House of Commons
Wednesday 18 March 2015
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
Female Genital Mutilation/Early Forced Marriage
Last year’s girl summit achieved unprecedented international commitments to end both practices. We are now tracking to ensure that those commitments and deliverables are delivered, and supporting national efforts in more than 25 countries. The UK is the largest donor on female genital mutilation and we are implementing major new programmes to end child and forced marriage.
Violence against women is always unacceptable, but female genital mutilation is child abuse and illegal. In the UK, there is increasing awareness of this repugnant practice as a result of the work of agencies such as the Kaiza project in my constituency. What efforts are the Government making to improve international awareness of efforts to combat FGM and to bring the perpetrators to justice in courts across the world?
I commend the work of the Kaiza project in my hon. Friend’s constituency. It does absolutely vital work locally. Internationally, we are working closely with national Governments in the affected countries to support the development and implementation of legislation and policy to end FGM. When a case reaches prosecution, it means that there has been a failure to prevent a girl from being cut, so our programme is focusing particularly on prevention.
As the Minister knows, I have a particular interest in this subject, as I changed and tightened up the law in 2003. The Easter holidays are coming up, and many young girls will be taken out of the UK to their countries of origin in the school holidays to have FGM practised on them. What are we doing across Departments to protect those girls from that awful fate?
There are two things. First, there is improved guidance from the Department for Education and, secondly, the right hon. Lady will know that at the girl summit last year we broadened the ability to prosecute people who are taking girls abroad to be cut.
I commend the Secretary of State, her Department and her Ministers for their campaigning work on this issue on behalf of women and girls. May I ask her not to hold back in countries such as Sierra Leone, where secret societies perpetrate female genital mutilation? The girls do not even know what is happening to them and they do not discuss it. Will she work with campaigners in that country to ensure that the matter is addressed?
My right hon. Friend is right to address that point. In spite of the challenges that Sierra Leone faces with Ebola, FGM has, ironically, stopped. This is because it was one of the main ways in which the disease could spread. The key now is to prevent those practices from coming back, and I am already having discussions on that.
Given that my right hon. Friend is leaving the House soon, I should like to take this opportunity to pay tribute to all the work that he has done as Chair of the Select Committee on International Development since 2005. The Committee has published more than 90 reports in that time. On a personal level, I have very much valued his objectivity and constructive working with our Department.
We have been careful to work with the momentum in many countries in Africa. One of our biggest challenges is that tackling female genital mutilation can be seen as some kind of western agenda. It is right that we should press those countries and work with them, but we should also be prepared to work with community groups at a grass-roots level if we cannot get the political will behind us. But the hon. Lady is absolutely right to say that, in the end, political will is needed if we are going to make significant progress.
Communication on FGM and forced marriage is essential at home and abroad. In just one of my local hospitals, 50 cases of FGM were discovered last year when the women happened to go in to give birth there. Will the Secretary of State work with the Education Secretary to ensure that we are getting that communication out to the next generation, internationally and at home?
My hon. Friend is absolutely right. The most powerful thing about the girl summit last year was the young people themselves, many from our country, saying that they wanted a different future. That is why the work that we do domestically in this country is so important. Getting the girls themselves to say no is one of the best ways of eradicating FGM.
Movement restrictions damage the Gazan economy, with the result that 80% of Gazans are dependent on aid, 57% are dependent on food aid and 43% are unemployed. Most of the UK contribution to the relief effort is delivered through the United Nations Relief and Works Agency, and I judge that to be effective within the limitations of the funding and the movement restrictions.
As winter approaches, the Minister will know that the humanitarian situation in Gaza remains dire. It is welcome that the UK has pledged £20 million to help, but what is his Government’s long-term plan, given the re-election this morning of the Prime Minister who believes that the continuation of the blockade of Gaza is a good thing; believes in the building of illegal settlements; has abandoned a two-state solution; and believes that the deaths of more than 2,000 people in Gaza last summer were “proportionate”? Surely now is the time for the Minister to put pressure on his ministerial colleagues, recognise the state of Palestine and end this appalling situation.
The hon. Lady is right in that the state of affairs in Gaza is desperate. However, on the recent events and the election, I am tempted to call in aid the wisdom of the Ents and say that we should not be hasty. It will be some time before the true policies of the new Government emerge, after long negotiations over a coalition. In the meantime, we remain committed to the two-state solution and we make our representations known on all the issues that she has raised, at the highest level.
As of this morning, more than 60,000 individuals have had access to building materials, out of the in excess of 100,000 who need such materials. I am confident that the mechanism is working effectively, but clearly there will have to be a step change in movement and access which can result only from a lasting solution.
Israel will have a Government opposed to a two-state solution and a Prime Minister who turned out his vote by an emergency broadcast that said:
“Arab voters are heading to the polling stations in droves.”
What is the international community going to do to get aid to Gaza, which is in occupation and under siege? How is the international community going to provide that aid when the occupation and siege are permanent?
A great deal of aid for Gaza was pledged at the Cairo conference. We have delivered a quarter of our pledge, and within the first few weeks of the financial year we will have delivered all of the £20 million we pledged. We have been entering into a considerable diplomatic effort to get other countries that have made pledges to step up to deliver, and I am glad to say that Qatar and Kuwait have now done so.
10. My right hon. Friend will know that some 600,000 tonnes of concrete have been used for the construction of illegal tunnels for smuggling and to enable the firing of weapons into Israel. How can he ensure that aid gets to the people who need it and not to Hamas? (908152)
One part of the Gaza reconstruction mechanism is the material monitoring unit, which my Department supports. It is designed specifically to do what my hon. Friend requests: to ensure that any materials supplied, stored and dispersed are for the proper purpose and that any infractions are reported.
The Minister says that we should wait and see what is going to happen in Israel, but now the mask has slipped and Netanyahu has said he will not allow a two-state solution and will not allow a Palestinian state. Is not the only solution that will relieve the suffering of the people in Gaza a concerted international action to lift the blockade?
I share the concerns about the election results in Israel and what they mean for people in Gaza and elsewhere in that region. On a number of occasions Israel has had restrictions on parliamentarians being able to cross at the Erez checkpoint to see what is happening in Gaza. Will the Minister seek to get that changed so that people can see what is happening to the aid that we provide and to the people there?
We are improving working conditions through our country programmes and through global standards. For example, in Bangladesh, we are providing £7 million to improve working conditions and safety in 1,800 factories, and we support labour practices globally through the ethical trading initiative.
I am sure that the Minister agrees that decent work is central to people’s well-being, as it provides income, paves the way for broader social and economic advancement, and strengthens individuals, their families and communities. Given the International Labour Organisation’s vital action on that agenda for almost 100 years, why have this Government withdrawn their funding?
We have not withdrawn funding. After the 2011 multilateral review, we withdrew core funding because we had reservations about value for money and we wanted to shift our focus to fragile states. We continue to work with the International Labour Organisation. We have a £7.4 million project with the ILO in Bangladesh, and, together, we are pursuing the Work in Freedom project. We will review that work with the International Labour Organisation at the next multilateral aid review, as the Secretary of State has already said.
Does the Minister agree that the Government’s inclusion of a specific clause on transparency and supply chains in the Modern Slavery Bill will help to improve dialogue between workers and management in Bangladeshi garment factories?
9. World Vision tells me that there are 168 million child labourers worldwide. An investigation by The Guardian has revealed that child labour was used in a DFID-funded project in Nepal. Will the Minister tell us whether that is correct and indicate what will be done to ensure that it does not happen again? (908151)
The hon. Gentleman is right about the figure of 168 million. The only positive thing that one can say is that it has fallen by a third since 2000. The World Food Programme was involved in the project in Nepal, and the services of the supplier were discontinued. None the less, it reinforces the message—we must get this through using our international ethical trading initiative—that producers must take control of their supply chains.
The Government’s successful International Citizen Service led by Voluntary Service Overseas also promotes good public health and good business practice, including better working conditions, but an unintended consequence of the new universal credit rules may be inhibiting young claimants from volunteering for ICS. I know that the Secretary of State has been supportive of VSO, but will DFID Ministers raise this matter with the Department for Work and Pensions to prevent this unintended consequence on an excellent Government programme?
13. Nearly two years on from the Rana Plaza disaster in which thousands of garment workers were killed or injured when their factory collapsed, will the Minister update the House on the work he is doing with UK brands and retailers to ensure safe working conditions and fair pay? (908156)
Our £7.4 million programme with the International Labour Organisation is training some 575 factory inspectors and carrying out, with our funding, some 1,800 factory investigations for electrical, fire and structural problems. We are driving forward that agenda.
In 2012 Human Rights Watch documented the loss of jobs and violent forced evictions of the Anuak people from their ancestral lands in Ethiopia. The World Bank project linked to those abuses was funded by the Minister’s Department. What steps did he take in 2012 to investigate those allegations of human rights abuses?
My understanding is that the programme is designed to lift some 50 million people out of poverty by 2022. With regard to the seed provision, my understanding is that it is not compulsory to take it and that the legislation that has been put in place is standard.
The right hon. Gentleman’s Department decided to stop funding that World Bank project only in January this year, and it announced that decision only the day before the World Bank published the findings of its investigation into those issues. Why did he take three years to act, and what steps has he now taken to ensure that British aid truly supports better working conditions and jobs for the poorest, and is never again linked to human rights abuses?
The UK has pledged £800 million in response to the Syria crisis, providing food, medical care and relief items to some of those most affected, including children. That includes the £50 million that I announced at the UN General Assembly for the No Lost Generation initiative, which provides education, psychosocial support and protection for Syrian children affected by the crisis in Syria and the region.
I am sure that the Secretary of State has read the report by the all-party group on protecting children in armed conflict and is considering its recommendations. Given the growing and unprecedented number of childhoods lost though conflict, will she commit to having someone lead on that vital issue within her Department?
The hon. Lady obviously has not yet received the letter I signed off to her earlier this week, which says precisely that. I commend her for the work she has done on the International Development Committee and on her interest in what is clearly a vital area. I can assure her that the Department will work with her.
For those children in places such as Jordan and Lebanon we have programmes under way to ensure that they can double-shift with local children in schools. For the several million children still in Syria, ensuring that they can access education is clearly far harder.
My right hon. Friend the Home Secretary is working hard, as part of her work on combating extremism, to ensure that those sorts of messages are disrupted so that young people in our country understand the huge risks they would face were they to break the law and go over to Syria to do jihad.
The route to ending aid dependency is through inclusive growth, creating jobs, raising incomes and increasing tax revenue. We have set out priorities in a strategic framework for economic development and will more than double our spending on economic development to £1.8 billion in 2015-16.
My hon. Friend is right to point out that our work on livelihoods can have far broader effects—for example, work with private sector companies such as Unilever can not only help to raise incomes and prosperity, but be a route by which employees can, in that example, improve health and hygiene measures.
In the last year of the previous Government we spent £56 million on private sector development. That is projected to rise exponentially to £1.8 billion. Rather than the Conservative party’s ideological approach of trickle-down economics, should not that investment be made on the promise of decent work, fair pay, good conditions and the right to join a trade union?
I can assure the hon. Gentleman that our work is about raising prosperity, raising incomes and helping people to get the dignity of work with, of course, the sorts of safeguards he talks about in relation to working conditions. We are right to expand our work in this area and I hope I can get cross-party support for that.
Last Friday, Cyclone Pam hit Vanuatu, causing widespread destruction. Working closely with the Governments of Vanuatu, Australia and New Zealand, the UK has made up to £2 million available to UN organisations and relief agencies working on the ground. In addition, the Royal Air Force’s swift action is providing further valuable support, alongside the rapid response facility that we launched.
My hon. Friend will be aware that since the last DFID questions I have been to Sierra Leone to see our work gradually bearing down on Ebola. I am proud that the private Member’s Bill introduced by the right hon. Member for Berwickshire, Roxburgh and Selkirk (Michael Moore) has completed its parliamentary stages and now awaits Royal Assent.
Volunteers in my constituency who had hoped to visit Sierra Leone to build a new school have, sadly, been forced to postpone their plans owing to the Ebola outbreak. However, will the Secretary of State join me in welcoming the York Circuit Ebola appeal run by those same volunteers, which aims to raise much needed funds for those affected by the epidemic?
I pay tribute to the work of the York Circuit on its Ebola appeal. I know how valuable that work is in helping to set up emergency education programmes. We have worked with UNICEF to set up care centres across the country. I hope the volunteers in my hon. Friend’s constituency can get on with their wonderful work shortly. [Interruption.]
As the hon. Lady will know, this year’s CSW was a vital discussion in order to make sure that we do not slide backwards on women’s rights, but position ourselves to get a stand-alone gender goal and mainstreamed improvements on tackling women’s rights across the new post-2015 framework. As it was hard for me to hear the whole of the hon. Lady’s question, I will check Hansard and write to her with a fuller response.
T2. Given the need to ensure in these dangerous times that our armed forces are properly funded, does my right hon. Friend agree that peacekeeping operations should be paid for in their entirety from the foreign aid budget, and that no cost should come out of the armed forces budget? (908133)
My hon. Friend will be pleased to hear that currently a percentage of peacekeeping operations count as official development assistance. That is currently 7%, although I am sure he would like it to be higher. He will be pleased to hear that a review is under way to understand what element of peacekeeping can be classed as aid and it will report shortly.
