Amendment of the Law
Debate resumed (Order, 13 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.
Last Wednesday, the Chancellor unveiled a one nation Budget with one aim in mind: security—the economic security of a country that lives within its means; the financial security of lower taxes and higher wages; and the national security of a Britain that defends itself and its values. Since then we have had almost a week of debate—a week of the Opposition trying and failing to pick holes and a week in which we have had the usual predictions of doom and disaster. It is a familiar story from Budget debates past. In June 2010, the then shadow Chancellor called our approach “a profound mistake” that ran the risk of “derailing the recovery”. Two years later, another shadow Chancellor said that our long-term economic plan had “failed”, although I should add that in the same speech, the former Member representing Morley and Outwood also warned that “after hubris comes nemesis”—a lesson he apparently failed to learn himself. Let us fast forward to 2015, and yet another shadow Chancellor said last week that
“this Budget made the wrong choices for working people”.—[Official Report, 9 July 2015; Vol. 598, c. 481.]
We have heard it all before.
Every year, the Opposition warn of catastrophe around the corner, yet every year Britain’s economy has got stronger. They said our policies would lead to mass unemployment, yet today more people are in work than ever before. They said that economic growth would be strangled; today, our economy is growing faster than any other in the G7. They said we could not bring down the deficit, yet today we are on course to have a surplus by the end of this Parliament. Even the most partisan critics can see that our economic plan is working. That is why, in May, the British people gave us a mandate to finish what we started, which is exactly what this Budget delivers.
While I accept that it is part of political knockabout that the Government say one thing and the Opposition say another, does the Secretary of State agree with external groups such as Parkinson’s UK, which said that the change to welfare benefits will have a debilitating impact on people with Parkinson’s and will do them real harm? Does he think that is part of the political knockabout, or does he accept what it is saying?
What I accept is that we need a welfare system that protects the vulnerable and is affordable and sustainable for the long term. As we deal with excessive welfare spending, we are able to strengthen the economy, which means higher wages for working people. I hope that the hon. Gentleman can support that.
Does the Secretary of State accept that child tax credits are, in fact, work incentives based on the American earned incomes tax credit, and that the reason the cost is so high at £30 billion is that productivity and wages are so low? In particular, there are 800,000 fewer people now earning over £20,000 than there were in 2010. Is that not a complete failure?
I think the hon. Gentleman would agree that it is better to have a sustainable welfare system that protects the vulnerable while at the same does not allow companies to get away with paying lower wages than they otherwise were. I hope he supports our national living wage, especially the fact that it means someone working at the national minimum wage today will get at least £5,000 more a year by 2020 because of our national living wage.
A business-led economy in which hard work is rewarded, entrepreneurs are encouraged and aspiration is applauded —that is at the heart of our Budget. Above all, it is a Budget that supports business. For all the rhetoric one hears from politicians, Governments do not create jobs; businesses do. As my right hon. Friend the Secretary of State for Work and Pensions said last week:
“It is only when businesses are thriving that the people of our country can thrive too.”—[Official Report, 9 July 2015; Vol. 598, c. 482.]
It is only a strong and growing economy that allows us to invest in the NHS and schools; and it is only a strong and growing economy that allows us to spend money on protecting our most vulnerable citizens. Anyone who is successful in business should be congratulated and not condemned.
My hon. Friend is absolutely right. At the heart of the new national living wage is just what she says—it will mean working people earning even more, and it will go on to boost productivity, too.
Aggressive regressive policies that penalise honest labour have no place in the modern world. That is why we have already cut the main rate of corporation tax to 20%, rewarding productive companies and boosting UK competitiveness. It will now fall further to 19% in 2017 and just 18% in 2020, making it the lowest in the G20. More than a million businesses will see their tax bill fall as a result, allowing them to invest more in their staff and facilities.
That is not all. As corporation tax falls, tax allowances for growing businesses will rise. The annual investment allowance will be set at £200,000—its highest-ever permanent level, while the employment allowance will increase by £1,000 to £3,000, cutting employer national insurance contributions still further. By next year, businesses will be able to employ four people full time on the national living wage and pay no national insurance at all. By April next year, we will publish a business tax road map, setting out our plans for business taxes over this Parliament and giving employers the information they need to plan ahead.
From September 2017, working families with three and four-year-olds will receive 30 hours of free childcare—twice what they currently receive. This will help the parents themselves, but it will also get more skilled employees back in the workforce sooner—a real bonus for British business.
I welcome my right hon. Friend’s announcements. In tandem with the enterprise Bill and plans to review self-employment, does he agree that they will help boost the enterprise culture that we Government Members believe is vital to further the interests of our national economy?
I agree absolutely with my hon. Friend. Conservative Members have always understood the power and importance of enterprise, while Labour Members have never understood just how important it is to boosting our productivity and making sure that our economy keeps growing and creating jobs at a record rate.
The Secretary of State makes great play of the importance of long-term planning. We all understand its importance for business, so what would he say to the company near Chepstow that used to make wind turbines but is now facing closure because of the sudden change in policy by his Government? Is it not sad that this Government, which should be offering certainty to business, are not only changing policy willy-nilly, but leaving a really big question mark over the European Union that is making businesses very jumpy indeed?
No one wants to see any company close in Britain, and no one wants to see any of the job losses that would potentially come alongside that. What is most important when changes in the economy affect businesses is a growing economy so that businesses are growing at record rates. We have record high growth as a country among the G7, which is exactly the sort of environment we want so that other companies can continue to grow alongside.
The national living wage will put more money in customers’ pockets. This will deliver a real boost to businesses right across the country, as eight out of 10 people who will see their pay rise live outside London and the south-east of England. These measures will all support growing, dynamic businesses, as we work with them to tackle the economic challenge of our time.
The right hon. Gentleman has made an intellectual case for what he calls the national living wage, which most people would call a rise in the national minimum wage. Why did the Government not choose to bring in the national living wage? Surely the case he has made is for the national living wage.
Perhaps the hon. Gentleman missed last week’s Budget and what the Chancellor said. The Chancellor did introduce the national living wage. Of course it will be phased in over five years, but by 2020 it will be equal to at least 60% of median earnings. It is the national living wage.
Will the right hon. Gentleman confirm the situation in Scotland for UK Government employees? Will they get his Government’s low national living wage or will they get the living wage that applies in Scotland, which is considerably higher?
People will be receiving the new national living wage, as set out by the Chancellor in his Budget. That is a huge step forward, raising the incomes of millions of people throughout Britain. At least 2.6 million people will benefit directly, and a further 6 million will also benefit. I am sure that the hon. Gentleman will join me in welcoming that.
As the hon. Gentleman may know, the new national living wage applies to those aged 25 or older. The statutory wages for younger age groups are already being set by the Low Pay Commission.
The economic challenge of our time is boosting Britain’s productivity. Britain is home to some of the world’s most dynamic businesses, staffed by incredibly talented, hard-working individuals, yet our productivity—the rate of output per hour worked—is well below its potential. Let me put this in stark terms. It now takes a worker in the United Kingdom five days to produce what his or her counterpart in France can deliver in four. There is encouraging news—the British automotive industry is among the most productive in the developed world, with a vehicle rolling off the production lines every 20 seconds—but by and large, in a situation familiar to fans of the England men’s football team, the country that invented modern industry has fallen behind its competitors, and the Germans in particular.
If the hon. Gentleman had joined me in Longbridge on Friday, he would have heard me set out the Government’s productivity plan, which I shall come to in a moment.
Productivity is not just some obscure measure that is of interest only to economists. Higher productivity means higher incomes. When productivity rises, standards of living rise too. That is why, as part of last week’s Budget, we published “Fixing the foundations: Creating a more prosperous nation”. It is our blueprint for getting Britain moving, building and growing, and creating the environment that is needed to tackle the productivity gap once and for all.
The productivity plan will support apprentices with a new compulsory apprenticeship levy that requires large businesses to invest in their own future. It will boost skills with a radical streamlining of further education qualifications and the creation of prestigious institutes of technology. It will support infrastructure, with vehicle excise duty paying for a new roads fund, and a plan to put Network Rail and the rail investment programme back on track. It will allow us to invest in innovation, putting nearly £7 billion into the UK’s resurgent infrastructure, and developing our network of Catapult centres for commercialising technology. It will make our world-class universities open to all, removing the student cap and putting higher education on a more sustainable footing. It will ensure that superfast broadband is available to 95% of UK households and businesses by 2017, and it will make it easier for the market to roll out fixed and mobile infrastructure by reforming planning rules on taller masts. It will mobilise the whole of Government behind exporting, working alongside a more effective UK Trade & Investment and building stronger links with emerging markets.
I am grateful to the Secretary of State for his generosity in giving way again. Why did the front page of The Economist sum up the Budget with the words “politically astute, economically flawed”? Why did its editorial observe that it was a result of quick fixing that focused not on productivity but on abandoning investment in the railways, not allowing enough easy access to universities, and not raising skill levels and improving infrastructure in order to make Britain strong?
Probably because The Economist was published before I launched the productivity plan on Friday.
The productivity plan will strip further red tape out of the planning system, making it easier to build the homes that British workers need. It will rebalance our economy, devolving further powers and responsibilities to the elected mayors of London and Manchester and working towards devolution deals with the west midlands, Sheffield, Liverpool, Leeds and West Yorkshire. It will create open and competitive markets with the minimum of regulation, an environment in which innovative businesses can thrive to the benefit of consumers.
The drivers of productivity are not a mystery; the barriers that prevent it are well understood. What has been lacking in this country for too long is the political will to do something about the problem by making the bold decisions that are necessary to unleash the full potential of British business. That is not lacking any more. This Government have the mandate and the will to deliver lasting change, and that is exactly what the Budget will do.
In the past few days, we have heard Labour’s former Chancellor say that his party lacks “a credible economic policy”. The Leader of the Opposition has attacked our changes in tax credits one day and supported them the next. We have heard the SNP’s economy spokesman, the hon. Member for Dundee East (Stewart Hosie), promise somehow to reduce the national debt while still running a deficit. On the Opposition Benches, economic competence is almost as rare as a Liberal Democrat Member.
Only this Government have the policies and the will to back British business. Only this Government have the foresight to invest in infrastructure and skills. Only this Government will build the homes that the country needs and the economy that it deserves. This Budget does not just fix the roof while the sun is shining. It fixes the foundations too, and I commend it to the House.
We gather here today to conclude the Budget debates, but before I dive in, I want to put the Budget in a long-term, global context.
All political parties in advanced economies face the challenge of translating their values into action in an era of change and globalisation. In some circles “globalisation” is seen as a dirty word, but in my view it is wrong to view it as such. We cannot ignore the fact that it has lifted millions of people out of poverty and destitution in developing economies around the world: that is something that we should celebrate. It has also expanded opportunities in advanced economies for some particularly highly skilled, internationally mobile workers. However, globalisation, powered by technological forces, is also displacing and reshaping industry after industry in economies like ours. It has failed to deliver for nearly enough people in middle and lower-income jobs, often destroying jobs that families and whole communities have done for generations.
The nature of work is also changing. More people are becoming self-employed, and more people need to work around caring and family responsibilities. That is not a bad thing, but our systems are not set up to serve those new work patterns so well. Anyone who speaks to a self-employed person about how difficult it is to take out a mortgage, or to a working family about the rising cost of childcare or the challenge of working while also caring for an elderly relative, will see what I mean. Economic policy is about nothing if it is not about the job that people do, from which so much else flows: self-esteem, a sense of security, and the ability to support a family.
The job of Governments, in addition to providing a safety net for those who cannot work, is to decide what policy responses can transform the challenges posed by technology, globalisation, and other changes from obstacles to solutions—solutions to problems related to jobs, growth and competitiveness—today and in the coming decades. That, ultimately, is the yardstick against which we must measure the Government’s Budgets during this Parliament. Do they empower people to get on in an era of globalisation? Do they promote growth and prosperity, at the same time as reducing our debt and deficit in a fair way?
Let me now turn specifically to this Parliament’s first Budget, and the projections for the economy and public finances in the short term. The Office for Budget Responsibility’s growth forecasts for the forecast period are relatively unchanged compared to those in March, although growth has been revised down for this year. The current recovery is real, but it is the slowest on record. The economy is still fragile. If that were not the case, the foot would not be firmly on the floor when it comes to monetary policy levers: the base rate has sat at 0.5% for more than six years. So there can be no complacency on growth. At the same time, we still need to reduce public sector borrowing and the national debt in the wake of the global financial crisis of 2008-09. That crash was triggered by grossly irresponsible behaviour in the banking sector. It caused a recession that precipitated a fall in tax receipts and the debt and the deficit to substantially increase. I will deal with the debt and deficit issues first, because I want to deal in more detail with matters of growth. Ultimately, the best way to reduce our debts is by people earning more and for the economy to grow in a sustainable way.
The hon. Gentleman sticks rigidly to the Labour party’s script that it was all the fault of the banking sector, but does he concede that his Government—whether through too little, too much or the wrong regulation—had any part to play in the economic downturn we are now coming out of?
First, undoubtedly we should have better regulated the banks during our time in office, but it is worth Conservative Members remembering that the Financial Services and Markets Act 2000 that put in place a tripartite system for banking regulation was not opposed by them at the time—[Interruption.] No, it was not; I have read the Hansard myself. It is also worth noting that, to the extent that we were criticised by Conservative Members, they were saying we were regulating the banking sector too much.
Secondly, I will happily acknowledge that after 15 years of economic expansion we should not have been running a deficit—albeit an historically small and unremarkable one—going into the crash, but again I remind Conservative Members that the average deficit during our time in office before the crash hit was 1.3% of GDP, whereas in the 18 previous years it was 3.2%. It was not that small deficit that caused the increase in the wake of the crash; it was the fall in tax receipts precipitated by the recession.
