public finances a little. I could have eased up on our determination to deal with our debts; I have not.
Although business investment is rising strongly, we know that there is still much more to do on productivity, so today we boost our skills, our exports, our science and our infrastructure. Although employment is at a record high, we must never give up on the task of finding work for all young people, so today we move further towards full employment by supporting the businesses that create jobs and apprenticeships. For decades our economy has been too unbalanced, so we do more now to build the northern powerhouse. And today we back aspiration—the aspiration to save, to work, and to own your own home—in stark contrast to those who would hit people’s pensions and jobs and homes with higher taxes, for that is an approach that we entirely reject. Instead, we support people who want to work hard and get on, and it is for their sakes that we resolve to stay on course for prosperity.
I now turn to the report from the Office for Budget Responsibility. Let me again thank Robert Chote and his team for their hard work, and for restoring integrity and independence to our country’s economic forecasts.
Since the Budget, new international statistical standards have changed the assessment of the British economy in recent years. We now know that, contrary to claims that were made at the time, there was no recession in this Parliament, and no double dip. Indeed, the only recession was the great recession under the last Labour Government. We also know that the economy has grown faster than previously reported. It is up by more than 8% over the current Parliament: that is the third fastest growth in any major advanced economy since 2010. We know, too, that growth has been more balanced. We were told that business investment had risen by 4% over this Parliament; in fact, it has risen by 27%.
That is what we know about the recent past. Let us turn to the future. The warning lights are flashing over the global economy. Japan is in recession, the eurozone is stagnating, and the geopolitical risks are rising. I can tell the House that the OBR has therefore revised down its forecast for global growth this year and in every year. It notes that the slowdown is particularly acute in our main export markets, such as Europe, where growth is a full 1% lower this year than previously forecast. It makes it even more imperative that we connect British firms to the faster growing emerging economies of Africa, Asia and south America. Today I am providing a £45 million package to do that and to provide new support to first-time exporters.
As one of the most open trading economies in the world, with a large financial sector, Britain cannot be immune to the risks in the global economy, but nor are we powerless—provided we go on working through our plan to put our own house in order.
That brings me to today’s forecast. In the Budget, I reported that the OBR had revised up its forecasts for growth this year. A year ago, we expected GDP to grow by 2.4%. In March we expected 2.7%. Today, the British economy is forecast to grow by 3%. Over the last year we have grown two and half times faster than Germany; over three times faster than the eurozone; and over seven times faster than France. I think we can safely reject the advice of those in this House who told us on the steps of the Élysée palace that we should be doing to Britain what has been done to France.
Growth in the UK next year is also forecast a little higher at 2.4%, with quarterly growth moderating as it returns to trend, then 2.2% in 2016, 2.4% the year after, then 2.3% in 2018 and 2019, and the growth we are now seeing is more balanced. Manufacturing is growing faster than any other sector, and investment is set to be up 11% this year—growing faster in the UK than in any other major advanced economy.
This balanced growth is creating jobs, too, with a record number in work. At the Budget, the OBR expected that over the last year employment would rise by 265,000. Today, I can tell the House that it doubles that number. Over the last year, half a million new jobs have been created. In March, it forecast that in the first three quarters of the year the number claiming unemployment benefit would fall by 7%. Today, it says that it actually fell by 23%. The number of young people on long-term unemployment benefit has almost halved in the last year alone. Unemployment is revised down in every single year of the OBR forecast, falling from the 8% we inherited to 5.4% next year, before settling at 5.3%.
On average, for every day this Government have been in office, 1,000 new jobs have been created, 1,000 new opportunities for people, new economic security for 1,000 families every single day. Britain’s long-term economic plan is working.
In response to the caricature that some like to draw—that these jobs are being created only in London, that they are part time with women losing out—I say, look at the facts. How many of the jobs being created are full-time? Eighty-five per cent. Where are the jobs being created fastest right now? In Scotland and in the north of England. What is happening to the gender pay gap? It has just fallen to its lowest level in the entire history of this country. That is progressive politics in action.
Regular earnings growth is now faster than inflation. For those in full-time work for over a year, earnings grew 4% over the last year. The compositional effect of many more people finding work, particularly young people, is weighing down on overall average earnings, but the OBR today predicts that “meaningful real wage growth” will pick up through next year and grow above inflation for the next five years. Indeed, I can tell the House that GDP per capita has grown faster on average in this Parliament than over the last two Parliaments combined.
Living standards are also supported by our robust monetary policy arrangements with the Bank of England. Today, there is welcome news that the OBR has significantly revised down its forecast for inflation: it is expected to be down to 1.5% this year, 1.2% next year and 1.7% the year after, before it returns to target. So we have lower inflation, lower unemployment and higher growth.
That brings me to the forecasts for debt and deficit. There are those in this House who have been predicting from the Opposition Dispatch Box in recent weeks that I would have to announce today that the deficit was rising and that borrowing this year would be higher than last year. We discover today—I am afraid not for the first time—that their predictions are wrong: the deficit is falling this year and every year, and, not only that, but in the final four years of the forecast, borrowing is actually lower than predicted in the Budget. [Interruption.] The Office for National Statistics has made revisions to the way the national accounts are measured—[Interruption.]—and one of the advantages of having created an independent OBR is that it has ensured that the figures presented today are comparable on a like-for-like basis with the forecast made in the Budget. [Interruption.] On this revised basis, the forecast at the Budget would have shown borrowing falling from the £150 billion we inherited to £99.3 billion last year, £86.4 billion this year, £68.3 billion next year, then £41.5 billion, £15.8 billion, and then a small surplus of £3.7 billion in 2018-19. [Interruption.] That is the Budget forecast. [Interruption.] Today’s forecast shows borrowing falling from £97.5 billion last year to £91.3 billion this year, then £75.9 billion next year, then £40.9 billion, £14.5 billion, and then a surplus of £4 billion in 2018-19. So borrowing falls every year. It falls slightly less than expected in the first two years, but then falls slightly more than expected in the four years after that. [Interruption.] We end in a marginally stronger position than expected at the Budget, and I can tell the House that by 2019-20 Britain is now predicted to have a —[Interruption.]
Order. There is now excessive noise in the Chamber. The Chancellor should not have to shout in order to make himself heard, and to some degree he is having to do so at the moment, and that is not right. The House knows the track record: I facilitate the fullest possible questioning of the Chancellor—always have done, always will do—but colleagues must, please, give the Chancellor his head.
I can tell the House that by 2019-20 Britain is now predicted to have a surplus of £23 billion—out of the red and into the black for the first time in a generation, a country that inspires confidence around the world because it seeks to live within its means.
As a percentage of GDP, today the deficit is also forecast to fall this year, down by 0.6% of GDP—down from what the OBR describes today in its own report as
“the post-war record deficit of 10.2% of GDP”
in 2009-10 to 5% this year. The deficit is no longer down by a third, but is now cut in half. It is still too high, but with our plan it falls again to 4% next year, then 2.1%, then 0.7% before we move into surpluses of 0.2% and 1% of GDP. The structural deficit also falls and moves into surplus at the same pace over the next five years, as forecast at the Budget.
We continue to meet the debt mandate a year late and the fiscal mandate two years early. Again, because of the statistical revisions and the reclassification of Network Rail—given that Labour tried to put it off balance sheet—the OBR has given us a like-for-like comparison on debt as a share of GDP. On the new basis, it is 80.4% this year, next year it peaks at 81.1% —half a per cent. lower than previously forecast at the Budget—and it is then lower in every subsequent year, at 80.7% in 2016-17, 78.8% the year after, then 76.2%, before reaching 72.8% in 2019-20. Again, this is less than was forecast at the Budget.
Borrowing is falling. The deficit is down this year to half what we inherited. Debt is falling in the same year predicted, and lower in every year thereafter. There will be a surplus that is higher and by the end of the period worth £23 billion. Britain is back living within its means. Our long-term economic plan is on course.