T7. One of my excellent community groups in Saddleworth supports Palestinian women into education. Members of the group inform me that one of the education centres that they know well was recently ransacked by Israeli forces. The education centre is in Palestinian territory. Does the Secretary of State agree that not only are these actions illegal, but they jeopardise future sustainable peace in the region? (908138)
Much of our work in the occupied Palestinian territories focuses on providing basic services, including education. At the Cairo conference one of the main concerns of donors was the need to end the perpetual cycle of violence, reconstruction, then destruction and violence and the need for more reconstruction. I agree with the hon. Lady that this cannot continue ad nauseam.
T4. Last month my hon. Friend the Member for Congleton (Fiona Bruce) and I had the honour of meeting Eileen Lodge, who has committed 60 years of her life to working for the poor and sick in Nepal. Does my right hon. Friend agree that the work of her Department would be impossible without the dedication of hundreds of millions of people, of all nationalities, who serve in difficult and dangerous situations, often for little or no financial reward? (908135)
Eileen is a fantastic example of someone who has worked in a country tirelessly for several decades now. I know that she is particularly focused on Nepal and has worked on leprosy. I really want to pay tribute to the work done by her and by so many millions of others.
The Prime Minister was asked—
The Chancellor said in his first Budget:
When we say that we are all in this together, we mean it.—[Official Report, 22 June 2010; Vol. 512, c. 167.]
When the Prime Minister and the Chancellor came up with such a vacuous soundbite, was it before they decided to give a £42,000 a year tax cut to millionaires, or before they attempted and failed to eliminate the deficit on the backs of the poorest?
The fact is that the hon. Gentleman cannot hide from the statistics that show that inequality is down, poverty is down, 3 million of the poorest people have been taken out of income tax altogether, and, most importantly, we have created jobs for tens of thousands of our fellow countrymen and women. Today, we see the unemployment statistics with a record number of people in work. In his constituency—I would have thought he would want to welcome this—the claimant count has fallen by 49% since the election. That is what has happened; that is how we are beating poverty.
Q15. When this Government took office, metal theft was rife, especially in the black country. This Government listened to the all-party group on combating metal theft, banned cash payments, and passed the Scrap Metal Dealers Act 2013. Once my right hon. Friend has been returned for another term as Prime Minister, what more will he do to ensure that instances of this abhorrent crime reduce still further so that no more church roofs get horrendously damaged and no more trains get stopped in their tracks as a result of sheer greed? (908131)
My hon. Friend is absolutely right. This is an important line of crime that has been increasing, not least because of the value of this scrap metal. The roof on Witney church in my constituency has been stolen. We have made sure that scrap metal dealers are required to hold licences and councils can revoke a licence at any time. We have banned cash payments to purchase scrap metal, and we have provided £6 million of additional funding for a dedicated national metal theft taskforce. What I will do, if re-elected, is make sure the police continue to have the powers and the ability to crack down on this abhorrent crime.
The Prime Minister promised before the last election no “top-down reorganisations” of the NHS. In the words of the chairman of the Conservative party, would he describe this as an “over-denial” or simply a straightforward broken promise?
What we did was we took the bureaucracy out of the NHS. We made two big decisions. Big decision No. 1 was to put more money in, and big decision No. 2 was to take the bureaucracy out. That is why we have 9,500 more doctors and 7,000 more nurses. I can see the shadow Chancellor chuckling. We know the shadow Chancellor wants to be in the kitchen Cabinet; he just does not know which kitchen to turn up to.
Somehow I thought the Prime Minister might mention kitchens. Let me just say that at least I paid for my kitchen, unlike the Government Chief Whip.
Let us get back to the NHS. First broken promise: on top-down reorganisation. Next, the Prime Minister said:
“I refuse to go back to the days when people had to wait for hours on end to be seen in A&E”.
Now we learn that the NHS will miss the four-hour A and E target for the whole of this year for the first time ever. Why did he break that promise?
Which of his kitchens did he pay for? I think we deserve an answer. I feel sorry for the Leader of the Opposition—he literally does not know where his next meal is coming from. [Hon. Members: “More.”] Oh, don’t worry, there is plenty more.
The right hon. Gentleman asked about accident and emergency. So far this year, 93.7% of people have been seen within the four hours. I want us to do better—we will bring together health and social care to make that happen—but we made a promise, which was that we would put £12.7 billion into the NHS. The Opposition said it was irresponsible; we invested in our health service.
That is another broken promise on accident and emergency. Now let us turn to cancer. On cancer, the Prime Minister said that the key issue was how long people had to wait to get treatment, but the NHS is missing the 62-day treatment target. Why did he make that promise?
Let me bring the right hon. Gentleman closer to home—genuinely, to his home in Doncaster. [Interruption.] This is the answer. Here are the cancer waiting times for his constituents: 95.2% of patients with suspected cancer were seen by a specialist within two weeks, and the target is 93%—target met; 97.9% of patients diagnosed with cancer began treatment within 30 days, and the target is 96%—target met; and 87% of patients began cancer treatment within 62 days of an urgent GP referral, and the target is 85%—target met. The fact is that on the NHS we have put in the investment, we increased the doctors and we increased the nurses. Frankly, if he cannot stand the heat, he had better get out of his second kitchen.
I think that was a long-winded way of saying the Prime Minister has broken his promises on the NHS. Now let us turn to another one of his promises. He promised “a bare-knuckle fight” to stop the closure of A and E and maternity units. He even did photo calls outside the hospitals whose units then closed. Why did he break the promise?
I am very glad that the right hon. Gentleman has raised this issue, because at a previous Prime Minister’s questions he stood at the Dispatch Box and produced a list of, I believe, 27 hospitals, seven of which were shut under a Labour Government. That is how incompetent he is as Leader of the Opposition. Just imagine what a mess he would make if he was running the country.
Great, because I have a photo of the Prime Minister at Chase Farm hospital, and he said that
“if you call an election on November 1, we’ll stop the closure of services at this hospital on November 2”.
Then he closed the services. That is what happened on his watch.
Since the last election, the Prime Minister has broken his health service promises on waiting times, cancer treatment, A and E and top-down reorganisation. When he makes a whole series of new NHS promises, why on earth should anyone believe him?
I will tell you why people should believe us: because we have the strong economy that can deliver a strong NHS. We promised more money for our NHS—promise delivered; we promised more nurses for our NHS—promise delivered; we promised more doctors for our NHS—promise delivered; and we said that we would sort out mixed-sex wards and hospital-acquired infections—promise delivered. Is it not interesting that the right hon. Gentleman has asked five questions and there has not been one mention of the unemployment figures today? The right hon. Gentleman cannot bear the fact that the employment rate in our country is at a record level: there is a record number of people in work; there is a record number of women in work; there is a record number of vacancies. That is what this country is delivering—a strong economy that builds a strong NHS.
People are worse off and the NHS is worse off on the Prime Minister’s watch, and that is why working families cannot afford another five years of him. Everybody knows the NHS cannot survive another five years of this Government. The NHS was built by Labour, saved by Labour and will only be safe in the hands of the next Labour Government.
There is only one Government in the history of the NHS who have cut the NHS and they were the last Labour Government in the ’70s: they did it because they lost control of the economy. Every forecast the right hon. Gentleman has made about the economy has been wrong. He said there would be no jobs; we have record jobs. He said we would not cut the deficit; the deficit is down. He said there would not be growth; we have the strongest growth of any major western economy. He has made misjudgment after misjudgment on every single question. We talk about our long-term economic plan because it is about changing lives, it is about jobs, it is about livelihoods and it is about giving people the chance of security—that is what will be on the ballot paper in 50 days’ time, and they will never trust him with the future of our country.
Does the Prime Minister agree that the best prospect for the people of Scotland is to be a successful part of a growing United Kingdom, and that Alex Salmond’s mission to shake this House to its foundations will deny recovery, jobs and mortgages, and threaten both the UK and Scotland, which is why the people of Gordon are uniting to deny his return to this House?
My right hon. Friend makes an important point, which is that what the SNP wants is to break up our country. That is why it is so appalling that although the Leader of the Opposition has now said that he does not want a formal pact with the SNP, he will not rule out a confidence and supply agreement. He will not rule out relying on the SNP in vote after vote after vote, making sure that it would get the advantage and people in England, Wales and Northern Ireland would be let down—[Interruption.] Yes, we rule it out. What I would say to the shadow Chancellor is that his boss threw both his kitchen sinks at the NHS and he still could not win. [Interruption.]
Q2. One in four patients is waiting more than a week for a GP appointment, and some in my constituency are waiting two weeks. A third cannot even get through on the phone, but 23% of London GPs are due to quit the NHS in the next five years. Will the Prime Minister take responsibility for the increasing crisis in GPs on his watch? (908118)
What I would say to the hon. Lady is that nationwide we have 1,000 more GPs in the NHS. In her constituency, there are eight more GPs compared with 2010, there are 317 more GPs in the London area, and the Royal College of General Practitioners, which has often criticised the Government, has said that there has never been a better time to go into general practice.
Q3. The black country economy in the west midlands has been one of the fastest growing local economies of any region in the United Kingdom over the last two years, with more investment in manufacturing, new high-skill jobs, more exports and better opportunities for local people in my constituency. Would the Prime Minister agree that as part of our long-term economic plan, the people in the black country can be proud of that industrial revival, and be confident in saying that things are made in the black country and sold around the world? (908119)
My hon. Friend makes an important point. It is a remarkable statistic that growth value added in the black country means that the area has grown faster than any other local enterprise partnership area in the entire country. Compare that with the so-called boom years of the 2000s, when private sector employment in the west midlands went down, not up, and it shows that we are seeing a genuinely national recovery. Huge credit must go to Jaguar Land Rover which, in the last five years, has tripled its turnover, doubled its sales and doubled its work force. Manufacturing in Britain is growing again, including in the west midlands, and we should be proud of that.
Q4. In January, John Smedley in Clay Cross announced that it was making 21 seamstresses redundant. It took nearly two months before someone from the Jobcentre Plus rapid response team went in to see those women. The response was unsympathetic, unhelpful and anything but rapid. What has happened to rapid response and why have those workers been so badly let down? (908120)
I agree with the hon. Lady: it is important that Jobcentre Plus is there to help employees when they are let go by their employers. That is what it is there for. Generally speaking, I hear very good reports of what it does. Of course, in her constituency, the claimant count has come down in the last year by 29%, so the overall economic picture is good. I will certainly look at the specific case and see if Jobcentre Plus needs a boost, but the fact is that jobs are being created and the vacancies are there. The hon. Lady talks about seamstresses, and we are actually seeing production in the garment industry being brought back onshore, which is very good news.
Q13. The unemployment count in Redditch at the end of the year had fallen to below 850 for the first time since 2005. Does my right hon. Friend agree that it would be catastrophic for the hard-working people of Redditch if that was undone by the Labour party? (908129)
I thank my hon. Friend for her question. Today’s figures are remarkable. We see employment up by 1.89 million since the election. We used to talk about creating 2 million private sector jobs; it is now 2.3 million private sector jobs. Another figure fresh out today is the youth claimant count, which is now at its lowest rate since the 1970s, 40 years ago. In Redditch, the claimant count has fallen by 63% since the election and the youth claimant is count down by 39% in the last year alone. The plan is working. It is not just dry and dusty statistics: this is about people getting a job, getting a livelihood, getting security. That is what we want to keep going.
Q5. The Prime Minister will be well aware of the hard work that went into the Smith agreement. He will be as disappointed as I am to see the front page of the Daily Record today showing four Scottish National party councillors burning that very agreement. Not only did they escape discipline; one of them was actually promoted. Are these the actions of a party that seeks to increase its representation in this place? (908121)
The hon. Gentleman makes an important point, which is that the Smith process and the Smith agreement was about bringing together different political parties, which often disagree with each other quite violently on issues, to come to the right answer for the future of Scotland and the future of devolution. It was an excellent report. We are all committed to putting it in place, whoever is in government after the next election. It is disappointing that the SNP, which only wants to break up our country, will not stick to the promises it made.
Last June, I asked the Prime Minister if he was satisfied with police investigations into organised child sexual abuse. By November, the Home Secretary acknowledged that years ago there might have been a cover-up. This week, we learned that the Met itself has identified as many as 14 cover-ups. Now that we have a judge-led inquiry, is it not time we treated this scandal, in the words of the Independent Police Complaints Commission, as
“high level corruption of the most serious nature”?
It went to the very core of the British state.
My hon. Friend is right to say how serious this is. It is right that not only is there an Independent Police Complaints Commission investigation into what happened in the police force, but that a separate part of the Metropolitan police is carrying out an in-depth investigation, Operation Fairbank, into what happened. Added to that, we now have the overarching Justice Goddard review to look at institutional failings in discovering child sexual abuse. What I would say to my hon. Friend and others in the House who I know are very interested in this issue is that we will do everything we can to get to the bottom of what happened. Anyone who is worried about whether people will be prosecuted under the Official Secrets Act for coming forward with information should be reassured by the assurances that have been given by the Attorney-General and the Home Secretary. It is in everybody’s interest that we get absolutely to the bottom of what happened. If people should be punished for their failures, they should be.
Q6. When the Prime Minister answered the Leader of the Opposition, he was able to show that cancer waiting targets had been met in my right hon. Friend’s constituency. They obviously have a very effective Member of Parliament, but—[Interruption.] The Prime Minister is responsible for the national health service as a whole. He will be aware that nationally the 62-day wait for treatment for cancer patients after referral has been breached in each of the last four quarters. What does he have to say to the more than 5,000 cancer patients, including one in four people with bowel or lung cancer, who are waiting months before they get any treatment? (908122)
Everybody in this House, me included, knows people who have been affected by cancer and have died of cancer. This Government have put an enormous amount of effort, as previous ones have done—[Interruption.] I will answer the question. I will answer the question very directly, right? We have made sure—[Interruption.]
