Amendment of the Law
Debate resumed (Order, 8 July).
Question again 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.
Good morning, Madam Deputy Speaker.
When one cuts through the rhetoric and the headlines that the Chancellor spun, one sees that yesterday’s Budget leaves working people worse off. It is the working families of Britain on low incomes, trying their hardest to do the right thing, who will pay the price for the gap between what the Chancellor said and the truth of what his Budget actually means. The Office for Budget Responsibility has flatly contradicted the right hon. Gentleman’s claim to have lowered taxes, pointing out on the first page of its analysis that tax increases are twice as big any tax cuts over the course of this Parliament. It is a Budget that is entirely concerned with chasing headlines to further the Chancellor’s well known political ambitions, rather than putting the working people of Britain first.
Pulling the rug from under people on low incomes with a hefty work penalty in the tax credits system— 3.3 million working families will lose out from these changes, with 500,000 families losing tax credits entirely—despite Tory denials before the election, will hurt those in work.
I did not realise that the hon. Lady was a conduit for the former Labour Chancellor of the Exchequer. I will certainly look closely at what he said, but I did not hear him say those words this morning.
I want to ask Ministers about the work penalty that they have introduced into the tax credits system. Did they know before the election that they were going to hit those who needed tax credits to make work pay, or was it deliberately hidden from public view because of the shock that such a cut to incomes would create? This was a Budget that exposed the Chancellor’s skewed priorities—a Budget that failed to build the more productive economy that we need, that ducked long-term decisions on vital infrastructure projects, and that sought to substitute spin for the support people need to go to work.
I will give way to the very eager Conservative Members in a moment, but I want to make a little progress.
We do recognise that sensible savings are needed to get the deficit down, and we will support measures that tackle tax avoidance and control overall household benefit levels. We regret that the Budget fails to address the overpayments and errors in welfare expenditure, which have ballooned in recent years during the welfare Secretary’s time in office, let alone his lamentable record on delivering the mythical universal credit, for which so many people are still waiting. As my right hon. and learned Friend the acting Leader of the Opposition said yesterday, we will be a responsible Opposition; we will not oppose for opposition’s sake, and we welcome a number of the Budget measures.
I have not used those words. The hon. Gentleman is reporting words that have apparently been said.
I believe it is important that the Opposition today look at the spin and the headlines that the Chancellor created in his Budget yesterday. Less than 24 hours later, the Budget is beginning to unravel—[Interruption.] Have I said something wrong? The Budget is beginning to unravel and I will explain why, but in the spirit of magnanimity I want to explain that there are Budget measures that we welcome. The Budget fails to address the long-term challenges Britain faces—[Interruption.]
Thank you, Mr Deputy Speaker.
Many parts of the Budget were suggested by Labour in recent months. Abolishing permanent non-dom status—that sounds very familiar to my hon. Friends. Increasing the minimum wage—again, we have repeatedly called for that. We welcome any action on low pay—by the way, the Conservatives opposed the creation of the national minimum wage in the first place—but this so-called national living wage is unravelling as it becomes clear that it is nothing of the sort. It is the rebranding of an increase in the national minimum wage—as I say, Labour created that in the first place—which, with the tax credit changes, will still leave working families worse off.
We will support steps to tackle tax avoidance—again, we have consistently pressed the Government on that—but this Chancellor has a poor record on hitting tax avoidance targets, with the amount of uncollected tax increasing to £34 billion last year and his so-called tax deals continually failing to bring in the revenues he predicted. In yesterday’s Budget, the Conservatives broke their manifesto promise to deliver £5 billion of savings by 2017-18. The Chancellor made that promise at the last general election, and he is now saying that we might perhaps get it by the end of this Parliament. We will file the supposed £5 billion of tax avoidance measures in the “believe it when we see it” category.
May I say how much I welcome my hon. Friend’s statement that Labour welcomes the Government’s announcement yesterday to move towards a living wage? Will he confirm in the Chamber what he has said elsewhere—that we will engage very constructively, looking imaginatively at the Red Book, to try to make this more comprehensive and to extend it to the public sector? Does he accept that the more success we have in developing this idea with the Government, the fewer people will be eligible for means tests, and that our aim is not to change means-tested benefits in line with such increases, but to make sure that people can earn enough not to be eligible for means-testing?
My right hon. Friend is right that we should be thoughtful about the Government’s proposals. It is sometimes difficult to see through the political fog of the games that the Chancellor is trying to play and the tactics he is trying to use. Oh, the look of innocence on his face! My right hon. Friend is right that it is important to take on questions of welfare reform and work through them methodically. We will not oppose everything just for the sake of it. My right hon. and learned Friend the acting Leader of the Opposition was right to say yesterday that while that might be the temptation, we will look at the proposals and be reasonable about those we can support.
We welcome the steps taken in the Budget to reduce pension tax relief for the highest earners, and of course the rise in the personal allowance threshold, as we support steps to cut taxes and try to get a better settlement for those in work.
The hon. Gentleman was doing so well until the little barb at the end of his intervention. Of course we want a situation—there is more political consensus on this than people perhaps realise—in which people in work are better off than they otherwise would be. The problem, which I will come on to later, is the Chancellor’s approach with this particular set of Budget measures. He is pulling the rug from beneath people’s feet while higher wages are not yet available. When we look at the package as a whole, we see that people will be worse off during that period. He cannot just shovel that beneath the rug.
I want to make some progress, but I will give way again in a minute. [Interruption.] I will give way now to the hon. Member for Rossendale and Darwen (Jake Berry) if he wants to intervene. [Interruption.] He complains that I am not giving way, but he does not want to intervene.
We will not support self-defeating false economies in the Government’s approach to social security. We do not support an approach that will leave more than 3 million working families poorer, and in turn mean that the poorest children are more likely to grow up into poor adults, which will cost society far more in the longer run.
The Chancellor and Ministers on the Front Bench have a track record when it comes to false economies, particularly during the last Parliament. They scale back nurse training, and then spend a fortune hiring nurses from private agencies, as my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) knows. They cancel major road schemes, such as the one involving the A14, and then revive them later on at vast expense. They pay redundancy to senior officials at the Ministry of Defence or the Foreign Office, and then rehire them at higher cost. They restrain local councils from tackling fraud in housing benefit, and then the level of overpayments escalates to £1.5 billion. They reduce the number of Her Majesty’s Revenue and Customs staff so that phone calls go unanswered from businesses that need to get through, and then are surprised when the tax gap gets wider and revenues go uncollected. And we have a Chancellor with the gall to boast of a northern powerhouse while simultaneously pulling the plug on the electrification of major commuter rail lines.
My hon. Friend will understand the dismay of many across Greater Manchester and the wider northern regions, not just at the pause in the electrification of the line between Manchester and Leeds—and the implications that will have for rolling stock in the north of England—but at the insult yesterday when we were told that we will get an Oyster-style piece of plastic to use on our Pacer trains.
It has been said many times, but the powerhouse has become a power cut. As time goes on, many—not just in the north but in the midlands—will see through the rhetoric to the reality that they are experiencing.
The Government are undercutting, not supporting, a productive economy. It says everything about the Chancellor that the impact of his Budget has been to worsen the outlook for productivity in our economy over the rest of this Parliament rather than to improve it. The OBR has done the calculations and its prediction is on page 77 of its report. Its conclusion is stark. The Opposition know that more productive businesses, and a more productive economy, are the key to a virtuous circle of higher growth, higher living standards and, as a consequence, more effective deficit reduction. For the Conservatives, productivity springs magically from thin air, but for us it is decent infrastructure and decent public services that can make all the difference to business success.
In his March Budget, the Chancellor did not even mention productivity, so perhaps we should be glad that he at least found time to mention it yesterday, even if we are still waiting for the much trumpeted productivity plan. I gather that it will be published on Friday, although the House is not actually sitting that day so we will not be able to scrutinise the details. Under this Chancellor, UK productivity has, in the words of the Office for National Statistics, undergone a period of “unprecedented” stagnation.
I have spoken to leading businesses in Taunton Deane this morning and the Chancellor’s Budget has been broadly described as “great stuff”. It will load the scales in favour of hard-working people. Surely the shadow Chancellor must consider that a positive policy, unlike the disarray of the Labour party’s economic policy, as mentioned today by the former Labour Chancellor.
I have not read the comments by the former Chancellor, although I keep hearing about them from Members. I will have a good look at them, but it is important that we scrutinise the Government’s record on productivity. Unless we improve productivity in our economy, we will not generate the revenues to deal with the deficit and raise living standards. In 2012 and 2013, our productivity growth was negative, and last year it was just 0.2%. That compares with an average of 2.2% under the Labour Government from 1997 until the global financial crisis hit. It is, therefore, almost beyond belief that on the OBR’s analysis the Budget could lead to lower productivity growth, now estimated to be 0.4% lower than the forecast for next year, 0.2% lower in 2017, 0.1% lower in 2018 and 0.2% lower in 2019—productivity down next year, the year after, the year after that and the year after that.
Is not one of the reasons for that the fact that the Government are creating lots and lots of low-paid jobs and substituting them for high-paid jobs? In particular, there are 800,000 fewer people earning over £20,000 now than there were in 2010. Is that not a catastrophic record of falling productivity? We want to stand up for the middle earners rising, not just the lowest earners.
Government Members will not be interested in scrutinising the compositional issues that are arising in our economy, but the share of jobs that are high-skilled is shrinking back, according to the Office for National Statistics, and being replaced by an increasing share of low-skilled jobs. That is definitely something to be concerned about. In fact, the OBR has voiced its concerns about the productivity threat to our economy, saying:
“If productivity fails to recover as predicted but wage growth continues to accelerate, the MPC could be forced to raise interest rates more quickly”
and wage growth will fall short of its forecast.
Having worked in retail for 30 years before coming to this place, I regularly saw good, hard-working people who wanted to work extra hours being prohibited from doing so because of the loss of tax credits. Does the hon. Gentleman agree that the announcements yesterday on reforms of tax credits and on a living wage will finally break the shackles for those people and let them take control of their own destiny?
Hold on. Let us just pause to scrutinise that. I think the hon. Gentleman just said that people should be grateful that they are having those tax credits taken away because that will free them up and make work pay—[Interruption.] Hon. Members speaking from a sedentary position call those tax credits a perverse incentive. I just do not think they understand the lives of those on low pay who are struggling to make ends meet and who rely on the support that tax credits have been able to give. That work penalty is going to cause real problems.
If only what the hon. Member for Calder Valley (Craig Whittaker) said was true and there was an incentive. Actually, the former Chancellor stated that the tapers on tax credits would become worse, so that for every pound over tax credit level that people earn, more of it will be taken away—they will have to pay marginal tax rates of 90% on every extra pound they earn, making it harder for them to get off benefits, not easier.
That is very much our critique of the Government today. Of course we want a higher-wage environment and of course we want those jobs to be there, but if we take away that support at that crucial moment, we are going to make people’s lives much, much harder.
No, not yet.
There was no mention of science or research and development in the Budget speech and no steps to increase mobility in the housing market. In fact, the OBR says that 14,000 fewer affordable homes will be built by 2021. How on earth that helps to reduce the housing benefit bill, I do not know. At the same time, the Government are delaying rail improvements, systematically decimating renewable energy investment and kicking the decision on airports into the long grass. There are tough choices to be made, and lower priorities where savings can be made, but the Chancellor has failed to prioritise those public services that boost productivity, and that will cost the country more in the longer run.
Seven Budgets on, it is time that that this Chancellor took some responsibility for his failure to eliminate the deficit this year, as he promised; for the drag on our economy and public finances caused by woeful performance on productivity; for the stagnation in living standards; and for the overruns in the social security budget. Growth has been revised down by the OBR, as has capital investment. These are incredibly difficult times for the wider global economy, but where is the urgent help to support our exports and productivity to tackle that other deficit, which has worsened significantly under this Chancellor—
I shall give way in a moment; I just want to talk about the other deficit: the current account deficit, where our trade gap with the EU has worsened and our balance of payments problems have set alarm bells ringing at the Bank of England. The Chancellor’s priority should be to build up the productive capacity of our economy so we can pay our way in the world, but we are still too vulnerable to external turbulence. It should not be neglected in this way. Britain’s current account deficit has widened to 5.9% of GDP, which the OBR states is
“the largest annual peacetime deficit since at least 1830”.
The OBR also reveals that the Chancellor is £367 billion short of his £1 trillion goal on exports that he promised by the end of this Parliament.
The hon. Gentleman has said several times that he is willing to support sensible measures to reduce the welfare bill. Can he assure the House that that comment will survive the imminent leadership elections in his party? [Interruption.]
Is the hon. Gentleman talking about the imminent leadership elections in the Conservative party or the Labour party? I do not know what is going to happen in the Conservative party leadership contest. There were of course a few little jokes about the hon. Member for Uxbridge and South Ruislip (Boris Johnson), and we will see how that pans out. I know that other Cabinet Ministers are a little concerned about the way that the Budget panned out for them; it is going to be difficult for them over the next few years.
This was the Chancellor’s second Budget in four months. He said in March that that was his Budget for the longer term, yet four months on he has delivered a different plan to a different agenda. He has been chopping and changing, with three different sets of figures in the past nine months alone—so much for his consistency. We learned more about the Chancellor and the nature of this Government in one hour of his Budget speech than we learned in the months of the election campaign. In March, when the Work and Pensions Secretary was pressed about where their £12 billion of welfare cuts would fall, he said:
“As and when the time is right, we will make it very clear what our position is.”
Is it any coincidence that the time is right for these Conservatives two months after an election rather than two months before it?
Before the election, the Conservative manifesto assured us that there would be only a two-year freeze in working benefits, but yesterday the Chancellor doubled that to a four-year freeze in most working-age benefits which will take £4 billion from households by 2020-21. That is one of the fastest-broken promises in political history. [Interruption.] There is an awful lot of noise from Conservative Members. I shall give way to the hon. Member for Richmond (Yorks) (Rishi Sunak) because he has been trying to intervene.
The shadow Chancellor mentioned the election campaign. In that campaign, the Opposition suggested that they would raise the rate of corporation tax—a move that would damage jobs and growth. Will he confirm that that is still Labour’s policy, or will he start backing British businesses?
I think the hon. Gentleman will find that we said in the election that we wanted to focus in particular on business rates. He will know from talking to small firms in his constituency that companies are concerned about the pressures on business rates, but where did the Chancellor mention business rates in yesterday’s Budget? We felt—[Interruption.]
Order. There is far too much noise. In the end, I want to hear, I will hear, and I am sure that you agree with me. Let Mr Leslie speak. He will give way as and when. We do not need be told that he has to give way; it is his choice.
We felt at the election that it was more important to prioritise support for businesses through business rates than through a change in corporation tax—but we lost the election. [Hon. Members: “Hooray!”] Conservative Members feel the need to crow about these things, but the public will be concerned that they said one thing before the election and have done totally different things after it. Yes, the Conservatives did win a majority, but they hid their specific cuts from the electorate—they concealed them. It was a secret agenda, only now partly revealed.