The House will want to know why the public finance numbers are much better than some were predicting, even though tax receipts have deteriorated. The answer is that we cannot look at taxes alone; we have to look at spending, too. As has been widely reported, tax receipts have not been rising as quickly as the OBR had previously predicted. The OBR now forecasts that revenues will be £23 billion lower by 2017-18. However, that is more than offset by three things. First, we are paying less in welfare and saving money on public service pensions because of lower inflation and more people being in work. That saves £4 billion a year.
Secondly, the revisions to our national accounts have slightly increased the measured rate of spending cuts in this Parliament. We have a choice: we can ease up, or we can continue with our plans. Our policy of continuing the spending cuts in the first two full years of the next Parliament, at the same pace as we achieved in this Parliament, now produces £4 billion less spending. Thirdly, and crucially, the interest we pay on our national debt is £16 billion lower in that year. That is, by a large margin, the biggest saving and demonstrates the value of our fiscal credibility around the world. Some have pointed to lower tax receipts and put forward policies for higher taxes. I prefer lower tax receipts offset by lower debt interest payments, and that is what we are seeing today.
I do not hide from the House that in the coming years there are going to have to be very substantial savings in public spending. Next week we will publish a new charter for budget responsibility that will reinforce our commitment to finish the job in the next Parliament, and we will ask the House to vote on it in the new year. However, no charter, valuable as it is, can be a substitute for the hard work of identifying real savings in the cost of government and delivering them in practice. That is what we have done in this Parliament, and it is what we will have to do in the next.
The work starts with our spending plans for 2015-16, which save £13.6 billion. We have published the detailed and specific departmental proposals that will achieve them. There will be two further years where decisions on this scale will be required and, as I have said before, we are going to have to go on controlling spending after those years if we want to have a surplus and keep it. Of course, people are already saying it will be impossible to achieve those levels of savings. We heard exactly the same thing in 2010, often from exactly the same people. In fact, we have come in under budget every year of this Parliament. This year I can confirm that we will be spending £10 billion less than set out in our original spending plans.
There are those who say we should cut even faster, and those who say we should cut more slowly. But we have got the pace right, as is clearly demonstrated by the fact that our economy is growing faster than almost any other. And because of careful management, we can afford to put part of that underspend money into our national health service to cope with the pressures it faces: £2 billion every year to the front line of the NHS—not money that busts our plans, but extra money that is available because we have a plan.
Instead of returning the foreign exchange fines paid by the banks to the City, as happened under the previous Government, we are using that windfall for a £1.2 billion investment in GP services across the UK. That is a down-payment on the NHS’s own plan, proving definitively for anyone in any doubt that we cannot have a strong NHS without a strong economy. I can also tell the House that we will help with the employment of carers, who do so much, by extending the £2,000 employment allowance to include them.
We have shown in this Parliament that we can deliver spending reductions without damaging front-line public services if we are prepared to undertake reform. Crime is down. Satisfaction with local government services is up. Savings and reform—and we will do exactly the same again. Continuing to reduce departmental spending in the first two years of the next Parliament would mean at least £15 billion off Whitehall budgets. Our control of public sector pay in the past four years has delivered £12 billion of savings. By continuing to restrain public sector pay, we expect to deliver commensurate savings in the next Parliament until we have dealt with the deficit. Today I can confirm that we are committing to complete the public service pension reforms proposed by Lord Hutton, bringing total savings of £1.3 billion a year. Administration costs in Whitehall are already down 40% over this Parliament. Today, the Minister for the Cabinet Office and Paymaster General, my right hon. Friend the Member for Horsham (Mr Maude), is publishing a plan for a further £10 billion of efficiencies.
I am also confident that in the next Parliament we can continue to crack down on tax avoidance and evasion, and aggressive tax planning. Doing so at the same rate as in this Parliament would raise at least another £5 billion, and today I commit to delivering that. Then there is the new welfare cap that we have introduced to control the one sixth of public spending that was subject to absolutely no control at all. The OBR today reports that
“the Government is on track to meet the welfare cap commitment”.
Today we undertake further steps to control benefit spending by freezing universal credit work allowances for a further year, cutting tax credits when overpayments are certain, and ending unemployment benefits for migrants with no prospect of work. Total welfare spending is now set to be £1 billion a year lower than forecast at the Budget and it will go on falling as a share of our GDP. And, as I have made clear, I believe that we need to freeze working-age benefits for two years, saving billions more.
Decisions to control public spending are never easy, but the impact on people’s lives when economic stability is lost is far, far greater. I have always believed that we should be straight about what is required to restore stability and what is required to stay on course. Our task is made easier by the deal we secured for this country when we got the European Union budget cut. Some people claimed that our payments to the European Union would go up this year. Instead, I can confirm that the OBR’s forecast today shows Britain’s net payments to the EU falling by around £1 billion for this year and next year, and falling in real terms over the next five years. That is the dividend we receive thanks to a Prime Minister who fights hard for our national financial interest in Brussels.
Another bill that has gone down is the cost of our overseas military operations. The end of our operations in Afghanistan allows us to save an additional £200 million this year from the special military reserve. I join the rest of the House in saluting the brave men and women of our armed services who for more than a decade have risked their lives for our security in Iraq and Afghanistan. Even as we speak, they are tackling the horrific Ebola virus in west Africa, a fight that reminds us all of the value of Britain’s commitment to 0.7% in development aid. Today I am extending our inheritance tax exemption to cover our aid workers who lose their lives in dealing with humanitarian emergencies. LIBOR fines will continue to support our military and emergency service charities with support for our armed services benevolent charities and the Gurkhas and £10 million for veterans with hearing problems. We will ensure that the first world war continues to be properly commemorated, and this morning I have announced we will repay the entire outstanding national debt incurred to fight the first world war.
We will extend the cathedral renovation fund to cover repairs to our country’s churches. Thanks to the brilliant campaigns run by my hon. Friends the Members for Filton and Bradley Stoke (Jack Lopresti) and for Bristol North West (Charlotte Leslie) and others, we will use the LIBOR money for new helicopters for the Great Western air ambulance, and the Kent, Surrey and Sussex air ambulance, too. I will go further and refund VAT for our search and rescue and air ambulance organisations across the UK. Our hospice charities also make an enormous contribution to our communities. They have long been subject to unfair rules that force them to pay VAT, when the NHS does not. I am today refunding the VAT that these hospice charities incur.
I turn now from those who have paid too much tax to some of those who have paid too little. First, we will make sure that big multinational businesses pay their fair share. Some of the largest companies in the world, including those in the tech sector, use elaborate structures to avoid paying taxes. Today, I am introducing a 25% tax on profits generated by multinationals from economic activity here in the UK which they then artificially shift out of the country; that is not fair to other British firms and it is not fair to the British people either—today, we are putting a stop to it. My message is consistent and clear: low taxes; but low taxes that will be paid. Britain has led the world on this agenda and we do so again today. This new diverted profits tax will raise more than £1 billion over the next five years.
Secondly, I am taking action today to make sure that our banks pay their fair share, too. Under the rules we inherited, banks can offset all their losses from the financial crisis against tax on profits for years to come. Some banks would not be paying tax for 15 or 20 years, which is totally unacceptable. The banks got public support in the crisis and they should now support the public in the recovery. I am today limiting the amount of profit in established banks that can be offset by losses carried forward to 50%, and delaying relief on bad debts, which together will mean that banks contribute almost £4 billion more in tax over the next five years. We will also put in place internationally recognised measures on hybrids and the reporting of tax by country.
That is multinationals and banks paying their fair share, and so should people aggressively trying to avoid their tax—that is the third step. I am taking measures to prevent the disguising of fee income by investment managers; the avoidance of tax through special purpose share schemes, miscellaneous losses and payments of benefits in lieu of salary; the avoidance of stamp duty on takeovers; and unfair benefits from the transfer of some intangible assets on incorporation. Those measures and others set out in the document raise £2.8 billion. We are also consulting on other measures, including the use of so called “umbrella companies” to deprive people of basic employment rights such as the minimum wage, and, as a result, to avoid tax.