We have made sure that half a million more people have been referred for cancer treatment, and as a result, cancer survival rates are going up. As well as looking at the national figures, it is worth while looking at constituency figures, and I have the right hon. Lady’s figures here—she is obviously a very effective MP too, because her area is meeting all three cancer targets. That is what is happening in Britain—more people referred, more resources going in, more people surviving, but more to be done—but let me remind her: this can only happen with a strong economy. It is when the Labour party wrecks the economy that it wrecks the health service.
Yesterday, the announcement was made that the minimum wage should increase from £6.50 to £6.70, which is a real-terms increase. After the great Labour recession, we did not have increases in the minimum wage and it lost its value, but under this Government, it is going up. I can guarantee my hon. Friend that if we keep increasing the minimum wage at the rate it is being increased now, it will get to beyond £8 by the subsequent election. So Labour’s proposal for an £8 minimum wage will mean a cut in the minimum wage. It is like so many of its other policies, including its university tuition fees policy—as someone said today, the first example in political history where you get less for more.
Q7. My neighbour Helen was able to live in her own home for many years with degenerative multiple sclerosis because of the independent living fund, until sadly she died. How can the Prime Minister and the Government morally justify taking away the fund from the most disabled people in our communities, so that they might end up being institutionalised, not independent? (908123)
As the hon. Gentleman knows, we have devolved the funding for the independent living fund, but we have also maintained the vital disability benefits, such as the disability living allowance, which has been uprated every year in line with inflation.
Q12. Does my right hon. Friend agree that our long-term economic plan is doing an outstanding job in my constituency? Unemployment now stands at 269, making it the best performance of any constituency in the country. Will he join me in thanking the firms that I visited last week in Thame that are running fantastic apprenticeship schemes, and the young people joining them? (908128)
I will certainly do that. I am delighted that unemployment is so low in my hon. Friend’s constituency. The latest figures show that the UK’s employment rate has seen the largest rise of any G7 country over the past year. Today, there are nearly 1 million fewer people on the main out-of-work benefits and nearly 2 million more people in work in our country. More young people have got into work in the UK over the past year than in the rest of the European Union put together. Those are the benefits of having a long-term economic plan, sticking to a long-term economic plan and ignoring the hopeless advice from the Labour party.
Q8. Despite the Prime Minister’s fine words and rhetoric, his Government’s cost of living crisis has hammered many families in the north-east. Tens of thousands of public sector jobs have been butchered; we have the highest unemployment level in the UK; we have weekly earnings £71 less than the national average; and our life expectancy is 10 years less than anywhere else in the country. Is it not time that the Prime Minister showed some guts and apologised to the people of the north-east? (908124)
Let us look at what has happened in the hon. Gentleman’s constituency. The claimant count has fallen in the last year by 28%, or more than a quarter, and in the last year alone—not over the whole Government—the youth claimant count has fallen by 32%. I thought this was the party that said how important it was to get young people off the dole and into work. That is what the Government have done. Unemployment has fallen in every region of the UK. In the north-east, it has fallen by 21,000 over the last year. That is what is happening. We are creating jobs, generating growth and taking the poorest people out of tax altogether—3 million nationwide. [Interruption.] Labour Members say, “Calm down”. I cannot calm down when I see the success that our long-term economic plan is generating. We have 50 days to make sure that the people who delivered this plan can go on delivering it, instead of the people who would wreck it.
Q9. On that theme, BAE Systems, which manufactures world-beating military jets, announced that it is to set up a training academy in the Ribble Valley, upskilling the current work force and bringing on new talent via its ambitious apprenticeship scheme. Will the Prime Minister welcome the £15.6 million investment in this training academy, and when it opens next year, will he visit the Samlesbury site in his continuing capacity as the Prime Minister of our great country? (908125)
I am very grateful for the invitation. I was at BAE’s other main site in the north-west, the Warton site, last week as part of the celebration of national apprenticeship week. I was looking at the training and the skills being delivered there. It is hiring 440 apprentices this year, which is a record for BAE Systems which is doing very well under this Government. This is vital work. We have delivered 2 million apprentices in this Parliament and we aim to deliver 3 million in the next Parliament. These manufacturing apprenticeships are particularly vital. So yes, I will certainly take up my right hon. Friend’s invitation to come and open this excellent academy.
Last Saturday, the Prime Minister spoke at the unveiling of the magnificent Mahatma Gandhi statue in Parliament square. I observed him in deep conversation with Arun Jaitley, the Indian Finance Minister, and Amitabh Bachchan, the country’s greatest actor. Which man offered him the best advice for the next election? Was it the person who presented a budget that will affect a sixth of humanity, or an actor whose acting tips might well help the Prime Minister in the TV debates?
I am very grateful that the right hon. Gentleman was able to attend that beautiful ceremony around the superb statute. There was a great turnout of Members of Parliament, schoolchildren and others to see the extraordinary statue. I think it is quite right that Mahatma Gandhi stands there alongside Churchill and Mandela in such an important square for our nation. As for the advice I was given, those were private conversations, so I shall not delve too far into them. All I will say is that the new Indian Government and the reforms they are making, opening up the Indian economy, will make sure that the relationship between our countries becomes stronger still.
Q10. Just over a fortnight ago, the Secretary of State for Transport visited Wolverhampton and reached a conclusion that I and almost every resident has reached: that the station is desperately in need of an upgrade. Locally, Centro, working with developer, Neptune, has come up with an innovative deal, bringing £80 million and 1,300 jobs, to make sure that we continue investment in the city. Will my right hon. Friend use his offices, along with the DFT, to ensure not only that Wolverhampton gets a station, but that we increase the industrial renaissance in the west midlands that we have seen over the last five years? (908126)
First, let me pay tribute to my hon. Friend for the incredibly hard work he has put in to campaign for that station. I can tell him that, following the visit of the Secretary of State for Transport, £13.5 million has been secured through the local transport and growth deal to fund the project. It is because of my hon. Friend’s hard work that it is going ahead. It is essential that Wolverhampton benefits from good road, rail and other infrastructure connections so that it can benefit from the growth we are seeing in our country.
Q11. The Prime Minister has a record of looking the other way when it comes to allegations of wrongdoing in his own team. He did it with Andy Coulson and he is doing it now with the right hon. Member for Welwyn Hatfield (Grant Shapps). Can the Prime Minister explain why he has been so quick to rule out an investigation into his own party’s chairman? (908127)
I would have thought that with all the things happening in the part of the world that the hon. Lady represents, she could have come up with a better question. My right hon. Friend has acknowledged that he made a mistake, but his entry in the Register of Members’ Financial Interests was correct. I think the hon. Lady is barking up the wrong tree. While I am here, let me say that I am sure she will want to welcome the fact that the claimant count in her constituency has fallen by 54% since the last election.
I want to thank the Prime Minister for steering this country in the past five years through economic waters never seen before, caused by the previous Labour Government. Does he agree that 765,000 people starting up their businesses since 2010, the highest quota since the 1980s, is a good thing—unlike the Labour party, when it caused the collapse in the labour market?
My hon. Friend is absolutely right. Some 95% of the jobs that have been created over the last year have been created for employees in businesses, but we have also seen a big increase in entrepreneurism and business start-ups in our country, lighting the fires of enterprise. That is vital, because those individuals will go on to build great companies, build our industrial base, and provide the jobs of the future. Yes, my hon. Friend is right: so often in the House we talk about our growing economy, and never hear one word of regret from the people who crashed the car in the first place.
This week it was revealed that a second criminal inquiry into a former Member of this House, Sir Cyril Smith, had been closed down by senior police officers, and I believe that there are other examples of cover-ups which are yet to be revealed. Notwithstanding the reassurances from the Home Secretary, will the Prime Minister please give a cast-iron guarantee that former public officials with knowledge of the cover-ups are given full whistleblower protections?
I am grateful to the hon. Gentleman for asking that question, which I think comes down to three separate questions. There is concern about whether people will be prosecuted under the Official Secrets Act. In terms of people giving evidence to the Goddard review, Justice Goddard is perfectly able to ask the Attorney-General—as has happened in the case of all previous commissions of inquiry of this type—to make sure that no one can incriminate themselves when they give evidence, and I am sure that that will happen. In terms of giving evidence to the IPCC inquiry, the Home Secretary has given very clear guidance. And in terms of disclosure to the press, the Attorney-General said very recently that it was highly unlikely that it would ever be in the public interest for someone who revealed wrongdoing to be subject to prosecution. I am absolutely clear about the fact that I do not want anyone to be prosecuted for uncovering wrongdoing in such a way, and I hope that the hon. Gentleman will take that in the spirit in which it was meant.
Ways and Means
Before I call the Chancellor of the Exchequer, I remind all Members that copies of the Budget resolutions will be available in the Vote Office at the end of the Chancellor’s speech. I also remind all Members that it is the norm not to intervene on the Chancellor of the Exchequer or the Leader of the Opposition.
Today I report on a Britain that is growing, creating jobs and paying its way. We made difficult decisions in the teeth of opposition, and it worked: Britain is walking tall again.
Five years ago, our economy had suffered a collapse greater than that suffered by almost any other country. Today I can confirm that in the last year we have grown faster than any other major advanced economy in the world. Five years ago, millions of people could not find work. Today I can report that more people have jobs in Britain than ever before. Five years ago, living standards were set back years by the great recession. Today the latest projections show that living standards will be higher than they were when we came to office. Five years ago, the deficit was out of control. Today, as a share of national income, it is down by more than a half. Five years ago, they were bailing out the banks. Today I can tell the House that we are selling more bank shares and getting taxpayers’ money back. We set out a plan, that plan is working, and Britain is walking tall again.
So the critical choice facing the country now is this: do we return to the chaos of the past or do we say to the British people, “Let’s go on working through the plan that is delivering for you”? Today we make that critical choice: we choose the future. We choose, as the central judgment of this Budget, to use whatever additional resources we have to get the deficit and the debt falling. No unfunded spending, no irresponsible extra borrowing; for no short-term give-away can ever begin to help people as much as the long-term benefits of a recovering national economy. In the emergency Budget I presented to this House five years ago, I said we would turn Britain around, and in this last Budget of the Parliament, we will not waver from that task, because we choose the future.
Our goal is for Britain to become the most prosperous major economy in the world, with that prosperity widely shared. So we choose economic security. This Budget commits us to the difficult decisions to eliminate our deficit and get our national debt share falling. We choose jobs. This Budget does more to back business and make work pay, so we create full employment. We choose the whole nation. This Budget makes new investments in manufacturing and science and the northern powerhouse for a truly national recovery. We choose responsibility. This Budget takes further action to support savers and pensioners. We choose aspiration. This Budget backs the self-employed, the small business owner and the home buyer. We choose families. This Budget helps hard-working people keep more of the money they have earned. This is a Budget that takes Britain one more big step on the road from austerity to prosperity. We have a plan that is working, and this Budget works for you. [Interruption.]
The British economy is fundamentally stronger than it was five years ago, and that is reflected in the latest forecasts from the Office for Budget Responsibility. It seems remarkable that until this Government came to office, our national forecasts were manipulated by Chancellors, to be fiddled and fixed in pre-election Budgets. Today they are produced with independence and integrity by Robert Chote and his team, and I want to thank them for their work. The OBR confirms today that, at 2.6%, Britain grew faster than any other major advanced economy in the world last year. That is 50% faster than Germany, three times faster than the eurozone and seven times faster than France. There are some who advise us to abandon our plan and pursue the French approach. I prefer to follow the advice of the secretary-general of the OECD, which he gave to us all last month. He said:
“Britain has a long term economic plan”
“it needs to stick with it.”
“A long-term economic plan”—now there’s someone with a way with words. We need to stick with that plan, at a time when global economic risks are rising.
The biggest development since the autumn statement has been the further sharp fall in the world oil price. This is positive news for the global economy, but the overall boost this provides has not yet offset the rising geopolitical uncertainty it causes, and the eurozone continues to stagnate. So at this Budget, the OBR has once again revised down the growth of the world economy, revised down the growth of world trade and revised down the prospects for the eurozone. It warns us that the current stand-off with Greece could be very damaging to the British economy. I agree with that assessment. A disorderly Greek exit from the euro remains the greatest threat to Europe’s economic stability. It would be a serious mistake to underestimate its impact on the UK, and we urge our Eurozone colleagues to resolve this growing crisis.
The problems in Europe remind us why Britain needs to expand our links with the faster growing parts of the world. We have made major progress in this Parliament. I can report that the trade deficit figures published last week are the best for 15 years, and we will do even more, so today I am again increasing UK Trade & Investment’s resources to double the support for British exporters to China. We have also decided to become the first major western nation to become a prospective founding member of the new Asian Infrastructure Investment Bank, because we think we should be present at the creation of these new international institutions.
Mr Deputy Speaker, you would expect weaker world growth, weaker world trade and weaker European growth to lead to weaker growth here in the UK. However, the OBR has not revised down Britain’s economic forecasts; it has revised them up. A year ago, it forecast growth in 2015 at 2.3%. In the autumn statement, that was revised up to 2.4%. Today I can confirm that GDP growth this year is forecast to be higher still, at 2.5%. It is also revised up next year, to 2.3%. That is where it remains for the following two years, before reaching 2.4% in 2019.
The OBR reports growth revised up, and its numbers confirm that growth is broadly based, for we are replacing the disastrous economic model we inherited. Between 1997 and 2010, investment accounted for less than one fifth of Britain’s economic growth—four fifths came from debt-fuelled household consumption. Meanwhile, manufacturing halved as a share of our national economy, and the gap between the north and the south grew ever larger.