I came into this House in 2005, and right up until the crash, week in, week out Conservative Members were saying in the Chamber and in Committee meetings that we were killing the banks—that we were stifling them with overregulation and we needed to weaken it. I also remember them coming to the House week in, week out saying they wanted more schools and hospitals in their constituencies; they wanted more spending.
Does my hon. Friend agree that in the 10 years up to the 2008 banking crisis the economy grew by 40% under Labour, which is how we afforded to double spending on the health service, and that since 2010—when, incidentally, the economy was growing under Labour—the share of the economy that is debt has risen from 55% to 80% because of the Conservatives’ failure to grow the economy and their focus on cuts instead of growth to get the deficit down?
I will come on to that right now.
The Prime Minister said in a speech to the CBI in 2010:
“In five years’ time, we will have balanced the books.”
The Government have failed to do that. It is worth revisiting the promises made then before giving the Chancellor the congratulations he seeks now for this 2015 Budget. In June 2010 they set a forward-looking fiscal mandate to achieve a cyclically adjusted current balance by this financial year. It was a rolling target, but no one took the rolling nature of it very seriously, so let us put that to one side. In short, they were saying they would eliminate the deficit by this financial year. In 2010, by their own measure, we were told they would do this, achieving a surplus of 0.3% last year and 0.8% this year. That is what we were told would happen. In the event, the Chancellor completely failed to meet that goal. The deficit came in at 2.4% last year, is forecast to be 1.7% of GDP this year and does not move into a surplus until 2017-18, some three years later than planned on their own measures.
There was also a supplementary target for public sector net debt as a proportion of GDP to be falling by 2015-16. The Chancellor managed to achieve that through some jiggery-pokery with the numbers, namely rapid asset sales in the last Parliament to pay down enough of the debt for his supplementary target to be met. But rushed asset sales mean poor value for the taxpayer, as the disastrous sale of Royal Mail illustrated in technicolour.
It is also worth reflecting on what we were told the debt-to-GDP ratio would be in 2010. It was supposed to fall from 61.9% of GDP in 2010 to 69.4% and 67.4% last year and this year, but debt as a proportion of GDP was 80.8% last year and is forecast to be 80.3% this year.
The truth is—I say this to the Chief Secretary—the Government borrowed over £200 billion more than they planned in the last five years. That is more in five years than the last Labour Government borrowed in 13 years. Now they want us to pat them on the back for their failure. I will not do it.
Oh dear; I think I will move on.
Why does all this matter? It matters because reducing the deficit is a progressive endeavour. We seek to balance the books because it is the right thing to do. We will not stand by while the state spends more paying interest every year to City speculators and investors holding Government debt than on people’s housing, skills or transport. It follows that aiming to reduce the national debt in the long term, and running surpluses when the economic circumstances allow and the economy is robust, is the right approach. It means we can free resources to invest in people to help them succeed in an era of globalisation. I would much rather invest in people than spend the £36 billion the Red Book tells us we will be spending on debt interest this financial year.
By the way, I say to Conservative Members that this is in keeping with the history of our party. In our 1964 election-winning manifesto we criticised, as we did in the lead-in to the last general election, “an ever-increasing burden” of debt payment on the country. I note that the Chancellor wants to legislate to make surpluses a legal requirement in “normal times”. In 2010, when the then Chancellor Alistair Darling sought to enshrine in law, in the Fiscal Responsibility Act 2010, a deficit reduction target, the Chancellor said that it was “vacuous and irrelevant.” to enshrine such things in law. The Conservatives now need to explain what has brought about this change of mind.
This recognition that we need to reduce the national debt is why we said before the last general election that there would be efficiency savings and cuts under a future Labour Government. However, we were clear we would achieve this in a fair way—not by balancing the books of the nation off the backs of the poor and the vulnerable. The centrepiece of this Budget was to proceed with further fiscal consolidation, principally by slashing the support which helps—[Interruption.] I ask the Minister for Skills to wait for me to finish my paragraph, and then perhaps he can comment on the national living wage.
As I was saying, the centrepiece of this Budget was to proceed with further fiscal consolidation, principally by slashing the support that, for lower and middle income earners, helps to make work pay, and then by supposedly compensating them with an increase in the national minimum wage, which people such as the Skills Minister have sought to re-badge as a living wage, even though it is anything but. Let me say a few things about that. No one will ever forget how the Conservatives opposed the very establishment of the national minimum wage in the first place. They can say what they like about it now, but no one will ever forget that.
In the lead-up to the election, I received sustained criticism from the Conservatives’ supporters in business about our plans to increase the national minimum wage in this Parliament. People say that imitation is the sincerest form of flattery, and in some senses that is what this is, but there are important differences between what we were proposing to do and what the Government are now doing. First, our national minimum wage increase would have applied to all adults on the main rate. This Government, however, do not believe that anyone aged between 21 and 24 deserves an increase. Having abolished their education maintenance allowance and trebled their tuition fees, they are now saying that when those young people get into work, they do not deserve to earn what everyone else does when they reach adulthood.
Secondly, we would not have punished any adult benefiting from the increase we were proposing by subsequently withdrawing their tax credits. The Government have called this a new deal, but it is a gigantic con-trick. Thirteen million families will be affected by the changes, and the Institute for Fiscal Studies could not have been clearer when it said that it was “arithmetically impossible” for the increase in the minimum wage to make up for the withdrawal of the credits that help people to work.
Let us take as an example a couple, both aged over 25, with two children. Both adults work full time and earn the minimum wage. Yes, they will gain £1,560 from the increase in the minimum wage, but they will lose more than £2,200 next year as a result of the change to tax credits. [Interruption.] I say to the Conservative Members who are chuntering that I totally accept that it would be better for people to be in receipt of a salary that did not necessitate the payment of tax credits to make ends meet, but reforming our economy so that it delivers more highly paid jobs must come first; otherwise, it is the working poor who will suffer.
Let me remind Conservative Members that nearly half the people in poverty in this country are in work. The Government seem to forget that. That is why it is unsurprising that the IFS calls this a “regressive” budget and says that the tax and welfare changes between them will result in poorer households losing out quite significantly, and much more significantly than richer households.
Does my hon. Friend agree that the minimum wage increase cannot replace children’s tax credits? If a single man and a woman with two children both went for the same job, which paid the minimum wage, the woman would have greater needs due to her childcare responsibilities. Tax credits provide an incentive for people such as her to work, yet they are being withdrawn. We accept that increasing the minimum wage is a good idea, but this measure will not help business at all, because putting up the minimum wage while removing tax credits will clearly be a disincentive for families to work.
That is quite right. The problem with Conservative Members is that they just lump everyone into the same bracket. Anyone who is in receipt of support is told, “It’s your fault. You’re not working.” The thing about tax credits is that they help to make work pay, but that seems to be lost on Government Members—
We are very clear that, in principle, we accept the benefit cap. In respect of the overall changes to tax credits, I have just made a comprehensive argument to illustrate the problem with those. This is not just about the overall tax changes. I will come on to talk about the withdrawal of support for students in poorer households, which the hon. Gentleman is going to vote for, and about other matters. It is for all those reasons that we cannot give our overall support to this Budget.
Ultimately, the best way to cut the deficit and the debt is to ensure that we have better-paid jobs, which will increase tax receipts and reduce people’s need for extra support from the state. We are among the countries with the highest incidence of low-paid work in the developed world. We come fifth in the rankings of the OECD economies in that respect. We have to change that by rebalancing and restructuring our economy through the active prosecution of industrial strategies—a term that the Business Secretary seems to have a problem with. Now is not the time to junk the approach that started under the last Labour Government and that his Liberal Democrat predecessor sought to continue. Now is the time to move up a gear on industrial strategy if we are to achieve the necessary rebalancing. I say this because, in fairness to the Government, they started with good intentions and sought to rebalance the economy, with their Liberal Democrat partners, from 2010.
I am happy to acknowledge—and have done so publicly—that rebalancing was something that the Major Government failed to do and that we failed sufficiently to address in office, in spite of our many achievements. Our economy was one with too few savings; it was also too concentrated in too few sectors and regions of the UK, and it was based too strongly on cheap credit. The problem is that the current recovery has those same weaknesses that have plagued British recoveries for decades: productivity growth has been absent, as the Business Secretary mentioned; our export performance remains lacklustre; output depends on private consumption; household debt is rising; regional imbalances persist; and investment in innovation and research and development lags behind that of our competitors. I am not at all convinced that the Budget will reverse those weaknesses.
Going back to the question of tax credits, does my hon. Friend agree that they gave a boost to employment, and especially to the employment of families with a single parent? Between 1997 and 2010, employment in that group increased by 28%.
My hon. Friend makes a very good point.
I want to comment on each element of the rebalancing that the Business Secretary mentioned. The first relates to productivity. We have the worst productivity in the G7, save for Japan. There was some fanfare around the Treasury-BIS co-sponsored productivity plan published on Friday—[Interruption.] Ministers might chunter, but having taken account of that amazing plan, the Office for Budget Responsibility has downgraded its forecast for productivity per hour for next year and the following three years. I am not surprised. Two key ways of increasing productivity are to sort out the skills system, which is simply not doing enough to resolve the chronic skills shortages in our economy, and to boost business investment.
After half a decade of Tory-led Government, the CBI warned in its annual skills survey this week of ongoing skills shortages acting as a drag on productivity. Its deputy director general could not have been clearer yesterday when she said that
“firms are facing a skills emergency now, threatening to starve economic growth. Worryingly, it’s those high-growth, high-value sectors with the most potential which are the ones under most pressure. That includes construction, manufacturing, science, engineering and technology.”
Of course we all want to see more apprenticeships, and we support the proposed apprenticeship levy, but we need to see far more action from the Government to ensure that all those apprenticeships are of sufficient quality to reduce the skills shortage. More than one in five apprentices are currently receiving no formal training whatsoever, and almost four in 10 employers do not regard the qualifications they are providing as apprenticeships, even though the Government deem them to be apprenticeship qualifications. Also, there are simply not enough people doing qualifications at level 3 and above.
It has always been generally accepted that, at a time of economic downturn, we should train people with the skills necessary to bring about the upturn. I have never understood why that was not undertaken sooner in this country. Germany has been doing it for many years. Why has it taken until now for the Government here to recognise that?
That is a good question, but in fairness I do not believe that there was consensus among employers that that would help increase the number and quality of apprenticeships. There is growing consensus in much of our manufacturing sector in particular—I know that my hon. Friend represents a constituency with a wonderful manufacturing tradition and history—that they must go down this route to prevent those who are not providing training in the different sectors from freeloading.
I have worked in manufacturing, unlike the Secretary of State, who had a crack earlier about visiting Rover. I have not only visited the factories, I have actually worked in the factories. One thing we did when I was involved in the trade unions to try to encourage employment, and particularly investment, was to get the companies to invest, as in a recession the first thing that happens is that training budgets are cut.
My hon. Friend makes a very good point. While I am on the subject of apprenticeships, it is worth remembering that the number of apprentices still not receiving the legal minimum wage is alarming. According to the Government’s recent apprenticeship pay survey, 15% are not receiving the appropriate minimum wage, rising to 24% for young apprentices. If we want more young people to study the science, technology, engineering and maths skills that we need them to study, taking away the maintenance grant from the poorest who want to study those subjects at university is hardly the way to encourage that. The Government are taking a huge gamble that that policy will not deter students from lower-income households from going to university.
That is a good point. The cuts that the Government are making in FE are already having a hugely negative impact, not least in the college that the Secretary of State attended.
To go back to undergraduate student financing, I note that the Government are switching from student grants to loans, but that simply dumps more debt on students. In the end, that is debt that, along with the loans taken out to pay tuition fees, will end up in the hands of the taxpayer. It is estimated, according to House of Commons Library figures, that that will add £280 billion to the national debt and we have heard no solutions from the Government to address that.
In the 2011 plan for growth, the Government told us to judge them not only against their achievements on skills but on whether they helped to deliver a substantial boost in business investment. Clearly, we must address that, because, as I said, our performance lags behind that of our competitors.
The Secretary of State said that the Government were working on a one-nation basis. Young people in this one nation are being deprived—they are being denied maintenance grants, will lose housing benefit and will not be allowed the proper living wage or minimum wage, yet they are supposed to be able to make their way in that one nation. Is that not nothing other than a two-nation strategy from the Conservative party?
My hon. Friend is right to draw attention to the assault on the aspirations of young people all the way from school to when they get a job. We remember that the Government stopped the Building Schools for the Future programme, which helped to give our young people a decent place to work. The Government took away the education maintenance allowance when people got to college and trebled their tuition fees when they got to university. Now, when they leave university the Government tell them that they should not earn as much as everybody else and that they will not extend the increase in the national living wage to those under 25.
Let me return to research and development. Although I welcome putting the annual investment allowance on a more long-term footing and the corporation tax changes, which also help, I would ask Ministers, who have suddenly perked up, this: where was the action on business rates for small businesses in this Budget? They create two thirds of private sector jobs, so where was the news for them?
Reducing the tax burden is all well and good, but in order to invest people need to be able to raise the finance to do so. According to the Bank of England, net lending to small firms has fallen by more than £1 billion in the past year and it continues to be an issue. Towards the end of his time in office, the Secretary of State’s predecessor joined us in championing a state-backed investment bank and put in place the British Business Bank, which we support. Now that he is no longer in post, and with the Government flogging off the Green Investment Bank, the British Business Bank has had no guarantees of future funding in the spending review and faces an uncertain future. I note that there was just one mention of it in the Red Book. I am happy to give way to the Business Secretary if he wants to answer this question: can he confirm today whether the Government plan to sell off the British Business Bank, too, and can he rule out doing that in this Parliament? The silence is deafening.