Fourthly, I want to preserve the non-dom status that makes our country attractive, but I want these people to pay a fair contribution while having certainty about their future arrangements. In the next Parliament, the £30,000 annual charge will remain unchanged, but those who have been here for 12 of the last 14 years will see their payment rise to £60,000; and I am introducing a new £90,000 charge for those resident in this country for 17 of the past 20 years. To tackle the continued use of enveloped properties to avoid stamp duty, I am increasing the new annual charge by 50% above inflation on properties worth over £2 million. All these tax measures I have announced amount to £9 billion over the next five years The distributional analysis the Treasury publishes today shows that the decisions across this Parliament mean that the rich are making the biggest contribution to deficit reduction. In fact, the net contribution of the richest 20% will be larger than that of the remaining 80% put together, proving that we are all in this together.
We will make further reductions in Government spending and welfare, and we will make sure taxes are paid, but ultimately our future living standards depend on Britain earning its way in the world, so we must increase our productivity. Today, we take steps to back business, support science and invest in infrastructure. This Government have succeeded in making Britain the most entrepreneurial economy in Europe, and today we want to go further. To ensure that our growing smaller businesses have access to credit, we will expand the British business bank and act to encourage peer-to-peer lending. With the Governor of the Bank of England, I am extending the funding for lending scheme by a further year and focusing it exclusively on smaller firms. We will strengthen entrepreneurs’ relief and the social investment tax relief. We will accept almost all the recommendations of the Office of Tax Simplification to reduce the administrative burden on firms, and I thank Michael Jack and John Whiting for their work.
Our tax breaks have ushered in a golden age for Britain’s creative industries as well. Today, we will extend our new theatre tax break to orchestras; and we will help one area of television production that has been in decline, with a new children’s television credit, alongside our new animation credit. I know that the whole House has been saddened to hear that Wallace and Gromit may no longer be produced because the man behind Wallace’s voice has retired, but after next May I am sure the whole House will unite behind a suitable and by then available candidate.
We also want to help British businesses do more research and development—that is crucial to our productivity. Today, I am increasing the R and D tax credit for small and medium companies to 230% and the credit for larger firms to 11%. This Government have repeatedly helped small business deal with the burden of business rates and we do so again today. We will double small business rate relief for yet another year. The last Government were going to close it, but it benefits half a million firms and means a third of a million firms pay no rates, and we are going to continue to fund it. I will also continue to cap the inflation-linked increase in business rates at 2%. I am also announcing a full review of the structure of business rates, and I urge business groups to engage with us on that. Last year, to help our high street shops, pubs and cafes, I introduced a new £1,000 discount on their rates. With the brilliant small business Saturday this weekend, I am increasing that help for the high street by 50%, to £1,500 next year.
The fall in the global oil price has meant a welcome boost to much of the British economy and to families. There is record investment this year in the North sea, but the lower oil price clearly presents a challenge to this vital industry. My right hon. Friend the Chief Secretary to the Treasury will set out our full proposals in Aberdeen tomorrow, but I can tell the House today that we will go ahead with an immediate reduction in the rate of the supplementary charge from 32% to 30%; we will expand the ring-fenced expenditure supplement from six to 10 years; and we are introducing, with immediate effect, a new cluster area allowance. That demonstrates our commitment to the tens of thousands of jobs that depend on this great British industry.
Despite falling fuel prices, let me make this absolutely clear: we have cut fuel duty and we will keep it frozen—with my hon. Friend the Member for Harlow (Robert Halfon) sitting right behind me, I would not dare do anything else. Just as we demand that falls in oil prices should be passed on to people at the pumps, other fuel price surcharges should also come down. We are going to require airlines to list the charges separately from the taxes on tickets, but I also want to reduce the cost of those tickets for families directly. My hon. Friends the Members for Altrincham and Sale West (Mr Brady) and for North West Leicestershire (Andrew Bridgen), and many others, have asked me to help reduce air passenger duty for children on economy flights, so from 1 May next year APD for children under 12 will be abolished. I will go further than they asked: from the following year, we will get rid of APD for children under 16 altogether.
Improving productivity for all businesses also demands a major investment in our nation’s infrastructure. Because we have controlled our day-to-day spending, I can confirm that we will invest more as a share of our GDP over this Parliament and the next than was achieved under the whole period of the last Labour Government. This week we have set out plans for the biggest road building programme for a generation. We have committed billions to our flood defences, and today I take forward the recommendation of my hon. Friend the Member for Waveney (Peter Aldous) and expand tax relief on business investment in those flood defences, too. It is all brought together in the national infrastructure plan, which is now helping our country attract more investment from around the world than any other single country in Europe.
Britain is raising its ambition, and nowhere is that clearer than in our commitment to science. It is a personal priority of mine as Chancellor. Scientific advance is a human endeavour worthy of support in its own right, but it is also crucial to our economic future. When this Government came into office, the UK was ranked 14th in the global innovation index—today, we are ranked second. But we aim to be the best. A year ago, I abolished the arbitrary cap on the total number of undergraduates at our universities. Today, I am going to revolutionise the support for our postgraduate students, too. Until now, there has been almost no financial support available, and the up-front costs of postgraduate degrees deter bright students from poorer backgrounds. Today, across all disciplines, we will make Government-backed student loans of up to £10,000 available, for the first time ever, to all young people undertaking postgraduate masters degrees.
The next step is the allocation of £6 billion on the biggest ever sustained programme of investment in the research facilities of our scientific community. This includes money for major new scientific challenges, including the search for advanced materials, ground-breaking work on ageing and the exploration of the universe. The Rosetta comet mission captured the nation’s imagination. I can tell the House that, yesterday, Britain was awarded the lead role in the next international effort to explore the planet of Mars. We on the Government Benches have often gazed at the barren and desolate wastelands of the red planet, and we have long given up hope of finding intelligent life there, but signs of any life at all would be a major advance.
Many of the new science investments will be made in the north of England. One of the great challenges of this country is to create a more balanced national economy—a challenge that has eluded Governments for generations. Our ambition is to build a northern powerhouse as a complement to the strength of our capital city, bringing together our great cities of the north. Since I set out that ambition less than six months ago, we have proposed, reported on, and given the green light to the concept of High Speed 3. This week, we commit billions of pounds to other road and rail improvements across the whole of the north of England. I can today confirm that we will tender for new franchises for Northern Rail and the TransPennine Express, replacing the ancient and unpopular Pacer carriages with new and modern trains.
When I set out the ingredients of a northern powerhouse, I promised to make progress. Today, I deliver. A few months ago, there were no proposals for major scientific institutions in the north of England. Today, we commit to a massive quarter of a billion investment in a new Sir Henry Royce Institute for advanced materials science in Manchester, with branches in Leeds, Liverpool and Sheffield. We back the brilliant work on ageing being conducted at Newcastle university, and big data computing at Hartree.
We are also committing to the industry of the north, with investment in new high-value manufacturing research. We are supporting new academy schools, and we are announcing a new sovereign wealth fund for the north of England so that the shale gas resources of the north are used to invest in the future of the north. The cultural life of the north will get a boost too, including a major new theatre space in Manchester. Manchester city council proposes to call it the Factory Manchester. Anyone who is a child of the ’80s will think that that is a great idea.
Six months ago, people would have said it was completely impossible to get the 10 local authorities of Greater Manchester to come together with the Government to agree a major devolution of power to the city and the creation of a new directly elected mayor. We have delivered in Manchester, and my door is open to other cities who want to follow its cross-party lead. I said that I had put the northern powerhouse at the heart of this autumn statement, and with billions of investment in science, transport and new civic power in our great northern cities, that is exactly what we have done this week. We show today what can be achieved if we have the determination and ambition to deliver a truly national recovery.