I can report that since 2010 business investment has grown four times faster than household consumption; Britain’s manufacturing output has grown more than four and a half times faster than it did in the entire decade before the crisis; and over the last year, the north grew faster than the south. We are seeing a truly national recovery.
Let me turn now to the rest of the forecasts. This morning we saw the latest job numbers. It is a massive moment. Britain has the highest rate of employment in its history—a record number of people in work and more women in work than ever before—and the claimant count rate is at its lowest since 1975. For years, Governments have talked about full employment. This Government are moving towards achieving it.
Unemployment today has fallen by another 100,000, and compared with the autumn statement, the OBR now expects unemployment this year to be even lower. It is set to fall to 5.3%, down almost a whole three percentage points from the rate we inherited from the last Government. When we set out our plan, the Leader of the Opposition predicted that a million jobs would be lost. Instead, over 1.9 million new jobs have been gained, because our long-term plan is based on the premise that if we provide economic stability, if we reform welfare and make work pay, and if we back business, then we will create jobs too. Today’s figures show that under this Government 1,000 more jobs have been created every single day. The evidence is plain to see: Britain is working again.
What about all those who say, “The jobs aren’t real jobs; they’re all part-time; they’re all in London”? Nonsense. How many of the jobs are full time? Eighty per cent. How many of the jobs are in skilled occupations? Eighty per cent. Where is employment growing fastest? In the north-west of England. Where is a job being created every 10 minutes? In the midlands. Which county has created more jobs than the whole of France? The great county of Yorkshire. We are getting the whole of Britain back to work with a truly national recovery.
It is only by growing our economy, dealing with our debts and creating jobs that we can raise living standards. To the question whether people are better off at the end of this Parliament than they were five years ago, we can give the resounding answer yes. We can measure it by GDP per capita, and the answer is, yes, it is up by 5%. Or we can use the most up-to-date and comprehensive measure of living standards, which is real household disposable income per capita—in other words, how much money families have to spend after inflation and tax. This is the living standards measure used by the Office for National Statistics and by the OECD. On that measure, I can confirm that, on the latest OBR data today, living standards will be higher in 2015 than in 2010. They confirm that they are set to grow strongly every year for the rest of the decade.
The British people for years paid the heavy price of the great recession. Now the facts show that households on average will be about £900 better off in 2015 than they were in 2010—and immeasurably more secure for living in a country whose economy is not in crisis any more, but is instead growing and creating jobs.
Because we have strong growth and a strong economy, we can also afford real increases in the national minimum wage. This week we accept the recommendations of the Low Pay Commission that the national minimum wage should rise to £6.70 this autumn, on course for a minimum wage that, as the Prime Minister just said, will be over £8 by the end of the decade. And we have agreed the biggest increase ever in the apprentice rate. It is the oldest rule of economic policy: it is the lowest paid who suffer most when the economy fails and it is the lowest paid who benefit when you turn that economy around.
Household incomes also go further because we now have the lowest inflation on record. The OBR today revises down its forecast for inflation this year to just 0.2%, and revises it down for the following three years. It is driven by falling world oil and food prices, not by the kind of stagnation we have seen on the continent. But we will remain vigilant.
I am today confirming that the remit of the Monetary Policy Committee for the coming year remains the 2% symmetric CPI inflation target. I am also confirming the remit for our new Financial Policy Committee, so that this time we spot the financial risks in advance.
The fall in food prices is good for families, but it reminds us of the challenge our farmers face from volatile markets. The National Farmers Union has long argued they should be allowed to average their incomes for tax purposes over five years. I agree and in this Budget we will make that change.
We will also use this opportunity to lock in the historically low interest rates for the long term. I can tell the House that we will increase the number of long-dated gilts that we will sell. We will also redeem the last remaining undated British Government bonds in circulation. We will have paid off the debts incurred in the South Sea bubble, the first world war, the debt issued by Henry Pelham, George Goschen and William Gladstone; the debt issued by Gordon Brown will take a little longer to pay off. [Interruption.]
Since the pound goes further these days, now is a good time to confirm the design of the new £1 coin. Based on the brilliant drawing submitted by 15-year-old David Pearce, a school pupil from Walsall, the new 12-sided pound coin will incorporate emblems from all four nations—for we are all part of one United Kingdom.
I now turn to the national debt. Lower unemployment means less welfare. Compared with the autumn statement, welfare bills are set to be an average of £3 billion a year lower. Lower inflation means lower interest charges on Government gilts: those interest charges are now expected to be almost £35 billion lower than just a few months ago.
Rising unemployment and compounding debt interest contributed to our national debt problem, but they were not the only cause. The previous Government increased debt by £192 billion bailing out the banks and sent the national debt rocketing up by a third.
We have already sold the branches of Northern Rock and raised £9 billion from Lloyds shares. Now we go further. Today I can announce that we are launching a sale of £13 billion of the mortgage assets we still hold from the bailouts of Northern Rock and of Bradford & Bingley. Lloyds bank has returned to profit and is paying a dividend, so we can continue our exit from that bailout, too. We will sell at least a further £9 billion of Lloyds shares in the coming year. The previous Government put taxpayers’ money into the banks and this Government are getting it back.
The bank sales, the lower debt interest and the lower welfare bills present us with a choice. We could treat them as a windfall, even though we know the public finances need further repair. With an election looming, some of my immediate predecessors may have been tempted to do this, but that would be deeply irresponsible. We would be spending money we did not really have and racking up borrowing that our country could not afford. We would be repeating all the mistakes of the last Government instead of fixing those mistakes.
Today, the central judgment of this Budget is this: we will use the resources from the bank sales and the lower interest payments and the lower welfare bills to pay down the national debt. We put economic security first, for higher national debt leaves our nation exposed, harms potential growth and costs taxpayers billions of pounds in debt interest. That would be throwing away billions of pounds we should be using to fund our public services and lower taxes.
Five years ago, national debt was soaring. That was why in my first Budget I set a target that we would have the national debt falling as a share of GDP by 2015-16, the last year of this Parliament. The eurozone crisis made that task here at home all the more difficult and for much of the past five years it looked like we might fall short. The Leader of the Opposition confidently predicted we would fail and the shadow Chancellor repeated that prediction last week, but I can announce to the House that the hard work and sacrifice of the British people has paid off. The original debt target I set out in my first Budget has been met. We will end this Parliament with Britain’s national debt share falling. The sun is starting to shine and we are fixing the roof.
The OBR reports today that debt as a share of GDP falls from 80.4% in 2014-15 to 80.2% in 2015-16. It keeps falling to 79.8% in 2016-17, then down to 77.8% the following year, and to 74.8% in 2018-19 before it reaches 71.6% in 2019-20.
National debt as a share of our national income has been increasing every single year since 2001. Those 13 years amount to the longest year-on-year rise in our national debt since the end of the 17th century. Today we bring that shameful record of irresponsibility to an end and make sure we pay down our national debt. There is a consequence for our fiscal plans. As the national debt share is falling a year earlier than forecast at the autumn statement, the squeeze on public spending ends a year earlier too.
In the final year of this decade, 2019-20, public spending will grow in line with the growth of the economy. We can do that while still running a healthy surplus to bear down on our debt—a state neither smaller than we need nor bigger than we can afford. For those interested in the history of these things, that will mean state spending as a share of our national income of the same size as Britain had in 2000. That is the year before spending got out of control and the national debt started its inexorable rise.
When we came to office, the deficit stood at more than 10% of our national income, one of the highest of any major advanced economy and the largest in our peacetime history. The IMF says we have achieved the largest, most sustained reduction in our structural deficit of any major economy. Today, the OBR confirms that it now stands at less than half of the deficit we inherited, but at 5% this year, it is still far too high and it must come down. With our plan, it does. The deficit falls to 4% in 2015-16, then down to 2% the following year and down again to 0.6% the year after that. The deficit is lower in every year than at the autumn statement.
In 2018-19, Britain will have a budget surplus of 0.2%, followed by a forecast surplus of 0.3% in 2019-20. We will also comfortably meet our fiscal mandate and Britain will be running a surplus for the first time in 18 years. That leads to borrowing. Every one of the borrowing numbers is lower than at the autumn statement. We inherited annual borrowing of over £150 billion from the last Government. This year borrowing is set to fall to £90.2 billion, £1 billion lower than expected at the autumn statement. It falls again in 2015-16 to £75.3 billion, then to £39.4 billion the year after that, before falling to £12.8 billion. In total that is £5 billion less borrowing than we forecast just three months ago. In 2018-19, we reach an overall surplus of £5.2 billion, a £1 billion improvement compared with December. In 2019-20 we are forecast to run a surplus of £7 billion.
Growth is up; unemployment is down; borrowing is down in every year of the forecast; we reach a surplus—all contributing to a national debt now falling as a share of national income. Out of the red and into the black—Britain is back paying its way in the world today.
Lower borrowing and falling debt as a share of GDP will continue only with a credible plan to control public spending and welfare. As we end the Parliament, we can measure the scale of the achievement. The administrative costs of central Government will be down by 40%. We have legislated for welfare savings of over £21 billion a year, and because savings have been driven by efficiency and reform, the quality of public services has not gone down—it has gone up. Satisfaction with the NHS is rising year on year; crime is down 20%; 1 million more children attend good or outstanding schools—but the job of repairing our public finances is not done, and here is a very important point that the country needs to understand. National debt as a share of GDP is now falling and we will only keep it falling if we commit to the fiscal path set out in this Budget. If we deviate from this path, if we go slower or borrow more, the national debt share will not keep falling—it will start rising again.
After all the hard work of the British people over the past five years to reach this point, that reversal would be a tragedy. Britain is on the right track; we must not turn back. In order to deliver that falling debt share we need to achieve the £30 billion further savings that are necessary by 2017-18. I am clear exactly how that £30 billion can be achieved: £13 billion from Government Departments; £12 billion from welfare savings; and £5 billion from tax avoidance, evasion and aggressive tax planning. We have done it in this Parliament; we can do it in the next.
The distributional analysis we publish today confirms that the decisions across this Parliament mean that the rich are making the biggest contribution to deficit reduction. That has been true at every fiscal event under this Government. I said we would all be in this together and here is the proof—[Interruption.] Compared with five years ago, inequality is down, child poverty is down, youth unemployment—[Interruption.]
They do not like to hear it, Mr Deputy Speaker, but inequality is down, child poverty is down, youth unemployment is down, pensioner poverty is at its lowest level ever. The gender pay gap has never been smaller. Payday loans are capped, and zero-hours contracts regulated. Even more than that, opportunity has increased. The number of university students from disadvantaged backgrounds is at a record high, apprenticeships have doubled and there are fewer workless households than ever before. In this Budget we are providing funding for a major expansion of mental health services for children and those suffering from maternal mental illness. Those who suffer from these illnesses have been forgotten for too long. Not any more, because we stand for opportunity for all.
We have also created a fairer tax system—further proof that we are all in this together. The share of income tax paid by the top 1% of taxpayers is projected to rise from 25% in 2010 to over 27% this year. That is higher than in any one of the 13 years of the last Labour Government. We are getting more money from the people paying the top rate of tax because we understand that if you back enterprise, you raise more revenue. The House will also want to know that the lower paid 50% of taxpayers now pay a smaller proportion of income tax than at any time under the previous Government. [Interruption.] I will not accept lessons from those who impoverished the entire country and left millions of people out of work. We are delivering a truly national recovery.
In this Budget, everything we spend will be paid for, and that requires the following decisions. We have already taken steps to curb the size of the very largest pension pots, but the gross cost of tax relief has continued to rise through this Parliament, up almost £4 billion. That is not sustainable. So from next year, we will further reduce the lifetime allowance from £1.25 million to £1 million. This will save around £600 million a year. Fewer than 4% of pension savers currently approaching retirement will be affected. However, I want to ensure that those still building up their pension pots are protected from inflation, so from 2018 we will index the lifetime allowance.
We have had representations that we should also restrict the annual allowance for pensions and use the money to cut tuition fees. I have examined this proposal. It involves penalising moderately paid long-serving public servants, including police officers, teachers and nurses, and instead rewarding higher paid graduates. So I agree with most of the Opposition Front Bench that such a policy would be neither progressive nor fair, and we will not do that.
Nor will we take advice on tax evasion and avoidance from those who, in office, were the friends of the avoiders and the evaders. When we came to office, City bankers boasted of paying lower tax rates than their cleaners, the rich routinely avoided stamp duty and foreigners paid no capital gains tax. We have changed all that, and it was this Prime Minister who put tackling international tax evasion at the top of the agenda at the G8. We will now legislate for the new common reporting standard that we have got agreed around the world. Our new diverted profits tax is aimed at large multinationals that artificially shift their profits offshore. I can confirm that we will legislate for it next week and bring it into effect at the start of next month.
I am also today amending corporation tax rules to prevent contrived loss arrangements, and we will no longer allow businesses to take account of foreign branches when reclaiming VAT on overheads, making the system simpler and fairer. We will close loopholes to make sure that entrepreneurs relief is available only to those selling genuine stakes in businesses; we will issue more accelerated payments notices to those who hold out from paying the tax that is owed; and we will stop employment intermediaries exploiting the tax system to reduce their own costs by clamping down on the agencies and umbrella companies that abuse tax reliefs on travel and subsistence, while we will protect those who are genuinely self-employed. Taken together, all the new measures against tax avoidance and evasion will raise £3.1 billion over the forecast period.