I will not give way because Conservative Members are not being reasonable and letting me make progress with my speech.
The impact of the work penalty in the tax credits system should have been set out at the election. A lone parent with two children working 16 hours a week on the minimum wage would gain just over £400 from the move to the new national living wage, as the Chancellor calls it, but would lose twice that—£860—from the change to tax credits next year. A couple on the minimum wage who work full time and have two children will gain £1,500 from the change to the minimum wage but lose over £2,200 next year from the changes to tax credits. As the Government were hitting the low-paid, the Secretary of State for Work and Pensions was punching the air. Working families did not vote for that, and they will not be fooled by the Chancellor’s hollow words.
May I just take the hon. Gentleman up on the case that he set out? I want to get the figures right. A lone parent with two children who works 16 hours on the minimum wage will, when we add in everything including childcare, actually be better off on the net figures after the Budget.
I will give way to the right hon. Gentleman again if he will confirm that the childcare promise, which was supposed to happen this summer, has been shelved until at least 2017. Is that correct? I will give way to him. This is a debate, so I will give way to him. He wanted to talk about the case studies. He thinks it is—[Interruption.]
So the Secretary of State is saying that the childcare change will come in at the beginning of that financial year—in 2016. We have heard it from the Secretary of State’s mouth, so it must be true: the childcare changes will come in in 2016. That is the announcement from the Government. It is a bit of an improvement on the announcement we heard from the Chancellor yesterday, who I thought said that the childcare changes were being pushed back to 2017.
The reasons that the cost of social security is £25 billion higher than the Conservatives expected are the underlying drivers of low pay, higher housing costs and insecure work. For all the Chancellor’s spin, this is a Budget that attacks the low-paid and will leave many people in the lurch, unable to make ends meet. If the Conservatives think a solution is to pull the rug from beneath the poorest, stigmatise claimants, rub out the statistics that measure child poverty and hope that the issue will go away, they are deeply mistaken.
We have to deliver a practical route out of poverty, provide a ladder of opportunity and view this challenge as integral to our long-term economic prosperity. We must help people into decent jobs that can be sustained. Cutting tax credits in this way and taking far more with the one hand than is being given with the other will leave too many people trapped on low incomes with low living standards. The ladder is being pulled away from those who want to get on. The achievement of the Labour Administration in significantly reducing child poverty staved off billions of pounds of longer-term welfare expenditure. Those who are in work pay taxes and improve the public finances as a result.
I have given way quite generously to Government Members and I would like to make some progress, if they do not mind.
The Institute for Fiscal Studies confirms that the introduction of tax credits played an extremely powerful part in the movement in the child poverty figures. The Conservatives cannot call themselves the party of working people, as they now do, when their Budget leaves millions of working people worse off. How exactly does decreasing their work-related assistance help those who become too sick to work and are on employment and support allowance? Does that policy not run the risk of increasing the number of people who are placed in the more expensive ESA support group, as has been the case in recent years, when the Government have overspent by £4.5 billion on their original plans?
What motivation has a council tenant to get a better job and work for promotion if he or she is on the living wage and the Government take that money away immediately? That is the crude nature of the rent rise that they are proposing. Seeking a contribution from higher earners is, of course, important, and it is one solution, but, as the Government’s own analysis pointed out before the election, going about it in the wrong way will result in perverse incentives and penalties for work.
This was more a Budget of tax rises than a Budget of tax cuts. A rise of more than 50% in the rate of insurance premium tax to raise £8 billion over this Parliament will be a tax hit on the insurance for the family home, the family holiday and the family car. The new car tax will be a surprise that raises £1.5 billion by the end of this Parliament, and—much to the Secretary of State’s surprise—the Government have shelved the childcare tax support that was due this summer until 2017, even if the Secretary of State has now brought that forward by a year.
Does my hon. Friend agree that these measures will further divide communities in high-value constituencies such as those in London, where there are huge gaps between incomes—people with very low incomes are living in the same constituencies as people with very high incomes—and will increase our sense of massive inequality? One of the problems is the failure to deal with the need for a proper living wage. I have experience of introducing a living wage, and it is very hard work. It takes years to achieve, and it means working with businesses. [Interruption.]
I do not think that was a very polite reaction from Conservative Members. My hon. Friend worked very hard during her time in local government to try to support the low-paid by introducing a London living wage, and I think it commendable that local authorities and businesses in London, in particular, have tried to make headway with that. Of course, a real living wage now needs to be about £12 to compensate for the reduction in tax credits.
When we are writing our manifesto for the 2020 election, I shall give the hon. Gentleman a call. I am afraid that we lost the most recent election, but I think it important for us to reflect on what the Government propose and what the Chancellor announced in his Budget. It is our job as an Opposition to make sure that his spin does not necessarily colour the view of the realities.
The Budget statement revealed that the Chancellor has the wrong priorities for Britain: headlines for himself rather than help for low-income households. We have a chronic shortage of affordable housing, and home ownership is increasingly out of reach for first-time buyers, but the Chancellor’s main housing policy was to reduce the number of affordable homes by 14,000. We need to encourage young people from poorer backgrounds to aim for higher education, but axeing student grants for the least well-off—and, by the way, taking the cap off tuition fee rises, which was not particularly trumpeted by the Chancellor—will make it harder, not easier, for them to do so.
This should have been a Budget to support working people, and to tackle the long-term challenges that our economy faces. The Chancellor is already crowing at his own perceived success in the headlines, but his work penalty in the tax credit system will hit those in work, and leave working people worse off. The Government have failed to make the big decisions that are needed to deliver the modern infrastructure that can make our businesses more productive. They have done nothing to address our alarming and widening trade deficit, and their rhetoric of a living wage has begun to unravel in less than 24 hours.
These are difficult times, and they require tough choices. The deficit needs to fall year on year, our debts need to be reduced, and sensible social security savings are also necessary. But this Budget made the wrong choices for working people and prioritised political gains over the long-term needs of our economy. As ever with this Chancellor, it will be the British people who pay the price for his ambitions.
I welcome—[Interruption.] I must be more statesman-like.
I welcome yesterday’s Budget statement from my right hon. Friend the Chancellor. He is in serious danger of coming to be seen as one of the great Chancellors of this country.
Yesterday my right hon. Friend set out a Budget of great significance. At its heart it is a Budget for working people. First, he set out the steps that we have taken to bring the economy back from its knees, where it was left by the Labour Government. It is only through a strong economy that we can deliver the growth and jobs that working people need. In the previous Parliament we created 2 million jobs, and the budget deficit is now less than half the 10% rate that we inherited. As we look forward, the Office for Budget Responsibility has forecast growth of 2.4% for 2015. That means that for the second year in a row, Britain is expected to have the strongest economic growth of any major advanced economy in the world. The economy will be in surplus by 2019-20, and it will be the largest surplus in structural terms in at least 40 years. Because of the steps taken by the Government, Britain is again standing tall in the world.
Secondly, the Budget sets out the actions we are taking on tax evasion, avoidance and planning, and the imbalances that were left to us in the tax system. This makes a vital contribution to bringing our public finances back into line, meaning that we can continue to provide the essential public services that working people in this country rely on.
Thirdly, the Budget sets out the steps we are taking to boost productivity and skills and to back business. We will have an innovative new apprenticeship scheme, which I hugely welcome, and we will introduce a levy on large employers to fund a big increase in apprenticeship starts and quality. The hon. Member for Nottingham East (Chris Leslie) spoke about productivity. This is one of the ways we will get productivity improvements. In England, firms will be able to get back more than they put in if they train a sufficient number of apprentices—a real incentive to get on and reskill. It is about ensuring that people in this country have the skills they need to get jobs, increase their hours and secure higher pay.
Fourthly, the Budget sets out the work that this Government are doing to support business. It is only when businesses are thriving that the people of our country can thrive too. One of the great things about the last election, apart from the fact that we won, is that it brought into the House so many of my new colleagues who have run businesses, started businesses and know what it is like to cut that pay cheque week in, week out. That is hugely different from the Opposition. We have been relentless in our commitment to cut corporation tax. In the previous Parliament it fell to 20%, the joint lowest rate in the G20. In this Parliament it will fall to 18%, sending out what my right hon. Friend the Chancellor said was a clear message that Britain is open for business.
Fifthly, the Budget sets out the measures that we are taking to reduce tax, to help people save, to help them own their own homes, and to support them in one of the most basic human aspirations—to pass something on to their children—through the changes we are making to inheritance tax.
Indeed. I shall shortly come to how these imbalances created disparities for people in work and trapped on low income.
We are sticking to two of our most important manifesto promises on personal tax. We are starting the journey to raise the tax-free personal allowance to £12,500 from next year. Once £12,500 is reached, as my right hon. Friend the Chancellor said, we will legislate so that the personal allowance always rises in line with the minimum wage—a great move to protect working people. We are keeping our commitment to raise the threshold at which people pay the higher 40p rate of tax to £50,000, starting with an increase to £43,000 from next year.
I consider one measure from yesterday’s Budget to be more significant than all the others—indeed, it is perhaps the most significant measure in all the Budgets that I have listened to during my many years in this House. The Government believe that if people work hard, they should be rewarded. In our growing economy, people should be able to expect a decent wage if they move into work and increase their hours. That is why, starting from April 2016, the Government have announced that we will move to a national living wage—set initially at £7.20, but rising to £9 by 2020. We will ask the Low Pay Commission to recommend future increases to the national living wage that achieve the Government’s objective of reaching 60% of median earnings by 2020. I believe that that is groundbreaking, and I hope that all Members of the House, instead of cavilling about it, will come to support it.
One of the lowest-paid sectors is the care sector, and it is right that it should get a pay increase. The Local Government Association has calculated that to pay the current living wage to all care workers who are directly employed by local authorities, and those employed by private firms that provide services to local authorities, would cost £0.75 billion. By 2020 that will rise to about £1.5 billion, or more. Will that be regarded as a new burden on local authorities for which the Treasury stands the cost, or will it be a further £1.5 billion cut to local authority services?
We have the spending review to address such issues. In my Department here in London I took on contractors about paying the London living wage, and I faced exactly the same debates and arguments about how it was not feasible and how they would face high costs. I insisted that they went away and looked at their productivity. My Department in London instituted the London living wage. Not one job was lost and productivity has improved. I would consider the matter carefully before we take those official statements as the reality.
Is there an economic imperative and also—perhaps more importantly—a moral imperative that, in the relationship between employer and employee, the employer ensures that the employee receives a salary on which they can live? It is not right that the Government make up the shortfall between employer and employee.
As someone who has long campaigned for an increased uptake of the living wage—not least by leading a debate on that in the House last November—I congratulate the Secretary of State on creating the national living wage. Will he tell me how many people’s incomes will increase as a result of that policy?
I apologise. That is a matter for his leader but—what can I say? Labour has no leader at the moment.
The hon. Member for Nottingham East was talking about the minimum wage and the living wage, and I want to pick up on something he said a fortnight ago:
“Do not the Government need a serious strategy to address low pay and boost productivity? They should be providing incentives for a living wage and new opportunities for high-quality skills, as a more positive route out of poverty.”
Absolutely. He went on to speak about the Chancellor’s Budget before it had been delivered and said:
“Unless he is planning a rise of 25% in the minimum wage, that will not happen.”—[Official Report, 25 June 2015; Vol. 597, c. 1038.]
Well, my right hon. Friend the Chancellor listened to that and initiated a rise of 38% to the minimum wage. The hon. Gentleman must be overjoyed, and will want to tell the House what a great man the Chancellor is and what a great Government we are.
Let me be clear: we are glad to see an increase in the minimum wage, but the problem emerges with the one-step-forward, two-steps-backward strategy. We cannot consider this question in the round by just brushing away the work penalty that has been introduced into the tax credit system. The Secretary of State must admit that people who depend on tax credits will lose out in the immediate period from April. Is that the case?
No, there is a clear question that needs to be answered. The hon. Gentleman has been asked it but he has not answered, and it would be helpful for us if he would: will he vote against the changes, and do the Opposition plan to reverse the changes on tax credits?
I cannot be much clearer in my opposition to the work penalty to the tax credit system. I do not think that it is right at this time to hurt those who are in work and in low pay. Of course we oppose the work penalty, but we support increases in the minimum wage. After all, it was our creation and something that Labour campaigned on in the election. We are delighted that Conservative Members now feel that they can adopt that policy when they campaigned so vociferously against it.
I notice that the hon. Gentleman said “at this time” when talking about tax credits. We can take note of that. It suggests to me—indeed, I am sure of it—that after the next couple of years Labour will have abandoned its opposition to the measure.
The measures that I set out in the Budget are vital to delivering the commitments that this Government have always made. We are committed to ensuring that a renewed economy goes hand in hand with a renewed social settlement, yet consider what we inherited in 2010: nearly one in five households with no—[Interruption.] Labour Members really do not like listening to this, but they have to hear it—[Interruption.] I will give way in a minute. Perhaps the hon. Member for Bishop Auckland (Helen Goodman) will sit down. Let me remind her what Labour left behind when it left government: nearly one in five households had nobody working; 1.4 million people had been on benefits for most of the previous decade; the number of households where no one had ever worked had doubled; and close on half of all households in the social rented sector had no one in work. Surely that is a shameful record.
I am grateful to the Secretary of State for giving way. He always tells the House that his politics is based on his faith. Will he explain why cutting tax credits for large families is a fair thing to do when that will be concentrated—I know he does not want to look at statistics—on families where children are living in poverty: Roman Catholic families and Catholics from other minorities? Does he understand that every child matters?
I do understand that, and I am coming on to speak about tax credits. For some time I have believed that the way tax credits operated distorted the system, so that there were far too many families not in work, living in bigger and bigger houses and getting larger while being subsidised by the state, while many others—the vast majority of families in Britain—made decisions about how many children they could have and the houses they could live in. Getting that balance back is about getting fairness back into the system. It is not fair to have somebody living in a house that they cannot afford to pay for if they go back to work, as it means that they do not enter the work zone and their children grow up with no sense of work as a way out of poverty.
This Budget creates clear dividing lines between this Government who help people into work, and the Labour party that created a high welfare dependency culture. Will my right hon. Friend remind the House of how many people under the previous Government were paying income tax to the state and receiving welfare credits from it? How many people are no longer in that situation?
The answer to my hon. Friend’s question, which I wanted to come to, is that that is the perverse nature of tax credits. About 40% of those on tax credits had tax taken off them, which was recycled through the system with some of it being given back to them. That seems to be a rather bizarre and absurd system.
The tax credit system was the brainchild of the previous Prime Minister, Gordon Brown. The original tax credit system, introduced by the Labour Government, cost £1.1 billion in its first year; the tax credit system now costs some £30 billion a year, most of which is spent on child tax credits. This money was pumped into the system in a clear attempt to chase what was then a moving poverty line. In fact, under the previous Government, £258 billion of hard-earned taxpayers’ money was recycled to be spent cumulatively on tax credits—a huge sum.