We will also respect and fully implement the devolution settlements across the nations of our United Kingdom. Today, I announce that we recognise the strongly held arguments for devolving corporation tax-setting powers to Northern Ireland. The Treasury believes it can be implemented provided that the Northern Ireland Executive can show that they are able to manage the financial implications. The current talks will see whether that is the case. If it is, the Government will introduce legislation in this Parliament.
In Wales, we are working towards a cross-party agreement on further powers for next March. I confirm today that we have reached agreement with the Welsh Government on the full devolution of business rates. This is a great opportunity to grow the Welsh economy. Last week, the Government supported the proposals of Lord Smith’s commission on Scotland. They will lead to the devolution of income tax rates and thresholds and other powers and ensure that the Scottish Government are responsible not just for spending money but for raising the taxes to pay for it. We will publish the draft clauses in the new year. The sheer scale of the devolution to Scotland now makes unanswerable the case for English votes for English laws.
To improve the productivity of our economy, we back business, build infrastructure and support growth across the whole UK. But in the end, Britain’s future lies in the hands of its people and their aspirations—aspirations to save, to work and to buy a home. Today we support each one.
First, on saving, from next April, we will trust people with control over their own pensions. In this autumn statement, I confirm that the 55% death tax that currently applies when a person passes an unused pension pot on to their loved ones will be abolished. People will be able to pass on their pensions to their loved ones tax free. I can also tell the House today that we will ensure that people who die before the age of 75 with a joint life or guaranteed-term annuity can pass that on tax free, too.
Next week, we will publish the market-leading rates on our new 65-plus pensioner bonds, which will be available from January. Our £15,000 new individual savings accounts are hugely popular with savers, too. Next April, we will increase the limit to £15,240. But we will do something more. At the moment, when someone dies, the savings in their ISA lose their tax-free status and their spouse starts paying tax on that money. From today, I can announce that when someone dies, their husband or wife will be able to inherit their ISA and keep its tax-free status. Pass on your ISA tax free and pass on your pension tax free. We are delivering fairness to savers and to those who aspire to work, too.
The number of young people on unemployment benefits has halved. Our goal is to abolish youth unemployment all together. To support businesses that take on young people, we are already, from next April, abolishing national insurance contributions for employing anyone under the age of 21. Today, I can go further. Under this Government, almost 2 million people have taken up an apprenticeship. The Prime Minister has set this country an ambition of 3 million apprentices in the next Parliament. We back the businesses that employ apprentices, especially young apprentices under the age of 25.
At the moment, we charge national insurance on businesses that employ apprentices. Today, I can announce that the jobs tax on young apprentices will be abolished altogether. When a business gives a young person a chance in life, we will support them, not tax them.
We also back people of all ages in work, which is why the Government have raised the tax-free personal allowance to £10,000. Next year, the tax-free personal allowance, which was set to rise to £10,500, will rise instead to £10,600. That is a total wage boost for working people of £825 a year. It means that 3.5 million of the lowest paid will now be taken out of tax altogether. That shows that we on the Government Benches do not sneer at people who want to work hard and get on. [Interruption.] I just wanted to flag that up.
It is the first step to the new goal that we have set of raising the personal allowance to £12,500 so that people working full time on the minimum wage pay no tax at all. Today, I can also announce that, unlike previous increases in the personal allowance threshold, this increase will be passed on in full to higher-rate taxpayers paying 40% tax. So the higher-rate threshold goes from £41,865 this year to £42,385 next year. That is the first increase in the higher threshold in line with inflation for five years. This year’s increase means that 138,000 fewer people will pay the higher rate than would otherwise be the case. It is a down-payment on our commitment to raise the higher-rate threshold to £50,000 by the end of the decade.
There are those who have said that it was impossible to control public spending, improve public services, reduce the deficit and still cut income taxes for hard-working families on low and middle incomes. Today, we have settled that argument: it is possible, provided that we hold to our long-term economic plan, and we are doing it.
I turn now to my final measure. As well as the aspiration to work and to save, there is the aspiration to own our own home. Today, I am announcing the complete reform of a tax that has been described as one of our worst designed and most damaging. Stamp duty is charged at a single slab rate on the whole purchase price of a home. It means big jumps in tax when house values tip into a new band. The distortions can be particularly damaging at the lower end: someone buying a property worth £250,000 pays £2,500 in tax, but if they buy a house worth just £1 more, they pay over £7,500—three times as much. In recent years, the burden of stamp duty has increased on low and middle-income families trying to buy a new home as prices have risen. That makes it even more difficult to get together the cash deposits that buyers need. It is time that we fundamentally changed this badly designed tax on aspiration, so I am today abolishing the residential slab system altogether. In future, each rate will apply only to the part of the property price that falls within that band, like income tax.
Here are the new marginal rates: you will pay no tax on the first £125,000 paid; and then 2% on the portion up to £250,000; 5% up to £925,000; 10% up to £1.5 million; and 12% on everything over that. As a result, stamp duty will be cut for 98% of home buyers who pay it. Someone buying an averagely priced house of £275,000 will pay £4,500 less in tax. The average home in London will see a similar reduction. As I said, 98% will pay less, and the whole reform represents a tax cut of £800 million per year. Only homes that cost just over £937,000 will see their stamp duty bill go up under this system—gradually to start with, rising to more substantial sums for the most expensive homes. A £5 million house will see its stamp duty rise from £350,000 to £514,000, but, of course, this is a charge that is paid only once, when the property is bought.
I can tell the House that these changes to stamp duty become effective from midnight tonight. Anyone who has exchanged contracts but not completed by midnight will be able to choose whether to pay under the old system or the new, so no one in the middle of moving house will lose out. The changes will apply in Scotland until the Scottish Government’s new regime comes into effect next April. At the end of the statement, I will move a motion to introduce this. There will be a debate tomorrow and legislation will follow.
There has been a debate in this country about taxing houses. The system that I introduce today replaces a badly designed system that has distorted our housing market for decades. It reduces stamp taxes for 98% of people who pay them in this country. It increases the taxes on the most expensive 2% of homes, but asks people to pay that tax only when they buy the house and they have the money. It does not involve a revaluation of hundreds of thousands of homes in this country. Today I am cutting stamp duty for millions of home buyers in this country—98% will be better off. That is a fair, workable, lasting reform of the taxation of housing, and it is in stark contrast to the shambles of the anti-aspirational, unworkable homes tax that the Labour party wants to impose.
Four and a half years ago, our economy was in crisis. People questioned whether Britain could remain among the front-rank economic nations of the world, but we set a course to restore stability, to get on top of our debts and to show that Britain was not going to be counted out. Through the storm we have stayed the course. Now Britain is on course for surplus, on course for lower taxes, on course for more jobs, on course for higher growth and on course for a truly national recovery—a long-term economic plan on course to prosperity.
Order. Before I call the shadow Chancellor, may I inform hon. and right hon. Members that at the end of questions on the autumn statement, I shall call the Chancellor of the Exchequer to move a provisional collection of taxes resolution? Copies of the resolution are available in the Vote Office.
Order. I made it clear that the Chancellor must be heard with courtesy and the same goes for the shadow Chancellor—[Interruption.] Order. I am grateful, Mr Robertson, for your intended helpful gesticulation. I am well aware of the old ruse of people sitting below the Gangway where they think I cannot see them and yelling their heads off, either on their own initiative or because they are rather stupidly following instructions. Either way, it does not work. They should pipe down, and if they will not pipe down, it is very simple—three words that are easily understood: “Leave the Chamber.”
As I was saying, the House has not yet seen the detailed documents from the Treasury and the Office for Budget Responsibility tables—I am sure that they will arrive shortly—but I listened carefully to the Chancellor’s statement. To establish the facts, I want to start by asking him questions about issues that are vital to our country’s future: living standards and wages; tax receipts and borrowing; growth and immigration; taxation; and the national health service.