I can also tell the House that we will conduct a review on the avoidance of inheritance tax through the use of deeds of variation. It will report by the autumn. We will seek a wide range of views, and we look forward to drawing on the particular expertise of the Leader of the Opposition—unless, that is, the Labour party has executed its own deed of variation by then. My right hon. Friend the Chief Secretary to the Treasury will tomorrow publish further details of our comprehensive plans for new criminal offences for tax evasion and new penalties for those professionals who assist them. Let the message go out: this country’s tolerance for those who will not pay their fair share of taxes has come to an end.
Because we seek a truly national recovery, today I also ask our banking sector to contribute more. Financial services are one of Britain’s most important and successful industries, employing people in every corner of the country. We take steps to promote competition, back FinTech and encourage new business such as global reinsurance, but as our banking sector becomes more profitable again, I believe it can make a bigger contribution to the repair of our public finances. I am today raising the rate of the bank levy to 0.21%. This will raise an additional £900 million a year. We will also stop banks deducting from corporation tax the compensation they make to customers for products they have been mis-sold, such as PPI. Taken together, these new banking taxes will raise £5.3 billion across the forecast. The banks got support going into the crisis; now they must support the whole country as we recover from the crisis.
In each Budget we have used the LIBOR fines paid by those who demonstrated the very worst values to support those who represent the very best of British values. Today I can announce a further £75 million of help. Last week’s service of commemoration reminded us all of the debt we owe to those brave British servicemen and women who served in Afghanistan. We will provide funds to the regimental charities of every regiment that fought in that conflict, and we will contribute funding to the permanent memorial to those who died there and in Iraq. In the 75th anniversary year of the battle of Britain, we will help to renovate the RAF museum at Hendon, the Stow Maries airfield and the Biggin Hill chapel memorial so that future generations can be reminded of the sacrifice of our airmen in all conflicts. We will provide £25 million to help our eldest veterans. That will include nuclear test veterans, and I congratulate my hon. Friend the Member for Basildon and Billericay (Mr Baron) on his campaign on their behalf.
Many Members on the Government Benches have also written to me asking for support for their local air ambulances. We have backed these brilliant local charities in the past, and we do so again today, with funds for new helicopters for the Essex & Herts, East Anglian, Welsh and Scottish air ambulances, and for the Lucy air ambulance that transports children requiring urgent care. I pay tribute to many hon. Friends, including my hon. Friends the Members for Norwich North (Chloe Smith) and for Castle Point (Rebecca Harris) for their campaigns on this issue.
Our blood bike charities also do an incredible job. MPs from across the House have written to me about this campaign, and we are responding to it today by refunding the charities’ VAT. We are also setting aside £1 million to help to buy defibrillators for public places, including schools, and to support training in their use to save more lives.
Talking about people who save lives, and who sometimes sacrifice their own life to do so, we will also correct the historical injustice to the spouses of police officers, firefighters, and members of the intelligence services who lose their lives on duty. And there is additional money today to support the fight against terrorism.
The £15 million church roof fund that I set aside at the autumn statement to support church roof appeals has been heavily oversubscribed, so we are today more than trebling it. Apparently, we are not the only people who want to fix the roof when the sun is shining. Every weekend, thousands of people go out and raise sums for their local charities across Britain through sponsored events and high street collections. I am significantly extending the scheme that I introduced that allows charities to claim automatic gift aid on those donations, increasing it from the first £5,000 they raise to £8,000. That will benefit over 6,500 small charities.
We could not let the 600th anniversary of Agincourt pass without commemoration. The battle of Agincourt is, of course, celebrated by Shakespeare as a victory secured by a “band of brothers”, which is, sadly, not an option available to the Labour party. But it is, of course, when a strong leader defeated an ill-judged alliance between the champion of a united Europe and a renegade force of Scottish nationalists, so it is well worth spending £1 million to celebrate it.
Our country does not rest on its past glories. Within just 15 years we have the potential to overtake Germany and have the largest economy in Europe. Five years ago, that would have seemed hopelessly unrealistic; economic rescue was the limit of our horizons. Today, our goal is for Britain to become the most prosperous of any major economy in the world in the coming generation, with that prosperity widely shared across the country.
London is the global capital of the world and we want it to grow stronger still. Today, we confirm: new investment in transport; regeneration from Brent Cross to Croydon; new powers for the Mayor over skills and planning; and new funding for the London Land Commission to help address the acute housing shortages in the capital, for we do not pull the rest of the country up by pulling London down. Instead we will build on London’s success by building the northern powerhouse. Working across party lines, and in partnership with the councils of the north, we are this week publishing a comprehensive transport strategy for the north. We are funding the Health North initiative from the great teaching hospitals and universities there. We are promoting industries, from chemicals in the north-east to tech in the north-west. And I can today confirm agreement with the West Yorkshire Combined Authority for a new city deal.
Our agreement with Greater Manchester on an elected mayor is the most exciting development in civic leadership for a generation, with the devolution of power over skills, transport and now health budgets. I can announce today that we have reached provisional agreement to allow Greater Manchester to keep 100% of the additional growth in local business rates as we build up the northern powerhouse. For where cities grow their economies through local initiatives, let me be clear: we will support and reward them. We are also going to offer the same 100% business rate deal to Cambridge and the surrounding councils, and my door is open to other areas that want to proceed as well, for our ambition for a truly national recovery is not limited to building a northern powerhouse. We back in full the long-term economic plans we have for every region.
The midlands is an engine of manufacturing growth, so we are today giving the go-ahead to the £60 million investment in the new energy research accelerator that has been sought and confirming that the new national energy catapult will be in Birmingham. And we are going to back our brilliant automotive industry by investing £100 million to stay ahead in the race to driverless technology. To encourage a new generation of low-emission vehicles, we will increase their company car tax more slowly than previously planned, while increasing other rates by 3% in 2019-20.
We are also connecting up the south-west, with over £7 billion of transport investment, better roads, support for air links, and, I can confirm today, a new rail franchise which will bring new inter-city express trains and greatly improved rail services to the south-west. We are confirming the introduction of the first 20 housing zones that will keep Britain building, along with the extension of eight enterprise zones across Britain, with new zones in Plymouth and Blackpool, too. I congratulate my hon. Friends from those areas on their campaigns.
We are giving more power to Wales. We are working on a Cardiff city deal and we are opening negotiations on the Swansea bay tidal lagoon. The Severn crossings are a vital link for Wales. I can tell the House we will reduce the toll rates from 2018, and abolish the higher band for small vans and buses. It is a boost for the drivers of white vans—let me reassure the deputy leader of the Labour party that it will apply to pink vans, too.
The legislation devolving corporation tax to Northern Ireland passed the House of Lords yesterday and we now urge all parties to commit to the Stormont House agreement, of which it was part. In Scotland, we will continue working on the historic devolution agreement, implementing the Glasgow city deal and opening negotiations on new city deals for Aberdeen and, of course, for Inverness.
Although the falling oil price is good news for families across the country, it brings with it challenges for hundreds of thousands whose jobs depend on the North sea. Thanks to the field allowances we have introduced, we saw a record £15 billion of capital investment last year in the North sea. But it is clear to me that the fall in the oil price poses a pressing danger to the future of our North sea industry, unless we take bold and immediate action. I take that action today.
First, I am introducing, from the start of next month, a single, simple and generous tax allowance to stimulate investment at all stages of the industry. Secondly, the Government will invest in new seismic surveys in underexplored areas of the UK continental shelf. Thirdly, from next year, the petroleum revenue tax will be cut from 50% to 35% to support continued production in older fields. Fourthly, I am, with immediate effect, cutting the supplementary charge from 30% to 20%, and backdating it to the beginning of January. It amounts to £1.3 billion of support for that vital industry in the North sea. The OBR assesses that it will boost expected North sea oil production by 15% by the end of the decade. It goes without saying that an independent Scotland would never have been able to afford such a package of support. But it is one of the great strengths of our 300-year-old Union that just as we pool our resources, so we share our challenges and find solutions together—for we are one United Kingdom.
We back oil and gas, and we also back our heavy industry, such as steel and paper mills. I have listened to the engineering employers, and I will bring forward to this autumn part of our compensation for energy-intensive plants. But since we aim to be the most prosperous major economy in the coming generation, then we must support the latest insurgent industries too. So we take steps to put Britain at the forefront of the online sharing economy. Our creative industries are already a huge contributor to the British economy, and we back them again today: we make our TV and film tax credits more generous, we expand our support for the video games industry and we launch our new tax credit for orchestras. Britain is a cultural centre of the world, and with these tax changes I am determined we will stay in front. In the week after Cheltenham, we support the British racing industry by introducing a new horse race betting right. Local newspapers are a vital part of community life, but they have had a very tough time in recent years. Today, we announce a consultation on how we can provide them, too, with tax support.
Future economic success depends on future scientific success, so we will add to the financial support I announced at the autumn statement for postgraduates, with new support for PhDs and research-based masters degrees. We are also committing almost £140 million to world-class research across the UK into the infrastructure and cities of the future, and I can announce today that our national research institutes get new budget freedoms. We will also invest in what is known as the “internet of things”. This is the next stage of the information revolution, connecting up everything from urban transport to medical devices to household appliances, so should—to use a completely ridiculous example—someone have two kitchens, they will be able to control both fridges from the same mobile phone.
All these industries depend on fast broadband. We have transformed the digital infrastructure of Britain over the last five years. Over 80% of the population have access to superfast broadband and there are 6 million customers of 4G that our auction made possible. Today, we set out a comprehensive strategy so that we stay ahead. We will use up to £600 million to clear new spectrum bands for further auction, so that we improve mobile phone networks. We will test the latest satellite technology, so that we reach the remotest communities. We will provide funding for wi-fi in our public libraries, and expand broadband vouchers to many more cities, so that no one is excluded. And we are committing today to a new national ambition to bring ultrafast broadband of at least 100 megabits per second to nearly all the homes in the country, so that Britain is out in front.
We cannot create jobs without successful businesses. As well as the right infrastructure, businesses also need low, competitive taxes. In two weeks’ time, we will cut corporation tax to 20%, one of the lowest rates of any major economy in the world. There are those here who are committed to putting the rate of corporation tax up. They should know that that would be the first increase in this tax rate since 1973, and a job-destroying and retrograde step for this country to take.
Rather than increasing the jobs tax as some propose, we will go on cutting it. This April, we will abolish national insurance for employing under-21s. Next April, we will abolish it for employing a young apprentice. I can confirm today that 1 million small businesses have now claimed our new employment allowance.
From this April, we are also extending our small business rate relief and our help for the high street. In my view, the current system of business rates has not kept pace with the needs of a modern economy and changes to our town centres, and it needs far-reaching reform. Businesses large and small have asked for a major review of this tax, and this week that is what we have agreed to do.
The boost I provided to the annual investment allowance finishes at the end of the year. A better time to address that is in the autumn statement. However, I am clear from my conversations with business groups that a reduction to £25,000 would not be remotely acceptable and so it will be set at a much more generous rate. Today, I am announcing changes to the enterprise investment schemes and the venture capital trusts to ensure that they are compliant with the latest state aid rules and increasing support to high-growth companies.
Businesses, like people, want their taxes to be low. They also want them to be simple to pay. We set up the Office of Tax Simplification at the start of this Parliament, and I want to thank Michael Jack and John Whiting for their fantastic work in this regard. To support 5 million people who are self-employed and to make their tax affairs simpler, we will, in the next Parliament, abolish entirely class 2 national insurance contributions for the self-employed.
Today, we can bring simpler taxes to many more people. Some 12 million people and small businesses are forced to complete a self-assessment tax return every year. It is complex, costly and time-consuming. So, today I am announcing that we will abolish the annual tax return all together. Millions of individuals will have the information the Revenue needs automatically uploaded into new digital tax accounts. A minority with the most complex tax affairs will be able to manage their account online. Businesses will feel like they are paying a simple, single business tax, and again, for most, the information needed will be automatically received. This revolutionary simplification of tax collection will start next year, because we believe that people should be working for themselves, and not for the tax man. Tax really does not have to be taxing, and this measure spells the death of the annual tax return.
We want to help families with simpler and lower taxes, so let me turn now to duties. I have no changes to make to the duties on tobacco and gaming that have already been announced. Last year, thanks to the persistent campaigning of my hon. Friends the Members for Burton (Andrew Griffiths) and for Keighley (Kris Hopkins), I cut beer duty for the second year in a row, and the industry estimates that that helped to create 16,000 jobs. Today I am cutting beer duty for the third year in a row—taking another penny off a pint. I am also cutting cider duty by 2% to support our producers in the west country and elsewhere. To back one of the UK’s biggest exports, the duty on Scotch whisky and other spirits will be cut by 2% as well. Wine duty will be frozen. That will mean more pubs saved, jobs created, families supported, and a penny off a pint for the third year in a row.
I also want to help families with the cost of filling up a car. It is a cost that bears heavily on small businesses, too. The previous Government’s plans for a fuel duty escalator meant that taxes would rise above inflation every year. But I want to make sure that the falling oil price is passed on at the pumps, so I am today cancelling the fuel duty increase scheduled for September. Petrol is frozen again. It is the longest duty freeze in more than 20 years. It saves a family around £10 every time they fill up their car. That is £10 off a tank with the Tories.
We believe that work should pay and that families should keep more of the money they earn. When we came to office, the personal tax-free allowance stood at just £6,500. We set ourselves the goal—even in difficult times—of raising that allowance to £10,000 by the end of the Parliament, and we have more than delivered on that promise. In two weeks’ time, the allowance will reach £10,600. That is a huge boost to the incomes of working people, and one of the reasons why we have a record number of people in work. Today I can announce that we will go further. The personal tax-free allowance will rise to £10,800 next year, and then to £11,000 the year after. That is £11,000 that people can earn before paying any income tax at all. It means that the typical working taxpayer will be more than £900 a year better off. It is a tax cut for 27 million people, and means that we have taken almost 4 million of the lowest paid out of income tax all together.