We saw massive spikes in tax credit spending in the run-up to election years. In the two years before the 2005 election, spending increased by £10 billion—a 70% increase. In the two years before the 2010 election, it increased by some £6 billion, or 25%. It is worth looking again at the in-between years, when it suddenly flattened but rose before an election. There were disproportionate increases in the child element, in an attempt to keep up with that moving median line. The child element was increased by more than earnings in 2004-05 and from 2008-09 to 2010-11, so that by 2010-11 the child element had increased by 25% more than if it had been uprated in line with average earnings since 2003-04.
One of the worst aspects of the system was the way people had to predict their income for a year. If their actual earnings turned out to be different, they were left with large overpayments or underpayments. This caused misery for families and left a gaping hole in the public finances. Although Labour Members have never owned up to it, we lost billions through that process. To try to deal with the situation, a large disregard was introduced. People then did not have to tell the Government if their income changed by up to £25,000 in the course of a year. To have the disregard at that level was completely irresponsible. It was an attempt to use taxpayers’ money to plug holes in a failing system.
I am very pleased that the Secretary of State has given way. It is ancient history for those of us who are here now. This is the right hon. Gentleman’s sixth year in government and the system is becoming more and more unfair. Will the Department for Work and Pensions carry out an equalities impact statement on the changes in the Budget? [Interruption.] I will repeat that, because the right hon. Gentleman is having trouble hearing. Will the Department for Work and Pensions carry out an equalities impact assessment in relation to changes in the Budget, both on employment and support allowance and on the changes to families, to ensure that ethnic minority families are not discriminated against and that the lives of people with disabilities are not being worsened by this evil policy?
There are impact assessments in the Red Book. There will be relevant impact assessments before Second Reading, as there always are.
The key point on tax credits is what they got for all of that: unsustainable spending that went up jerkily, but by huge amounts; and a subsidy for employers, which enabled the payment of lower wages and completely distorted systems, and presented a bizarre set of incentives for moving in and out of work. It is now well documented that for many people it made sense to work only 16 hours —no more, no less—and we saw spikes in the employment data at 16 hours. There were huge spikes of people clustered around 16 hours, because it did not pay to work anything else.
I do. As my hon. Friend makes clear, if people can afford to work only 16 hours, businesses will not invest in them and their training because it will not be worth their while. That means their chances of progressing are nil. Many rotated and crashed out of work directly, because they had no sense that they could go on any further. She is absolutely right.
We believe that two-fifths of those who received tax credits ended up paying for the tax credits they received. It was a bizarre system.
This Government are different. We are building on the firm foundations of a welfare system by balancing the books and fixing the economy, while continuing to provide a strong safety net to support the most vulnerable. Our record in the previous Parliament spoke for itself, so I am going to say it again. Despite all the doomsday predictions from the Opposition—
No, no. Honestly, I am not that kind.
Despite the doomsday predictions that the hon. Lady and many of her colleagues made, this is the actual result: 2 million more people in work; 2 million more apprentices; the proportion of workless households at an all-time low; and, perhaps most importantly, the proportion of workless households in the social rented sector at a record all-time low. That is a real record of success on which we will build. That is what we are going to do with the Budget.
Research from Oxford university predicts that the number of people going to food banks, as a result of the Budget’s changes to welfare, will increase by 1 million to 2 million. Does the right hon. Gentleman agree with that assessment? If not, how much does he think it is going to increase by?
I must say that that would have to be pretty quick work. If they have done that much work in a matter of hours, I want to employ them in my Department. No, I do not agree with that, and here is why. I fully support food banks. What people do to help with food banks is a very good idea. However, the figures on usage put out by food banks have all been proven to be incorrect. In Germany, 1.5 million people a week use food banks and its benefit system is meant to be more generous than ours. In Canada, more than 800,000 a month use food banks. This country has a very low number compared with other countries. Those figures speak for themselves.
As we build on this, we must meet our commitments to protect the elderly and the most vulnerable, protecting those benefits that provide for additional costs arising from disability or caring, and protecting pensioner benefits. My right hon. Friend the Chancellor and I make no apology for that, with good reason. When we took office, pensioners were some of the most vulnerable people suffering from a very, very low income. We have begun to put that right, and we intend to be proud of it.
It is right that we provide extra support for those who face the biggest challenges in changing their income levels. Spending on the main disability benefits—disability living allowance, personal independence payment and attendance allowance—will be higher in every single year to 2020 compared with 2010. Our commitment to protecting the most vulnerable is why we have protections in place on policies such as the benefit cap, so that people are exempt if someone in a household is claiming DLA, PIP or working tax credits. Wherever possible, we are introducing measures on a flow basis to give people the time and knowledge to prepare for the changes.
We are also ensuring that people on benefits face the same choices as those in work and not on benefits. Our measures will mean people making decisions and choices about their lives, which is why we are introducing the two-children element on a flow basis, and why we are lowering the benefits cap to £23,000 in London and £20,000 elsewhere, emphasising that it is not fair for someone on benefits to receive more than many people in work. I think that that principle is well accepted and popular around the country. In London, about four in 10 households earn less than £23,000, and outside London the same proportion earn less than £20,000.
I am grateful to the Secretary of State for giving way; he is being very generous today.
Will the Secretary of State not admit that although he is protecting disability benefits, he is not protecting disabled people, because disabled people also get tax credits and housing benefit?
I just do not agree with that, I am afraid. We have set out to protect disability living allowance and PIPs so that those in the greatest need are protected and their benefits continue to rise. As I said, we will help those in work and capable of work through the living wage and childcare support. We will get people back to work and doing more hours. I do not agree, therefore, with what the hon. Lady says; we have gone out of our way to protect those in the greatest need.
In my constituency, people would say that the £20,000 benefits cap is not only morally right but much more in line with circumstances in our area. I tried to intervene on the shadow Chancellor to find out if he agreed with that. Has the Secretary of State had any such indication?
We have presented today a package for working people that will incentivise those who can work to go back to work and work the hours they need to improve themselves and their families. My hon. Friend is absolutely correct. This is exactly the drive the Government are making.
My hon. Friend is absolutely right. The other point that has not come up but which my right hon. Friend the Chancellor has made clear is that the amount of money we pay to people outside Britain to pay off our debts is money that we cannot spend on education and health. Getting the deficit down and paying off our debts has to be the best thing we can do for people on low incomes, who need those services.
No, I have given way twice to the hon. Lady; I am going to make some progress.
We remain relentlessly focused on supporting people to move into work. Universal credit is now rolled out to half of all jobcentres in Britain, and by the new year will be rolled out to all of them and will then be expanding. It will provide people in work with even better help and support, meaning that those on low pay will do better as a result of universal credit, which was a big reform that was opposed by the other side but which we will deliver and make work.
Unemployment in Cannock Chase fell dramatically in the last Parliament. Does my right hon. Friend agree that the measures in yesterday’s Budget will see unemployment in Cannock Chase, Staffordshire and the west midlands fall even more dramatically?
As I said earlier, and as my hon. Friend says, in all these areas, we inherited a country riven by deep unemployment, debt and a massive deficit and unable to pay its way. In many senses, it was in a worse state than Greece. Look at the difference five years later. I believe that the next five years will see a renaissance in Britain, as we become an economic powerhouse, both in the north and the south, and more people get back to work earning a decent wage—in fact, a living wage.
Opposition Members never miss an opportunity to miss an opportunity to apologise for wrecking the country’s economy. The shadow Chancellor criticised my right hon. Friend the Chancellor and said there was no mention of science and technology. My right hon. Friend has a very proud record of investment in the north of England, as part of the northern powerhouse—
I thought it was altogether too brief. My hon. Friend was just getting into his stride. I feel we need another intervention. I agree with him—how could I not? The Opposition never miss an opportunity to miss an opportunity. They should have said years ago, “We’re sorry; we won’t do it again. We need to spend some more time thinking about what we did wrong.” We intend to give them that time.
I have to say to my hon. Friends that I really have to make some progress, because lots of Members want to speak. They will have a chance to speak later.
With universal credit, people will get up to 85% of their childcare costs paid, which is up from 70% under the previous system. In addition, there will be 15 hours of free childcare if someone has a two-year-old, or a three or four-year-old, and if they are working, while the 30 hours of free childcare a week will be worth £5,000 a year. By the way, the 30 hours of free childcare will start exactly when I said it would—it will be cutting in in the 2016-17 period.
On a point of order, Mr Deputy Speaker. It is important that the record is correct. I think the Secretary of State said that the childcare provisions were coming in in 2016 and that this was not a delay to the planned date of 2015. Am I right, Mr Deputy Speaker?
In that case, to clarify, the 30 hours of free childcare for working parents with three and four-year-olds has not been delayed; it will start to be introduced in September 2016. Thank you very much; now let’s move on.
If someone needs support to improve their skills or talk to their employer about increasing their hours, universal credit comes in again. For the first time, it will stick with them and help them to increase their hours, which is why it will complete the process of supporting people back into work. Even with the changes we are making, the welfare system will remain generous.
No, no; the hon. Gentleman had his chance.
About five in 10 families with children will still be eligible for tax credits as a result of these reforms. These figures show that we are taking a balanced approach to welfare—an approach that expects people to stand on their own two feet whenever possible but which provides them with the support to do that, by reducing their taxes, providing childcare, skills and back-to-work support, introducing universal credit to make work pay and asking employers to play their part by increasing wages at a time when our economy is growing.
In conclusion, ours is an approach that continues to provide a generous safety net and support for those who need it and expects people to face the same choices as those in work and not on benefits. At its heart, it is about moving from a low-wage, high-tax, high-welfare country, to a high-wage, lower-tax, lower-welfare country. It is a positive vision for Britain under a one nation Conservative Government delivered by a great Chancellor and a great Prime Minister.
When the Chancellor delivered his Budget speech yesterday, he made the oft-repeated claim that the
“best route out of poverty is work.”—[Official Report, 8 July 2015; Vol. 598, c. 333.]
That was probably true once, but it is no longer true—it has not been true for a number of years. The truth today is that, for millions of low-paid workers, poverty persists no matter how many hours or how hard they work. For people who are bringing up children on low or, indeed, average incomes, the costs of housing and of childcare mean that they are running to stand still. I have said before in this House that in-work poverty is the great scandal of our age. Sadly, very little was announced yesterday to tackle the underlying drivers that are stifling the opportunities and aspirations of the working poor.
Instead, we learned that the axe of the £12 billion-worth of cuts will fall most heavily on low and middle-income families. Last week the Government announced changes to the way in which child poverty is measured. Having heard yesterday’s announcements, it is not hard to understand why they did that, because the lowering of the threshold for tax credits and other changes announced yesterday will take income largely from the pockets of working parents and compound the projected increases in child poverty arising from the last round of cuts.
I am sure that the hon. Lady is well aware that Scotland’s childcare offer is significantly better than that enjoyed by people in other parts of the UK, and that our housing situation is not exacerbated by real rent imbalances similar to those experienced in London and the south-east of England in particular. I will pick up on that later.
The hon. Lady will also be aware that the Scottish block grant is calculated on the basis of the contents of the Red Book. The money currently allocated to Scotland is determined by this Chamber, so this Budget is relevant to everybody throughout the UK. It would be very wrong to ignore the fact that the purse strings are still controlled here, and that is one of the reasons why I argue for those powers to be sent up the road to Scotland, where we can use them more wisely.
I want to return to the issue of child poverty and the paper exercises conducted to measure it. Whatever we do to massage the figures, I do not think any of us can avoid the evidence of our own eyes in our constituencies. We are seeing growth in child poverty on the ground. We see it in the rise of food banks, which have already been alluded to, and in the larger number of people coming through MPs’ doors with income-related problems. That is also being experienced by advice bureaux. We also see it in the evidence of organisations that work directly with vulnerable families and those on low incomes.
In my constituency, one in five children is growing up in poverty. That might come as a surprise, because we enjoy some of the lowest unemployment in the whole country. A very small percentage of people are not in work, but many thousands of people are in low-paid work, and it is those working poor who are going to be most affected by what was announced yesterday.
More families than ever are running to stand still, and under this Government more people are being left behind. The UK has a deeply polarised labour market, and the ability of people in low-paid work to get ahead is severely curtailed.
I will not give way at the moment.
Amid all the rhetoric and the hyperbole of Budget day, it would have been very easy to form the impression from the media lines being trotted out yesterday that tax credits are predominantly a benefit paid to unemployed people, when in fact the opposite is the case. In Scotland, the overwhelming majority of tax credits are paid to working people. In fact, half of all families benefit from tax credits, and 95% of tax credits in Scotland are paid to families with children. We should make no mistake about where the cuts are being targeted.
It is inevitable that today we will consider the short-term consequences, because those cuts will put acute pressure on families, but we should be under no illusion: growing up in poverty has serious long-term consequences for children, too. It is associated with poorer educational attainment, poorer job prospects, poorer health throughout life and lower life expectancy. That is why asking families to bear the brunt of the cuts is so short-sighted. It has not only an enormous social cost, but an enormous economic cost: it holds back our economic progress and productivity, which are what we should really be focusing on and trying to improve.
The Government have tried to argue, today and yesterday, that the cuts will be offset by increases to the minimum wage and changes to the personal allowance, but that claim simply does not stand up to scrutiny. I think we all welcome the announcement of a long-overdue increase in the minimum wage to £7.20 an hour from next year and, indeed, the changes to national insurance, but let us not kid ourselves that rebranding the minimum wage as a living wage will actually make it a living wage.
There is already a living wage: it is calculated by the Living Wage Foundation and is already used by employers in the public, private and third sectors, including, I am very pleased to say, the Scottish Government. The living wage is based on the actual cost of living and it is already £7.85 an hour outside London and is due to go up again in November. We need to be absolutely clear that £7.20 is not a living wage and it will not offset the cuts in tax credits.
The critical point about the living wage is that it has been calculated on the basis of low-paid workers claiming their full entitlement to tax credits at the present rate, so any cut in tax credits means that the living wage will have to go up even further in order for it to provide enough for people to live on. If the Government take on board only one of the points I make today, I want it to be that one.
Scotland has already shown the progress we are making towards a high-skill economy. I was interested to hear yesterday’s announcement on improving the apprenticeship scheme in England. I hope the Government will aspire to do what the Scottish Government have already done. The uptake has been phenomenal and we are well on course to reaching 30,000 apprenticeships a year, which is far more proportionately per head of population than the current number in England. The Opportunities for All scheme guarantees a place in education or training for every single young person. It has been a phenomenal success, with more than 90% of our young people going into sustained employment afterwards. Instead of waiting until people have been unemployed for a year before intervening, we are intervening early so that every school leaver gets those opportunities. The approach is much more carrot than stick. The scale of the uptake shows that in Scotland we are committed to having a more successful economy and to growing it to meet the needs of our population.
I want to return to tax credits and not be distracted from them. Today the Resolution Foundation, which has done so much to promote the living wage and highlight the issue of in-work poverty, has said that the living wage would need to be £10 an hour by 2020—not the £9 announced yesterday—to keep pace with the cost of living under the new tax and benefits regime. Let us be clear: we are not going to get out of the poverty trap with this rebranded minimum wage. We need to bring it up to the level of a living wage if we are going to take away the support currently provided through tax credits.