First, on living standards—[Interruption.] These questions about living standards, wages and tax receipts are important, so I advise Conservative Members to listen to them carefully, and then we will hear the answers.
Wages have not kept pace with prices for 52 of the past 53 months. Today’s OBR forecasts confirm that wage growth is once again weaker than expected. Working people are now £1,600 a year worse off than in 2010. Someone in full-time work is now £2,000 a year worse off. For working people, there is a cost of living crisis, and the squeeze on living standards not only is hitting family budgets, but has led to a shortfall in tax revenues. The OBR confirms that stagnant wages and low-paid employment have hit revenues, saying that
“weaker-than-expected wage growth so far in 2014-15”
“depressing PAYE and NIC receipts.”
Does the Chancellor agree with the OBR’s analysis? Will he tell us how much tax revenue has been lost this year because of stagnating wages and forced part-time employment?
The result of that shortfall in tax revenues is that, once again, the Chancellor has had to revise up his forecasts for Government borrowing. He told the House today that the deficit for this fiscal year is now expected to be £91.3 billion—[Interruption.]
I am trying to establish the facts about the deficit from the Chancellor. He told the House that the deficit for this fiscal year is now expected to be £91.3 billion, but he did not set out in detail how much worse things are since the Budget. Will he tell the House by how much borrowing this year has been revised up compared with his Budget forecast?
Back in 2010, the Chancellor and the Prime Minister pledged to balance the budget by the end of this Parliament and that we would see the national debt falling this year. The Prime Minister said in 2010:
“In five years’ time, we will have balanced the books.”
Today the Chancellor has, I believe, announced that the deficit next year is forecast to be £75.9 billion. Will he confirm that number and the fact that the national debt next year is forecast not to fall, but to rise? While he has clearly missed his targets, he did not tell us the scale by which he has missed them. How much more will he have borrowed in this Parliament than he planned back in 2010?
Wages, income and borrowing have been hit so hard because productivity growth has been so weak. Today the Chancellor announced that he is forecasting that growth will not accelerate but—[Interruption.] The Prime Minister’s Parliamentary Private Secretary will be interested to know that the Chancellor forecasts that growth next year will slow down. I know that the Chancellor wants to blame poor growth performance and poor productivity growth on the eurozone. I share the concerns about the eurozone—we need a plan for stronger growth in Germany and across the continent—but the weakness of the eurozone cannot explain why, despite the notable successes of a number of our companies, our export performance has been so poor, and so much worse than that of other eurozone countries. Since 2010, our export performance has been 16th in the G20. In the EU, we have been 22nd out of 28 countries; three quarters of EU countries have done better than us.
Business investment, which has also lagged behind that of our competitors, fell in the last quarter. Bank lending to small businesses is falling. The number of apprenticeships for young people is falling this year. House building under this Government is at its lowest level since the ’20s. On infrastructure, for all the Chancellor’s preheated re-announcements, barely a fifth of projects are in construction, and infrastructure output is down over 11% since 2010.
On business rates, the research and development tax credit and air passenger duty, we welcome the action that the Chancellor has taken. We will support what he has proposed on APD, but let me ask him—[Interruption.]
Order. There is far too much noise in the Chamber. Mr Opperman, I have told you three times, and I do not want to have to tell you again: be quiet, sit and listen. If you do not wish to do so, get out. The same goes for the Government’s Deputy Chief Whip, the right hon. Member for Chelsea and Fulham (Greg Hands); I have been looking at and listening to him. Let me make it clear to him that he ought to know better. Behave or get out, man.
We’ll get him out next year, Mr Speaker.
I would like to ask the Chancellor about the air passenger duty proposal. We will support what he has proposed, but following the Smith commission proposal to devolve air passenger duty to Scotland, will the Chancellor urgently lead work across Government, with the Scottish Government, on a mechanism to ensure that English airports, particularly in the north of England, are not disadvantaged by that devolution?
On business rates, while the review is welcome, it will not report, I believe, until 2016. Why can the Chancellor not take immediate action and adopt our plan to cut business rates for small companies? Why will he not increase the bank levy now and increase free child care for working people? Why will he not properly capitalise the business investment bank? Why will he not raise, as a proportion of earnings, the national minimum wage? Why will he not repeat the bank bonus tax and guarantee a compulsory job for all people? On regional devolution, why will he not devolve full growth in business rates to all city and county regions, to give them real control? We need a real plan for good jobs and more balanced growth.
On the subject of growth, the figures that the Chancellor announced reveal that growth has been revised downwards in 2016 from 2.6% to 2.2%, in 2017 from 2.6% to 2.4%, and in 2018 from 2.7% to 2.3%. Why is growth being revised downwards year after year? This is an interesting fact from the OBR: if our economy grew by just 0.5% a year faster than forecast, Government borrowing would come in more than £32 billion lower in the next Parliament. Does the Chancellor not see that those downgrades to growth are bad news? Without decisive action to sustain growth and raise living standards, and without a recovery for the many, not the few, he will carry on missing his deficit targets year after year.
Let me ask the Chancellor about another missed target. Over the past 12 months, net migration to the United Kingdom has been 260,000 people. Can he tell the House—this will be an interesting question to many Back Benchers in all parts of the House—the OBR estimate for net migration over the next 12 months that underpins the growth and public finance forecasts? It seems highly unlikely that it will be anywhere near the Prime Minister’s forecast, which is for tens of thousands. Will it be over 100,000 next year? Over 150,000? Over 200,000? This time, did the Chancellor remember to tell the Prime Minister the facts?
Turning to spending and taxation, the Prime Minister claimed in The Times a month ago that 80% of the planned spending cuts had been made. The Institute for Fiscal Studies says that it is less than 50%. Can the Chancellor clarify who is right and who is wrong? He claims that in the next Parliament he can cut welfare spending by over £10 billion, but in this Parliament, spending on social security is over £20 billion higher than he planned in 2010 because of what happened to housing benefit in particular. He is planning a £3 billion real-terms cut in tax credits that will hit 3 million working people on middle and lower incomes, and once again he is hitting women harder than men.
The Prime Minister rather let the cat out of the bag earlier when he referred to “masosadism”. As I understand it, masosadism is when someone enjoys having pain inflicted on them and enjoys inflicting pain on other people. We know the Chancellor’s views on the first; it seems, from the way he smiled when he announced the tax credits cuts, that he is rather enjoying the second as well. How can it be fair to hit working people with a £3 billion cut to their tax credits when he has spent £3 billion giving a tax cut to people earning over £150,000?
When families are paying £450 more in higher VAT, does the Chancellor really think that people will fall for the Prime Minister’s latest promise of a £7 billion unfunded tax cut in the next Parliament, which even the Business Secretary has called a “fantasy”? Two months on, the Chancellor gave us no details at all of where he will get the money from—not a single penny. Is he planning to pay for that with a further rise in VAT? He said at the weekend that he has no plans to raise VAT. That is what he said before the last general election, and then he raised it after the election. He should stand at the Dispatch Box today and promise that he will not raise VAT again for families and pensioners.
On the national health service, we welcome the Chancellor’s belated recognition that there is a funding crisis. Everyone knows—other than the Prime Minister, it seems—that our health service is going backwards. Accident and emergency department waiting times and GP waiting times are going up, thanks to the Government’s £3 billion reckless reorganisation. The Chancellor announced £2 billion for, he said, every year into the future—paid, it seems, by an underspend every year into the future. I have never heard of a prospective forecast of an underspend being made in quite that way. Will he confirm that that is £2 billion a year for the national health service over a flat, real baseline? We need to know the answer to that one. It seems that the Chancellor has also confirmed that £700 million of the crisis cash is a re-announcement of a re-allocation from within the existing Department of Health budget.