As we pass on the full gains of this policy, I can make this announcement today: for the first time in seven years, the threshold at which people pay the higher tax rate will rise not just with inflation, but above inflation. It will rise from £42,385 this year to £43,300 by 2017-18. That means that an £11,000 personal allowance and an above-inflation increase in the higher rate have been delivered by a coalition Government and a Conservative Chancellor. That is a down-payment on our commitment to raise the personal allowance to £12,500 and the higher rate threshold to £50,000—it is an economic plan working for you.
In this Budget, the rate of the new transferable tax allowance for married couples will rise to £1,100, too. That is the allowance that is coming in just two weeks’ time to help more than 4 million couples. That is help that Labour would take away, but that we on this side are proud to provide.
This Budget takes another step to move Britain from a country built on debt to a country built on savings and investment. Last year I unlocked pensions with freedom for millions of savers, but there is more to do to create a savings culture. Today I announce four major new steps in our savings revolution. They are based on the principles that cutting taxes increases the return on savings, and that people should have freedom to choose how they use those savings. First, we will give 5 million pensioners access to their annuity. For many, an annuity is the right product, but for some it makes sense to access their annuity now, so we are changing the law to make that possible. From next year, the punitive tax charge of at least 55% will be abolished. Tax will be applied only at the marginal rate, and we will consult to ensure that pensioners get the right guidance and advice. That means freedom for 5 million people with an annuity.
Secondly, we will introduce a radically more flexible individual savings account. In two weeks’ time, the changes that I have already made mean that people will be able to put £15,240 into an ISA. But if they take that money out, they lose their tax-free entitlement, and so they cannot put it back in. That restricts what people can do with their own savings, but I believe that people should be trusted with their own hard-earned money. With the fully flexible ISA, people will have complete freedom to take money out, and put it back in later in the year, without losing any of their tax-free entitlement. It will be available from this autumn, and we will also expand the range of investments that are eligible.
Thirdly, we will take two of our most successful policies and combine them to create a brand new Help to Buy ISA. We do it to tackle two of the biggest challenges facing first-time buyers: the low interest rates when they build up their savings, and the high deposits required by the banks. The Help to Buy ISA for first-time buyers works like this: for every £200 they save for their deposit, the Government will top it up with £50 more. It is as simple as that. We will work hand in hand to help you buy your first home. This is a Budget that works for you. A 10% deposit on the average first home costs £15,000, so if you put in up to £12,000, we will put in up to £3,000 more. A 25% top-up is equivalent to saving for a deposit from your pre-tax income; it is effectively a tax cut for first-time buyers. We will work with industry so that it is ready for this autumn, and we will make sure that you can start saving for it right now.
So, there is access for pensioners to their annuities, a new flexible ISA, the backing of home ownership with a first-time buyer bonus—and one other reform. Today I introduce a new personal savings allowance that will take 95% of taxpayers out of savings tax altogether. From April next year, the first £1,000 of the interest earned on all savings will be completely tax-free. To ensure that higher rate taxpayers enjoy the same benefits but no more, their allowance will be set at £500. People have already paid tax once on their money when they earned it; they should not have to pay tax a second time when they save it. With our new personal savings allowance, 17 million people will see the tax on their savings not just cut, but abolished altogether—an entire system of tax collection can be scrapped. At a stroke we create tax-free banking for almost the entire population; and we build the economy on savings, not on debt.
Five years ago I had to present to this House an emergency Budget. Today I present the Budget of an economy that is stronger in every way than the one we inherited—the Budget of an economy taking another big step from austerity to prosperity. We cut the deficit, and confidence is returning. We limited spending, made work pay and backed business, and growth is returning. We gave people control over their savings and helped people own their own homes, and optimism is returning. We have provided clear and decisive economic leadership, and from the depths Britain is returning. The share of national income taken up by debt—falling; the deficit— down; growth—up; jobs—up; living standards—on the rise. Britain: on the rise. This is the Budget for Britain, the come-back country.
Provisional Collection of Taxes
Motion made, and Question put forthwith (Standing Order No. 51(2)),
That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—
(a) Alcoholic liquor duties (rates) (motion no. 27.); and
(b) Tobacco products duty (rates) (motion no. 28.).— (Mr George Osborne.)
Question agreed to.
I now call upon the Chancellor of the Exchequer to move the motion entitled “Amendment of the Law”. It is on this motion that the debate will take place today and on succeeding days. The Questions on this motion and on the remaining motions will be put at the end of the Budget debate on Monday 23 March.
Budget Resolutions and Economic Situation
Amendment of the Law
Motion made, and Question proposed,
(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
(a) for zero-rating or exempting a supply, acquisition or importation;
(b) for refunding an amount of tax;
(c) for any relief, other than a relief that—
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.—(Mr George Osborne.)
Never has the gap between the Chancellor’s rhetoric and the reality of people’s lives been greater than it was today. This is a Budget that people will not believe from a Government who are not on their side. Because of the Government’s record, because of their instincts, because of their plans for the future and because the Chancellor, most extraordinarily, made no mention of investment in our national health service and our vital public services, this is a Budget that people will not believe from a Government they do not trust.
This Chancellor has failed the working families of Britain. For the first time since the 1920s, people are earning less at the end of a Government than they were at the beginning. [Interruption.]
People are £1,600 a year worse off. The next generation has seen wages plummet and tuition fees treble. The Government have built fewer homes than at any time in the past 100 years. It is certainly not a truly national recovery when there are more zero-hours contracts than the populations of Glasgow, Leeds and Cardiff combined. That is the reality of the lives of working people. These are the facts. These are the inconvenient truths of this Chancellor’s record. It is a recovery for the few from a Government of the few.
The Chancellor chose to make a number of references to me today. Let me just tell him that we are not going to take lessons on fairness from the trust fund Chancellor and the Bullingdon club Prime Minister. Not for the first time, this is a Budget from this Chancellor that simply will not be believed.
We support the change on the personal allowance, but on tax he gives with one hand and takes far more away with the other. Nobody believes this Chancellor when he says that he will cut their taxes, because that is not what has happened. Not only are wages down by £1,600, but taxes are up—24 tax rises. As a result of his measures, families are worse off by £1,127 a year, on average, which is equivalent to 8p on the basic rate of income tax. That is the reality behind a Budget that cannot be believed. Everyone knows what is coming if the Government get back in charge: another rise in VAT, the tax the Tories love to raise. Of course, in the finest Tory tradition, the lesson is this: deny it before an election and jack it up afterwards.
On living standards, which the Chancellor made much of in his speech, he knows that, as the official measure from the Office for National Statistics shows, people are clearly worse off under him, so he had a bright idea: invent a new measure of living standards to prove that what people know from their wallets and pockets to be true is somehow not true. People do not need a new measure that pretends they are better off; they need a new Government to make them better off. That is the reality behind a Budget that cannot be believed.
What about low pay, which the Chancellor also talked about in his speech? He poses today as the friend of the low-paid. You could not make it up, Mr Deputy Speaker. [Interruption.]
I am bound to ask, whatever happened to the promise of a £7 minimum wage this year? The Chancellor made much of that 18 months ago, but he has broken that promise. The idea of this Chancellor boasting about a 20p rise in the minimum wage, expecting low-paid workers to be grateful: that is the reality behind a Budget that cannot be believed. Of course, the Chancellor does not just claim to be a friend of the low-paid; he now claims to be a friend of the north. [Interruption.]
On the specifics, we are pleased that the Chancellor has adopted our policy of councils being able to keep 100% of business rates, but why not for every council right across the country? Why is he doing it for just one? [Interruption.] Oh, he has done it for two, says the Chief Secretary, helpfully. Is it not great? The Liberal Democrats locked in the boot of the Conservative party.
Let us talk about what the Chancellor has done to the north of England. Let us test whether he is a friend of the north—75% bigger cuts to local government budgets in the north than in the rest of the country. In the north-west, 400,000 working families have seen their tax credits cut. That is more than any other region. In the north-east the Chancellor is spending £1 on transport for every £25 he spends in London. He spent time in his speech praising northern councils. Let us see what northern councils have to say about him. He talked about Leeds. This is what the leader of Leeds council said—[Interruption.] Yes, Labour. The Chancellor was praising northern councils in his statement. Let us see what they have to say. The leader of Leeds council says that the Chancellor “fails to deliver the devolution we need. This Government is no friend of the north.”
For the interests—[Interruption.]
Order. This is getting seriously out of hand. [Interruption.] Just a moment. He can shout all day. I have already looked at Mr Hands. He may hide behind Sir Tony, but we all know where he is. His voice carries and I know where he is sat. Sir Tony may move, but I recognise the voice. [Interruption.] I do not need any more help. All I will say to those on the Government Benches is let us listen. Let us get to the end because, as I said earlier, our constituents want to hear what both sides wish to say.
Joe Anderson, the mayor of Liverpool, said that the Chancellor has “bludgeoned Liverpool. We’ve had 58% of our funding taken away. Even Dick Turpin had the decency to wear a mask when he robbed people.” That is what he thinks of the Chancellor. [Interruption.] Hon. Members ask why I do not quote Conservative leaders. In the interests of balance, I would have liked to quote a Conservative leader of a northern city, but there are none, and with these two—the Prime Minister and the Chancellor—in charge, there never will be.
The Chancellor spoke about tax avoidance in his statement, but the gap between what is owed and what is collected is up, not down, and no wonder. He has not acted on tax havens, despite the Prime Minister’s promises. He did not act on HSBC. In fact, he appointed the chairman as a Minister. What about hedge funds? Those were strangely absent from the Chancellor’s statement. Where was the action on stamp duty avoidance? It is costing well over £l billion a year. Of course the Government cannot act on hedge funds because they bankroll the Tory party. The Chancellor cannot act because they own him, lock, stock and barrel. The Conservative party is now just the political wing of the tax avoidance industry.
The biggest sleight of hand of all is on the deficit. The Chancellor was rewriting history today. Five years ago, the Prime Minister said: “We will balance the books in five years”—no ifs, no buts, no maybes, just like the immigration pledge. Today, the Chancellor comes along to boast that he has halved the deficit, but that is not what the Prime Minister used to say about halving the deficit. He said that would be “completely inadequate”. Let me get this straight—it has gone from completely inadequate to a great triumph. I do not think that will wash with people. The only thing long-term about the Chancellor’s plan is that it will take nearly twice as long to balance the books. And it cannot be believed—[Interruption.]
It cannot be believed, because we have heard it all before—five years of promising a recovery for all, five years of delivering a recovery for the few, and now the Chancellor asks us to believe it all over again. The most unbelievable thing of all is the Government’s claim that we are “all in it together”. They say yes to the bedroom tax, no to the mansion tax. Food banks are on the rise, bank bonuses are in the billions. Taxes are up for working families, taxes are cut for millionaires. The best thing one can say about the Chancellor and the Prime Minister is that when the removal vans turn up, they will be in it together.
The Chancellor’s failure on living standards, on tax and on the deficit are all linked. That is because our economy is too unproductive, too unbalanced and too insecure. There are some things that he did not mention in his statement today. Our productivity gap with the rest of the G7 is now the worst for a quarter of a century—on his watch. He talked again today about rebalancing, but the rebalancing that he promised has not happened. The Chancellor’s target for exports is set to be missed by over £300 billion. On this Budget’s figures, he has overseen the slowest recovery for 100 years. That is the reality behind the Budget that cannot be believed.
For all the window dressing today, the Government cannot tackle insecurity at work, because they think that is how we compete. They cannot make work pay, because they believe low pay is the way that we succeed. They cannot build an economy for working families, because they think wealth flows from the top. Not for the first time, the chairman of the Conservative party perfectly summed up Tory philosophy in his celebrated handbook, “Stinking Rich 3”. I am not sure what happened to “Stinking Rich 1 and 2”.
The Chancellor announced a number of measures on savings and it is important that we look at the detail of these changes. We want people to have more flexibility, including on annuities. He talked about advice in the annuity market. It is incredibly important that advice is available quickly because there are rip-off merchants ready to pounce. We know that it has happened before—[Interruption.]
This is a serious issue. We know that it has happened before. It happened in the 1980s—a dreadful mis-selling scandal—and the Chancellor needs to get proper regulation in place on these issues. We will look at the changes that he spoke about.
The glaring omission from this Budget statement was the national health service and public spending. It was an extraordinary admission. Where was that discussion of the national health service and investment in public services? It is time that we looked at the reality of this Government’s spending plans, because this is the Budget that cannot be believed. The Chancellor does not want us to know it, but he had an extreme spending plan yesterday and he has an extreme spending plan today. It is here in the Red Book in black and white. Page 69 shows his plan for extreme cuts in the next Parliament. Table 2.4 of the Red Book shows that he is trying to hide big cuts between 2015-16 and 2018, so let me tell the House what the Chancellor tried to hide. His plans are for at least as many cuts in the next Parliament as in this one, and the pace of cuts in the next few years will be faster than the cuts in the past few years.
Here is the thing, and it is important that the country knows it: the Chancellor came along today to try to suggest that the pain was over, but if the Conservatives get back, it is not. Their failure on the deficit means that they are planning massive cuts—billions of pounds of cuts—in the next Parliament.
You might ask, Mr Deputy Speaker, what is the evidence for it. There is a lot of evidence. Let us start with what the Prime Minister said in his education speech. He said they were going to cut early years, they were going to cut schools, and they were going to cut colleges: cuts in education spending. Short-changing education today means we cannot build a recovery for all tomorrow.