The huge cuts in tax credits will make the gap between the minimum wage and the living wage even greater and it will leave the earnings of low-paid workers even further below the actual cost of living. At present, a family with two children where both parents work and who live in a house with average rent will be below the breadline, and the changes announced yesterday will not change that. Such families will still struggle to keep their heads above water and their children will still grow up disadvantaged.
We need to recognise that bringing up children is expensive—for everyone, in all income groups—but children are not some sort of luxury lifestyle accessory. Having children and encouraging family life is an essential, necessary and natural part of the human life cycle. For some years, however, we have made it really difficult for younger adults to even contemplate starting a family, simply because of the pernicious combination of low pay, job insecurity and exorbitant housing costs.
That brings me to the differential impact of this Budget on women, because, in spite of the progress that has been made, women are still heavily concentrated in low-paid work. We are far more likely to be working part-time or in zero-hours jobs, and we are more likely to be the primary carer of children or, indeed, frail or disabled relatives. Too many women end up in low-paid, part-time work such as cashiering or cleaning simply because they can work their hours around their family responsibilities. While I welcome the increase in the personal allowance, we need to recognise that many of those women working part time in low-paid jobs will not see the full benefit of it. Indeed, the key beneficiaries are, of course, higher-rate tax payers like ourselves, and 80% of the benefit of the increase will fall in the upper half of the income spectrum.
I have a number of questions for the Government about limiting tax credits to two children. I am not sure why they would do this—certainly in Scotland, we have a worryingly low birth rate so we should not be trying to deter people from having more children. I ask Ministers for clarification about the basis on which the number of children eligible for support through tax credits will be determined. Will it be a couple’s first two children together, or will children from a previous relationship be counted in the total? What will happen, for example, if a woman has her first child with a partner who already has two children from previous relationship or if a mother’s third child is the father’s first? As anyone who ever runs a constituency surgery will know, these are not abstract questions, and I hope Ministers will address them this afternoon.
The point I am trying to make is how important it is for us to have children. If our birth rate stays as low as it is, we will be storing up long-term economic problems for ourselves. Scotland has the lowest birth rate in the UK and one of the lowest anywhere in Europe. That is precisely because people know that they have to combine their incomes even to get a starter flat. They do not have room for a baby, they do not know how they would pay for a baby if one parent had to work part time, they do not know how they would be able to continue to pay a mortgage—still less a mortgage on a bigger house—and they do not know how they would pay the rent. People have to make serious choices, but the bigger social picture is that we must absolutely encourage people to have a family and encourage family life.
I will make sure that the hon. Lady’s questions are answered in the winding-up speeches, but there are all sorts of provisos involved. If two families are joined, the original child element is kept. Following up the point made by my hon. Friend the Member for Lewes (Maria Caulfield), the six deciles in the middle can end up paying for others to have more children than they can afford themselves. This is a point about fairness: they are the ones paying, but they do not feel that they can afford to have more children themselves.
The key point is that a falling birth rate is not good for anybody in whatever decile. Even those of us who do not have children are going to be dependent on the next generation being large enough to support us in our dotage when we need people to come in and look after us. The economics do not stack up. In the context of worryingly low birth-rate projections, we desperately need to encourage and make it easier for people in all deciles to decide whether having children is a possibility for them.
I have to say that I was appalled at the reference on page 88 of the Red Book to
“protections for women who have a third child as the result of rape, or other exceptional circumstances.”
I know this point was picked up yesterday, but I think the implications need to be addressed more thoroughly. It is perhaps important to acknowledge that rapes do not necessarily result in pregnancy. After all, rape is a crime that affects pre-pubescent children and post-menopausal women, as well as people of child-bearing age. How does the DWP intend to establish that a child has been born as a consequence of rape? Will there seriously be a box to tick on the form? Will a criminal conviction against a perpetrator be required?
We know that rape is one of the most unreported and poorly prosecuted serious crimes in the UK, with most surveys suggesting that 85% of women who are raped do not report it—for a variety of reasons, not least because most victims know their assailants and know that securing a conviction is a very long shot under our criminal justice system. Many simply do not want to put themselves through another traumatic ordeal.
I put it to Ministers that the women most likely to become pregnant as a result of rape are those in long-term abusive relationships who are being repeatedly assaulted. They are among those least likely to report rape, and those in the most extreme danger if they do. So I ask again, what will this “protection” mean in practice? How will the DWP arbitrate? Will women be believed? What steps will be taken to preserve their dignity and privacy? I would like to hear some answers to those questions.
My hon. Friend raises a very pertinent point—we should not be stigmatising children whatever their parentage. This could indeed cause many problems.
Before I conclude, I want to address the lowering of the benefits cap. One aspect that always seems to get lost in the debate is that the main driver of the excessively high benefit payments we see in London, the south-east and a few other hotspots across the UK is excessively high private sector rents. In most cases, the claimant does not see a penny of that money; it goes straight into the pockets of the private sector landlords. This is a very serious problem, but I think the Government are tackling it from entirely the wrong angle. They need to address the chronic under-supply of affordable housing, because until they address that underlying issue, rents will continue to soar and housing—to rent or to buy—will continue to be completely unaffordable for people on low and average incomes, by which I mean people who earn normal wages doing normal jobs. Plans to force housing associations to sell their properties to tenants will only make matters worse.
I remember that when the benefits cap was first introduced, I went to the Library to look at the impact on my own constituency. There was a grand total of three claimants affected, and two of them were people in temporary accommodation—they were in a short-term transitional situation. That was simply because our rental market was not quite so out of control as the rental market in some other parts of the UK.
My main concern about the new benefit cap is that it is entirely arbitrary and will mostly affect people in the private rented sector in high-rent hotspots. Fundamentally, it does not tackle the underlying problem of affordable housing supply, which is one of the main drivers of income poverty right across the UK. Instead, it seems to me that this arbitrary cap will create perverse incentives for people to move to areas or stay in areas of low economic growth where housing is more affordable but jobs are thinner on the ground. That gets us to the heart of the problem with this Budget. It puts a desperate squeeze on low and middle-income families, but there is little in the Budget to boost productivity. There is nothing to give Scotland a competitive advantage or give us a jobs boost. Instead, those who have already carried the can for the banking collapse of 2008 will stay trapped in work that does not pay.
Austerity has been a failed policy. It has held back our economic recovery and has harmed the most disadvantaged people. That is why we need powers over our economy, our employment and our benefits system to be devolved to the Scottish Parliament, where we can use them to build a more successful and a more equitable country that is in everyone’s long-term interest.
As the City’s MP, it would be remiss of me not to touch on the issue of the bank levy. When it was introduced in the immediate aftermath of the financial crisis, it was specifically designed to reflect the cost to the public purse of the implicit insurance provided by the Government to the finance sector. The suspicion is that more recently the bank levy has become as much an instrument to assist in deficit reduction.
I understand why the Chancellor sought to outwit his political opponents in March’s coalition Budget—that close to an election, I guess there were few votes to be gained by siding with bankers—but now that we have political stability, I welcome his commitment to ensuring that in future the replacement surcharge does what was initially intended. I suspect that this will sufficiently impress HSBC to stay for now, although I appreciate that perhaps too much good will has been expended by the Government on the ring-fencing arrangement for much to change in that regard—despite the threat to the international competiveness of the UK financial services from elements of the Vickers regime.
The more significant medium-term threat to banks remaining headquartered here in London probably arises from the “reckless banking” legislation. Once this is properly tested in the courts, it will be instructive to see just how many senior executives in the largest global banking conglomerates regard London as a place where they will be happy to be domiciled. That is work in progress for most of the City and the Treasury.
I shall say a quick word on the infrastructure and airport capacity debate. My constituency will undoubtedly be adversely impacted by the enlarged flight paths that will accompany the proposed third runway at Heathrow. I am also deeply concerned about air quality, even before the prospect of additional aviation pollution. However, all of us west and central London MPs need to recognise the national interest. There were certainly only anti votes when I supported Crossrail, which has disruptively carved its way through several residential districts in my constituency, but this major infrastructure is essential. Similarly, the UK and London economies desperately require additional airport capacity.
I would have been keener had the Davies commission come out in favour of Gatwick, but it has unequivocally come out in favour of expansion to the north-west of the Heathrow site. It is a finely balanced judgment, and I think there will be some funding problems when we come to put this in place in the years to come, but with reluctance I now take the view that the Government should move ahead with minimal delay and implement the Davies commission’s clear conclusions.
The Government have been wise to raise their horizons in addressing the sustainability of the UK’s recovery in an ever-expanding sea of global debt. At the last emergency Budget, in June 2010 as the last Parliament began, the Chancellor assumed that the then £1.32 trillion of accumulated national debt would cost some £66.5 billion annually to service. The debt pile has now risen to £1.63 trillion, but here’s the rub: we are expecting that to cost only about £51 billion a year in debt interest.
At this point, it should be said that the Chancellor’s determined rhetoric of fiscal retrenchment has earned him the confidence of the capital markets, which I am sure would rapidly have deserted any Labour Finance Minister. However, there is a herd of investors in the capital markets pricing Government debt with a deceptive, even dangerous, sense of calm. Incidentally, it is worth noting that the record low global interest rates apply to Government bonds issued by all but the most basket-case economies, even in the eurozone. In large part, there is a fear that deflation might be here to stay and that a prolonged period of stagnant or very low growth could be in the offing.
I will not, if the hon. Gentleman will forgive me; we are under a strict time constraint.
In such uncertain circumstances, taking on Government debt often seems the safest bet in the markets. The impact of quantitative easing and the excess demand for bonds, driven largely by EU regulatory requirements to invest in safe havens, have both helped to reduce the cost of borrowing by Governments. At the same time, however, our own Office for Budget Responsibility, along with the International Monetary Fund, is projecting healthy growth for the UK economy in the years to come. They are both predicting not a period of Japanese-style deflationary stagnation implied by the pricing of Government debt but solid year-on-year growth at a rate of 2.5% to 3%. The trouble that lies ahead for the UK economy is that once the markets catch up to this reality, it is a racing certainty that the cost of servicing our debts will rise, and fast.
In short—and perhaps paradoxically—it is a sustained economic recovery that risks blowing a huge black hole in future years’ budgets as the UK continues to grapple with the vastly expanded debt that has been accumulated over the past decade. That is why the Government are absolutely right to say that drastic and determined Government action on deficit reduction is essential for the medium-term health of the economy. The Chancellor is right to tackle the debilitating impact of entitlement in much of our welfare system, and now is clearly the time to do that, while the sun is shining. Given all the difficulties in the markets, and all that is going on in Greece and China, our positive economic news might not be around for much longer.
At the beginning of this year, analysis by the McKinsey Global Institute revealed that global debt had risen by some 17% since the final quarter of 2007, when the collapse of Bear Stearns and Lehman Brothers was in the offing. The racking up of debt on this scale represents the biggest experiment we have ever conducted in the global economy. Short of the unleashing of a burst of unprecedentedly high levels of output and sector-wide productivity growth, or alternatively a programme of fiscal contraction hard to imagine in an era of welfare dependency and universal suffrage, it is impossible to see how the developed world will ever be able to repay these levels of debt properly.
Historically, Governments have dealt with debt piles by allowing a little inflation to develop. The other option is to introduce what the economists call fiscal retrenchment. The double whammy of the 1930s depression and the cost of fighting world war two in the following decade left all western economies with equivalent debt levels relative to national income. Between the 1950s and 1970s, yields from Government bonds were deliberately set at just below inflation. As a consequence of the alchemy that comes with compound interest, a lot of our debts were paid off.
That might seem to be a comforting parallel, but there are key differences today. One is that we live in an age of free cross-border capital flows, and much of our borrowing comes from international sources. The model of squeezing creditors by means of negative real interest rates and rising prices simply will not work when credit is denominated in a foreign currency or in a deflationary era. We need only look at the ongoing travails of the eurozone to see the limits of imposing financial repression when nation states are locked into a monetary straitjacket.
Much is made of the fact that one third of UK Government bonds have been mopped up by the Bank of England, which has helped to keep interest rates very low—we have now had 76 consecutive months at the emergency 0.5% rate. More distorting still is the fact that more than 40% of our gilts are owned by foreigners. In this uncertain world, those overseas creditors might take on the chin the impact of artificially low returns on their bonds, but they may be considerably less sanguine about the impact of currency risk. The market sentiment towards sterling is currently benign, despite record current account deficits, but if that were to change and if the pound were to fall, sterling-denominated gilts in the hands of foreign investors would rapidly lose their value. The prospect of such overseas creditors losing confidence in the UK economy would then be very real.
For that reason, the Government’s actions are of critical importance. They must persist in reducing the deficit as a matter of national urgency, to ensure that we collectively start to live within our means as rapidly as possible. What really concerns me, and what should concern policymakers, is that at the moment it is difficult to imagine the circumstances in which the cost of credit might be rapidly increased—as will be necessary in the years to come—without the economic roof falling in.
It is a pleasure to follow the right hon. Member for Cities of London and Westminster (Mark Field) in this debate. I listened carefully to what he said about the issues of importance to his constituents, and it struck me that the issues of importance to my constituents are very different. The Budget has been presented to us as a Budget for working people, and a one nation Budget because we are all in this together, but I have to say to those on the Government Front Bench that it just will not be seen in that way in the north-east of England.
I have no quarrel with the Government’s desire to drive up wages, to increase productivity and to broaden and deepen the private sector employment base in the north-east of England, but we do not think that those things will actually happen. We believe that we will get all the welfare expenditure cuts but not the increased wages or the longer working hours, or the chance to earn a living in the private sector marketplace.
The maximum grants for students from households with incomes below £25,000, which encourage youngsters to go to university, are being converted into loans. In my constituency, one elector in five is a student. The change will mean that those in the very poorest households will be the ones leaving university with the highest debts, and that just does not seem fair. Similarly, the assault on working families tax credits will penalise the working poor. That point was very well made by the hon. Member for Banff and Buchan (Dr Whiteford)
Does the right hon. Gentleman agree that these proposals will result in young people from deprived backgrounds being penalised and discouraged from going to university? No student should have a debt around their neck at the very time they want to make progress in life.
In fairness, Mr Deputy Speaker, I took the intervention, but I accept what you say.
There is an issue for those who rely on working families tax credits and who are in relatively low-paid jobs in the north-east of England. Let us take the example of a lone parent with two children who is working 16 hours a week on the minimum wage. Once both changes have come into place, the Chancellor’s living wage announcement makes up about £400, which is just under half the £860 that person would lose from the tax credit change. I listened to the earlier exchange between the Front-Bench teams. I take into account what was said and accept that it might ameliorate the position; none the less, the change is shown in the Red Book as a saving to the Exchequer, which means that it is money that my constituents get now but will not be getting in the future.