Let me turn now to infrastructure. We must end the dither and delay in making decisions on projects that not only increase our productivity but iron out regional imbalances and help people travel around in a more cost-effective way. In the Red Book, we are told that the Government believe that a modern infrastructure network is vital, so why, having commissioned the Davies report on aviation, do they appear to be locking themselves into a holding pattern right through until the autumn before coming into land and making a decision on this important matter? Our aviation industry employs hundreds of thousands of people, contributes more than £50 billion to GDP and pays the Exchequer more than £8 billion in tax every year. We have been clear that we will make a swift decision on this matter in the national interest. If the commission’s proposals to build a third runway at Heathrow can meet our tests, including consistency with our climate change obligations, we will take swift action to back them. I suspect that the Business Secretary agrees with me and all I say to him is that he needs to face down the opposition arising in Cabinet and do the right thing.
As for the regional growth policy, there has been a lot of chat about the northern powerhouse, so let me make a few observations. We cannot build a powerhouse if there is no power to connect our northern cities. The decision to shelve northern rail electrification, such as for the TransPennine Express route between Manchester and Leeds, was a kick in the teeth to the areas and regions of the north, and plans for a northern Oyster card do not make up for it. If I have one criticism of the Government’s overall approach to devolution, it is that they should be seeking to make every region a powerhouse rather than simply having a northern powerhouse.
Order. Before the hon. Gentleman gives way any more times, I should draw his attention and that of the House to the fact that a very large number of colleagues wish to speak in this important debate. The hon. Gentleman has taken well over half an hour of the time so far, in contrast to the Secretary of State—[Interruption.] Order. I hope that the hon. Gentleman will bear that in mind before considering taking further interventions.
I think my generosity in taking interventions perhaps got the better of me, Madam Deputy Speaker.
Let me finish by dealing with trade. In 2010, we were promised that an export boom would fuel the recovery. The Government set a target of tripling exports to £1 trillion by 2020 and getting 100,000 more small businesses exporting. What has happened since? The current account deficit widened to 5.9% of GDP last year —the largest peacetime deficit since at least 1830 according to the OBR. Frankly, I am not surprised given the degree to which we have seen various initiatives fail. Ministers have to sort out what is happening at UK Trade & Investment. UKTI’s own surveys show that more than a quarter of businesses that use its services saw no business benefit in doing so, and it is little wonder when we consider the range of different schemes and the failure to command the attention of Ministers. Records are not even kept of the trade missions that Ministers go on.
We are a great country. We have a great history and great people. We have a tradition not only of ensuring that those who can get on are able to realise their ambitions and aspirations, but of looking after those who cannot. That is one of the big problems with the Budget: it is unfair and regressive. Ultimately, if we really want to get the economy powering on all levels, we have to ensure that our people have the wherewithal and the tools to do that, particularly the skills and business investment needed, but they come up short as well. This Budget is unfair and not equal to the challenges we face as a country, and that is why I ask all hon. Members to support us in opposing the Budget today.
It is a privilege to be called to speak in this debate, Madam Deputy Speaker, and a pleasure to follow the hon. Member for Streatham (Mr Umunna).
There is much to commend in this excellent Budget, but to me one conclusion stands out: that by the end of this Parliament, under this Government, Britain will live within its means. No more irresponsible borrowing. No more spiralling debt at the taxpayer’s expense. No more passing the debt to the next generation. I was delighted to hear the Chancellor’s plans for this nation finally to run a budget surplus.
I have spent my career in business. Every company I have been involved in sets a budget, as indeed does every household in this nation, and when they do they operate with these basic principles: first, “How much is coming in?” and only then, “How much can I spend?” For too long, Governments have got that back to front, spending first, ignoring how much is coming in, then letting borrowing endlessly make up the difference.
Coming from a financial background, I decided to spend some time analysing our nation’s fiscal history. I wanted to know, when it comes to our Government’s revenue, how much does in fact come in. I can tell the House that, since 1955, tax receipts, with limited variation and remarkable consistency, have averaged 36% to 38% of GDP. In spite of the vast differences between Labour and Conservative Members in our approach to setting tax rates, the average tax take has been remarkably similar under Governments of both parties. There appears to be a natural ceiling to what any Government can extract from the pockets of its hard-working taxpayers.
That to me suggests a simple conclusion: in normal times, public spending should not exceed 37% of GDP. That is the best estimate of our income as a Government and therefore the best guide to what we can afford to spend. So the Government’s plans to get public spending to that level are not, as some Opposition Members have suggested, an ideological crusade or clever politics; rather, tackling excessive public spending is simply the sensible, logical and responsible course of action. That action, taken to make sure that we live within our means, is the same course of action that any business or household would take when presented with the facts. We all know what happens when those facts are ignored: more borrowing, more debt.
The hon. Gentleman makes a good point about debt. Does he agree that a graduate in social care from London Metropolitan University with personal debt of £54,000 not only has a personal problem on her hands, but represents a long-term national problem for us, because in the end we will have to pick up that debt?
It is clear that university graduates’ earning power is raised. It is hardly fair to ask people working hard without the benefits of a university degree to pay for the earnings of someone in the legal profession or the City who is earning a great deal. That is why this Government created a progressive system whereby those who earn more pay more back and those who do not pay just a fair share.
I would like to make some progress. As you said, Madam Deputy Speaker, many people wish to speak.
All debts need to be repaid, with interest. For the next generation, that means higher taxes or less money to spend on public services. As the hon. Member for Streatham said, we already spend more money on debt interest than we do on the police, transport or housing. That simply cannot go on.
Whether one is a Thatcherite or a Trotskyite, the rules of budgeting are the same: one cannot sustainably spend more than one earns. I commend the Chancellor for acting on that principle and ensuring that Britain’s finances will once again be back in the black.
I beg to move an amendment, after “importation”, insert
“other than in relation to Police Scotland and the Scottish Fire and Rescue Service”.
The amendment stands in the name of my hon. Friend the Member for Dundee East (Stewart Hosie).
On this final day of the Budget debate, we have heard a great deal about debt and deficit, the Budget itself, and the recently released productivity plan. All the Scottish National party Members have listened with sadness to the planned cuts, which strike fear into our hearts and those of our constituents. I have found myself reflecting a great deal on it—both the conflict of moral principles and the economic madness I believe is contained therein. Called out by the Institute for Fiscal Studies, this Budget is described as having
“benefit cuts at the centre”;
and as a “tax-raising budget”, the IFS gives the stark warning that,
“unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average”,
and that ultimately it is a “regressive” budget.
We are supposed to believe that the smart economic choice is for the UK to eliminate any deficit, pay down all debt, and run—and then sustain—a surplus. We are fed the yarn that an economy must be in surplus; that the gain is worthy of the pain. Despite the concerns of Robert Chote of the Office for Budget Responsibility, who described the plan—somewhat euphemistically—as “ambitious”, and the concerns of 77 leading economic academics, the Chancellor has ploughed on regardless. Now, I know that a degree in history—or, for that matter, one in music—does not equip one with an instinctive understanding of cause and effect, supply and demand or even so-called Micawber economics for that matter, but history does teach us about previous economic choices, and that ability to look back provides real accuracy. We know how the Chancellor’s previous predictions failed to meet actuality, and we know that the much vaunted current growth has taken place only over the past few years.
A number of issues concern me today, one of which is levels of personal debt. The OBR predicts household debt going above the levels of 2008 and reaching an incredible 173% of GDP by 2019. That household debt figure excludes mortgages but is based on unsecured lending such as credit cards and store cards and, with increasing frequency, payday loans. Fundamentally, it contributes to a very real risk of a repeated debt crisis as a direct result of the cuts. We have seen a consumption-led crisis before, yet here it is planned again. I quote the Chancellor, who said:
“This growth is driven by stronger private consumption”.—[Official Report, 8 July 2015; Vol. 598, c. 322.]
There is a small mention in the productivity plan about championing enterprise by stimulating finance for small and medium-sized enterprises—but what and how specifically? Simply privatising RBS with the mantra “private equals good” is frankly not good enough. A lack of access to liquidity remains the biggest single issue for small business, while at the other end of the spectrum large businesses stockpile their cash. It has been asked before but is worth reiterating: where is the support for the challenger banks? The cut in corporation tax has been trailed as encouragement for businesses to invest, but there is no clear link or evidence to suggest that will happen. I would have thought that I would have been intervened on by now to ask what within the Budget I agree with, and I confirm that, although I am disappointed with the cut in the annual investment allowance from £500,000 to £200,000, it is better than what was proposed, which was taking it down to £25,000.
The continued focus on financial services, in which I must declare a previous interest, without rebalancing to improve our exports or manufacturing is a worry, particularly where we continue with the models we have adopted. The New Economics Foundation has expressed the view that the
“United Kingdom has the least resilient financial system among leading industrial (G7) nations. It is unusually large and homogenous, highly interconnected . . . highly complex and highly reliant on funding from the wholesale financial markets”.
I recommend to all Members that they read the foundation’s recent report; its concerns concur with those of many other economists.
The SNP is urging action so that we can end the unfair anomaly whereby Scottish police and fire and rescue services alone are liable for payment of VAT. The proposed change to the Budget resolutions would enable us to introduce the necessary changes to the Finance Bill. Were this unfair and discriminatory situation to be corrected, we could free up an additional £23 million of resource for the Scottish Police Authority and £10 million for the Scottish Fire and Rescue Service—money which, I trust, all hon. Members would agree could provide welcome funds to support the fantastic work that our emergency services do.
Our calls for an end to this anomaly have gained cross-party support in the Scottish Parliament, and I am disappointed that the Government have so far refused to address the disparity in their treatment of emergency services north and south of the border. I hope that Members will take the opportunity today to take action and put this situation right.
We all agree that this is about choices, and the choice is how we grow the economy. This must fundamentally be by investment. Despite the productivity plan and various Ministers suggesting an increase in capital expenditure, a comparison between the Red Book of July and that of March 2015 shows total capital spend going down through the lifetime of this Parliament. If the Chancellor is unwilling to invest in the UK economy, give us the powers in Scotland and we will get on with the job.
When talk turns to economic and productivity comparisons, we hear a lot about the G7, the group of the world’s largest western economies, with which the UK likes to compare itself.
On productivity in the economy, my hon. Friend may be aware that since 2008 and until about 2014, it is fair to say that in terms of productivity per capita the UK has effectively been flatlining, while many other countries, including smaller countries such as Ireland, have seen their productivity rise significantly. There is much to learn from others, is there not?
I thank my hon. Friend for his intervention, and I thank the House of Commons Library for some excellent work on GDP per capita and GDP per hours worked, including in relation to Ireland. I shall come on to that.
Where the UK stands in relation to Germany, France, Italy, the USA, Canada and so on provides some useful benchmarks for relative economic performance. The fact that the UK lags behind its peers on so many key indicators is another, all too sad, story. Last out of the recession, lowest productivity, and lowest GDP per capita growth rates—a record that does not tally with the UK Government’s “back in business” narrative.
Although the G7 provides a useful comparison for the UK, its relevance to Scotland is less apparent. We do not aspire to be one of the largest economies in the world, to strut faded imperial grandeur on the world stage or to maintain the pretence of exerting some kind of global influence, 100 years after the height of the British empire. Our ambitions are different—more modest, some would say; more enlightened, others would call it. In business there is a saying, “Turnover is vanity, profit is sanity.” To be big is not always to be beautiful. Scotland seeks fairness and prosperity for those who live there.
We know that at its heart the sell-off of RBS is an attempt to balance the books, but the issue that I pointed out earlier is that banks such as RBS are still not lending enough to small businesses. That is vital. I referred to challenger banks. I come from a business background and speak to many people. That is what I hear from them about what they consider to be a critical issue.
For us, the G7 has more limited relevance. What we need to know is how we are performing as a medium-sized north-west European nation. Are we doing well, or are there opportunities for improvement? Thankfully, there is no shortage of comparable countries—our very own G7 equivalents, nations with characteristics similar to those of Scotland, but in most cases with far fewer natural resources. Whether we look north to Scandinavia, east to central Europe, south to the low countries or west to our Celtic cousins, comparisons abound among nations of similar size to Scotland. They are medium-sized in global terms, sitting in the middle third of global population rankings, not too big, not too small—the Goldilocks nations. Let us call them the M8, and I do not mean the boring motorway that runs between our two great cities. Those are countries with diverse histories, a range of memberships of international organisations and monetary systems, and varying levels of natural resources, physical geographies and cultures, but in their diversity all providing useful comparisons for Scotland. So how does the UK line up against them?
The M8 countries are among the wealthiest nations in the world. In terms of GDP per head their average has consistently outperformed that of both the G7 and the European 28. In terms of GDP per hour worked, which it is so vital to improve as a measure of productivity, their average also beats that of the G7 and Euro28. M8 countries are all richer than the UK by 25% on average, and the M8 countries are 9% richer per capita than the G7 as well—not a bad place to start, given our ambitions. Our aspiration as a nation is to be the best we can be, not to accept the poor performance and failed austerity agenda of the UK Government, but to look to what can be achieved when we set our sights a bit higher. Perhaps it is time we used the M8, rather than the G7, to frame our aspirations.
Thank you, Madam Deputy Speaker, for allowing me to make my maiden speech in this important debate. It is a privilege to have the opportunity to speak from these Benches that have borne witness to so much of our country’s rich history.
I would like to begin by paying tribute to my predecessor, Sir Malcolm Rifkind. One of only five Ministers to serve throughout both the Thatcher and Major premierships, Sir Malcolm has a long and distinguished record of service to our country.