In the Chancellor’s stamp duty reforms, he is accepting that high-value properties are under-taxed, which is welcome. But rather than taxing them only on sale, why does he not have the courage of his conviction? The average person pays 390 times more in annual council tax as a percentage of their property than the billionaire buyer of a £140 million penthouse in Hyde park. Why will the Chancellor not have an annual charge on the highest value properties and use that for a £2.5 billion a year investment in the NHS so that we can have 20,000 nurses and 8,000 GPs every year? Why will he not match that commitment? Our national health service deserves a proper funded long-term plan, not just more short-term sticking plaster.
We then heard the Chancellor’s diversionary stunt. He had to admit today that he has failed to balance the books in this Parliament. He is now trying to divert attention with a vote on balancing the books in the next Parliament. At the time of the Budget, he talked up a vote on the overall budget surplus, but I understand from reports in the Financial Times that he has done a U-turn and retreated to a vote on a current budget surplus in the next Parliament. Will he explain what is going on with that vote and the nature of the problem that he is dealing with? We want to get the current budget back into surplus as soon as possible in the next Parliament, and get the national debt falling, but the lesson of this autumn statement is that a plan to balance the books will work only if it puts good jobs, rising living standards and stronger growth at its heart.
The Chancellor’s diversionary tactics will not work. Since he sat down, I have received the Office for Budget Responsibility’s forecasts. Table 1.2 on page 15 sets out in detail how the latest forecast compares with the forecast at the time of the Budget. It gives us the numbers that the Chancellor failed to tell us in his autumn statement. I will give the country and the House those numbers. Compared with his Budget target—it is here on page 15 in table 1.2—borrowing this year has not gone down. It has been revised up by £4.9 billion. Next year it is revised up by £7.6 billion. Over two years the Chancellor has revised borrowing up by £12.5 billion.
The answer to my other question, which I did not have when I started, is that those figures mean that in this Parliament the Chancellor will have borrowed £219 billion more than he planned in 2010—£219 billion. It is all here in black and white—hard evidence from the Office for Budget Responsibility. The Chancellor’s borrowing targets are all in tatters. We all know that he has changed the way he styles his hair, but he cannot brush away the facts. People are worse off and he has failed to balance the books in this Parliament. For all his strutting, all his preening and all his claims to have fixed the economy—he promised to make people better off—working people are worse off. He promised that we were all in this together, then he cut taxes for millionaires. He promised to balance the books in this Parliament, and that commitment is now in tatters—every target missed, every test failed, every promise broken.
We need a recovery for the many, not just a few. We need to balance the books fairly. We need a long-term plan to save our NHS. That is the autumn statement that we needed. It will take a Labour Government to deliver it.
With that performance, we see why the right hon. Gentleman is totally unfit to be put in charge of the nation’s finances in six months’ time. We have had an object lesson in how not to plan an autumn statement reply before hearing the autumn statement. That was what he expected to hear, as we know because he went round the TV studios over the past few weeks predicting it. He said that the deficit would go up this year. He said it last month, he said it last week, he said it on Sunday. I have his words. He said that the Chancellor is going to have to make an autumn statement where he is
“going to have to say that the economy is weakening, the deficit is getting larger”.
I have just quoted independent forecasts which show that the economy is stronger, the deficit is falling and the debt is lower in every future year. The shadow Chancellor got it completely wrong.
It is hardly surprising that his party has such low economic credibility when the shadow Chancellor repeatedly makes predictions about the British economy that turn out to be completely wrong. No more boom and bust, he said—wrong. A double-dip recession, he predicted—completely wrong. He has spent the past three months betting the entire credibility of the Labour party’s response to the autumn statement on the prediction of a massive deterioration in the public finances and the deficit going up, and he got that completely wrong. People say there is a split in the leadership of the Labour party. They are right. It is between people who get the deficit figures completely wrong and people who forget about the deficit altogether.
The Opposition have no economic credibility and they have policies that show that they are not up to the job. The shadow Chancellor mentioned his homes tax. We still do not know what the Labour party’s view is of the stamp duty reforms. I guess we will find out in the next few days. We do not have a clue what its views are on the postgraduate changes or the infrastructure investments that we have announced. The right hon. Gentleman spoke about his homes tax. This is what the Labour party thinks about his homes tax. The Chair of the Public Accounts Committee says:
“I don’t think it’s the world’s most sensible idea.”
The former Housing Minister, the right hon. Member for Greenwich and Woolwich (Mr Raynsford), says that it hits the “cash poor”. The right hon. Member for Tottenham (Mr Lammy) says it is “a tax on London”, and the right hon. Member for Dulwich and West Norwood (Dame Tessa Jowell) says:
“Let’s stop calling it a ‘mansion tax’…these are family homes”.
One of Labour’s council group leaders summed it up best when they said it was “completely bonkers”. That is the housing policy—to put taxes on housing.
The shadow Chancellor asked about our tax cut on apprentices. His jobs tax policy is to increase national insurance. He talks about pensions. His pensions policy is to tax pensions. He asked me a couple of questions about savings in the public finances. I was hoping that he was going to give me some suggestions for savings that we can make in the public finances. I have had to do a bit of research myself about what his party’s policy is.
The Opposition have conducted what is called a zero-based review for the past year and identified two surplus assets that the Government should sell. The first is the Queen Elizabeth II conference centre. The shadow Chancellor first proposed selling that in 2001 and seems to have forgotten that it is the only bit of Government that pays us an income. The other thing they found to pay down the national debt—it is in the Labour party document—is a restaurant in St James’s park, estimated to be worth £6.7 million. That is 0.005% of the national debt, so their national economic policy is literally out to lunch.
That is the problem that we have seen in the right hon. Gentleman’s reply. He has absolutely no answers to the economic challenges that Britain faces. He has no credibility and no workable policies because Labour has no workable plan. We are five months away from a general election in which people will have to choose their Government. The most serious responsibility incumbent on anyone seeking office is to show that they can provide economic stability to the nation and protect the families who live here. The Opposition do not have a clue how to do that. They do not have a plan. Their whole response today shows that they would take Britain back to square one. Britain has pulled itself out of the economic crisis that the shadow Chancellor created, and we are not going to let him take us back there.
Does my right hon. Friend recall, as I do, that the shadow Chancellor was the right-hand man of the Chancellor who presided over the credit crunch, the banking collapse and the incurring of the biggest deficit in the G20, and does he not find his conversion to rigid fiscal discipline and the pursuit of fiscal surpluses absolutely quaint and ridiculous?
On a more serious note, my right hon. Friend is proposing to devolve considerable powers, in a very welcome way and to varying degrees, to the different nations and cities of the United Kingdom. Can he reassure us that he will combine that with firm and enforceable commitments to financial responsibility so that he and the UK Treasury can retain overall responsibility for the stability of sterling and our economy, because not every local government Labour leader can be trusted to follow the clear and effective path that he has followed in getting our debt back under control?
My right hon. and learned Friend makes a good observation about the shadow Chancellor’s career. I should pay tribute—probably for the first time—to the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), who this week announced his retirement: first, for his commitment to advancing international development and to British aid, which I fully support; and secondly, because when he was shadow Chancellor, as we all remember, he built up a really compelling case for fiscal discipline. That, in part, is why the Labour party won the 1997 general election. That stands in such marked contrast to the shambles we see from the pair sitting opposite me now, who subsequently advised him.
On my right hon. and learned Friend the former Chancellor’s good point about devolution, of course both local government and the different nations of the United Kingdom—the devolution arrangements apply to both—will have in place robust arrangements that protect taxpayers across the United Kingdom. That is certainly an important part of the Smith commission report and how we must take it forward. It is also at the heart of the devolution settlements that we have discussed with English local authorities.
I am sure that the House will want to return to that last point on the UK Government’s ability to control their finances. Did I hear the Chancellor correctly when he was claiming credit for having halved the deficit over the course of this Parliament, because his view used to be that that would not be a terribly good thing? We are still borrowing £90 billion this year, and the reduced growth forecasts for the next five years, which we see in the OBR report, show that it will slow down, so can he tell us what impact that will have on the likely tax revenues, which of course have a bearing on our ability to pay down the deficit?