The reduction in the employment and support allowance to jobseeker’s allowance levels will not help anyone find a job; it just makes them poorer. The public sector pay freeze of 1% for the next four years is on top of a public pay policy that saw a freeze for two years from 2011, then below-inflation settlements of 1% up to the current financial year. This will be the longest sustained public sector pay freeze ever, and it is just not fair on the workers, especially the low-paid public sector workers. The benefit tapers have been narrowed, and on top of all that there is the benefits cap itself. I am not against the cap in principle, but reducing it from £26,000 to £23,000 in London and imposing a lower regional ceiling of £20,000 outside London is harsh on the English regions.
The Chancellor has burdened housing associations with an unwanted right to buy, which is good for the few but not for the many. Local authority housing stock is still burdened by the bedroom tax, which is not just unjust but actually counter-productive in communities such as my own constituency where a private one-bedroom bedsit in Jesmond costs more to rent than a two-bedroom council flat in Walker. Yet full housing benefit will go to the one-bedroom flat, and those in the two-bedroom local authority-owned flat will be penalised by £8 a week. I do not see how any of this helps the north-east. Certainly, it does not help to make work pay.
In some parts of the country, it may be reasonable to argue that employers should pay better wages rather than rely on the state to top them up, but the danger for the north-east is that those who rely on working families tax credit will not be able to get extra hours at work to make up for the shortfall in their weekly income and will not be able to get a pay rise because there is not sufficient profitability in the business for that to be sustained.
I understand some of the right hon. Gentleman’s concerns and I appreciate that we live in two different worlds, but does he not think it slightly ironic that he is more or less making the case that was made from the Conservative Benches 20 years ago when the minimum wage was brought in? It was said that it would somehow lead to a reduction in jobs. That is the case he is making today, yet it was one that he eschewed two decades ago.
The even greater irony is that I was the Government Chief Whip when we put through the minimum wage legislation. My hon. Friend the Member for Sheffield South East (Mr Betts) was the Whip on the Committee that went right through the night on this. But that is going down memory lane. Indeed, it was the current Secretary of State for Defence who was making the case in the Committee at the time. There was some substance in the point, which is why I make it now in relation to the specific circumstances of the constrained nature of the private sector economy in the north-east of England. A broader, deeper and stronger private sector economy is the way forward for our region. It will help to give us the wages and the breadth of job opportunities that the south-east of England enjoys.
The great hope offered by the Government to the north-east is in their northern powerhouse initiative. The Chancellor is right to take regional policy seriously, but he just does not seem to understand how the north-east of England works and what precisely it needs. Indeed, he did not reference us once in his Budget speech when he was going through the offers to the other English regions. The only practical manifestation of the Government’s northern powerhouse policy so far is in the rail upgrades, and they have been delayed.
When I was the regional Minister in the previous Labour Government, I met representatives of Hitachi in Downing Street. They were considering locating in the north-east of England, and wanted to discuss how they could bring that about. I give credit to the current Government for having seen that programme through, because it does involve Government support and they could have cancelled it but they did not. But it was a shared endeavour, and it was certainly coming into place well before the northern powerhouse initiative. However, the hon. Gentleman is quite right that it is exactly the sort of initiative that we would like to see for our region. If it comes under the northern powerhouse brand, I shall take no exception to that.
The problem is that we do not know the geographical boundaries of the northern powerhouse initiative or the functions ascribed to it. We do not even know whether it is some form of local government reorganisation or a regional economic development initiative, or both. We are being told in the north-east that we must sign up to a metro mayor, but not why. The Government have given no details of the powers, functions, workings, accountability or budget for the post, yet they say we must have one.
The past five years have seen a plethora of initiatives that have had no practical impact on the problems in the north-east. The new local enterprise partnerships simply do not have the resources and capacity to address the scale of the problems. The LEPs have been followed by city deals, enterprise zones, regional growth funds, local growth deals and joint leadership boards. They are fragmented, piecemeal initiatives that collectively do not amount to an effective, focused regional policy from the Government. Metro mayors risk being just the latest addition to this confused approach. There is a serious question as to whether so many proposed policy responsibilities can and should be invested in one single individual. People in Newcastle who rejected the local government version of the elected mayor in 2012 and the wider north-east should at the very least be given a choice on this in a referendum.
The past five years have seen a persistent focus on structures and process at the expense of any real, meaningful action. We continue to lag behind in jobs. We have high unemployment and a lack of skills and investment in infrastructure. We simply cannot afford to waste the next five years dithering on structures.
I rise today to congratulate the Chancellor on his Budget. His amazing job yesterday is warmly welcomed by most of the country. I am disappointed to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown), who said that the Budget will make no difference—he probably said the same thing about previous Budgets brought in by the same Chancellor. Surely unemployment is down in his constituency; I cannot believe that it has gone up. What did his Government do, in all the years they were in power, to help people in the north-east? They did not do anything, which is why there have been problems. This Government, though, have made a difference.
I am also disappointed to follow the hon. Member for Banff and Buchan (Dr Whiteford). I found it astonishing that she should be advocating that people on benefits should be allowed to have—encouraged to have—more than two children. Completely responsible people who recognise that children are expensive to bring up and cannot afford to because they are not on benefits subsidise those who the hon. Lady would like to have three, four or five children. That is completely mad.
The hon. Lady completely misrepresents what I actually said and what the record will show I said. The point I was trying to make was that half of all families in Scotland receive tax credits, a huge majority of whom are in work. They are people who work extremely hard.
I recognise that most people getting tax credits are in work, but I still do not believe that people who are in work, not receiving tax credits, acting responsibly and having the number of children they can afford should be subsidising those who want to have more children. That is completely topsy-turvy economics; perhaps it is how some Opposition Members from Scotland deal with economics there, but it is not what we want to do here in London. I am very disappointed by the hon. Lady’s attitude, and I feel that she completely misrepresents what the Government are doing.
I congratulate the Secretary of State for Work and Pensions on doing a fantastic job in bringing the welfare budget under control. It was not under control for many, many years—it was completely out of control, which is one reason why this country got into such difficulty with the deficit.
One of the things that we hear about in the Budget is the importance given to increasing productivity, but if we are to increase productivity, we need incentives for investment in the economy. The Government are incentivising those who have financial assets by changing the inheritance tax rules to benefit the type of people who sit on the Government Front Bench. That is the reality of what they are doing. If we want to make sure that work pays, we need to drive investment in the economy, and we need incentives for business to do so. [Interruption.]
Thank you, Mr Deputy Speaker.
I will ignore what the hon. Gentleman said because, again, it is topsy-turvy economics. We are trying to increase investment in business to provide more jobs. We have created 2 million more jobs in the past five years, and that is carrying on. Apprenticeships are increasing, which will help people into work. In my constituency of Mid Derbyshire, which started off with 1,267 claimants in 2010, the figure went down to 340 this May. That is a huge reduction. I would still like those 340 people to be in work.
Some hon. Members have talked about youth unemployment. I started off in Mid Derbyshire with 350 such claimants; the figure is now down to 80. That is a huge increase in the number of young people who have jobs, thanks to our brilliant local industries. Young people are better off in work—everyone is better off in work than on benefits. We want to stop the culture of people relying on benefits.
As the Secretary of State for Work and Pensions said, when the Labour party was in government, it put up benefits before an election, flatlined them and then put them up again before the next election. Labour Members should not be playing politics with benefit claimants, who need honest, clear benefits. Those who need benefits will get them under this Government, but we want to get more people into work because that is better for their self-esteem and health; it is also better for their children to have as a role model someone who is in work.
My hon. Friend makes a very good point, and that is exactly what the Government are trying to escape from. They are trying to raise the tax threshold, so that more people keep more of the money that they have earned. That must be a good thing to do. We need to grow the economy and get the finances under control, with the national debt falling.
(Sheffield South East) (Lab): The hon. Lady rightly talks about the need for honesty in politics. Obviously, she believes profoundly in what the Chancellor has proposed in his Budget. Why, then, was that not set out for the electorate to take a view on before the election? Why was it hidden away until after people voted?
As the hon. Gentleman knows, we did not know what the result of the election would be. We did not even know that we would be in government; we thought that we might be in a coalition. It might have been the Labour party in a coalition. We have now had a Budget that sets out extremely clearly for the electorate exactly what we will do over the next five years. We want to invest in business. We want to help businesses, so that they can employ more people. That has certainly happened in my constituency, as it will have done in his constituency and those of every hon. Member, because business has created so many jobs. The climate is right for business. Britain is open for business, and we need to get more people working hard.
My hon. Friend is absolutely right. One of the ways in which we will do that, hardly mentioned by Opposition Members, is by changing inheritance tax. People have paid taxes on their money. They have bought their houses, and it is good to allow them to leave their houses to their children, so that they can benefit as well. The housing market is difficult for younger people. If parents can leave their houses to their children, that will benefit society.
Something that has not been mentioned at all is the 2% commitment on defence. I would have thought that everyone in the Chamber would welcome that; it was certainly welcomed by Government Members yesterday. I cannot believe that no one wants to mention it at all. Surely the Opposition believe that that is a very good thing for the country, to secure our safety and security here.
Labour Members should welcome the fact that the success of our long-term economic plan has created jobs and is encouraging growth, which has meant that spending on welfare as a percentage of GDP has been falling since 2012.
I should like to finish because time is short—I apologise, Mr Deputy Speaker. This is a good Budget for jobs, for employment and for this country. I commend the Chancellor and the Secretary of State for Work and Pensions for their sterling work and how they have put this country on a much better footing.
I represent a south-west London suburban constituency, not an area normally associated with high housing stress, difficulties and problems. I have had the great fortune to be the MP for Mitcham and Morden— the place of my birth—for the past 18 years. Half the people I see at my advice surgery come to me with housing issues.
For 16 years, before I first entered the House, I worked for Battersea Churches Housing Trust and, before that, for Wandsworth Council in the homeless persons unit. I have seen long queues for bed-and-breakfast accommodation. I have seen people in desperate straits, but that has not prepared me for the length and depth of the problems that people face in securing housing in my constituency.
I sometimes hear myself tell constituents things like, “Oh, please don’t go homeless on a Friday or a Monday, because God only knows where the council will be able to put you. You see, they can’t take into account the fact that your daughter is doing her A-levels or O-levels, that your mum is ill, that you have a job. They have to put you in temporary accommodation where they can find it.” These are things I say without even thinking about them.
On a Friday night, I regularly see vulnerable children with vulnerable mothers go off to bed and breakfasts on the other side of London, if not in Birmingham. I am not ashamed to say that I wake up in the night and think about what happens to those families—what sort of accommodation they are going to and how they will manage. However, it is not on behalf of those people that I stand to talk this afternoon because many Opposition Members will do that more eloquently than I can.
The people I want to speak for are all those in good jobs who save their money, but cannot get a foot on the housing ladder. They cannot buy their homes partly because they are being eased out of London by those who already own a home: the buy-to-let landlords. Housing is becoming an investment model, rather than somewhere to live, have a family, put down roots and become part of the community. It has become a real problem for that generation. The possibility of buying the home in London that my family had in the fifties and I had in the eighties is not there for the generation coming up now. We have to do something for them if we are to avoid the family breakdown and problems that will inevitably arise if we do nothing.
For those reasons, I welcome the Government’s announcement that they will look at the £14 billion in tax breaks that landlords can claim every year. There are not many things that I, the Chancellor and my hon. Friend the Member for Islington North (Jeremy Corbyn), who is standing in the Labour party leadership election, agree on, but reform of buy to let and how buy-to-let landlords are treated in the tax system is one of them. The Exchequer gives tax relief on mortgage interest payments, money spent on repairs and maintenance, and even accountants’ fees to help landlords to take full advantage of the relief. Some of the tax breaks help tenants—we should encourage landlords to keep their property in a good state of repair and to improve living conditions—but it is completely unfair to give landlords a £6 billion tax break on mortgage interest payments.
Why is it right to subsidise the mortgages of people buying their second, third or fourth home with taxpayers’ money when so many people cannot afford even to take out their first mortgage? People paying off the mortgage on their own home that they live in do not get those tax breaks. We should be incentivising buying to live, not buying to let. Mortgages for landlords are cheaper than mortgages for first-time buyers, in part thanks to that subsidy, and it distorts the housing market. As of last week, the cheapest two-year buy-to-let mortgage cost less than half the cheapest two-year first-time buyer deal, according to brokers. That puts first-time buyers at a real disadvantage compared with buy-to-let landlords, who are swamping the market and shutting out first-time buyers. A third of Members of this House are themselves buy-to-let landlords.
The changes announced by the Chancellor yesterday are a drop in the ocean and do little to tackle the ridiculous double taxpayer subsidy of private rental landlords. We are, in effect, giving a double taxpayer subsidy to buy-to-let landlords because we give tax breaks of £6 billion that encourage people to buy to let and monopolise the housing stock, and then, when tenants cannot afford the growing rent, the taxpayer has to give them housing benefit. Housing benefit paid to private landlords has now reached £9.3 billion, or 38% of the total bill. With fewer people able to buy homes, there is more demand in the private rental sector, which in turn pushes up rents.
I am pleased that the Government have agreed this is a problem, as the Budget shows, but their proposals utterly fail to confront the buy-to-let taxpayer subsidy in any significant way. The flawed principle that landlords can claim tax relief on their mortgage interest will remain; landlords will simply get a slightly lower tax relief. The Government’s own documents estimate that it will save the taxpayer just £665 million pounds a year by 2020—just one tenth of the £6 billion in mortgage interest claimed back in tax breaks by landlords in 2012-13.
To seriously tackle the root causes of the housing crisis in this country, we have to go further than reducing these unfair tax breaks by a meagre 10%. Taxpayer subsidies should be used to help people to get on the housing ladder, not to pull the rug from under their feet. By looking again at mortgage interest tax breaks for landlords, and cutting them by more than just 10%, or even limiting them to new builds, the Government could save up to £6 billion—the equivalent of grants to housing associations that could enable them to build 100,000 new social housing units. Spending the money on building new homes, instead of on existing bricks and mortar, also helps to stimulate the economy and provides jobs. For every £1 spent on housing construction, an additional £2.09 of economic output is generated.
I totally agree, but may I make it clear that I am a big supporter of the right to buy? I believe it has liberated a lot people, but it is the opportunity for all, or all who can, that I want to save today.
Correcting the flaws in the tax system would stop the housing market being distorted to disadvantage first-time buyers.
My problem with the current plans is what they will do to the security and continuing support that housing associations can provide, but if the Government can provide a model whereby we can replace those properties, one for one, my answer is: almost certainly.
Many constituents come to me afraid they will never be able to save enough to put down a deposit on their first home; most of their monthly pay packet goes straight on rent and there is nothing left to save. Their rent is driven up by buy-to-let landlords, who monopolise the housing supply and charge what they want. As a result, 82% of people in London who do not own a home believe they will never be able to do so. If the unfair advantage given to buy-to-let landlords is removed, more people will be able to buy their first home; in addition, there will be reduced demand in the private rental sector, so rents and the housing benefit bill will fall. I urge the Chancellor to look again and do more with buy-to-let mortgage tax breaks.
Thank you, Madam Deputy Speaker, for giving me the opportunity to make my maiden speech. It is a pleasure to follow the hon. Member for Mitcham and Morden (Siobhain McDonagh).