A fierce opponent of injustice, Sir Malcolm is not one to be cowed or intimidated. In 1984, as a junior Foreign Minister on an historic visit to Poland, against the wishes of the then Polish communist Prime Minister, General Jaruzelski, Sir Malcolm insisted on meeting the leaders of the Solidarity movement and laying a wreath at the grave of a Polish priest who had been brutally murdered at the hands of his communist oppressors. Sir Malcolm is also a visionary and a forward thinker. Quick to identify Mikhail Gorbachev as someone with whom the west could “do business”, he was instrumental in convincing Margaret Thatcher of the importance of our engagement with the Soviet Union. Above all, Malcolm Rifkind was much admired in the constituency.
Like Sir Malcolm, who as Transport Minister was sent to inspect the early construction of the channel tunnel, I too have had the good fortune to inspect multimillion-pound infrastructure projects. Upon the instruction of my now hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson), I was lowered through a manhole cover to inspect sewers, as part of the re-engineering work for Crossrail. Separately, I have made further visits to inspect the sewers as part of the Thames tideway renewal work. Who says being deputy Mayor of London is without glamour?
While preparing for this maiden speech I dipped into the fantastic resource of books in the Library; I am very grateful for the assistance of the Library team. I re-read my predecessors’ maiden speeches: Sir Malcolm spoke about children with special needs, and incapacity benefit, still topical today. Michael Portillo highlighted what an area of contrasts Kensington is, with some of the most expensive property in the land contrasting with some of the poorest, drawing attention to people living in leasehold property struggling against unscrupulous landlords.
Alan Clark, before Michael Portillo, not only wrote about the delightful architecture of our leafy squares, but spoke about our splendid, robust and diligent local authority, which I am glad to say continues today. I must mention, however, that when my husband was skimming through Alan Clark’s diaries and found my name in the index, he was somewhat concerned. [Laughter.] The story remains untold. I am glad to say that again we were fortunate to have an MP who was a charismatic supporter of Kensington.
Dudley Fishburn, our MP in 1988, reminded the House that it was Sir Brandon Rhys-Williams who argued for people having the right to portable private personal pensions, so I am delighted that this Government have at last made some progress on implementing one of my predecessor’s proposals. I hope that the whole House can empathise with my sense of trepidation in following in the footsteps of such political titans, and in being the first woman to represent the residents of Kensington.
Having come from a family background in engineering, I went into business for many years, becoming a school governor, a campaigner and then a local councillor. As a lifelong Londoner, I was honoured to be elected to the London Assembly in 2008, and in 2012 I was honoured that the Mayor, now my hon. Friend the Member for Uxbridge and South Ruislip, asked me to be his deputy.
Kensington is my home; it is where I grew up, went to school, worked and raised my family. Although I have seen Kensington change over time, I am not quite old enough to have seen the deprivation of the mid-19th century piggeries and potteries, which were some of the most evil-smelling in London, but which have since been transformed into the stylish streets of Notting Hill.
I know many hon. Members are familiar with Kensington. How many have beaten a path with their families to twirl the handles and press the knobs at the Science Museum, to explore the world of the dinosaurs and meet the much-maligned Dippy in the great hall—now the Hintze hall—of the Natural History Museum, and to marvel at the glories of the V&A, to name but a few of our cultural attractions? Twelve million visitors came to our museums last year. Nationally, more people visit museums and cultural attractions than go to football matches.
However, the museums and the streets lined with terraced mansions tell only one side of the story in Kensington. Beyond the affluent stereotype there is a deeper story: the blight of poverty and social isolation afflicts Kensington, too, with some of London’s poorest communities. The constituency is not just for the rich and famous; it is home to a melting pot of constituents who make London the greatest city on earth. I intend to be a champion for all my constituents, irrespective of their backgrounds. It is with this sentiment in mind that I would like to touch briefly on my campaigning priorities.
I have been married to Jamie for over 30 years, and we have four wonderful children. Sadly, our eldest two were born with serious heart defects. Our eldest son spent a year in the Royal Brompton & Harefield hospital. Despite the excellent care, he was left with permanent disabilities. But Jamie and I are great believers in the American maxim, “When life gives you lemons, make lemonade.” We quickly gained a working knowledge of paediatric cardiology and, of course, lifelong disability. I know that I am not alone in this Chamber when I talk about the hours spent by the bedside of a sick child or loved one, or about the toll that being a carer takes. I intend to work steadfastly here with others to represent the needs of the disabled, just as my husband takes up the cudgels for that campaign on the red Benches.
The second issue of vital importance to me is the need to support local businesses, which is topical, given today’s Budget debate. Only by supporting entrepreneurs and small businesses can we help promote jobs and employment. For much of my career I was involved with the art and antiques industry. There are over 7,000 specialist art and antique dealers nationally, offering jobs and employment, particularly in Kensington Church Street and, of course, our famous Portobello Road. As president of the British Antique Dealers Association, I support our trade. We should be working with those small businesses to ensure that we in this House do not impose ill-considered restrictions upon them.
So it is that I come here to fight for the needs of the vulnerable and disabled in our country, and to work with the Government to build on and promote both our small businesses and our national industries, which offer such a valuable contribution to Britain’s growing economy. I welcome the challenge.
Thank you, Madam Deputy Speaker, for calling me to make my maiden speech in such an important debate. I want first to pay tribute to my predecessor, Douglas Alexander, who served the constituency for many years—I was only three when he was elected. It is for that reason that I want to thank him for all he did for the constituency. I especially commend him for the dignified way he handled himself on what must have been a very difficult election night for him. He did himself proud, and he did his party proud. I wish him the best for the future.
When I discovered that it is traditional for a new Member to speak about the history and legacy of their constituency in their maiden speech, I decided to do some research, despite the fact that I have lived in mine all my life. I am at the tail end of Scottish National party colleagues making their maiden speeches, and I have noticed that they tend to mention Rabbie Burns a lot. In particular, they have tried in their maiden speeches to own him for themselves by claiming some intrinsic connection between him and their constituencies. I feel no need to do that, because during my research I discovered a fact that trumps them all: William Wallace was born in my constituency, in Elderslie, which you will be familiar with, Madam Deputy Speaker.
Beyond the Hollywood film and the historic name, my constituency has a fascinating history, from the mills of Paisley to the industries of Johnstone and the weavers of Kilbarchan. It has a wonderful population with a cracking sense of humour and much to offer, both to tourists and to residents. But the truth is that things are not all fantastic in my constituency. We have watched our town centres deteriorate and our communities decline. Our unemployment level is higher than the UK average. One in five children in my constituency go to bed hungry. Paisley’s jobcentre has the third highest number of sanctions in the whole of Scotland.
Before being elected, I volunteered for a charitable organisation. There was a gentleman there who I grew very fond of. He was one of those guys who have been battered by life in every way imaginable—you name it, he has been through it. He used to come in to get food, and it was the only food he had access to and the only meal he would get. I remember sitting with him while he told me about his fear of going to the jobcentre. He said, “I’ve heard the stories, Mhairi. They try to trick you out and tell you you’re a liar. I’m not a liar, Mhairi.” I said, “It’s okay. Calm down. Go and be honest and you’ll be fine.”
I then did not see him for two or three weeks and became very worried. When he finally came back in, I asked him how he had got on. Without saying a word, he burst into tears—a grown man standing in front of a 20-year-old and crying his eyes out. What had happened was that in order to get to the jobcentre he had needed to use the money that he would normally have paid to travel to the charity in order to get his food. He needed to save the money, so he did not eat or drink for five days. He fainted while on the bus going to the jobcentre due to exhaustion and dehydration. He was 15 minutes late and was sanctioned for 13 weeks.
The Chancellor spoke in his Budget speech about fixing the roof while the sun is shining, but who is the sun shining on? When he spoke about benefits not supporting certain kinds of lifestyles, is that the kind of lifestyle that he was talking about? If we go back even further, when the Minister for Employment was asked to consider if there was a correlation between the number of sanctions and the rise in food bank use, she stated:
“Food banks play an important role in local welfare provision.”—[Official Report, 22 June 2015; Vol. 597, c. 608.]
Renfrewshire has the third highest use of food banks, and food bank use is going up and up. Food banks are not part of the welfare state—they are a symbol that the welfare state is failing.
The Government, quite rightly, pay for me, through taxpayers’ money, to be able to live in London while I serve my constituents. My housing is subsidised by the taxpayer. The Chancellor said in his Budget:
“It is not fair that families earning over £40,000 in London…should have their rents”
“by other working people.”—[Official Report, 8 July 2015; Vol. 598, c. 335.]
But it is okay so long as you are an MP?
In this Budget the Chancellor also abolished any housing benefit for anyone below the age of 21. So we are now in the ridiculous situation whereby because I am an MP, I am not only the youngest, but I am also the only 20-year-old in the whole of the UK that the Chancellor is prepared to help with housing. We now have one of the most uncaring, uncompromising and out-of-touch Governments that the UK has seen since Thatcher.
I must now turn to those with whom I share these Benches. I have sat in this Chamber for 10 weeks. I have very deliberately stayed quiet and listened intently to everything that has been said. I have heard multiple speeches from Labour Members standing to talk about the worrying rise of nationalism in Scotland. Yet all these speeches serve to do is to demonstrate how deep the lack of understanding about Scotland is within the Labour party. I, like so many SNP Members, come from a traditional socialist Labour family, and I have never been quiet in my assertion that I feel it is the Labour party that left me, not the other way about. The SNP did not triumph on a wave on nationalism; in fact, nationalism has nothing to do with what has happened in Scotland. We triumphed on a wave of hope—hope that there was something different from and better than the Thatcherite, neo-liberal policies that are produced from this Chamber, and hope that these representatives could genuinely give a voice to those who do not have one.
I do not mention this in order to pour salt into wounds that I am sure are very open and very sore for many Labour Members, both politically and personally; colleagues, possibly friends, lost their seats. I mention it in order to hold a mirror to the face of a party that seems to have forgotten the very people it is supposed to represent and the very things it is supposed to fight for. After hearing of Labour leaders’ intentions to support the changes to tax credits that the Chancellor has put forward, I must make this plea through the words of one of their own, and a personal hero of mine. Tony Benn once said that in politics there are weathercocks and signposts. Weathercocks will spin in whatever direction the wind of public opinion may blow them, no matter what principle they have to compromise. And then there are signposts, which stand true and tall and principled. They point in one direction and they say, “This is the way to a better society and it is my job to convince you why.” Tony Benn was right when he said that the only people worth remembering in politics are those who are signposts.
Yes, we will have political differences; and yes, in other Parliaments we may be opposing parties, but within this Chamber we are not. No matter how much I may wish it, the SNP is not the sole opposition to this Government—but neither is the Labour party. It is together with all the parties on these Benches that we must form an Opposition. In order to be effective, we must oppose, not abstain. So I reach out a genuine hand of friendship which I can only hope will be taken. Let us come together; let us be that Opposition; let us be that signpost to a better society. Ultimately people are needing a voice and people are needing help—let us give them it. [Applause.]
Order. The hon. Lady has just made an excellent speech—particularly her reference to William Wallace and Elderslie, where I was also born—but the House will show its appreciation in a way other than clapping. [Hon. Members: “Hear, hear!”] The House—[Hon. Members: “Aye!”] Yes, the House can show its appreciation vociferously—just do not clap.
It is a great privilege to stand before you today to make my maiden speech in a such an important debate, particularly as the Chancellor’s Conservative Budget is one of the greatest Budgets of modern times. It is also an enormous pleasure to follow my hon. Friend the Member for Kensington (Victoria Borwick), who delivered a wonderful maiden speech that puts me in a difficult position in following it.
I feel that, as a Welshman, I should—I must—tell the House a little story. I have to admit that this was not the easiest speech I have ever had to write. Many hon. Members might find this surprising, as one’s maiden speech should be the easiest of them all. In many ways it was, but in many others it was rather difficult. You see, since my election, my time in this House has been a total whirlwind. When I arrived in this place, I was given my pass and a laptop and set about meeting a great many people and discovering how this place works. I was rushed off my feet and time never seemed to stop.
That was until I came to write my maiden speech. I sat down at my desk, pen in hand, ready to go, but no words flowed forth. At first, I thought it could be the pressure I felt after listening to so many of my colleagues’ excellent maiden speeches, or the realisation that electioneering was now over and the real work would now begin—but I was wrong. As I looked out of the window at London, I realised that it is almost 180 miles from here to my constituency of Brecon and Radnorshire —the largest constituency in England and Wales, where the distance from Lower Cwmtwrch, below Ystradgynlais in the Swansea valley in south Breconshire, to Llanbadarn Fynydd in north Radnorshire is 85 glorious miles. As I sat in my office, I was a long way from my home in the village of Glasbury in the beautiful Wye valley, and a long way from my family—my wife and my two children. I will be honest—I felt very, very homesick. I wondered what I could do to make myself feel better so I decided to put down my pen and go for a walk; I thought that might make me cheer up and give me inspiration. I left my office and began walking.
The first place I came to was Central Lobby. I looked up and saw the mosaic of St David looking down on me. I smiled and thought of Wales and of how proud I am to be a Welshman—and proud to be a Unionist. I immediately began to feel a little less homesick. I then looked around and saw everybody waiting to meet their Member of Parliament, and I was reminded of my constituents and how honoured I am that they elected me with the largest majority in Brecon and Radnorshire for nearly four decades. I am truly indebted to them for putting their faith in me to represent them, and I will do my utmost to repay that faith by always putting them and their interests first in this House.