Let me also pay tribute to the former Chancellor for his work on the Scottish referendum campaign. To be fair to him, what we did not know in the debate before the previous general election, but which has subsequently been revealed in the various memoires that have been written about the Government he was at the heart of, is that he was arguing internally for the Government to set out the spending cuts that they would make. Indeed, he argued that the Labour Government should commit to a VAT increase, which of course the Labour party, somewhat hypocritically, opposed several months later when we had to take that step. What we know about his role in the previous Government does him great credit.
On the right hon. Gentleman’s point, as I explained in my statement, although borrowing falls in each year, the OBR has revised up the borrowing for the first two years but then revised it down, compared with the Budget, in the years after that. The structural deficit continues to fall at the same pace as in the Budget. This is not the big deterioration in the public finances that everyone has been predicting—it was on the front pages of many newspapers, and indeed the shadow Chancellor went about repeating it. That has not happened. With regard to lower tax receipts, I gave the tax receipts forecast but pointed out that one of the reasons why there has not been that deterioration in the public finances is the big reduction in debt interest payments.
The OBR forecasts that over the course of this Parliament the eurozone will grow at a little over 2% and the UK will grow at nearly 9%, which of course is a tribute to the capacity of UK businesses, particularly small businesses, to adapt to the huge economic shock of the euro crisis. However, just doing a bit better than the eurozone is not enough; our prosperity will depend on whether we can absorb the annual shock of increased global competition. Is not it therefore crucial, as we have seen with the pressure on Northern Ireland’s corporation tax rate, that we do much more to sustain a globally competitive tax system?
My hon. Friend is absolutely right. It is not enough just to do better than our neighbours, because of course they have their own problems and are stagnating. If one looks at all the various indexes of global tax competitiveness and global innovation, one sees that the UK is climbing up the ranks. We in the Treasury certainly seek to mark ourselves against the most competitive economies in the world, not just those on the continent of Europe. The steps I have outlined today, which probably will not make it on to the front pages of the newspapers, such as the increase in the small business research and development tax credit, the large company tax credit and changes to entrepreneurs’ relief and its relationship with the enterprise investment scheme, are all designed to support research and development and entrepreneurial business in this country.
I sincerely welcome the Chancellor’s announcement of the new measures to crack down on tax avoidance, particularly by challenging the mismatch between the form of a company’s structure and the substance of its activities, which is a key recommendation from the Public Accounts Committee. This week, Starbucks announced that it will pay no corporation tax in the UK for the next three years. Can he tell the House when the measures that he has announced will be implemented and how they will prevent Starbucks from sticking two fingers up to the British people?
Of course, the legislation needs to pass through the House of Commons before the tax can be levied, so the diverted profits taxes are from April next year, and the hybrids taxes are from a little later, in 2017. It is complex tax legislation, but we aim to get it through. I suspect that, in order to get it through before the general election—the right hon. Lady might be helpful in this—we might need the co-operation of the Opposition in passing those clauses in the Finance Bill.
With several hundred job losses already announced in the north-east of Scotland, I certainly welcome the UK Government’s decision to send a signal that we want to maximise investment in the North sea. That would have been a necessary signal whether or not the price of oil was falling, and it will build the jobs base in the UK and a great export industry. Will the Chancellor confirm that such a move is possible because we are part of the United Kingdom’s diversified economy?
My hon. Friend makes a good point. Of course, what is very striking, if one looks at the receipts revenue forecasts from the OBR, is that they are wildly different from those produced by the Scottish Government before the recent referendum. As he will see tomorrow, when his colleague the Chief Secretary to the Treasury sets out in Aberdeen what we are doing, the tax cuts we announced today, which will come into effect in the coming weeks, will have an immediate effect, but we are also going to try to set out a longer road map for the direction we want to head in. As he well knows, industry investment decisions are made over long cycles and people need predictability about the future of the British oil and gas tax regimes so that we get the maximum amount of oil out of the basin.
With average wages still suffering the longest and biggest fall since Victorian times, productivity still one of the lowest in the OECD, business investment still flat and below pre-crisis levels, the deficit on traded goods now the biggest in British history and, to cap it all, the budget deficit is clearly beginning to rise because of the fall in tax receipts, how can the Chancellor, against that background, continue with austerity when its consequences are clearly now causing the deficit to rise?
I am afraid that the right hon. Gentleman is just wrong. Business investment is not flat; it is up 27% and is rising faster in the UK than in any other major advanced economy in the world. The deficit, according to the OBR document, was 10.2% under the previous Labour Government; it is now 5%. The idea that that is an increase is obviously nonsense. Indeed, it falls in every future year, just as it has fallen this year.
Does not providing potentially up to £100 million in infrastructure investment to make Bicester an exemplar of a garden town for the 21st century, and ensuring that 13,000 new houses are built as speedily as possible, demonstrate that a key part of the Government’s long-term economic plan is building new homes and creating communities of which we can all be proud for generations to come?
My right hon. Friend is absolutely right. I commend him and the community leaders in Bicester for working with us to secure this extra investment in the town, to create the vision of a garden town, and to make sure that there are housing and jobs for the town’s population while preserving its beautiful character.
I welcome some of the individual measures announced today, but they do not amount to a long-term economic plan. At its heart, what the Chancellor said was that the target to see debt fall as a share of GDP this year has not been met; that the current account will not be in the black next year, as he promised; and that borrowing then, far from being £20 billion, will be almost four times that, at £75 billion. Why should the public believe that if the Government do the same things over the next two or three years, that will be any different from their failure in doing them first time round?
At the moment, we see Britain as the fastest growing major economy in the world. We also see a record fall in unemployment, and the highest rate of job creation occurring in Scotland. That is the United Kingdom delivering for the people of Scotland. Now we have proposals from the Smith commission, jointly agreed between the different parties, whereby the Scottish Government, and the Scottish Parliament, can take more responsibility for raising their own taxes to pay for their own expenditure. Then we will have an even better debate in Scotland on how things are paid for.
I was glad to hear my right hon. Friend confirm that there has been no new recession in the years since 2010. It would have been a strange recession that resulted in unemployment falling by 45% and average weekly pay being up by 12.5% in my constituency and in 4,000 new businesses opening in my borough. Will he join me in congratulating the thousands of people who have got into work and started new businesses in my constituency in the past four years?
My hon. Friend has been a real champion for small businesses and for exporters in her Stourbridge constituency, and for attracting investment into the black country. I pay tribute to the work she has done. The measures we have taken today to help high street stores by increasing the business rate discount to £1,500, to take the smallest businesses out of business rates, and to back exporters and to increase the research and development tax credit for firms in the west midlands are all tribute to the work she has done and the issues she has raised in Parliament.
In the hon. Lady’s own constituency, unemployment is down. In her own constituency, economic security has increased as people can see that the country is not in the crisis it was in four or five years ago. She has to ask her constituents this: do they want to return to the economic instability and crisis that everyone remembers under the previous Labour Government, or do they want to stay on course to prosperity? I think the British public will conclude that they want to stay on course to prosperity.
May I warmly congratulate the Chancellor on extending the new loans to postgraduates? With increasing numbers of jobs requiring a postgraduate qualification, that really does remove a significant barrier to social mobility. Does he agree that if more people are able to stay on and do masters courses, that is an opportunity to look at broadening the range of subjects that they study at early stages of their education?
My right hon. Friend is absolutely right. Of course, he knows that we embarked on this work on how to extend support to postgraduates when he was Minister for Universities and Science—it might have been him who first proposed the idea to me—and I am absolutely delighted that it has come to fruition. This is one of the biggest reforms I have announced today. It will provide real support for postgrads, who do not currently get any support. In almost all the reports that one reads on social mobility, including the report by Alan Milburn, that has been identified as a barrier to entry for people from low-income backgrounds into the professions. It is a really important step forward. Again, I suspect that it will not be the headline in tomorrow’s newspapers, but that does not mean that it is not going to change lots of people’s lives.