Standing here now, I realise how wise were the words of my hon. and good Friend the Member for Tamworth (Christopher Pincher) when he, during his maiden speech, suddenly understood the significance of the occasion and said,
“nobody is looking forward to the end of my speech more than I am”.—[Official Report, 2 June 2010; Vol. 510, c. 526.]
I can assure the House that this is definitely the case for me, too.
Having said that, I am delighted to have been called in this debate following the first Conservative Budget for 19 years, as during the election economic competence was one of the key issues raised on the doorstep. I know that many of my constituents will be pleased that the Chancellor has already implemented promises made in our manifesto, especially the increase in the lower tax threshold and the introduction of 30 hours of free childcare.
I pay tribute to my predecessor, Dan Byles. He was my local MP, so I can confidently say that he served our community with true integrity and commitment. Dan stood up resolutely for his constituents and was seen as champion, fighting for them on issues that mattered—none more so than the mitigation and compensation for those affected by HS2. I will continue to fight for that cause in the manner for which he was so respected. As a result of Dan’s hard work and that of my right hon. Friend the Secretary of State for Work and Pensions, unemployment dropped to the lowest level ever in our constituency. Dan was rightly proud of that.
It was an outstanding achievement for Dan to win the seat in 2010, with the smallest Conservative majority of just 54 votes, although I note that, following the last election, 54 is a cushion that many colleagues would be delighted with. As his constituency chairman in 2012 and 2013, I confidently predicted that not only would he win in 2015, but I would ensure that we doubled his majority. Having now increased the majority to nearly 3,000—[Hon. Members: “Hear, hear!]—that may be the only target that I have been happy to get wrong by such a considerable margin. Indeed, should this career not work out, then, given that margin of error, I see a possible future as a pollster. [Laughter.] I am sure that many constituents and indeed many Members of this House will join me in thanking Dan for his work and send him and his family the very best wishes for their future.
My own route into politics was not exactly a traditional one. Until recently, I subscribed to the thoughts of the eminent historical figure Blackadder that “Wanting to be a politician should actually ban you for life from ever being one.” I grew up in the renowned Conservative heartland that is Durham city and attended the local comprehensive, Framwellgate Moor. My dad was one of 15 children and moved from Ireland in 1960s, when he met my mum in London. They moved back to her native north-east and eventually set up and built their own business, which they have now run for over 40 years, employing many local people in the process. It was from them that I learned the Conservative belief of aspiration, and that with hard work and resilience almost anything is possible. They inspired and encouraged me to start my own business at 21, and it is some testament to them, and to the tolerance of the British people, that I still ran that business until I was elected to the House just a few weeks ago. I will miss my three staff—Laura, Allison and Georgia—but I am sure that they now realise they did all the work anyway and do not really need me.
The North Warwickshire and Bedworth constituency is a wonderful mix of towns and villages, boasting a rich history of coalmining and industry. The small market town of Atherstone sits on the old Roman Watling Street, and the town centre has changed very little in 750 years, even though the traditional hatting industry has now disappeared. The town still plays an annual Shrove Tuesday ball game, a tradition that has survived for over 800 years, although given the physical nature of this game, the lifespan of competitors is significantly less.
Coleshill is a historic coaching town in the western part of North Warwickshire, lying close to the outer edge of Birmingham. It is a thriving community, which also hosts successful companies such as Sertec, BMW and a host of others at its Hams Hall estate. Incidentally, it is also famous for being the town that invented Brylcreem.
The largest town is Bedworth. Although predominantly thought of as an ex-coalmining area, it also formed an important part of the 19th-century silk ribbon weaving industry of Coventry and North Warwickshire. One world famous ribbon maker still operates in Bedworth—Toye, Kenning and Spencer, which produces high-class medal ribbons and masonic regalia that are exported around the world. In the centre of the town is Bedworth’s hidden gem, the picturesque Nicholas Chamberlaine almshouses, managed by the Nicholas Chamberlaine Trust, which celebrates its 300th anniversary this year. Bedworth also proudly hosts the largest and most famous Armistice Day parade in Britain, which is always held at the exact hour, day and month each year.
The constituency is dotted with many smaller villages that all have their own identity, such as Fillongley, Austrey, Newton Regis, Warton, Grendon, Baddesley, Shustoke, Mancetter and—not forgetting my home for the last 15 years—Shuttington, a small village that is famous not just for the Wolferstan Arms pub, but as the birthplace of Charles Bonner, a recipient of the Victoria Cross.
Our major local issue remains HS2. The line will run through a number of areas, such as Water Orton, Kingsbury, Middleton and Polesworth. I will do all that I can to support residents in their opposition to the HS2 route, and to assist them with their mitigation and compensation cases.
The main hospital in our constituency, George Eliot, has undergone a huge transformation in recent years, thanks to the hard work and dedication of the staff there, working in partnership with the Government. It has recently achieved a good rating, and I will work with it to ensure that this excellent upward progression continues.
I am very proud of the previous Conservative record on increasing apprenticeships, and this is an area that I will continue to champion. It is important that we not only deliver high-quality qualifications that benefit local students and employers, but give pupils a real choice in the path that they take when leaving school.
Finally, we are rightly respected across the world for our outstanding military, and it is great to see many colleagues now on these Benches who previously have served their country. Although I did not serve myself, I am very proud of the nearly 10 years that my wife Karen spent in the RAF, seeing active service in the first Gulf war. In such volatile times, we must remember that the first duty of Government is to protect their citizens. Equally, we have a duty to ensure that, when we ask our brave servicemen and women to put themselves at risk for their country, we do so safe in the knowledge that we have provided them with the best possible training, equipment and resource to do so. On that, I welcome the Chancellor’s commitment to the 2% figure.
I want to finish by expressing my thanks to the people of North Warwickshire and Bedworth for electing me to be their representative in Parliament. This is a role that I do not take lightly or underestimate. I relish the challenge of making North Warwickshire and Bedworth an even better place to live over the next five years.
Thank you, Madam Deputy Speaker. It is a pleasure to follow the hon. Member for North Warwickshire (Craig Tracey).
There can be no greater privilege than becoming a Member of this House, the mother of all Parliaments, and I am particularly proud to be delivering my maiden speech as the Member for Bradford South. This great sense of pride and privilege has been possible only because the good people of Bradford South placed their trust and confidence in me. For that, I will be eternally grateful, and I promise I will never let them down. I am proud to be the first woman to represent Bradford South, and to be the first woman parliamentarian from the transformational Ruskin College.
My predecessor, Gerry Sutcliffe, served Bradford South for 22 years from 1994, following the untimely and sad death of the hugely respected Bob Cryer. With Gerry’s departure, the House has lost a generous, approachable and extremely popular Member. Many in this House, from all political parties, will have benefited from his sound advice, his sharp wit, and perhaps most importantly, his pearls of wisdom about this season’s football player transfers. Incidentally, you would get such pearls irrespective of whether you had actually asked for them.
Bradford South is one of five constituencies covering the metropolitan area of Bradford. We are renowned first and foremost for our proud industrial and cultural heritage, but we are also recognised by the discerning for other—often under-appreciated—reasons. For example, the village of Howarth was home to the great literary Bronte family, a fact known all too well by the Japanese tourists who annually pay homage. Our creativity is legendary, a fact recognised by UNESCO when it bestowed upon Bradford the prestigious UNESCO city of film status. In the world of British politics, few would be aware of the fact that it gave birth to the Independent Labour party, fighting for social justice, thus giving its chairman, Keir Hardie, his seat in this House in 1900. In the world of sport, I know that all Members will be aware of the fact that we are home to the world-famous Bradford Bulls.
I have spoken about Bradford as a place, but, as the cliché goes, a place is only as good as the people who live there, and in that regard I am most fortunate indeed. The people of Bradford South are fair-minded, good-natured and hard-working folk. In return, they rightly expect fairness and justice, security and respect in old age, a decent education for their families, affordable homes to call their own, access to free healthcare on demand and a job that pays a fair day’s wage. These fundamental needs are what all people in our country should expect. I promise to dedicate my next five years to working to ensure that these fundamental needs are respected and upheld for the people of Bradford South. Sadly, they are all too often beyond the grasp of hard-working people in my constituency, and that must change. I will campaign tirelessly for Bradford South until these fundamental needs are met to their fullest. It will be on these fundamental needs that I will hold this Conservative Government to account during this Parliament.
I am in the Chamber today to pursue the same struggle that led Keir Hardie to this House some 115 years ago—the fight for social justice. People living across Bradford deserve social justice, a phrase that is sometimes overcomplicated by academics and commentators alike. To me, it is not complicated; nor is it to the people of Bradford. By the same token, neither is injustice complicated—the upwelling of discomfort in the pit of your stomach in the face of injustice will be familiar to all.
We see injustice on pensions. We would all agree that we need to look after the elderly, yet pensioner poverty is still a reality. Those who have worked hard all their lives and paid into the system deserve dignity and security in old age, yet far too many of our older generation are still struggling to get by. This simply cannot be right and it must change.
We see injustice in housing. As a country, we need to ensure that all our citizens have access to affordable homes—a home to raise their family and a home in which to enjoy their retirement years. We need a housing sector that delivers for the ordinary people of this country.
We see injustice in access to healthcare services. Too few people are able to access timely appointments at their local GP surgeries and NHS dentists. As a country, we need to look after our young and old, our mums and dads, our daughters and sons. Without good health, so much else becomes increasingly difficult, or even impossible—working a job, looking after our families, playing in the local park. Good healthcare services are the cornerstone of a thriving community. Our healthcare services need to support our local communities and at the moment that is simply not happening. Increased resources for those critical services must be a priority.
We also see injustice in access to further education. Too few of my constituents are able to access the courses they so desperately need. Without access, they will not be able to develop the skills critical to a prosperous career in the global market we inhabit. The reason for that is simple: insufficient investment. Education equips people for a successful and prosperous life, where they get on and are able to cope with life’s challenges. In Bradford, we are blessed with two outstanding education institutions, Bradford College and Bradford University. They have transformed the life chances of countless generations of young people in Bradford over the decades, but without sufficient resources their ability to continue to transform the lives of Bradford’s people, both young and adult learners, will be stunted. In higher education, the abolition of the student maintenance grant, announced yesterday, is a backwards step, which will limit aspiration and undermine the concept of one nation that the Government seek to champion.
We also see injustice when we look at the number of jobs that pay a fair day’s wage. Weekly pay in my constituency is significantly below the national average, and the consequences of that are stark. For example, HMRC child poverty figures reveal that in my constituency an appalling 28.3% of our children—the future of this country—are stranded in poverty. Without family incomes rising in line—and, indeed, above inflation—children are always the first to suffer. We need those children to become the scientists, the artists, the wealth creators and the inspirational leaders of tomorrow, but we condemn them to the most deplorable start in life. That must change. At first sight, yesterday’s Budget announcement on the living wage appeared to offer hope to the working poor, but closer scrutiny reveals that any benefits accrued will easily be wiped out by deep cuts to in-work benefits.
I pledge to stand up for the people of Bradford South against such cynicism, and I conclude with words of warning from Martin Luther King, who said:
“Injustice anywhere is a threat to justice everywhere.”
It is a great privilege to follow the hon. Member for Bradford South (Judith Cummins)—a fine constituency and a fine city. I am sure that she will do an excellent job as the constituency’s new MP. I also pay tribute to my hon. Friend the Member for North Warwickshire (Craig Tracey), an outstanding individual who will, I am sure, do a great job for his constituents. I also pay tribute to his good lady wife for her service to Queen and country.
At a time of uncertainty abroad—be it in Greece, Russia or the middle east—the Chancellor delivered a Budget that prized economic stability at home. It was a one nation Budget that will provide security for working people in Weaver Vale, greater Cheshire and the north-west as a whole. Despite the chaos in the eurozone, Britain is still growing faster than any other major advanced economy in the world—faster than America and Germany. Our economy grew by 3% last year, a figure revised upwards from the 2.6% we expected in March. Our long-term economic plan is working. Indeed, before the election, the US President commented that the UK must be doing something right on its economy.
British businesses, backed by the Government through tax cuts and the removal of red tape, have created 2 million new jobs since 2010. I know that businesses across Weaver Vale welcomed the announcements made by the Chancellor yesterday about the extension of the employment allowance to £3,000 and the news that corporation tax will fall to 18% in 2020—from the 28% we inherited five years ago.
Earlier, the shadow Chancellor said that science and technology were not mentioned in the Budget, but the Chancellor has a fine record on such investment, including in Sci-Tech at Daresbury. The previous Labour Government took investment away from Daresbury, and when I became MP for the area in 2010 I was advised by the then Chairman of the Science and Technology Committee—he is no longer a Member, but he was a fine Chairman and I pay tribute to him—to watch like a hawk to ensure that the new Government did not take away investment from Daresbury as the previous Government had done. Instead, the Chancellor invested £150 million recently in big data, and I was proud that, just before the election, IBM signed a £130 million partnership with the Science and Technology Facilities Council that will secure high growth and high-tech, well-paid jobs for my constituents in the long term. That is good for my constituency and for the country, as we become an international hub for science and technology and big data.
The OBR has predicted that a further 1 million jobs will be created over the next five years, but we are the party of ambition and we want to go further. We are working towards a target of full employment—a job for everyone who wants one and a country that is open for business. In the past five years, Government-backed schemes such as the right to buy have helped 200,000 people on to the property ladder. That is vital, because home ownership is central to the aspirational country that we are building. Owning their own home means so much more to families. I was born in a council house, the youngest of four children. My family lived there for 20 years and, in 1972, Ted Heath’s Conservative Government offered us the opportunity to purchase the property, so my parents did so. My father died when I was a teenager and my mother had security in old age and retirement because they had invested in that house. The right to buy is central to the Conservative party’s philosophy that everyone should have a home of their own.
Yesterday, my right hon. Friend the Chancellor gave Britain a pay rise. Over the course of the Parliament, the introduction of the national living wage could be worth more than £5,000 to someone working full time for the minimum wage. I need not tell the House how much that extra income will mean to hard-working families trying to get on. Not only will working people earn more, they will keep more of what they earn. Typical taxpayers will pay £905 less tax than in 2010, thanks to the increases in the personal allowance over the last five years.
I do not know whether the hon. Gentleman has seen the analysis from the Institute for Fiscal Studies today, but it says that the minimum wage announcement will not go anywhere near compensating for welfare cuts in cash terms. People currently on tax credits will be significantly worse off and the reform could cost 3 million families an average of £5,000 a year. That is the IFS’s calculation.
I have to confess that I have not seen those figures, but the Government’s overall mantra is “A higher wage, lower tax, lower welfare economy”, which will benefit all of our constituents. That is in contrast to the Labour party, which had a high-tax, low-wage, high-benefit culture. That is the debate we are having today: the Conservatives want high wages and low benefits and I believe that the Budget will move Britain in that direction. That will be good for the country, for my children and for our country’s future. We are a beacon in Europe, as its second biggest economy, and if we continue down the same road, in 10 to 15 years we will become the biggest economy in Europe. The whole world is watching this great country, and we are the beacon for how things can be done in difficult economic circumstances.