I then left Central Lobby and entered Members Lobby, where I encountered the postboxes of Members of this House. I stopped and looked at all the names of current Members and thought of the names of all those who have had their postboxes here over the years. Roger Williams, my immediate predecessor, whom I would like to thank for all of his hard work over the past 14 years, would have had his name here when he was campaigning for lower VAT on the tourism industry—a cause I also intend to champion. Jonathan Evans, my friend and my last Conservative predecessor back in 1992, who served as a junior Minister in John Major’s Government, would have had his name on a postbox. Even Walter D’Arcy Hall, my Conservative predecessor from 1924, whose heroics on the battlefields of world war one won him the Military Cross and Bar, would also have had his name there—though I do hope that my battles in this House are not as ferocious as his on the fields of northern France. As I stood in front of the postboxes, I realised that I too get to walk in their shadows and collect my post as they would have done.
I turned around and saw my Whip coming out of the Whips Office, ready to keep me in order. As he headed towards me, I was reminded of my wife back at home, so I quickly slid into the Chamber. It was there that I saw your Chair, Madam Deputy Speaker. I was reminded that as an auctioneer by trade and an announcer at the Royal Welsh show for more than 25 years, I have some understanding of the role that you undertake, although my time as an auctioneer was in the rural sector, encouraging animals to parade around the ring, preening and prancing and showing off their best sides—of course, that is very different from your role in this House, Madam Deputy Speaker.
Taking a load off my feet, after my thus far long walk, I sat down and took my place on these very green Benches. Looking at their colour, I was reminded of the green fields, valleys and hills of my constituency and of the enormous respect I have for those who farm the beautiful and varied acres that make up the rural counties of Brecon and Radnorshire. I thought of my election to the Select Committee on Environment, Food and Rural Affairs and how I cherished the opportunity to play my part in helping our family farms and young farmers clubs to continue to play a vital role as the backbone of our rural economy.
My eyes continued to gaze around the Chamber and I saw the crests and shields that adorn the walls. I remembered that they represent Members of this House who fell during active service in conflicts past. I was reminded of the armed forces that are based in Brecon and Sennybridge in my constituency, and the courage that those servicemen and women show day in, day out on our behalf.
Thinking about my constituency raised my spirits and I was beginning to feel less homesick. As I sat on the Bench, I listened to the speeches being made from the Government Benches and I was pleased to see so many of colleagues called to speak—and yes, their surnames were Davies. It felt just like being at home. I was reminded of the abundance of Davieses in the regiment of the South Wales Borderers, who won 11 Victoria Crosses in the battle of Rorke’s Drift, which was made famous by the film “Zulu” and brilliantly commemorated by the Regimental Museum of the Royal Welsh in Brecon—an organisation for which I am the resident fundraising auctioneer.
Having listened intently to my colleagues, I began to walk back to my office, feeling in much higher spirits, which only began to rise as I encountered a tour group walking around this beautiful Palace and thought of the excellent tourism industry in Brecon and Radnorshire, which plays host to some of the best events this country has to offer. Many in this place will have come to the Hay literary festival in Hay-on-Wye trying to sell one of their books—I hope that they were successful. [Laughter.] We have the Crickhowell and Talgarth walking festivals, the Llandrindod Wells Victorian festival, the Rhayader and Knighton carnivals and the Royal Welsh show, to which I will be delighted to welcome my right hon. Friend the Prime Minister for the second year in succession next week. Then, of course, we have the world alternative games at Llanwrtyd Wells, which includes the world bog snorkelling championship, where, I have no doubt, many in this House would excel if they attended.
As my walk came to a close, I was feeling much happier. I found myself in Westminster Hall. The glorious old building was full of visitors, staff members and even more tourists, but the people who caught my attention most were the schoolchildren. There were school parties of all ages, shapes and sizes in the hall and, as I climbed the stairs and opened the door to my office, I was reminded of schools in my constituency, including Gwernyfed high school, where I am a governor. Its future is currently under threat unnecessarily. I decided that I would continue to take a proactive role in promoting our schools’ interests to ensure that every child in Brecon and Radnorshire has the opportunity of the best start in life.
I sat down at my desk once more and realised that there were reminders all around me of my constituency, as Brecon and Radnorshire is as much this place as this place is Brecon and Radnorshire. I lifted my pen with a smile, for I no longer felt homesick. In fact, I felt right at home and, with that, my maiden speech was as good as written for me.
It falls to me to comment on the excellent maiden speeches that we have just listened to. The hon. Member for Kensington (Victoria Borwick) made a lovely, warm and engaging speech, with some generous recollections of her predecessor. She need not feel trepidation in following him. We will all remember the emotional and feeling way in which she talked about carers and the disabled. She will make a clear contribution to the House in that regard.
The hon. Member for Paisley and Renfrewshire South (Mhairi Black) made a remarkably confident, relaxed, witty and effective speech. It is not often that a maiden speech in this House makes a strong political case, but she certainly got away with it. I liked her distinction between weathercocks and signposts, with which I wholeheartedly agreed. I think that we will hear a great deal more from the hon. Lady in future debates in this House.
I congratulate the hon. Member for Brecon and Radnorshire (Chris Davies), who again made a warm and generous speech about his first recollections in this place. I am not sure whether his speeches will remain so generous, not least given his early contact with the Whip. It is nice that in some ways, this place reminds him of Wales, his constituency and his roots. I very much hope that he will continue to reflect those things, and I wish him well.
Turning to the debate, all the hoo-hah about the Budget has centred on the £9 so-called living wage in 2020, even though the living wage in London is already £9.35. It is therefore not a living wage at all, but a slightly revamped minimum wage. Nevertheless, it is the macroeconomics of the Budget that really matter—and they are unreservedly depressing. If this is such a wonderful economic recovery, as we are constantly being told, why are average wages still 6% below their pre-crash level seven years ago? Why was the growth rate in the last quarter—the first of this year—just 0.4%, with an annual rate of just 1.5%? Why has productivity been flat for the past five years?
I would like to ask the hon. Gentleman—although I am not inviting him to come back in—how he would explain the fact that in the latest quarter the growth rate was 0.4%, up from 0.3%. In the last three quarters it has gone down from 0.9% to 0.6%, and then to 0.3% or 0.4%. It was clearly a short-term growth surge, which is now fading.
We all regard productivity as crucial, but the UK’s investment as a percentage of GDP is now among the lowest in the world at barely 14%. By the time depreciation is netted off the growth figure, we are actually down at just 2.5%, which hardly even keeps up with our rising population.
Why does the OBR’s Budget report forecast a never-ending decline in Britain’s share of world exports, even compared with 2014, when this country experienced the biggest proportionate balance of payments current account decline since 1830? Why have the Government squeezed the economy so hard that they are now looking to a steep rise in household borrowing as the main source of future demand? Dangerously, the borrowing level already exceeds £2 trillion and may well be the source of the next economic crisis.
For all those reasons, the Chancellor’s boasts about the state of the economy do not bear even superficial scrutiny. Nor is his explanation of the cause of the economic crisis any more truthful. He continually lambasts the last Labour Government for overspending, but their economic record actually shows the opposite. The largest budget deficit under the Blair and Brown Governments in the 11 years from 1997 to 2008, before the crash, was 3.3% of GDP. The Thatcher and Major Governments ratcheted up budget deficits in excess of that in 10 of their 18 years. Who were the profligate ones? It was not Labour.
Then there is the question of which party has handled better the enormous rise in the deficit, caused by the bankers and the international recession. Again, it is valuable to look at the economic record. Alistair Darling, the last Labour Chancellor, gave the economy a big fiscal stimulus worth nearly 5% of GDP, allowing the automatic stabilisers to work and bringing forward public investment projects worth more than £30 billion.
My hon. Friend makes a good point, and I will come on to comparing what the Government have achieved with what the Chancellor said in 2010.
Bearing in mind that it takes between 12 and 18 months for Budget measures to work their way through the economy fully, we should remember that Alistair Darling cut the deficit from its peak of £154 billion to just £114 billion by the fourth quarter of 2011—a cut of £40 billion in fewer than two years at a rate of £20 billion a year. The current Chancellor, however, through his successive austerity Budgets, slowed that deficit reduction to a trickle. Today it is still £90 billion, which represents a reduction of £24 billion in three years at a rate of £8 billion a year. If he wanted to reduce the deficit as efficiently and as fast as possible, he has clearly failed. But of course, his real aim all along has been to shrink the state and squeeze the public sector. The deficit has merely been a convenient pretext to enable him to do so.
Now the Chancellor is telling us that he will eliminate the structural deficit by 2019-20. Judging by the fact that he boasted that he would achieve that by this year, when it is still a whopping £90 billion, we can take that with a fair pinch of salt. His Budget forecasts assume a 2.5% a year growth rate all the way to 2020, but with the £25 billion of further expenditure and benefit cuts now being imposed on the economy, we are likely to see a reprise of what has happened in the past five years. The reimposed austerity will flatten growth, exactly as it did from 2010 to 2012, when it was relieved only by postponing austerity to generate a short 18-month economic surge in 2013-14. As I have explained, that surge has now deflated. That pattern is likely to be reproduced in the next five years. I fear that we will have the worst of both worlds—a short-lived growth spurt that fizzles out and is achieved only through a further postponement of deficit reduction extending well into the medium-term future.
The most fundamental question is: what is the right way to deal with a large deficit? We all agree that it is far too large and has to be reduced. It is a statement of the blindingly obvious, but one that is not publicly stated, that there are two ways of doing that—either by cutting expenditure or by increasing income. An individual does not have that option, of course, but the state does, because it controls the momentum of the economy through either expanding or contracting it. The Chancellor chose exclusively to pursue the latter because it suited his political ends of shrinking the state, but economically, it has been dire—the impoverishment of a quarter of the population and the generation of 350 food banks, rather like a third world country, while cutting the deficit by only a marginal amount.
Historically, all the evidence is against the Chancellor. The reduction of large deficits by both the US and Sweden in the 1990s occurred as a result of sustained growth policies. Above all, we have the precedent of Britain in 1945, when the debt was 260% of GDP—three times higher than the 80% it is today. That did not prevent the Attlee Government from introducing the NHS and the welfare state, building 300,000 houses a year, reconstructing the country’s broken infrastructure and, above all, restoring full employment, with the deficit steadily decreasing to 60% over the next 30 years.
The Chancellor has not only failed to cut the deficit by much, but his legacy will be that he fundamentally chose the wrong way to do it, for the wrong reasons, with huge, irrecoverable losses to UK growth and output.
I congratulate colleagues on the excellent maiden speeches we have heard this afternoon. My hon. Friend the Member for Kensington (Victoria Borwick) made a passionate speech about the work she wants to do for the House and what brought her here. My hon. Friend the Member for Brecon and Radnorshire (Chris Davies) reminded me, as another Member of Parliament who represents a rural constituency, that the green of these Benches reminds us of home when we are so far away. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) made a passionate speech. I very much enjoyed her signpost analogy and might well use it myself in future.
This was by far the most aspirational Budget I have seen delivered. It speaks to people who want to get up, work hard and get on in life. It promises that work will be rewarded, and seeks to cut taxes and let people spend their hard-earned money as they see fit.
People who work on the minimum wage in my constituency, as I did for a number of years, will take great pride in the implementation of the living wage. I am sure they will also be extremely pleased to know that the Government are clamping down on tax avoidance on a scale never seen before. For those who are successful, who put money away and who want to support the next generation, it is a welcome step that the inheritance tax threshold has been raised.
I should like to discuss the Chancellor’s proposals for devolving Sunday trading hours rules. I am a retailer who has worked in supermarkets since the age of 16. I remember somebody on the campaign trail telling me they would vote for me if I could tell them the price of milk. They were very surprised when I told them not just the price, and how many millilitres were in the carton, but that the barcode was 20076795, and that they could get it mix-and-match with a loaf of bread at best value at the shop round the corner.
I am familiar with the Sunday trading hours rules and they have caused me and other retailers no end of frustration. I understand that there are concerns about the reforms among some smaller retailers and have spoken to a number of retailers in my constituency in the past few days. Many stores are extremely keen for the right to trade when and how they wish, as they already do online, but Stanshawe service station, a local business in my constituency located within a mile of a Tesco, a Lidl and a Morrisons, is concerned that it could lose business to larger stores if opening hours are relaxed.
The Government’s stance is the right one. The internet is a risk to the high street and I want shops to have the freedom to work and innovate wherever possible. I have heard stories of stores doing whatever they can to ensure cash flow by bending the Sunday trading hours rules and serving customers on Sunday when opening hours are restricted. I understand that, in some cases, stores even provide computers for customers to order the product online before giving it to them inside or just outside the store. The stores do not want to break the rules. They simply want to be able to trade freely at times when they know they can sell their goods.
The internet does not rest on a Sunday. In 2011, online sales accounted for just 8.3% of all retail sales. That figure is now at 11.2%. Wherever we can, we must help stores manage that shift in consumer behaviour and for some stores—especially those that serve weekend activity, such as garden centres—Sundays can be the busiest trading day of the week because of the nature of the business. It is right that local authorities can determine the opening hours of such businesses.
Order. When the hon. Member for Thornbury and Yate (Luke Hall) gives way, he should sit down until the intervention has finished, and then he can stand back up. We cannot have two people on their feet at the same time. He should not worry; we are all learning. It is not a problem.
Thank you, Mr Deputy Speaker.
I absolutely agree that we should do everything we can to support retailers, including the option of trading online. Removing the restrictions on Sunday trading will give consumers and families the flexibility that they need. People who work in small businesses often have Sunday as their day off, because it can be an easy day to manage stores. Current restrictions mean that their first day off—Sunday—is often the least productive and, in the modern world and the retail industry, convenience is key.
I will work closely with local shops in south Gloucestershire to ensure that their voices are heard when local authorities consult on these changes. It is vital that any consultation includes all retailers in any area, and that small shops in the catchment area of larger stores and supermarkets have a strong voice locally in any consultation.
In conclusion, I once again voice my support for the Budget, and I look forward to hearing ones like it in the future. We should support workers by ensuring that work always pays, encourage employers and free the market to provide what the public demand. The Budget delivered the Conservative promise and supports our long-term economic plan to get this country moving forward.