Yesterday, the right hon. and learned Member for Rushcliffe (Mr Clarke), a former Chancellor, gave an extended interview to the BBC in which he said, among other things, that the Government should keep tax increases in the locker in case they are needed. Does the Chancellor intend to consult former Chancellors on his long-term economic plan? If not, will he now deny that a VAT rise will be imminent after the next election?
I have set out today how our plans to bring the deficit down and bring borrowing down can be achieved through spending reductions in Departments and through welfare savings, and therefore do not require tax increases. I also explained that if we were to achieve over the next period the same as we have achieved during this Parliament in dealing with tax avoidance, tax planning and aggressive tax evasion, we could achieve £5 billion of savings, or extra revenue, in that space of time as well. That is a better way to proceed, and that is the course we have set.
The Chancellor will be aware that I, and many colleagues in this House, have been working with the CLA, which is actively campaigning for reform of compulsory purchase to deliver fairer compensation for landowners who are affected by infrastructure projects such as HS2. I greatly welcome his announcements on stamp duty. Will he go a bit further and consider abolishing stamp duty land tax on the purchase of replacement property by landowners who are so badly affected by infrastructure projects?
Like my right hon. Friend, I too have the challenge of HS2 going through my constituency, although of course she is further along in the process because her constituency is affected by the first phase of the route. I know, from my experience and from talking to her, that this has a big impact on communities. We have tried to make the compensation generous and to make the process for accessing it easier. It is certainly a lot easier than when I, as a constituency MP, had to deal with the compensation relating to the second runway at Manchester airport. Of course, I will look at any ideas that she puts forward, but any measure has to be affordable. I should also point out that in today’s document we set out further reforms that we intend to make to the compulsory purchase regime.
The Chancellor talked tough on tax evasion today, but so far none of the Crown dependencies or overseas territories has committed to a public register of beneficial ownership. I know that my right hon. Friend the shadow Chancellor will act tough on this issue. Why will not this Chancellor and his Government make some progress on it?
Frankly, the hon. Lady is not being fair to the Government or to those territories and dependencies. There had been no progress at all when we came into office. They have all now committed to the automatic exchange of information; they all attended the conference in Berlin where they made the international commitment to do that; and they are all consulting, right now, on the creation of these registries. They are doing that because my right hon. Friend the Prime Minister put this issue centre stage on the G8 agenda in Lough Erne.
The Chancellor said that the end of our operations in Afghanistan will allow this country to save an additional £200 million this year from the special military reserve. There is also the sale of surplus Ministry of Defence radio frequencies, which he did not mention. Will he agree to ring-fence both sums to pay to modernise the family homes of the brave men and women of our armed services, whom he says he salutes?
We do have a programme, which we have extended, to renovate the accommodation of service families. We are all aware of the challenges that many families face with that accommodation. The special military reserve was created to fund overseas military operations—that is what it exists for. When we came into office, this country was spending £4 billion a year on operations in Afghanistan. The special military reserve is now down to about £1 billion; I have been able to reduce it a little today. Despite what the reserve is for, I am always willing to consider specific requests for support. I did not have time in my speech to set out the very many military good causes that we are supporting with the LIBOR money.
New analysis shows that an ambitious energy efficiency programme would create up to 108,000 new jobs, generate £1.27 in tax revenues for every £1 invested by the Government and end fuel poverty. Will the Chancellor explain why this statement fails to direct one penny of the infrastructure budget towards tackling the cold homes crisis in places such as Brighton?
We have proposals to help, for example, off-grid consumers with energy efficiency, and we also have the energy companies obligation programme to help with energy efficiency. We have announced this week a commitment to look at the idea of the Swansea bay tidal lagoon project, which could be a very interesting project for renewable energy generation in the future.
Under 13 years of Labour, unemployment went up in east Northamptonshire, there were no road improvements and shops closed. That is why Tom Pursglove, our excellent candidate for Corby, and I launched a joint listening campaign to improve things in east Northamptonshire. Unemployment is now 30% lower, and we now have the Rushden Lakes retail development on line and, thanks to the Chancellor this week, the Chowns Mill and the A45 dualling improvements. Will the Chancellor visit east Northamptonshire so that Tom Pursglove and I can carry him shoulder-high through the streets of Rushden, Higham Ferrers, Stanwick, Raunds and Irthlingborough to cheering crowds?
That is quite an offer. I met Tom Pursglove and my hon. Friend to discuss the infrastructure improvements that they wanted in the east midlands. We have been able to deliver what they have so successfully campaigned on and attracted so much local support for. That is a good combination of two strong local campaigners working for their local area to deliver improvements that, frankly, were never delivered under a Labour Government and that Labour MPs have never asked me for.
The Chancellor has recognised that he will not deliver on his commitment to eradicate the deficit in this Parliament. Will he also recognise that a large part of the reason for the failure is that, as the OBR has acknowledged, tax receipts have been hard hit by the fall in real wages since the general election?
I acknowledged in my statement that tax receipts are £24 billion below what we forecast for 2017-18, but I pointed out that people have focused only on the tax side, not the spending side of the equation: lower unemployment and lower inflation have an impact on welfare payments and debt interest payments—we are paying £18 billion less in debt interest than was forecast—which is of course why we have not seen the big deterioration in the public finances that he and others predicted.
If we are to have a shale gas industry, I welcome the idea of a sovereign wealth fund. Does the Chancellor agree that northern money for northern investment could be a real game changer? When he sets up the fund, will he take into account the fact that it looks as though the majority of the gas will come from Lancashire, not Yorkshire? [Interruption.]
My right hon. Friend the Leader of the House, who is sitting next to me, said, “Oh, really”. I said that the sovereign wealth fund should be for across the north of England so that I did not get into any trans-Pennine, war of the roses dispute.
My hon. Friend is absolutely right that many of the immediate opportunities are in Lancashire, in or near the area he represents. I have spoken to him about what more we can do to make sure that local communities see the benefit of the jobs, investment and resources that we will get as a result of this important energy exploration and extraction. Of course, we now have the new college in the area—that has just been announced—so local people will have the right skills to get those jobs.
The reason is that we started with a 10.5% budget deficit, which we have had to reduce. Interestingly, the International Monetary Fund assesses that we have had the longest and most sustained reduction in the structural deficit, and that we are forecast to have the strongest reduction in the headline and the structural deficit in the future. The IMF assessment of how we have done shows that we are restoring economic stability to this country.
May I again congratulate the Chancellor on being a friend to small and micro-businesses? His autumn statement is first class. His extension of national insurance and business rate reliefs is much appreciated, and it is inspirational that he is going to have a full review of business rates, the most-hated tax for all small businesses. While he is feeling inspired in the demolition business—getting rid of the slabs in stamp duty—will he look at the cliff in VAT? It is a real barrier to growth, despite the fact that it is a European tax.
As my hon. Friend knows—this is the problem of previous Governments having handed over various powers and rights of this country to Brussels—we are constrained by the VAT threshold that we can levy in this country. I think that it is already the highest in Europe, so we are restricted in what we can do. That is why we are seeking to help small businesses in her west country constituency both through the measures on business rates, and through investment in infrastructure, such as the A303, the Dawlish rail line and the Kingskerswell bypass. As I saw a few weeks ago, the bypass is proceeding very well in her constituency.
Instead of wasting his time in Northamptonshire with a dead-beat candidate, may I suggest that the Chancellor comes to the Rhondda, particularly to visit the Conservative club in Tylorstown? I say the Conservative club, but it has closed and, ironically enough, is now a food bank. If he came to that food bank, he would learn from those who run it that the vast majority of people that they are helping with 2.5 tonnes of food every year are in work. That is because of the sanctions regime, low hours, zero-hours contracts and, most importantly, the bedroom tax. Why does he not deal with any of those facts?