The position is most worrying of all on the national health service. The massive cuts that the Government have announced—all their Members will have to go and justify this to their constituents—mean that colossal cuts will be planned, and I emphasise “planned”, in defence, in policing, and in local government. But they will not be able to deliver those cuts, so they will end up cutting the national health service. That is the secret plan that dare not speak its name today. The Chancellor did not tell us—[Interruption.] You can tell they are really worried about it. The Chancellor did not tell us that his plans also continue massive cuts to social care. [Interruption.]
They did not tell us that their plans involve massive cuts to social care as well. We have already, in this Parliament, seen hundreds of thousands fewer elderly people being cared for. What is the lesson? If you devastate social care, you betray the elderly and pile unsustainable pressure on our national health service—and these two are coming along and promising more of the same. That is why they cannot be trusted on the national health service.
Building a truly national recovery needs a new Government. We will not sit by when people are on zero-hours contracts month after month, year after year. Instead we will legislate for a new principle that if someone does regular hours they get a regular contract. The Chancellor talked about the minimum wage. Let us talk about what has happened on the minimum wage. [Interruption.]
The minimum wage has gone up by just 70p in this Parliament. A Labour Government will raise it by more than double that to a minimum wage of more than £8 an hour. And we will have a real industrial policy.
The Chancellor has been a particularly malign influence in this Government on climate change. The Prime Minister used to claim that he believed in climate change. I have to say that it is extraordinary, even by his standards, to put a wind turbine on your roof and then want a moratorium on wind turbines. I know he is a stranger to consistency, but even by his standards that is going some. We will end the dabbling with climate change denial and have a proper green investment bank.
A Labour Government will support the young, not make them pay the price of hard times. We will ensure that every major Government contract will guarantee apprenticeships. We will cut tuition fees to £6,000 to reduce the burden of debt on young people—and let the Deputy Prime Minister defend his broken promises on the doorstep.
All of this will be underpinned by a balanced plan that cuts the deficit every year, protects education and health, and has fairer taxes—yes, I do believe in a progressive tax system—by reversing the Chancellor’s millionaires’ tax cut, introducing a mansion tax to fund the NHS, and abolishing the vindictive, unfair bedroom tax that he imposed. That is what a Labour Budget would do, from a Labour Government who know that Britain succeeds only when working families succeed.
Now we know the choice at the election. We have seen five years of falling living standards, young people paying the price of hard times, and the NHS going backwards. This Budget did not solve the problems facing working families; it confirmed them. Britain needs a better plan—a plan for working families. Britain needs a Labour Government.
Thank you very much, Mr Deputy Speaker.
The Leader of the Opposition has to make the most difficult speech of anyone’s in Parliament: he has to respond to a Budget that he has not even seen. I congratulate him on his effort, and I can assure him that those bits of the Budget that he argued should be scrutinised carefully we will scrutinise on the Treasury Committee. It is a tall order to make that speech when the economy is weak, but when it is strong, it really is an impossible task—and the economy is strong, with the best growth in the G7 last year.
Chancellors should be judged on the performance of the economy during their tenure. We should all now accept that this current Chancellor deserves a good deal of credit for the improved performance of the British economy. Five years ago, Britain’s prospects were pretty bleak. The UK was saddled with a deficit of over 11% of GDP, and the developing euro crisis was shrinking the UK’s export markets and creating a massive risk of financial contagion. Above all, the UK was afflicted with a crisis of confidence. Five years later, as the Chancellor has announced, the deficit will be 4% of GDP next year—only a little over a third of what was inherited. The banking system, which he did not discuss at great length, is much better equipped to handle a euro crisis if it comes, particularly the risk of a disorderly exit by Greece. Confidence is returning. The evidence for the returning confidence is overwhelming from survey data.
A great deal of that success—
The hon. Gentleman makes an assertion that every analyst I have read denies. The lack of investment—the amount of money held in corporate bank accounts that is not being invested—is a major problem for this economy, so where does he get the evidence of this rising confidence in investment?
I have not brought all the survey data along with me, but I can supply it to the hon. Gentleman if he is interested. He makes a valid point, which is that there is a lot more work to be done fully to restore confidence to the point that is needed to unlock cash piles on the balance sheets of some of Britain’s larger businesses. For smaller businesses, investment is often not taking place at the level we would like, although it is much better, because the small and medium-sized enterprise lending market is still relatively weak. The banks are not supplying them with the resources they need. We desperately need to break down what still amounts to a banking cartel on lending. We need to get to the point where these small firms—the new firms that create so much wealth in Britain—can get access to the lending they need.
I agree entirely, but I will not linger on the point, because I am sure that my hon. Friend will be making his own speech in his own way very shortly.
What has also happened is that many people have found ways of improving quality and value for money in the goods and services they provide, whether in the public or the private sector. That has generated a good deal of force for the recovery—something that is not fully captured in productivity statistics. Governments do not create wealth; they either get in the way of it or create the conditions for it.
Will the hon. Gentleman give way on that point?
If the hon. Gentleman will forgive me, I would like to make a bit of progress now.
This Government have helped to create those conditions for growth in at least three important ways. First, in the early part of the Parliament, they authorised £175 billion of extra quantitative easing. That was crucial. Secondly, they allowed the so-called automatic stabilisers to kick in—that is, allowing the deficit to widen as eurozone demand collapsed. It is important to recall that the Chancellor was faced, right at the start, with a weakening of demand for our exports in European markets. That caused a great deal of difficulty for British industry. Thirdly, in my view, the Chancellor showed a good deal of tenacity. The coalition has contributed a great deal to restoring confidence. Few predicted that it would last five years. To be frank, I did not think that the Liberal Democrats had it in them to stay the course, but to their credit they have stuck with it, and for that they deserve a good deal of praise.
I thank the hon. Gentleman for his recognition of the coalition, which the broadcasters have lost sight of in reporting what happens in the House. The Budget specifically talked about how Government can get in the way of business, but has it not shown how the Government can, with the right engagement, take positive action, as they have with the North sea oil and gas industry? Entering into dialogue and bringing in incentives will see the industry through the downturn and enable it to reach maturity so that we get a long-term benefit; without the industry, the oil would be left in the ground, and we would get no tax.
I wonder where the hon. Gentleman represents.
Broadly speaking, the hon. Gentleman is right, although I wonder whether we needed quite as many changes to the North sea oil tax regime during this Parliament, particularly since we began it by announcing there would be stability for the medium term in the overall fiscal regime. It can be argued, however, that North sea oil is a special case, and not like the rest of the tax system. Frequent changes in the tax system nearly always have an economic cost in the bottom line for growth.
My colleagues on the Treasury Committee and I will collect as much evidence as possible on the Budget before Prorogation. We will hear from the Office for Budget Responsibility, the Institute for Fiscal Studies and the Chancellor. One measure that was effectively announced before the Budget is the extension of pension freedoms to those who already possess an annuity, and we will take evidence on that major change. Likewise, we will look at the savings measures that have just been announced, not least the savings allowance and the change to the structure of individual savings accounts. Both of those measures sound extremely significant, given that we must revive the savings culture. The Committee will ask about other measures that the Chancellor announced today, including making sure we can be confident that £3 billion will be made available by the tax avoidance measures, the North sea tax regime to which the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) referred, and of course the increase in the personal allowance. There is a great deal for the Committee to do in a short space of time before the election, and we will get on with it as best we can.
We will hear a lot more argument about who is better off. A key recommendation of the Committee in 2010 was that the Treasury and the Chancellor should be required to provide much more information about the distributional impact of tax and benefit changes—who wins and who loses—and, to their credit, they now provide much more detailed analysis at each Budget and autumn statement. For decades, successive Chancellors—my right hon. Friend’s predecessors—were very reluctant to provide that analysis, but they now do so. We will consider the published distributional analysis in the light of the debate, about which we have already heard, about who is better off and who is worse off. It is already clear from the data that almost everybody has borne some of the burden of austerity one way or another, but also that everybody has now almost certainly gained overall, and I will come on to that if I get the chance.
In relation to the distributional analysis, is the hon. Gentleman concerned that the Institute for Fiscal Studies has quite clearly shown that the situation for families on the lowest incomes has worsened, and that the Equality Trust has said that £39 billion has been taken out of the economy as a result of such inequalities?
An answer to that would need to be quite long and involved, but I invite the hon. Lady to come to our hearing with the IFS because that is a central issue. I am not at all sure that the IFS got it quite right on the basis of the published data. In any case, if I may say so, it did not quite say what she purports it to say.
The Chairman of the Select Committee is trying to make the case that there have not been distributional problems, but as I am sure he knows, the truth is that according to the Government’s own statistics, there are 2 million more households living in absolute poverty in this country.
We will be looking at such issues. I was not trying to make that case, or if I was, I was also pointing out that, in the early stages of the recession created by the financial crisis, almost every sector of society had borne some of the burden. I think that the Hansard record will show that I made that point.
We have to rely on conflicting survey data from the Office for National Statistics. The Bank of England has complained about the quality of data, and a heap of other people have said that the data need to be improved. The Treasury Committee ought to look at that in the next Parliament. Some data suggest that the man in the middle is not much better off even in nominal terms—the point was made by the Leader of the Opposition—which is based on the annual survey of hours and earnings. However, another ONS annual survey shows that the man or woman in the middle who has been in continuous employment has done well since 2010, both in nominal and real terms. Those data need to be considered very carefully, because the overwhelming majority of people in work have been in continuous or near continuous employment for the past five years. The data look quite persuasive as an overall picture of living standards. In answer to the hon. Lady’s intervention, the Treasury Committee will certainly consider that matter.
Whoever wins the next election—I hope the whole House will understand that I am very biased about who I think will win—all these tricky issues will need to be considered carefully. The Committee will need to set to work on further research into some of the points and policies covered in this Budget and over this Parliament. Competition in lending and banking has already been mentioned, and we must find a way of getting much greater competition in the banking sector. In relation to doing more to encourage long-term savings, the measures announced today are only a start, because something has been seriously wrong with the savings culture in this country for a long time. The Committee has already said a good deal about reforming and simplifying the tax system, and more needs to be done. The fact that some parts of the tax system are still hopelessly complex provides an opportunity for tax avoidance and evasion, reduces the yield and is bad for overall economic performance. There are also the economic effects—by no means all good—of current energy policy, among many other important energy issues, its reliefs, allowances and public spending subsidies.
What matters most are the measures that will succeed in releasing the energies of the British people. That used to travel under the name of supply-side reform. The next Parliament, with the next Government inheriting a more stable economy, will be an opportunity to get more supply-side reforms under way. I have a clear view, as do many other Members, about how to accomplish that, but it is absolutely essential to move on from the deficit reduction task to that of ensuring we improve the overall economic performance of the British economy in the long run.
It is an honour to follow the hon. Member for Chichester (Mr Tyrie). I have listened to his speeches during this Parliament, and he has offered us his wisdom and made a serious contribution. I am very glad that he finished by talking about deficit reduction, because that is how I want to start my speech.
I am afraid that I must begin with what I see as the Chancellor’s failed record on deficit reduction. We must not let people in this country forget what he promised when he came in and wrote the emergency Budget in 2010. He told people in this country that he would close the budget gap by the end of this Parliament, but he has failed to do so. Despite the most severe cuts to some of our communities in this country, he has failed in the objective he set himself. That will leave the next Government, whoever they are, with a serious and significant challenge. I will say more about the right way to meet that challenge.
The Chancellor has also failed on two of his other targets. Let us not forget the target he set himself on protecting our credit rating, which he failed. Given that the Chancellor’s target was to get debt falling, not rising, in this Parliament, do we really expect the British public to accept that a mere 0.2% is good enough to meet that target? That is meeting the target by the merest technicality. We have sort of and a little bit turned the corner on reducing debt, and that is supposed to be okay with the British public. Well, that might be okay for the Tory party, but it is not okay for my constituents.
The Chancellor has failed the tests he set himself, but—much more importantly—he has failed the test that the country set for him, which was to put money in the pockets of British people. I want to set out four ways in which the next Government will get that right. On the deficit, we will close the gap in the right way. We will not do as the Chancellor did and claim that severe austerity will do the job and that we just need to cut indiscriminately to fix the gap.
With those cuts decimating some of the poorest people in society and the need to leave at least two thirds of fossil fuels in the ground if we are to avoid dangerous climate change, does the hon. Lady agree that handing out yet more eye-watering tax breaks to multinational oil and gas companies is a deeply irresponsible use of public money?
I am glad that the hon. Lady focuses on those with the least. I have been to Brighton and seen people rough-sleeping, and it worries me greatly that the council there is insufficiently focused on those with the least. She also mentioned wrong choices, and I want to say a little more about the right choices. First, we need to focus on the financial services industry, because it worries me that the Chancellor has defended bank bonuses on many occasions, not least in Europe. That is why I want to see us raise more through a bank levy, which we will invest in the next generation through our pledge for free universal child care for three and four-year-olds from working families.
If the right hon. Gentleman had been listening to my speech, he would have heard me say that we need to make the right choices and show our priorities. As I was saying, the right way to close the budget deficit is to focus on taking money through a bank levy on the financial services industry and investing that money in the next generation and in hard-working families in Britain. I am pleased that we have confirmed that the next Labour Government will have no requirement for new debt for our election pledges. That is the right way to go about managing the British economy.