I should start by saying a few words about the three maiden speeches that I have recently heard. All were passionate, witty or lyrical, and one was all three. We will look forward to hearing more from those hon. Members in the future.
I want to concentrate my remarks on young people, especially those in Knowsley. Three years ago I carried out a project over the summer in my constituency. I think we called it, “What young people in Knowsley think”. It is not a very original title, but it summed up what we were trying to do. Without going through the whole process and perhaps spending too much time on an analysis of what we did, I just want to talk about two conclusions that I drew from the questions that we asked some 80 young people.
The first conclusion was that young people in Knowsley are no less ambitious than young people anywhere else in the United Kingdom. Like other people, they want to have their own business, to join one of the professions or to be in the entertainment business. Some of them were remarkably specific about what they wanted to do: one young man wanted to be a diesel fitter in Canada. I never did get to the bottom of that story. In any case, they were all very ambitious.
The second conclusion, however, came from asking the young people what barriers they saw to achieving what they wanted to achieve in their lives. Most of them were between 14 and 18, and it was staggering that at that young age they recognised that in an area such as Knowsley—one of the poorest in the country—the barriers to achieving what they wanted in life were enormous. Some of the barriers were to do with educational qualifications—they thought that they would not get the requisite number of GSCEs to go on to do A-levels or to higher education, and that there was a lack of availability of training in the things they wanted to do.
Others feared that they did not have the right connections to get into professions they wanted to follow. In other words, mum and dad could not buy them an internship in a firm of national accountants so that they could get a head start to put on their CV. I say that not with any sense of bitterness, but at the tender age of 14 to 18 young people in Knowsley already know the limits of their potential owing to the poverty of their background. I am not saying that some will not get out of that—some will—but at that point in their lives they realise that there are enormous barriers to their achieving what they want to do.
What will the Budget do for children and families with children, particularly for those in receipt of tax credits? There are 9,900 such families in Knowsley, compared with the average in English constituencies of about 3,342—we have more or less three times the number. The number of families affected by the changes to tax credits will be nearly 10,000, which is an enormous number. That will have an impact on the children in those families. The percentage of children in families receiving tax credits in Knowsley is 71%, compared with 55% for England as a whole. On top of that—I am grateful to the Children’s Society for these statistics—the Government have allocated just £6.8 million in early intervention funding to Knowsley Council for the current year. That is £10 million less on early intervention than in 2010, yet we know that to overcome the sort of barriers I referred to earlier early intervention support is crucial. Children need that head start at an early age, but fewer resources will be available.
We also know from the Children’s Society that nationally there are 3 million children living in poverty. Some 5,290 of them are in Knowsley alone, of whom 3,840 are living in families who are the working poor. In other words, the families are in employment but they are still classified as being in poverty. I know the Government might like to redefine poverty in such a way that a lot of these statistics fall out of the definition, but there is real poverty in many of those families. We know that from some of the things that have already been mentioned.
For example, two weeks ago I spent Saturday morning collecting food for the Big Help Project food bank in Knowsley. As always when I do that, I am struck by the incredible generosity of people. They were going around Tesco, as it happened, buying their own food and then setting aside one or two bags full of food to donate to the food bank. Other hon. Members have referred to food banks. I am a huge supporter of the Big Help Project and I recognise the necessity of food banks because of the situation some families are in—many of them, by the way, are in employment, not on benefits. I never thought—a number of customers in Tesco made the same point to me—that I would live through a time when we saw families dependent on food banks to feed their children.
I shall try my best, Mr Deputy Speaker.
My hon. Friend is right; of course it is not a lifestyle choice. Who would choose a system where they have to get a voucher, turn up somewhere and give it to someone they have never met before in return for food to take home to their family? It is not a lifestyle choice. Of the 7,000-odd people—a staggering number—who have used the food bank in Knowsley, 700 are in employment. It is definitely not a lifestyle choice for them, and I do not think it is for the others either.
In conclusion, I have set out the reality for many children in Knowsley, and Knowsley is not unique—I am not making that argument—but even at the end of it all, what sort of employment opportunities are available? For many, there are zero-hours contracts under which the person does not know when they are expected to turn up for work, or even how many hours they are going to work, and in some cases—I have spoken to people for whom this is the case—the person gets a call at 11 o’clock at night telling them to go 10 miles away to do a two-hour shift in a packaging factory, the first hour’s earnings from which go on a taxi because public transport does not start until after 6 o’clock. Is that the sort of work these children should inherit? I think not. And these are often major international firms. For those not lucky enough to go into higher education, the other option is a rolling contract. That sounds great, doesn’t it? Why would anyone not want to be on a rolling contract? Actually, it means that every now and then the person gets sacked, so they do not have any continuity of employment rights. Sadly, that is the future for many young people, and this Budget does nothing to take away the fear of that future.
Thank you, Mr Deputy Speaker, for giving me the opportunity to speak in today’s Budget debate, particularly on enterprise and business. It has been an honour to listen to the maiden speeches of colleagues from across the Chamber, each so different, so eloquent and so passionate. I have two lasting memories: the references to Dippy the Dinosaur and—I cannot resist—the “preening and prancing” of animals into the auction ring. They were all really enjoyable speeches.
I am particularly pleased to speak on business and enterprise, not just because I come from a family manufacturing business—we started 25 years ago thanks to the enterprise allowance, introduced by the then Conservative Government, without which we would never have taken that first step and for which I will always be grateful—but because I believe business is at the heart of Britain’s economic recovery.
A main objective of the summer Budget was recognising that business was leading our economic revival. Like other colleagues, I spend time visiting and using local businesses in my constituency, be they the large manufacturers, the small shops and traders in the villages and high street shopping centres, or the farmers. Each business plays a vital part and contributes to our local economy, be it in Aldridge, Brownhills, Pelsall, Rushall or any of our other communities, and each plays a part in securing the economic future of our country. We must never forget that.
We hear much about the plans for the northern powerhouse. As someone from the north originally—my roots are in Yorkshire—I welcome those plans; they are exactly what we need. But let us not forget the west midlands. I believe that the west midlands is the engine room of our economy—the engine room of the future. That is what I will be supporting and fighting for. It will come as no surprise that I am not a mechanic, but I know that a good engine needs to be well tuned. In a similar way, businesses need to be well tuned to keep running smoothly and to keep our economy moving forward. I believe that there are measures in the Budget that will help to make a big and positive difference to businesses in this country.
Back in 2010, corporation tax was a staggering 28%. It was lowered under the coalition Government to 20%, and this Budget sets out further reductions, from 20% to 19% from April 2017 and down again to 18% from April 2020. From April next year, the employment allowance, which gives national insurance contribution-free allowances to businesses, will be extended, from £2,000 to £3,000. That means that a company will be able to employ four people full time on the new living wage without paying any national insurance. These are the sorts of practical measures that I believe help businesses today. They therefore also help local communities—when we help a business, we are helping to create jobs and put money back into the economy.
In 2010, the figure for jobseeker’s allowance claimants in my constituency was 4%. In May this year, it was down to just 1.4%. That does not just happen; it happens because of the economic policies of the Government of the day—a Conservative Government. It is also down to the hard work and the efforts of all those businesses and traders, who work day in, day out, often to keep those businesses going and to support their staff. The Budget will be a strong step forward in continuing to support and encourage business, enterprise, and apprenticeships and skills. We will continue to deliver this country’s economic recovery and security. We will continue to show not only that Britain is backing business, but that we are well and truly back in business.
Before I finish, I want to refer to the welcome news on vehicle excise duty and the fact that we will be putting that money into improving our roads. With my Aldridge-Brownhills hat on, I want to make a plea: please make sure that some of that money really comes down to the local level and that we all feel the benefit of it.
I for one welcome this Budget. It is the right Budget for this country. It is the right Budget for moving us forward.
It is a pleasure to speak in this vital debate. I commend the three Members who have given their maiden speeches. The hon. Member for Kensington (Victoria Borwick) spoke of her constituency and how we can deal with what life gives us. I commend her for that. The hon. Member for Brecon and Radnorshire (Chris Davies) did not walk too far in the House, but he walked the length and breadth of his constituency, and we appreciate that. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) has just left the Chamber. I am unashamedly a Unionist and I do not agree with the ultimate goal of the Scottish National party, but I tell the House this: I agree very much with many of the issues that she raised, as my speech will reflect. I commend her for her contribution. While she speaks for her constituents, I know that I speak for mine.
There are several issues that I feel must be addressed, as I have already been inundated with phone calls from constituents concerned in particular by the announcement on tax credits. That is a massive issue for me; the mailbag has been enormous. Those who have phoned or written have been worried. There are some pleasing announcements in the Budget—I recognise that—including on defence spending. I am on the Select Committee on Defence and I am pleased that we will be spending 2% of GDP, but is that enough? The Chairman of the Defence Committee has said we should have 3%, and I agree with him.
Does my hon. Friend accept that the 2% on defence spending has been reached only as a result of including expenditure on internal security—it is not pure defence spending—which is a disappointment and, indeed, a manipulation of the figures?
I thank my hon. Friend for his contribution. We made the decision in the Defence Committee just today that we will look at this issue. We will thoroughly investigate whether the 2% figure amounts to real money. As I said earlier, the Chairman of the Defence Committee wants 3%, and I want it too.
Another of my concerns is about the national living wage. I also fear for the huge number of small and medium-sized enterprises across the Province and particularly in my Strangford constituency. I have grown increasingly concerned about the large number of people using food banks, to which other hon. Members have referred. Some people in secure employment simply do not earn enough to live, so it obviously goes without saying that wages have to increase. We must help to safeguard the most vulnerable in our society.
The Federation of Small Businesses Northern Ireland claimed that 99.9%—its figures—of employment in the Province comes from small and medium-sized businesses, so naturally this change in wages poses a huge threat to some employers. I am concerned about that. What is the Chancellor going to do about the minimum wage? We welcome it, but what is he going to do to help small and medium-sized businesses to remain profitable and successful. Will some businesses be forced to employ people in the lower-age bracket, and will it demean and detract from what is being put forward?
As for child tax credits, it seems that we are given something on the one hand, but a great deal is taken away on the other hand. It is great to hear that tax-free personal allowances will increase next year. I hope that it will put a little bit of extra money into our constituents’ pockets, but whether it will really help the poorest in our society is debatable.
I find it rather distressing that the Government are virtually saying that by 2017 they will support people if they have two children or fewer, but if they happen to have more than two children, they are on their own. One cannot help but draw comparisons between the United Kingdom of Great Britain and Northern Ireland and the Democratic Republic of China. I am reminded of a quote from the American poet, Maya Angelou, who said:
“I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
Clearly, this Government are in danger of adversely affecting the people they are supposed to be standing up for. This change in tax credits and benefits will greatly affect many of my constituents.
The anti-child poverty charity, Barnardo’s in Northern Ireland, has claimed that 160,000 families across the Province could be left struggling if plans to cut tax credits go ahead. Barnardo’s also warned, as it launched a campaign, that the Westminster Government should keep the “lifeline” benefit. Lifeline benefit is rightly named, because that is exactly what it is. With low wages and high living costs stretching budgets across Northern Ireland, tax credits are an everyday lifeline for families. It would be remiss of me not to remind the Government of the impact on families of the reduction or removal of child tax credits and working tax credits. Let me assure the Chancellor and the Minister that people feel extremely aggrieved. Large families feel totally alienated, and people feel they are being punished for having more than two children.
In the last Parliament, the Democratic Unionist party worked alongside the Conservative Government to deliver the marriage allowance. What a breakthrough that was: we encouraged marriage, we encouraged the family. Yet now, one year later, it seems that the Government intend to punish those with more than two children. I find that quite incredible. Last year, the family was the cornerstone of our society, and we agreed that family brought communities closer together; now it seems that the Government have done a U-turn. The Government cannot claim to support the family unit, and then attach terms and conditions to it. We cannot say that we support families so long as they do not go over the two-child criterion—this is simply ludicrous. I have already had many calls from concerned parents, from families and from many of my constituents who are struggling. This reduction in child tax credits is going to make it even more impossible for them just to get by. Unfortunately, this is evidence that the Budget was certainly not designed to help working people in our society.
Another issue that concerns me—this, too, was raised by the hon. Member for Paisley and Renfrewshire South—is the change in housing benefit for those aged between 18 and 21, which will force young adults to live at home with their parents until they are 21. They will have to either “earn or learn”. In principle, that seems a good idea, given that a significant number of 18 to 21-year-olds are either working or still in education, but the fact is that a great many of them are not. All that this measure will do is increase the pressure on social workers, and that concerns me greatly.
The Budget has made some welcome changes, but a great many others will cause the worst off in society to struggle even more. It has been estimated that, in the years leading up to 2019, a 10th of the population in the United Kingdom will lose about £800 a year as a result of the tax and benefit changes. That is equivalent to nearly 7% of their net income. As I have said, I fear that the pluses in the Budget do not outweigh the disadvantages, especially for the most vulnerable and the worst off in society.
It is good to see the economy recovering and growing, but those at the bottom are struggling to see that that is happening. I fear that if the Chancellor and the Government press ahead with their £9 billion saving, reducing tax credits, housing benefit and other benefits and pushing 160,000 more families in Northern Ireland—including families in my constituency—towards child poverty, they will undo all the economic good that has been done. They may well lose sight of it altogether as, once again, the purse strings tighten around those who can least afford to absorb the changes.
Those are my concerns about the Budget, and they reflect the concerns of my constituents. I shall vote against the Budget this evening.