I want to add to what my hon. Friend the Member for Sheffield South East (Mr Betts) said. The IFS has said that it is “arithmetically impossible” for the Chancellor’s national living wage to offset the loss of income from tax credits. I recommend that the hon. Gentleman reads that. Will he and other Government Members who have said similar things to him today also advertise a surgery on tax credits and invite their constituents to see how they feel about it and whether they think this Budget makes things better?
I am most grateful to the hon. Lady. I will indeed look into those figures. I hold surgeries every Friday, so I will see constituents about that. What I would say to her is that unemployment in Weaver Vale has dropped by 70% since 2010, and that is 80% full-time, good quality jobs.
I am not saying it is easy, but these difficult decisions have to be made. When Gordon Brown introduced working tax credits, he said the figure would be £2 billion. It is now £30 billion. The Labour party has to decide—I asked this question yesterday and did not get a reply—whether £30 billion is too much, too little or about right. We have to make these difficult decisions, but the hon. Lady makes an important point. I am not saying for a moment that it will be easy, but we are the party of aspiration. We are the party that always makes work pay, which is something that did not happen under 13 years of Labour.
My hon. Friend will recognise, as those of us on the Government Benches do, that we will still be paying out tax credits in the same numbers that we were paying them out in 2007 and 2008, under the last Labour Government. What we are talking about is the sudden spike to which my right hon. Friend the Secretary of State for Work and Pensions referred in his speech.
My hon. Friend makes a powerful point. Working-age benefits are something we have to tackle so that we can eradicate the deficit and start paying down the national debt. That is what I believe in. I believe that the Government are right: a higher-wage, lower-tax, lower-welfare economy. Britain is open for business. That is the future for our country.
I extend my congratulations to the hon. Member for North Warwickshire (Craig Tracey) and my hon. Friend the Member for Bradford South (Judith Cummins) on their excellent maiden speeches today.
I am grateful to the people of St Helens South and Whiston for the faith they have placed in me to represent them here in this great Chamber. St Helens South and Whiston has a proud economic heritage and is at the heart of British industry and innovation. It is therefore only right that we continue to build on innovation and provide more and better jobs for our residents. This is a key element of my maiden speech.
First, I pay tribute to my immediate predecessor, Shaun Woodward, who had a distinguished ministerial and parliamentary career. I pay tribute in particular to his work in Northern Ireland and his support in securing the construction of the new St Helens South and Whiston hospital and the demise of the workhouse that was our hospital. I wish Shaun every happiness and success.
I would like to express my sincere appreciation for the genuine support given to new Members by the Commons staff. They are simply wonderful people and a credit to Westminster.
My constituency gave the world household names such as Pilkington and Beechams, as well as being home to the first railway trials, at Rainhill, when Stephenson’s Rocket became famous the world over. It is a constituency that quite literally enabled Britain to become the industrial powerhouse of the world. Britain would not be what it is today if it was not for the coalmines of Bold, Clock Face, Cronton and Sutton Manor. Over 30,000 people were once employed in my constituency in the great British industries of coal, manufacturing and pharmaceuticals, all of which revolutionised the world. Sadly, these jobs are gone, replaced too often by low-paid, short-term, part-time and insecure agency employment. I have seen nothing that the Government have done to help to eradicate that. We have 8,600 children in working families that are receiving either child tax credits or child and working tax credits. I am deeply concerned about the impact of yesterday’s Budget on those families.
However, today I want to talk about how my constituency can once again make Britain great and how it can be at the leading edge of innovation and creativity. Just last year, NGF Europe, based in my constituency, won the Queen’s award for innovation. Although I worked in the glass industry for 37 years, I will not pretend to know exactly what a small filament diameter glass cord actually does. But what I can say is how proud I am that they are made by skilled workers employed by NGF Europe, continuing our great glass-making tradition.
My constituency sits at the heart of the much talked about northern powerhouse—it was previously the northern way—as a generator of wealth and jobs. We aim to be a centre for logistics in St Helens and Whiston—a centre with connectivity and a place where industry and manufacturing can grow once again. The development of advanced manufacturing is our goal, leading to good, well paid jobs, high-level skills development, work experience and qualifications.
As hon. Members can tell, my constituency has always been at the heart of industrial change, and its heart has suffered from that change. Losing so many jobs from our economy crippled many families and tore not only the heart but the soul from their lives. My constituents literally lived through industrialisation and de-industrialisation. My hope is that they will live through further advanced manufacturing and industrialisation.
In 2008, the global financial crisis, caused by Lehman Brothers, had a devastating impact on my constituency. Quite simply, our plans were put off track. The Government of the day had to borrow to save our banks and, perhaps even more importantly, the savings of ordinary working-class people. But that was by the same Chancellor who paid off more debt than any previous Government on record. I am proud of that Chancellor.
The result of change has been the creation of a resilient people, often innovative in their own way and willing to try something new—proud people, with values underpinned by trade unionism; people who are warm and caring, with a great sense of humour. We have over 13,000 unpaid carers and over 400 recorded young carers—that is, children caring for their parents. It is estimated that there are 2,000 unrecorded young carers. As hon. Members will see, we are a strong community, compassionate and caring. We help each other. Above all else, my community has a strong heart—a resilient heart. That is why I want to see economic development that repairs the wounds of the past and gives each and every person an opportunity to shine—an opportunity to embrace new industries so that they can thrive.
In trying to grow our economy, we have great support. Our businesses are supported by a remarkable chamber of commerce—one of the largest in the country and twice awarded British chamber of the year. It is nationally recognised for its passionate approach to tackling the skills agenda for both employed and unemployed young people and for supporting business start-ups. We are also supported by a local enterprise partnership that is focused on business growth and ensuring fairness and equity in the jobs market. We connect industry, colleges and universities to nurture innovation and advanced manufacturing. My constituency shares its values with the rest of Liverpool city region, in that it is outward looking and strongly committed to helping our young people and graduates into work.
A strong economy goes hand in hand with a strong society, and we have an excellent voluntary sector. I pay tribute to the 93 voluntary organisations and the army of volunteers. We are proud of the many volunteers who support our Willowbrook hospice, awarded the Queen’s award for volunteering. We are proud of and thankful for all the support and volunteering given to our food banks to ensure that our families do not go hungry. We are very proud of St Helens and Whiston’s new state-of-the-art hospitals, a major NHS employer that provides the highest standards of medical care and just last month was recognised for providing the best patient experience in the UK.
We have St Helens—Saints—the internationally recognised rugby league team, twice former World Club champions and current Super League holders, now at Langtree Park, our world-class new stadium, and also providing good employment opportunities. Indeed, Russell Crowe, the star of “Gladiator” and “Les Misérables”, chose to come to Langtree Park rather than appearing at the Oscars this year.
We will continue to look forward to the economic challenges, building on the strength of our excellent manufacturing base. We will continue to champion skills, transport and business growth at every opportunity. We will continue to afford all the people of my constituency the dignity of work that is respected and rewarded with fair and just conditions and pay. My constituency already plays a leading role in manufacturing and in exporting goods to Europe and the rest of the world. We are willing and able to play an even bigger role in championing the growth of advanced manufacturing and exports of the future.
My constituents and I believe that Government should encourage and support such economic growth by investing in infrastructure and incentivising the private sector to invest to do what Britain is best at—innovating, producing, and exporting—thereby reducing the trade deficit and increasing revenues so that all people may benefit. This is my focus and my firm intent during this Parliament. I will not let my constituents be let down. I will ensure that my voice is heard and that my constituents get a fair, just hearing in this great Chamber.
It is a great pleasure to follow the maiden speech by the hon. Member for St Helens South and Whiston (Marie Rimmer); I have a sneaking suspicion that she is going to be quite a formidable presence on the Opposition Benches during the next five years.
Britain has come a long way over the past five years. Tough decisions have been made to get the country’s deficit under control, to reform the welfare system, to make business more competitive, and to create new jobs. Unemployment in my constituency has fallen by more than 50% since 2010. In the black country, part of which I represent, there has been a significant manufacturing revival such that the region has been one of the fastest-growing of any in the United Kingdom over the past two years.
At the heart of this Budget is a recognition that we need to continue the work to rebalance the British economy away from London and the south-east, to make sure that we have a productive and balanced economy in the midlands, the west midlands and the north. Devolution of power, funding and decision making is absolutely fundamental if the regions of the United Kingdom, including the black country, are to reach their potential.
We need to encourage more jobs and investment in the black country, where we have a huge number of brownfield sites that can be used for development. One need only think of the industrial heritage of the black country to know that huge swathes of its land can be used for the development of industrial sites and for housing. I urge the black country’s local enterprise partnership and local authorities to identify appropriate brownfield sites for economic development to bring new jobs, taking advantage of the powers and responsibilities that the Government are offering to develop those sites. We should not go down the route of a recent idea by Dudley council to develop a huge industrial site on green-belt land just outside Halesowen. That is a very bad idea. I am the first to want to get jobs and investment into the black country, but the policy of Dudley’s LEP and local authority should be to focus first on brownfield in developing new jobs and opportunities.
At the heart of the plan to make Britain a more productive economy is further investment in skills to make sure that our young people are equipped to take advantage of the opportunities out there. That is why I welcome the Chancellor’s announcement in the Budget of a levy on larger companies to encourage further investment in quality apprenticeships. There have been 4,000 new apprenticeship starts in my constituency since 2010, but we need more and we need them to be better matched with the available opportunities in the local economy. That will build on the success of the Government’s city deal in the previous Parliament, which saw a significant level of investment, with about £1 million coming into the area for the development of a science and technology apprenticeship centre at Halesowen College.
Those are precisely the sorts of high-quality opportunities that we need in our local economy to encourage a greater focus on science and engineering—for example, to support the supply chain of Jaguar Land Rover. At the heart of this Budget, and absolutely fundamental to the future of the country and of the regions of Britain, is the continuation of the work that we started over the past five years to tackle the productivity problem by investing in high-quality skills so that people can take advantage of these opportunities.
While the Budget recognises the need to rebalance the economy and to make our businesses more competitive by cutting business taxes and creating more jobs, there is also—this has not been mentioned so far—the welcome commitment to further substantial real-terms increases in our national health service over the next five years. The Budget is clear in its commitment that this Government will support Sir Simon Stevens’s five-year plan for the NHS to continue the work of making it one of the best health services in the world. This Government, through this Budget, are committed to those real-terms increases over the next five years.
As the Financial Secretary to the Treasury is on the Front Bench, I want to make the case—which fits into the narrative of the new Government on one nation Conservatism, supporting people and making a more resilient and productive economy—that some of the new money being allocated to the NHS should be focused on improving mental health care. I was chairman of the all-party group on mental health in the previous Parliament. The argument is strong, given that mental health will become the most important health challenge that we face over the next 20 to 25 years. I am pleased that the Conservative party manifesto had specific pledges on mental health in the NHS, focusing on extending the range of availability of psychological therapies across the country, that are now being translated into action in government. The previous Labour Government introduced the IAPT—improving access to psychological therapies—programme, and the coalition Government invested £500 million in developing it. Now we need to take it further to give it to anybody who needs it.
I support the hon. Gentleman’s comments about mental health. I hope that some of the extra funding could go towards reducing the long waiting lists for IAPT, particularly where people are on benefits such as employment and support allowance and want to get off them and back into work. I hope we can work at a cross-party level to reduce the waiting lists for those crucial counselling therapies.
I thank the hon. Lady; she makes a very good point. The Conservative party manifesto had a commitment to extend the range and availability of psychological therapies. The Department for Work and Pensions has been running pilots on specific forms of back-to-work support for people suffering from mental health problems—for example, individual placement and support.
We need to invest further in child and adolescent mental health services because—this is why I raise the issue in the context of the Budget—it makes economic sense to do so. It fits into the thrust of the Budget, which is that we need to build a more resilient and productive economy. We have a commitment to invest in perinatal mental health. If we get the investment in mental health care right, it will lead to huge economic benefits for Britain, a more productive society, stronger families and more resilient individuals—people capable of stepping up to the plate and taking advantage of the opportunities out there.
I urge Ministers to be sympathetic to the cause of mental health in the national health service as they consider further investment in our public health system, and to continue the work of achieving the Conservative manifesto commitment to greater parity of esteem between mental and physical health in the NHS.
A more productive economy, a more competitive business environment with lower taxes and a focus on high-quality skills and further job creation in a highly competitive global economy, combined with investment in our health service and in meeting the key health challenges of the future, such as mental health care and building more individual resilience—all that is the true measure of a one nation Conservative Government. We are creating an economy that can generate millions more jobs, building on the jobs that we have already created in the last five years, and a more entrepreneurial society, in which people are prepared to take risks and invest for the future. We are building not only a more competitive economy, but a more compassionate society.
Order. The speeches are getting a little long, but I do not want to impose a time limit, especially as the next two speakers on the Opposition side will make maiden speeches. If we can keep speeches to eight minutes and interventions to an absolute minimum, we will get through everybody.
Thank you, Madam Deputy Speaker, for giving me the opportunity to make my maiden speech in this magnificent Chamber. The sense of history and occasion in here is tangible. It has long been a place of high emotion and drama, from the plotting of Guy Fawkes to the second world war, when it was bombed no fewer than 14 times. Those events should remind us of the fragility of liberty and democracy—something we must never forget.
We in the SNP are invested in an open, civic, inclusive and aspirational polity that seeks a better Scotland in a better world. We have made many friends in this place already, and I hope we will continue to do so.
I represent a constituency that is one of the most beautiful and diverse in these islands. Berwickshire, Roxburgh and Selkirk is vast and varied, stretching almost from one coast to the other. Its many towns and villages are proudly independent, and each has its own identity, traditions and history. As a native, I am delighted and proud to call the Scottish borders my home. I urge anyone to visit—all my colleagues seem to have done the same, but my constituency is the first one you come to as you cross the border—and to see the many and varied attractions, from Sir Walter Scott’s home at Abbotsford to the ruined abbeys across the region. You will find no warmer welcome anywhere, I promise.
Hon. Members should know, however, that borderers have fierce pride, huge family loyalty and, if roused, fire in their hearts. For centuries, political authority was loose in my constituency. Indeed, some parts were known as the debatable lands. Cattle were moved backward and forward over the border, clan feuds were common and arguments were often settled in brutal fashion. In this Chamber, convention has it that opposing Members are separated by two sword lengths. That has never been a propriety observed in my part of the world.
Close by in Northumberland lies Flodden, where in 1513 Scotland’s finest fell in a battle that is remembered across the borders in our common ridings in places such as Hawick, Coldstream and Selkirk. Every year, the Selkirk common riding honours the single Scottish warrior who crawled back holding an English banner. The Liberal Democrats must now understand what that feels like. [Laughter.]