The right investments matter. It matters whether we choose to invest in infrastructure for the long term. I am sorry that the rhetoric about investment is still not matched by the reality on the ground, and is still so heavily focused—as it has been over the past five years—on London and the south-east. Of course steel in the ground matters, but we also need to think about our education system as part of our country’s infrastructure. I am concerned that we have not heard a pledge from the Chancellor to match our commitment to fund education properly and to ring-fence that budget all the way through children’s lives.
While we are talking about the right balance and right investment, I want to talk about the north of England. I am in politics because I grew up on Merseyside in the 1980s and 1990s and I knew that the then Governments did not care very much about families like mine. I wanted to see a future for my friends and family in Wirral South in which they did not have to leave the place that they loved to have a successful career. Under the last Labour Government, that was happening. We had “The Northern Way”, which saw regional development agencies investing in the north. That was the right way to rebalance the economy, and it was working. Labour investment was working.
Today the Chancellor has tried to use rhetoric and spin to talk about a northern powerhouse that nobody in Merseyside believes in for a second. We have been living with the Chancellor’s true political priorities—a level of cuts not seen in the wealthier parts of the country. That is despite historical deprivation and the fact that we are still living with the consequences of a Tory Government who deindustrialised the north and provided no other options. “The Northern Way” and the regional development agencies were working under the last Labour Government, and that was the right way—not soaring rhetoric about northern powerhouses, but actual investment in the north—[Interruption.] If the Under-Secretary of State for Transport, the hon. Member for Devizes (Claire Perry), wants to intervene, she is more than welcome. As she does not seek to do so, I take it that she has nothing to say about the north.
I am a Member from the north-west and I have shared platforms with the hon. Lady in the past. Does she not accept that, under the Northwest regional development agency and the infrastructures that her party put in place, the jobs that were created were public sector jobs? We now have a more sustainable platform of private sector growth. From memory, unemployment in her constituency is down by more than 30% in the last year—does not she welcome that?
I bow to no one in my applause when unemployment falls, but to say that Wirral, Merseyside and the rest of the north-west have not suffered from huge cuts to local government is to ignore the facts. I know that that is an argument that almost everyone in the north-west—perhaps with the exception of members of the Tory party—will recognise.
We need not just the right investment but the right protections. We have seen family budgets hit radically and hard, we have seen child poverty rise and, on the relative measure, we have seen people in the middle of the income distribution fall back towards the bottom. That is not offering families in our country the right protections—
Will the hon. Lady give way?
I will not take any more interventions, because I might be here for a long time if I did.
We need a bank levy to fund 25 hours of free child care for working families with three and four-year-olds. That pledge alone will help 51,000 children in poverty and will be a real boost to their families’ incomes, which have been hit hard. Whatever the Chancellor says, and whatever the Tories try to convince themselves of, it is not only the London School of Economics and its analysis of the past five years that shows that the incomes of the bottom half have fallen while those of the top half have risen; the Treasury’s own figures now say that the bottom fifth has done worse. We need the right protections to ensure that when economic growth happens, it is not just for the few but real growth for the many. Rather than failed austerity, we need a truly progressive Government in favour of the many, not the few, and more than anything else we need a Labour Government.
May I first refer Members to my declaration in the Register of Members’ Financial Interests?
I commend the Chancellor for his Budget, which continues the themes of economic reform and fiscal consolidation that we have seen in each of the Budgets and autumn statements in this Parliament. It is that twin-track approach that has led to a fall in the deficit, putting the nation on a path towards a surplus in 2019-20, with one of the strongest growing economies among our competitors, falling inflation and a job-rich recovery confirmed by today’s unemployment figures.
It is absolutely vital that we continue the programme of deficit reduction. The previous Government spent beyond the nation’s means, increasing the deficit even when the economy was growing. In his speech, my right hon. Friend the Chancellor mentioned the fact that debt as a proportion of GDP increased in each year of the previous Labour Government. Even in the good times, Labour continued to spend more than the country could afford. The problem we inherited was not that the UK was under-taxed, but simply that the Government were spending too much. It has therefore been right that the bulk of deficit reduction has been borne by spending cuts.
I am pleased the Chancellor has reconfirmed our commitment to tackling the deficit after the next general election. It is wrong of both the Labour party and the Liberal Democrats to seek to slow the pace of deficit reduction. The longer the deficit takes to tackle, the more debt we will incur. Labour has failed to mention—I notice the Leader of the Opposition failed to mention it in his speech today—the £30 billion of cuts it has already signed up to. It is also pledging to spend £50 billion more than we are, which would require increased borrowing or increased taxes. The people of this country cannot afford borrowing on that scale, and to continue would be inequitable. There are three reasons why I think it is wrong.
I would just like to point out that although we have cut the planned spending increases of the previous Government, public spending has actually been going up. As the Red Book confirms, Government spending went up by 1.5% in real terms in 2014, and by another 1% this year.
That demonstrates the challenges we face to get the pace right. One thing we should be absolutely clear about is the importance of sticking to the course. There are three reasons why it is important to stick to the course of reducing the deficit and reducing debt. It is inherently unfair for future generations to bear the cost of debt we have built up.
Does the hon. Gentleman agree that since 2010 debt as a share of GDP has grown from 55% to 80%, and that the Tories have borrowed more in five years than we did in 13 years even though we had to bail out the banks? Is that not a complete failure of economic management?
That is a remarkable argument. Is the hon. Gentleman saying that we should have cut further and faster? That is not the prescription of the shadow Chancellor or the Leader of the Opposition. They always said we were cutting too far, too fast. They cannot have it both ways. That is the problem and that is why the Labour party has no economic credibility: it has no coherent argument on the economy or on the deficit.
While interest rates are at historically low levels we can afford to service those debts, but when interest rates return to more normal levels, money that could be better spent on schools or hospitals will have to diverted to meet higher interest payments. The Chancellor today talked about the £35 billion we have saved as a consequence of lower interest rates. If we return to the economic chaos of the previous Government, will interest rates remain low? Will we not see an increase in the cost of interest payments cutting the amount of money that can be spent on health and social care?
I was struck by the hon. Gentleman’s comments about economic credibility. What credibility do the current Government have, given that they insisted they would eliminate the deficit in this Parliament but have achieved only half that?
I am surprised by what the hon. Gentleman says, because he is a member of the Treasury Committee and has looked at these things very carefully. He will have seen what happened in the eurozone in the first half of this Parliament. The headwinds from the eurozone—the OBR confirmed this—had a negative impact on the UK economy. We cannot ignore the impact of turmoil abroad on the strength of the UK economy. It is surprising that a respected Member fails to recognise the lessons of what has happened over the course of this Parliament.
My hon. Friend is absolutely right. The problem for Labour Members is that when they are confronted with the facts, they hide. That is the problem they will all face in the course of the next 50 days. They have clearly not developed economic credibility, because their plans and message are confused. They have no idea how they would deal with the economy. All we know about Labour is that it will spend more and borrow more and tax more, the way all Labour Governments have behaved in office.
The final reason we should be moving towards a surplus and reducing the national debt is that if we continue to lock in debt at high rates, we are reducing the capacity of future Governments to withstand future economic shocks. One of the challenges we faced in this Parliament was that the high levels of debt racked up by the previous Government made it increasingly hard to put in place the measures to turn the economy around.
We cannot simply pretend to ignore, or rack up, unfunded spending cuts. We need to work hard to tackle the deficit to ensure debt falls as a proportion of national income, as it will at the end of this Parliament, to get the right messages across. Let us be responsible about how much we spend. Let us be responsible on taxation and spending. Running a surplus in the good times will help the economy when difficult times lie ahead.
Does the hon. Gentleman not accept that this has been the slowest recovery from any recession just about ever? Research from the National Institute of Economic and Social Research shows that, had it not been for the austerity cult and the Government choosing austerity, GDP would be 5% higher and extra tax revenue would be about £32 billion—about a third of the current deficit. Cuts and austerity have cost not just the economy but people’s opportunities.
I am really not going to be lectured by a Member from the Scottish National party about economic realities. We heard in the Budget today that because the United Kingdom is together, we are able to support the North sea oil sector in a way it could not have been supported if the SNP had achieved independence, so I am not going to take any lessons on economic credibility from the SNP.
In preparing for this speech, the last I will make in this House, I looked back to my maiden speech. Unsurprisingly, it touched on the local economy. I highlighted the strength of the business community in Fareham and its low unemployment rate. I also talked about the pressures on public services and infrastructure from house building. Perhaps it is with this frame of reference that I should talk about the economic reforms the Government have introduced in the past five years.
Fareham’s economy is still strong. In 2010, unemployment was 2.2%; today it is 1%. Strong businesses have helped to contribute to that and they have benefited from the Government’s reforms. Lower employment and corporate taxes have helped businesses to recruit locally. The apprenticeship reforms introduced in the past five years have meant that Fareham businesses have taken 740 apprentices in the past year, compared with just under 600 in 2010-11. The reforms have led to a renaissance at Fareham college where, thanks in part to taxpayers’ money, it has opened a specialist advanced manufacturing centre to meet the growing needs of local business, as well as refurbishing its campus in Fareham.
In my maiden speech, I criticised the top-down housing quotas that characterised the old-fashioned approach to planning. They had failed Fareham. The Government’s planning reforms, focusing on securing consent through a bottom-up approach, have secured widespread consent for 6,500 homes to be built in the new community of Welborne. This new settlement has benefited from the local growth deal funding infrastructure improvements, such as the new all-ways junction at junction 10 of the M27. Whereas in the past infrastructure never quite met local needs, I am more confident now than ever before that new development in Welborne will not harm the quality of life of local residents.
One of the challenges we face in Fareham is getting young people on the housing ladder. The Help to Buy ISA announced today by the Chancellor in the Budget will help to make it easier for many young people in my constituency to get a home of their own.
The economy of south-east Hampshire is dependent on good infrastructure, which is why I am pleased that the M27 is scheduled to be upgraded to a smart motorway in the next Parliament. I encourage my hon. Friends on the Treasury Bench to ensure that that is delivered in the first half of the next Parliament, not in the second half. Poor road and rail infrastructure makes it harder for those out of work in the older urban areas of south-east Hampshire to access employment opportunities in Fareham.
In taking forward the economy in south-east Hampshire, we have benefited from the abolition of regional development agencies and the introduction of local enterprise partnerships. I always felt that the South East England Development Agency neglected south-east Hampshire and focused its money and efforts elsewhere. The Solent LEP has had a relentless focus on economic growth in our community, playing an outstanding role in delivering all aspects of economic infrastructure in our community. I believe that our economic reforms and long-term economic plan have benefited Fareham and its residents and provided a route for further prosperity and security for local families. It has been an honour to serve those families over the last 14 years as their Member of Parliament, and I am grateful to them for the trust they have shown in me.
Through you, Madam Deputy Speaker, I would like to thank the staff of this House for the support they provide to Members of Parliament. Their work over the past 14 years has been invaluable and has supported me in becoming a more effective Member. It is ironic that I am making my last speech in front of you, Madam Deputy Speaker, as we sparred many times on Finance Bills under the last Government. One of the most important roles of any Government is economic stewardship. We need to provide jobs and growth for families and economic stability, which is vital to people’s confidence and well-being. I leave Parliament at the next election knowing that the economic future of my constituency is much more secure than it was five years ago. We should not squander those hard-won gains by losing the next general election.
It is a pleasure to follow the hon. Member for Fareham (Mr Hoban) in his last speech to the House. Like you, Madam Deputy Speaker, I faced him through the long hours of many long Finance Bills when he was on the shadow Treasury Front Bench. His reflective and loyal speech this afternoon was characteristic of the way he has served his party and Government. It is a shame he is not on the Front Bench this afternoon, because perhaps then he would not be leaving the House come Dissolution.
However, the hon. Gentleman has a problem, because, as the Leader of the Opposition said, this is a Budget that cannot be believed. I shall pick just two things that the Chancellor said during his Budget statement. He said that living standards were higher than when they entered office and that our economy was fundamentally stronger than it was five years ago. The gap has never been greater between their rhetoric and the everyday reality of people’s lives. I want to pursue two arguments that expose some of the rhetoric we heard from the Chancellor and some of the reasons why their long-term economic plan is failing and why the structural and cyclical weakness of our economy remains five years after they entered office.
There are two principal arguments. First, the Government’s economic policy directly choked off the recovery under way at the last election in May 2010, leading to the slowest economic recovery from recession in this country for 100 years. Secondly, the economic recovery is unbalanced, unequal and unsustainable. The structural weaknesses are still there, despite the rhetoric from the Chancellor—the rabbits coming out of the hat—and the underlying failures of the long-term economic plan are unchanged by this Budget.
I am listening carefully to the right hon. Gentleman, as are many Members opposite. Would he at least acknowledge that running a deficit of more than 10% was unsustainable? It might have fuelled some growth in the short term, but in the long term running a deficit in excess of 10% was not sustainable, and something had to be done about it.
There are not many Members opposite, as the hon. Gentleman says. [Interruption.] He will remember, however, that after 10 years of the last Labour Government, before the global financial crisis and recession hit, borrowing and debt were lower than when we entered office. We have a deficit to deal with because of how the Government intervened to pull the country through that deep recession, to keep people in their homes and jobs and to keep firms in business. Of course there is a deficit, and of course it needs to be dealt with. The difference between the parties is that we will deal with it in a more balanced way. There is a choice. We can do it with tax rises that are fair, spending cuts and efficiencies. We will do what we need to do in a more balanced way.
Is it not the case that the most significant change after 2008 was the plan, which Labour backed and which the coalition continued with for its first two years, of taking the RBS balance sheet down from £2.2 trillion to £1.5 trillion? Was that not what provided the mighty shock to the British economy? It was something that Labour wanted to do.