According to figures published by the Office for National Statistics in 2014, there are 4,155 businesses in my constituency, but that is almost certainly a considerable underestimate. Many businesses will have started up since the figures were compiled, and many others are not captured by official statistics because they fall below the VAT threshold. Of those businesses, 90% are defined as micro-businesses, having between zero and nine employees. That, too, is almost certainly an underestimate, because it is in the micro-business sector—the back-bedroom business, the converted garage business, the former farm outbuilding business—that we see the most expansion. Those businesses form the cornerstone of the British economy. Other members have rightly spoken with pride about the number of businesses in their constituencies, but it is at that end of the business spectrum, the small and micro-business end, that the largest opportunity for employment growth presents itself.
I was deeply disappointed, saddened and shocked by how infrequently the shadow Secretary of State used the words “business”, “firm” or “company” during the half hour that he spent at the Dispatch Box. The simple truth is that, eloquent as the hon. Gentleman is, and good as he is at using words, the words that he used today were fundamentally flawed. This country is, has been and always will be built on a business foundation, and when the Labour party loses sight of that fact, we are in trouble. I am very proud that my party has presented a Budget with business at its heart.
As is often the case, I am in considerable agreement with my hon. Friend, who I know shares my passion for, and understanding of, small business.
I feel guilty that I have not yet congratulated my hon. Friends on the Conservative Benches who have just made their maiden speeches. I will now set that right. Both of them have strong business backgrounds and credentials—my hon. Friends the Members for Kensington (Victoria Borwick) and for Brecon and Radnorshire (Chris Davies). I almost said “Brecon and Renfrewshire”.
That would be a big constituency.
I also wish to put on record my huge admiration for the hon. Member for Paisley and Renfrewshire South (Mhairi Black) for her excellent and punchy delivery of what was an impassioned and very well thought-through maiden speech—I have already written a personal note to her. Her maiden speech was more political than I would perhaps have delivered, but it was none the weaker for that.
An understanding of small business is essential if the British economy is to succeed and I am proud that my Government have recognised the significant part small businesses play not just in the economic prosperity of this country, but in its social prosperity. Employment does not just give people the opportunity to pay the bills; it gives them a sense of worth and place, and it is a foundation stone in their lives that enables them to blossom and flourish in so many other areas.
I feel the need to defend my hon. Friend the shadow Business Secretary, who is being unfairly attacked by Conservative Members. It is being said that he did not even mention business in his opening speech. [Interruption.] I am one of the people on this side of the House who does have a business background; I have a very substantial background in the IT sector, supporting manufacturing industry up and down the country. An extensive section of my hon. Friend’s speech addressed the need to do something about business rates, but there was no answer from the Secretary of State on that point. I think—
I am running short of time and have been very generous in taking interventions, so if the hon. Lady forgives me I will continue.
The message that came through loud and clear on the doorsteps when I visited businesses in my constituency during the election campaign was that they did not feel that the Labour party understood them or was sympathetic to their plight. The hon. Member for Worsley and Eccles South (Barbara Keeley) asked me specifically about business rates. We are going to have a business rates review—
I am not a member of the Government. The hon. Lady needs to take that up with a member of the Government. If anyone wants to make me a member of the Government, however, my door is always open.
Small businesses need a tax and regulatory framework that is sympathetic to their needs, but they also need interventions that will unlock their potential. I am unapologetic that I am now going to mention the need for broadband in rural Britain, and I shall continue to mention it almost every time I get to my feet in the Chamber. I recently visited a business in my constituency, ESco Business Services Ltd. It provides services to the magazine industry, dealing with magazine subscriptions and prizes and so on. It is a digitally enabled business, and much of its work is done online. It is in a building in the middle of the countryside, near the picturesque village of Finchingfield. It provides good quality, well-paid local employment, and it relies absolutely on good quality digital connectivity, without which it would be unable to locate where it is. Instead, it would be forced to locate in a nearby city such as Cambridge, or even in London. If we are to spread economic activity in this country away from London, it is really important that we open the door to businesses such as ESco to allow them to locate where the potential employees are, rather than where the broadband is.
I echo the point made about road investment, and I make no apology for once again mentioning the A120, which is sorely in need of attention. My Government understand the needs of small businesses—I am far from convinced that the Labour party does—which is why I welcome the Budget and will be supporting it in the Lobby later.
I congratulate the people who have made their maiden speech today. I particularly commend the very mature speech from the hon. Member for Paisley and Renfrewshire South (Mhairi Black), and I agree with her view that Labour Members and our colleagues from Scotland must form a shared opposition against the Conservatives.
It is well known that British education is among the best in the world. We also know that the more we pay for it, the better it is. And didn’t that show last week, when we saw our Chancellor, the Old Etonian, in action? We are used to the Tories fiddling the figures, but now they are using a new tactic. As well as fiddling the figures, they are misleading by message. Let me give the House some examples. The first, and most blatant, is the renaming of the national minimum wage as the new living wage. That is clearly a farce. It might have seemed to Conservative Members like a real wheeze, a rabbit being pulled out of the hat, but it is nothing other than subterfuge.
The concept of the living wage—the real living wage—has been around for decades. Back in the 1990s, when the national minimum wage was introduced at a level of £3.60 an hour, I led the Unison delegation to the Low Pay Commission, where we proposed a living wage of £4.85 an hour. We made the case that that was the level at which working people would not need wage support from the state. It is on that basis that the proper living wage has been developed over the last two decades.
The farce is that the rip-off Chancellor wants to con our people by pretending that this new living wage is a genuine substitute not only for the national minimum wage but for the present and very worthy living wage. Added to his attack on young people who will be excluded, and building in the appalling attack on in-work benefits, we now have a new basic wage that is nothing but a con. He has not spelt out what he intends to do to support public sector bodies to pay the so-called new living wage. For example, councils have already said that they will have a £1 billion funding gap in paying their in-house workforce and at least a £500 million funding gap in paying the wages of workers contracted in from private sector service companies providing things such as care for the elderly.
Is that not the flaw in the argument that we move the burden of wages from the taxpayer to the employer? First, there is no guarantee that the timing will be correct, secondly, there is no guarantee that employers can make the payment and, thirdly, there is no guarantee that many employers will even bother making the payment.
It is absolutely clear that that is the case and that this was nothing other than a political ruse to try to mislead the country and to wrong-foot the Labour party to pave the way for the Chancellor to move from No. 11 to No. 10 Downing Street. It is nothing other than that.
The Government now call this the new living wage, but we have been here before. We were there in the 1980s and 1990s, when the Conservatives tried to pretend that the community charge was not really the poll tax. We have been with them over the past five years as they have tried to pretend that the spare room subsidy was not a bedroom tax. Just as those two ideas have never stuck, the new living wage will not stick. People know that it is nothing more than half of a new minimum wage that blocks out young people in this country.
I want to move on to something else the Chancellor said last week:
“The left will never understand this, but we on the Conservative Benches know that the wish to pass something on to your children is about the most basic, human and natural aspiration there is.”—[Official Report, 8 July 2015; Vol. 598, c. 330.]
Well, he is half right. The left never will believe that providing for the grown-up children of dead millionaires with a bung from taxpayers while poor families and children go hungry is a basic, human or natural aspiration. What is basic is that far too many families face the reality of sending kids to school hungry, and worrying about where the next meal will come from and whether they can afford to clothe and feed their children. Too many families are worrying about whether to keep the house warm or not, and now they are being hit even harder in the struggle to pay their rent. The hit is £60 a week in this city and £120 a week for the rest of us across the nation. When the landlord says, “I want your rent off you,” the tenant has to say, “I’m sorry, I can’t pay the rent this week and, by the way, next week I will pay you £120 a week less than I am now.” I really do not know where those people will end up. That is basic, that is life at the sharp end and that is what is happening in the real world. That is what happens when the children of dead millionaires are prioritised over the children of poor working people. It is an utter disgrace.
Order. I think that I am the judge of how long people have been here. We have already had one intervention from Kwasi Kwarteng and I can assure the hon. Gentleman that he has been here for a lot longer than five minutes, although it might only feel like that.
The people who die leaving property worth £1 million. In the past, some of that would have been taxed and now it will not be. Instead, the Government will tax poor working people, people who are on the dole and people who have more than two kids—they can have two kids, but no more.
Let us also consider the deliberate misuse of language by this Government over the past five years. They have replaced the notion of social security with the idea of welfare, yet they pretend to be the workers party. The concept of social security is crucial to the notion of how civilised we are in this country. Social security underpins the lives of working people and is based on the real concept of people being in this together, with a national insurance scheme that we all pay into if and when we can work and a security net that will support us when we cannot work for whatever reason. I know that the Conservative party has spent the past 10 years trying to paint everybody who uses public services or needs social security as a skiver and not a striver, or a shirker and not a worker, to further its own political narrative. That despicable tactic has to be challenged as the poor, the vulnerable, the ill, the young, the women and the disabled people of this country struggle to make ends meet in desperate times. They are the people the Tories are making pay for the economic mess that their friends in the City, the banks and the hedge funds got us into.
At the same time, the Tories are attacking the millions of public sector workers in this country who take care of the nation by freezing their pay for what will become a decade. We have to stop making nurses, careworkers, firefighters, police and other public sector workers pay the price for the failure of the Tories’ friends. Let us acknowledge in the debate about productivity the productivity gains that have been made in the public sector, where far fewer people are doing a lot more.
Actually, less than a quarter of the people of this country voted for the Tory party, and the vast majority of them would not be traditional working people. More than 75% of the people of this country did not vote for the Tory party.
Let us acknowledge that people in the public sector have made great sacrifices. The hon. Member for Braintree (James Cleverly) told us less than five minutes ago about the 4,000 businesses in his constituency. What about the thousands of people who work in the public sector in his constituency, who he never mentioned once? They have not had a pay rise for five years and will not have one for another five years, but they are the people who pay for his businesses to make their way.
Quite frankly, this Budget stinks—it is as simple as that. It is divisive, it is dishonest, it is damaging, and people inside and outside this House know it. It will not be long before they and those of us who really care about this country stand up against it to get rid of it. We have to send a strong message from this House. On Saturday, going on for 150,000 people marched on the streets of Durham saying clearly, “You’ve got it wrong. We’ve got to stand up. We’re not taking any more of this. We’re sick to death of the poor paying for the failings of the rich.” It is time to change the tune in this country.
It is a pleasure to follow the hon. Member for Blaydon (Mr Anderson), who gave us a more than adequate demonstration of what one might call the Corbynisation of the Labour party. It is an equal pleasure and a privilege to follow three fantastic maiden speeches. My hon. Friend the Member for Kensington (Victoria Borwick) reminded me that I must go back and flick through my copy of the “Alan Clark Diaries”, which I did enjoy. I was not present to hear the speech of my hon. Friend the Member for Brecon and Radnorshire (Chris Davies), but knowing him as I do, I am sure he lit up the House. I look forward to reading his maiden speech in Hansard. I had to go to visit a constituent who is a black cab driver attending a rally upstairs about Uber. Those people are small business people in their own right, and it is important that we take that into consideration. As has been said, the hon. Member for Paisley and Renfrewshire South (Mhairi Black) gave a fantastic maiden speech, and I know we will hear far more of her in the years to come.
For 20 years or so, I have run my own small business—I refer the House to my entry in the Register of Members’ Financial Interests. Being responsible for other people’s livelihoods, going through bad times when one struggles to pay the mortgage and the bills, but also during the good times of real success when one can think, “Actually, that was down to me and my efforts as a self-employed businessman”—those experiences give one a perspective on life, on business life, on working life, on wages and on what it means for people to strive and take opportunities. That is why I welcome so many of the measures that the Chancellor has given us in the Budget, in stark contrast with Labour. In the lead-up to the election, we had what has been described as the heaviest suicide note in history—the Ed stone.
Does the hon. Gentleman accept that the Chancellor has tried to imitate one of our policies by trying to raise the minimum wage? He mistakenly calls it a living wage, but it is not at that rate. However, he has not offered any incentives to employers to introduce it, as we were proposing.
I will come back to the national living wage.
The platitudes on the Ed stone were in stark contrast to the measured policies in the Budget.
Hon. Members can talk about semantics and about whether it is the national minimum wage or the national living wage. What we have seen is a significant—
Does my hon. Friend agree that the doubling of the workforce at Jaguar Land Rover from 3,000 to 6,000 in three years is not semantics? Those are real jobs for real people—a real opportunity that we are giving those people, which the Opposition never did.
Absolutely. I could not have said it better. The number of jobs that we have created and the amount of wages that we are putting in people’s pockets are real measures. With this increase in the national living wage, the Chancellor has put cash in people’s pockets.
No. I believe it was in a London warehouse, but your guess is as good as mine. I think it may be auctioned off as a fundraiser at some point in the future.
The lowest paid people in this country will be more interested in the cash in their pockets than in the semantics being played by Labour. The big leap in the national living wage chimes with me as an employer. A good employer does not scrape around the bottom and pay people the bare minimum. The Chancellor has allowed the lowest paid to get more than that. As an employer, I tend to try and look after my employees, pay them more than the market rate and give them other benefits as well, to make them feel valued. In that way an employer gains loyalty and has people who want to work with him as a career, rather than as a job.
We have increased the employment allowance by 50%, which will help ease the burden on employers. A couple of months ago I was at an independent shop in Cheam, Dragonfly. I was speaking to the proprietors with an Evening Standard journalist. When we talked about what the Government have done over the past five years, they explained that they had benefited from the small business rates relief, which enabled them to pay very little, if any, business rates. They also explained that they had benefited from the employment allowance. The fact that they knew that term floored the Evening Standard reporter. The employment allowance, they explained, had allowed them to take the gamble of taking on a part-time worker when times were tough financially—a gamble, they went on to explain, that had worked out for them and helped them grow their business.