I want to single out one Liberal Democrat in particular—my predecessor, Michael Moore. Michael was an immensely hard-working MP, who was rightly held in great affection in the constituency. I have always found him a warm, gracious and principled adversary, as well as a highly capable politician. One of his greatest achievements was his private Member’s Bill in the last Parliament, which legally bound our Governments to allocate 0.7% of GNP to overseas aid. That is a worthy testament to an honourable career. I am sure that all Members will join me in wishing him all the best for the future.
Our borders landscapes are not just varied and beautiful; they are a hugely important part of our economy, generating revenue and sustaining employment. We do, however, face real disadvantages. Rural Scotland, including my constituency, can feel like a forgotten land—a policy afterthought: take technology infrastructure and, in particular, mobile phone spectrum licensing, where the UK Government’s clamour for money leaves rural areas short-changed. If other countries can mandate 99% coverage and insist on rural areas being covered first, we can too.
Rural areas also suffer from poor transport links. As the argument rages over HS2, we would be happy just to get better conventional rail. Of course, our new Borders Railway opens in September. That is a welcome investment by the Scottish Government. Now, we must examine the feasibility of extending it to Hawick and Carlisle. I call on hon. Members on both sides of the Border and from all parts of the House to join me in advancing that important project.
We also need support for our Scottish farming communities. This is an area where the UK Government are wantonly failing to provide assistance. The EU’s common agricultural policy provides a lifeline for many farmers, but Scotland will end up bottom of the payments league on pillar 1 by 2019 and is already at the bottom on pillar 2. UK Ministers have cynically failed to pass on more than €220 million of convergence money that was intended for Scotland. On pillar 2, the EU’s newest member state, Croatia, already has a budget more than 20 times that awarded to Scotland. That is a remarkable abandonment. UK Ministers have been not so much sleeping on the job as comatose in the corner.
The Prime Minister promised to respect Scotland, but he and his Government continue to neglect our national interests. The Smith commission agreed that Scotland should lead on EU fisheries talks when appropriate. There was therefore an expectation that when the UK Minister was unable to attend talks some weeks ago, the Scottish Cabinet Secretary would do so. The UK Government blocked that, and instead sent an unelected Conservative peer with no involvement in fisheries. Such behaviour flies in the face of assertions by the Prime Minister and his colleagues that all parts of this United Kingdom are equal. Indeed, it presents a compelling argument for Scottish independence—and so does the behaviour we have seen from the Government in recent days. To reject every single SNP amendment to the Scotland Bill, while also suggesting that it should be amended in another place, is to laugh in the face of Scottish democracy.
Moreover, the crippling austerity Budget with which we were presented yesterday completely ignores the traditional Scottish—and, indeed, United Kingdom—values of fairness, protection of families, and decency. My hon. Friend the Member for Banff and Buchan (Dr Whiteford) made an excellent speech that gave a voice to some of the vulnerable groups the Budget targets.
But there is hope. There are times when the Government’s stubbornness can be broken by the will of this House, as we have seen today with the suspension of plans for English votes for English laws. Ministers have retreated in the face of parliamentary numbers, and we have sent them homewards to think again. I welcome that, and urge them to learn their lesson and do the same more often.
Despite the Government’s hostile actions, we have not come to this place to agitate for independence. We are here to protect and promote Scotland’s interests, and to stand with all those who will oppose austerity and work for freedom, human rights and social justice. We want to be constructive, and to fulfil our constitutional role in opposing this Tory Government—and, at times, opposing the official Opposition too. Our 56-strong SNP team were elected to this place in the most powerful affirmation of a people’s democratic will ever seen within the Union. The move towards a better, fairer, more democratic Scotland took a huge leap forward in May. This is our time. We come from an ancient nation, but we bring new thinking. I urge all Members to listen to what we have to say, for we have much to offer.
Let me end by asking Members to reflect on the words of the French philosopher Voltaire—[Hon. Members: “Ooh!”] I am sorry that it is not Robbie Burns. Voltaire famously remarked
“we look to Scotland for all our ideas of civilisation.”
We may be the elected representatives of a highly civilised nation, but my colleagues and I come here without conceit. We know that we will not always be right, but we want to listen, make friends and forge alliances. We seek fairness and a fair hearing, and we will always sit at the right hand of those who are at hame wi’ freedom. Like all in this place, regardless of politics or party, we want to do what we can to build a better world. Let that better world be the continuing and permanent vision and aspiration of each and every one of us, and, together, let us spare no toil in making it so. [Applause.]
It is a pleasure to follow the hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr). I wish him a long and distinguished career in the House. I hope that he and his colleagues will forgive me if I add that I hope to see his seat represented here for a long time. We are, of course, relieved to learn that the SNP is no longer agitating for independence from the House. As a Unionist, I am greatly reassured by that.
It is also a pleasure to follow the maiden speech of the hon. Member for St Helens South and Whiston (Marie Rimmer). Many people have asked what the boundaries of the northern powerhouse will be, but I can see that, in typical northern fashion, she will be boundless in pursuing the interests of her constituents. I pay tribute to her for making a characteristically warm speech. I also pay tribute to the hon. Member for Bradford South (Judith Cummins).
I warmly welcome the Budget as both a strong plan for the country’s finances and an important statement containing a considerable number of measures that will affect my constituency. As many Conservative Members have already noted, the continued strength of the recovery in the economy is impressive. Our growth is outstripping that of the rest of the G7, employment continues to rise, and unemployment continues to fall.
In my constituency, substantial progress has been made over the last five years under a Conservative-led coalition Government. Since 2010, there has been a fall in the number of people claiming jobseeker’s allowance, and an even more impressive fall of 58% in youth unemployment. Those may sound like the dry statistics that are pronounced all too regularly in the House, but they are much more than that. They reflect real people. The 49% fall in unemployment in my constituency represents 713 people: 713 people with greater prospects, greater financial security and greater peace of mind when it comes to providing for themselves and their families.
It is against that background that I want to speak briefly about two specific measures in yesterday’s Budget. My right hon. Friend the Chancellor’s announcement of a living wage of £9.00 an hour by 2020 is to be welcomed. Tackling low pay is part of our plan to move to a higher-wage, lower-tax, lower-welfare society, building a more productive Britain and giving families the security of well-paid work. This measure will benefit 6 million workers across the country, and will boost pay for those who are currently earning the minimum wage by £5,200 a year. To see just what that means to working families on low wages, one had only to look at the expression on the face of my right hon. Friend the Secretary of State for Work and Pensions, such was his obvious joy at the announcement.
Beyond the euphoria of that moment, however, it is worth considering the careful balance that has been struck between the new living wage for employees and what we must do to offset the resulting cost to employers. Small businesses can be reassured by the plans to extend the employment allowance to £3,000, cutting the jobs tax for firms, so that a business will be able to employ up to four people, full time, on the new national living wage and pay no national insurance at all. Larger companies will benefit from a reduction in corporation tax from 20% to 18% between now and 2020. As part of the Government’s plan to make work pay, the announcement of an increase in the personal allowance is also significant. A further 727 people in my constituency alone will pay no tax at all, and the total number of beneficiaries will be some 34,677. Again, those are seemingly dry statistics, but there is a real, positive story behind them.
While the Chancellor was able to pull the living wage rabbit out of the hat, the nettle that he had to grasp was that of tax credits. Members will, I hope, forgive me for reminding them that tax credit expenditure trebled in real terms between 1999 and 2010 to an estimated £30 billion—a far higher level than was expected by the “prudent” Labour Chancellor of the time. Some Chancellors can be accused of robbing Peter to pay Paul, or giving with one hand and taking with the other. However, the policy of tax credits itself, created by the last Labour Government, meant that the state would, in effect, tax with one hand and “give” benefits with the other, thus creating an inefficient cycle of tax and spend. The policy succeeded in greatly inflating the size of the welfare state and bloating the system that was required to administer it, but by taking money away from people in tax only to credit it back to them later, it did little to increase their net income and standards of living. My right hon. Friend the Chancellor is now faced with the unenviable task of unpicking that knotted system, built up under 13 years of Labour rule. It is no easy task, but the Budget makes some important headway.
As I have said, I welcome my right hon. Friend’s Budget. I believe that, by allowing people to earn more and, most importantly, to keep more of what they earn, it will raise the living standards, prosperity and wealth of the country as a whole and my constituents in Hazel Grove in particular, and I commend it to the House.
Thank you, Madam Deputy Speaker, for giving me an opportunity to contribute to the Budget debate.
As we heard from my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr), history is important. We can learn much by studying the social and economic conditions of the past, and my constituency holds many lessons that are relevant today, for I represent the part of Scotland that endured the clearances. Indeed, it would be remiss of me if I did not begin my speech by paying tribute to the remarkable families, and the crofters, who lost their livelihoods, their homes and their lives during that shameful period of history.
The clearances were perpetrated during the 18th and 19th centuries when highlanders were forced from land they had held for generations. The clearances shifted land use from farming to sheep raising because sheep were considered more valuable than people. In the process, a way of life was exterminated to further the financial ambitions of aristocratic landowners. The evictions that took place are remembered for their brutality and for the abruptness of the social change that they prompted. At the time this Parliament compounded the inequity by implementing legislation to prohibit the use of the Gaelic language, the playing of bagpipes and even the wearing of tartan. The cumulative effect devastated the cultural landscape of the counties that I represent and the resulting impact destroyed much of Scotland’s Gaelic culture.
This Parliament’s policy ultimately failed, although I suspect that the Chagos islanders would recognise this account. In those dark days the cries and pleas of innocent families were ignored. If they were lucky, those families were dragged screaming from their homes, evicted and left to face destitution. If they were unlucky, their homes were simply set alight as they sat within them. The clearances forced the migration of highlanders to the sea coast, the Scottish lowlands, and further afield to the new worlds of north America and Australasia. Today more descendants of highlanders are found in those diaspora nations than in Scotland itself. These dispossessed highlanders travelled the world and applied their creativity and resource in ways that have benefited all of humankind. The economic and social contribution of the ancestors of people from my constituency stand today as a shining example of why the free movement of people is something no Government should hesitate to encourage.
As we debate the Government’s Budget, it is unfortunate that the cries and pleas of many people in my constituency continue to be ignored. Whereas in history the people of the highlands were burned out of their homes so that others could profit from sheep, the beneficiary of this Budget will be the financial markets that continue to take precedence over people. The impact will be that vulnerable people will face impoverishment owing to lack of economic opportunity, low wages, Europe’s lowest pensions, further experimentation with the failed system that we know as universal credit, the erosion of working tax credits and, frankly, the stifling lack of imagination that is self-evident in the austerity these measures promote, and that has raised the UK to be the fourth most unequal society in the developed world in terms of wealth inequality. For many in my constituency, past and present, the hardship, misery and impoverishment that accompany this inequality are the only consequences of the Government’s long-term economic plan that has been over 300 years in the making.
While some here today speak of economic laws, I choose to highlight the fact that many of our fellows are starving. It is time we recognised that economic laws are made not by nature, but by human beings. These laws are chosen for implementation by human beings and their effect will be felt by human beings. A further £12 billion of cuts, accompanied by a punitive sanctions regime, will do nothing except ensure that the jeely piece, of which my hon. Friend the Member for Glasgow South (Stewart McDonald) spoke in his maiden speech, will remain a significant feature of childhood for far too many of our children.
Until 8 May my constituency was a Liberal stronghold. As long ago as 1918 the seat of Caithness and Sutherland was held by Sir Robert Leicester Harmsworth, Baronet of Moray Lodge in the Royal Borough of Kensington. I don’t think he was a local. Later the seat was held for many years by Robert Maclennan, who sits now as Baron Maclennan of Rogart just a short walk away, and more recently by the 3rd Viscount Thurso, John Archibald Sinclair, the fifth generation of the Sinclair family to represent Caithness in this Parliament. I pay tribute to Lord Thurso. In the past few weeks I have learned that he was a popular member of the establishment here at Westminster and I wish him well for the future.
I have lived in the highlands of Scotland for the greater part of my life and I can confirm that Caithness, Sutherland and Easter Ross is one of the very largest parliamentary constituencies by area and, despite what many of my colleagues will claim, it is easily the most beautiful—spectacularly so. It is a great honour for me to represent a highland seat in this Parliament. It seems clear that in my constituency at least, few ordinary people have had that privilege.
Beautiful as my constituency is, it is subject to great acts of vandalism. Cape Wrath is the only site in Europe where live 1,000 lb bombs are dropped. The bombing is enormously destructive to fragile wildlife and excludes communities from the proximity for up to 120 days each year. Similarly, Scotland’s oldest royal burgh, Tain, is tormented by fast jets flying as low as 150 feet to drop 1,000 lb concrete bombs just a few miles from housing estates and primary schools. It is instructive that while many of my constituents work tirelessly to protect our marine animals, our rivers, our wildlife and our environment, this Government consider it acceptable to bomb the land that we consider precious. I say instructive because this seems to be the manifestation of the one nation ideal that my hon. Friends and I are expected to be impressed by, but from which communities in my constituency derive only disadvantage.
I have spent much of my adult life in the voluntary sector, working with those cruelly challenged by the UK Government’s long-term economic plan. Like others, my family and I pay the punitive electricity charges and excessive carriage charges that this Government impose. We are exposed to the reform of rural fuel duties that has brought a new and vital meaning to the word “failure”. My communities prepare for the disastrous repercussions of the recent announcement of the closure of three Royal Bank of Scotland branches in our rural areas, and our businesses endure the iniquitous transmission charging regime maintained by this Government, which acts as the main obstacle to securing energy supplies and wealth for Scotland.
We are used to empty promises, but in the early days of this Parliament, Scotland has chosen to watch as the promises of something
“as close to a federal state as possible”,
“all the options of devolution are there and are possible,”
are publicly erased from the Scotland Bill. The Government know that for many, this Budget visits hardship on disadvantage.
Like my hon. Friend the Member for Inverclyde (Ronnie Cowan), I grew up fascinated and inspired not just by the technological achievements of Project Apollo, but by the social achievements of the civil rights movement. As a child I learned of the bravery of Rosa Parks and how she changed the world, and as an adult I learned of the personal challenges met and overcome by, and of the uncommon political imagination of, Franklin Delano Roosevelt. In those individuals I found examples not only of bravery but of imagination: the imagination to perceive the benefit of change in a world that aspires to achieve, not receive.
Many of those who supported me on 7 May did so in the belief that it is now time to achieve, and their uncommon political imagination sits around me today. Our aim is to achieve the right to build a fairer Scotland; we aim to establish a state of affairs where our old, our disadvantaged and our vulnerable are valued, and where our poor are protected not punished.
I made the decision to stand for election to this Parliament knowing, as Mrs Parks did, that
“I had the strength of my ancestors with me”,
and I know, as you do, Madam Deputy Speaker, that “all are equal”. Indeed, I stand here today knowing, as Mr Roosevelt did, that the
“test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little”.
In that task we will not be found wanting for, like Roosevelt:
“We are going to make a country in which no one is left out.”
Order. Before I call the next speaker, we are getting tight on time and now that the maiden speeches are over I will be a bit stricter. I do not want to impose a time limit, but if we can keep speeches to about seven or eight minutes—that is a maximum; Members should not feel that they must use all that time—we will get everybody in.