The hon. Gentleman will be aware that small businesses up and down the country, especially those in the construction industry, are struggling to stay afloat due to incomplete payments. Does he agree that a voluntary approach will not work and that tougher sanctions should be available so that small businesses can spend less time chasing debt and more time creating economic—
The combination of measures—paying the lowest paid more and softening the cost to employers with the increase in employment allowance— will help businesses solve that problem themselves.
The Budget is only one part of helping to build growth and productivity. It is the Whitehall part, but we also have the town hall part. We need to look at our changing high streets and at issues such as parking. For example, Ross’s Fruiterers in Worcester Park is a real centre of the community—my hon. Friends the Members for Aldridge-Brownhills (Wendy Morton) and for Braintree (James Cleverly) made similar points—because everybody knows Ross Nelson and uses his business as their local shop. The key issue for him is parking, as it is for hundreds of shops and small businesses in Sutton and Cheam and Worcester Park. He needs stop-and-shop parking so that his delivery vans can come and go. That is a matter not for the Chancellor, but for the local authority and Transport for London, so we need to work in partnership.
The third part of the jigsaw is businesses themselves. As we heard earlier, Governments do not create jobs; businesses do. Having been a businessman for 20 years, I feel that, in becoming a politician, I am a poacher turned gamekeeper. However, I still believe that business people are far better placed than any politician to solve the problems faced by retailers dealing with changing high streets or by small businesses trying to attract more customers and grow. Members will remember Ronald Reagan’s remark that the nine most terrifying words in the English language are, “I’m from the Government and I’m here to help.”
I am obliged to my hon. Friend, who is being generous in giving way. Of course, the Labour party was never there to help business when it was in government, because it introduced regulation after regulation. Is not regulation bad for business, and should not the Government—
Order. Mr Pincher, you should have applied to make a speech, rather than making these long interventions. The problem for Mr Scully is that he is coming to the end of his speech, because I said that Members should speak for up to 10 minutes, not beyond.
Regulation is a key issue for businesses.
I will conclude with the welcome news about the cut in corporation tax. Having inherited a rate of 28%, bringing it down to 20% and now 18% will release £6.6 billion for companies to put back into their businesses to help improve jobs, training and productivity. It is really good news for big businesses in Sutton such as HH Global and Subsea 7, and for small businesses such as Sense Communications, Press 2 Dress and Brasserie Vacherin, which is a fantastic restaurant in Sutton. Some 40% of residents in my borough commute to London, but those sorts of investments help deliver a local option to allow them to work closer to home.
Finally, I echo the Chancellor’s words, which really chime with my Conservative guiding principles, about moving from a low wage, high tax and high welfare economy towards a higher wage, lower tax and lower welfare economy. That is why I very much support the Budget.
Thank you, Mr Deputy Speaker, for calling me to make my maiden speech in this most important of debates. It is a pleasure to follow all the excellent maiden speeches we have heard this afternoon, particularly that of my hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black). She has just graduated with a first-class degree in politics. I suspect that her first-class speech will be read by generations of her successors as political students. It was brilliant, powerful and moving. In line with the Scottish National party being in trend in this place, my hon. Friend is now trending on Twitter.
I rise sharing some of the trepidation described in the maiden speeches of many of my predecessors, including the former Leader of the Opposition, John Smith. The fact that he was humble enough to share his nervousness fills me with hope for the next few minutes. If I can be half the parliamentarian and constituency representative that he was, my constituents and I will be doing well.
I owe a huge debt of gratitude to a number of people for helping me to my place here today: first, my brilliant campaign team, led so ably by Graham Russell and Michael Coyle; my Scottish Parliament counterpart and former boss, Alex Neil, who first encouraged me to stand, and whose example I wish to follow; and my family, particularly my wife Karlie and baby daughter Isla, who are a constant source of love and support. It will not be standing up to this most right-wing of Tory Governments or, indeed, standing up for the good people of Airdrie and Shotts that I will find most challenging over the next five years; it will be missing my family when I am here. I am sure that is a sentiment shared by many others in this House.
Lastly, I am incredibly grateful to the 23,887 people who voted for me on 7 May. Fifty-four per cent. of voters in Airdrie and Shotts voted for an end to austerity, for the Scottish Parliament to receive the full package of powers promised last year, and for an end to the immoral and financially obscene Trident nuclear fleet. While I am incredibly grateful to those who took journeys of varying difficulty to arrive at the decision to mark their cross next to my name and that of the SNP, I want to make it clear to everyone in Airdrie and Shotts that I am here to represent you, no matter which way you voted or if you voted at all. The SNP won a decisive victory in Scotland because we put forward a credible alternative to austerity and we are recognised as the party of and for all of Scotland.
This result was many decades in the making. We must not just be thankful for the work done by the First Minister and by my right hon. Friend the Member for Gordon (Alex Salmond); we must also thank the giants whose shoulders we stand on. One of them comes to mind more than most for me personally. As I prepared this speech, and as I go about my business pursuing the various issues I plan to in this place, I am truly sorry that I cannot seek the wise counsel of my friend Margo MacDonald. Her experience here, of the Parliament up the road, and of life in general would have given all of us, as new SNP Members, valuable guidance. It would also have been great to tease her about gaining only a 26.7% swing in her 1973 Glasgow Govan by-election, but I would have needed to be prepared for the inevitable stinging but witty rebuke that would have followed.
I must take this opportunity to pay tribute to my most immediate predecessor, Pamela Nash, with whom I shared a positive election campaign. When Pamela took her seat in 2010 she was the baby of the House, at just 25—a veteran compared with my hon. Friend the Member for Paisley and Renfrewshire South. Her election was none the less a fantastic achievement. She went on to represent her constituents to the very best of her ability and championed the cause of those with HIV/AIDS around the world through her position as chair of the all-party parliamentary group on HIV and AIDS. I wish her well for whatever she chooses to do with the rest of her career.
Pamela Nash regularly spoke of her pride at representing Airdrie and Shotts, and I am equally proud and humbled to be here to represent the good people of this constituency. Airdrie and Shotts sits either side of the M8 motorway between Edinburgh and Glasgow and stretches from the Airdrie town boundary, with Coatbridge in the west through to Harthill in the east. To the north are Greengairs, Wattston, Riggend, Longriggend, Stand, Glenmavis, Plains, and Caldercruix; to the south are Holytown—the birthplace of Keir Hardie—Calderbank, Chapelhall, Salsburgh, Newmains, Bonkle, Allanton, Hartwood, and Shotts, which I hope will receive town status from North Lanarkshire Council very soon.
It is a constituency dominated by heavy industry. Communities have literally been forged by mining, steel and iron. The grit, determination and common weal needed for workers, their families and communities to make ends meet has lived on from those days and I am proud to represent people who are warm, generous and welcoming. You need only look at the incredible work done by Airdrie Supporters Trust, Getting Better Together in Shotts, Shape up Shotts, the Moira Anderson Foundation, HOPE for Autism, Basics food bank, St Andrews Hospice, Airdrie food bank and many more brilliant community groups who are supported by the kind-hearted people of my constituency to know that the people I represent are as honest and generous as they come.
Looking back on the maiden speeches of some of my predecessors, I was struck by the fact that there was a consistent theme running through them all, and that is how we treat those who are disadvantaged and living in poverty in our society. In that vein, as I look to address this Chancellor’s Budget statement, I must quote what Margaret, or Peggy, Herbison said in her maiden speech on 17 October 1945:
“I realise that I have chosen a subject upon which one cannot be at all non-controversial.”—[Official Report, 17 October 1945; Vol. 414, c. 1281.]
This Government are plotting a path of social engineering with this Budget and by continuing their ideological austerity agenda. For example, saying that families on low wages can receive support for only two children is outrageous. As my hon. Friend the Member for Glasgow Central (Alison Thewliss) pointed out, the fact that there needs to be a form for the victims of rape to “register” their child highlights everything that is wrong with this policy. It is stigmatic, demonising and utterly degrading.
Further cuts to social security will hit not only the poorest and most disadvantaged people in our society, but ordinary working families. The Tories plan to freeze working-age benefits for the next four years, which will fail to protect social security against rises in the cost of living. They also plan further to marginalise young people by scrapping support for those who are under 25 and under 21.
The Government must recognise that they cannot threaten, demonise and sanction people into work. After seven years working on casework in Airdrie and Shotts, I am still to come across anyone who has chosen to live on social security. That is why the Chancellor’s comments about benefits being a lifestyle choice were inappropriate, inflammatory and, frankly, ill judged.
People in my constituency are desperate for work that allows them a decent standard of living and that suits their skills and qualifications. If they cannot work due to temporary illness or permanent disability, or intermittently due to mental illness, they rightly expect the support to meet minimum living standards. There is no doubt that the best way to lift people out of poverty and indignity is through work, but it must be well-paid work.
The wholesale cuts to tax credits that the Chancellor has announced, which include a reduction in the income threshold at which tax credits are paid, remove any benefit from the minimal increase in the minimum wage. For the Chancellor to attempt to present the proposed minimum wage rise as a living wage is a scandal. The living wage is £7.85 an hour outside London, so he is 65p short. It is a con trick. If he gives with one hand and takes back with another, the people will not swallow it.
Freezing public sector pay at 1% for another four years yet again punishes those who are delivering vital front-line services for the profligacy of the banks. It was not the low-paid, it was not the disabled, it was not the under-25s, it was not the public sector workers who got the UK into dire financial straits, so why is the Chancellor choosing repeatedly to kick the legs from underneath those who are struggling to stay on their feet? We on these SNP Benches are opposed four-square to the dismantling of the social security system by this Tory Government.
Earlier, I quoted the maiden speech of Peggy Herbison, who must be birling at the state of her proud party. At the beginning of the sitting in which she delivered her maiden speech, Sir Basil Neven-Spence, the then Member for Orkney and Shetland, raised a point of order and begged the Speaker to allow Scottish Members to be called more frequently in the House. Without wishing to prejudge, Mr Deputy Speaker, I doubt that you will need such a reminder of the presence of Scottish Members. The Chair has certainly been more than fair thus far. It strikes me that then, as now, the status of Scottish Members was under discussion, although with the constitutionally kamikaze English votes for English laws proposal, the status of Scottish MPs and, as a result, the Union hangs far greater in the balance.
I am proud to hail from Orkney and a large chunk of my family and friends still live there. I am reliably informed by the learned listeners of BBC Radio Orkney that I am the first Orcadian parliamentarian for 200 years, since Malcolm Laing served in this House between 1807 and 1812. I hope that after next year’s Scottish elections, Orkney returns its first ever SNP representative. I was proud as a schoolboy to carry the Orkney banner at the parade for the reopening of the Scottish Parliament in 1999. It struck me then, as a 13-year-old, that a nation having its own Parliament was perfectly normal. Why on earth would we want decisions about us to be taken elsewhere?
On that note, I will make my closing remarks. As SNP MPs, we are not here just to argue the case for the Scottish people; we are here on behalf of the people of Scotland. We want to build consensus where we find it to deliver progressive policies across these isles. We are here to be a voice for change, and we are determined that the voices of our constituents will be heard, no matter which Standing Order the Government use to try to curb our right to represent them. As we have seen with the Budget, Scotland cannot afford for decisions over its people and resources to be taken here for much longer. That is the ultimate change that we want to see: independence for Scotland. Benjamin Franklin said,
“When you are finished changing, you’re finished.”
That is something we all must reflect on.
I am delighted to follow the maiden speech of the hon. Member for Airdrie and Shotts (Neil Gray). Like him, I represent an area whose heritage is in mining, steel and iron, and that has similarly warm-hearted and welcoming people. I thank him for his tribute to his predecessor, Pamela Nash, and for opening his speech with a quote from John Smith, whose premature death was a sad loss to all of us in politics. The hon. Gentleman made a powerful maiden speech that demonstrated values and passion, which indicates that he will bring a great deal to the House.
I want to congratulate the Chancellor—[Interruption.] There is some dissent among my hon. Friends, but he did well to put the issue of low pay in the headlines. He is right that we need to tackle the scandal of low pay, and he was right when he stole the words of the TUC in saying that Britain needs a pay rise. The question is whether his measures meet that challenge. Any increase in wages for struggling families has to be a good thing. That was why Labour introduced the national minimum wage.
My hon. Friend is absolutely right, and other colleagues have made that point forcefully in this debate.
As we have been reminded today, Labour’s introduction of the national minimum wage was opposed by the Conservatives. I am delighted that they now apparently embrace it. It ended the scandal of poverty pay, providing a safety net below which wages should not fall. But for too many people, the national minimum wage has become the norm, not a safety net, as have zero-hours contracts and part-time hours for those who want full-time work. Alongside those setting up real businesses, there has been a growth in bogus self-employment, particularly in sectors such as construction. Uncertainty has replaced job security, and it has all been aimed at reducing labour costs.
I will tell the hon. Gentleman that too many people are employed on zero-hours contracts, and I could cite countless examples of people in my constituency whose lives have been destroyed by them and who have raised the issue with me.
It was interesting last week to hear Ministers, almost in the same breath, expressing their concern about low pay and then condemning tube staff for their industrial action.
I will not at this stage, simply because other Members want to speak and I am conscious of time.
Over a generation, we have seen a shift of between 5% and 7% of GDP from wages to profits, and from profits to shareholders’ dividends. That has widened inequality and reversed a century of progress towards a more equal society, and it started with deliberate decisions in the 1980s to weaken the bargaining power of working people and the trade unions that represent them. A sensible policy response to low pay would be to strengthen the negotiating hand of working people, but instead the Government made it clear in the Queen’s Speech that they want to weaken their position further with more attacks on the trade union movement.
Would the hon. Gentleman concede that when tube drivers, for example, go on strike, the people who are hurt the most are not those who can fire up their laptops and work from home but those who, if they cannot get to work, do not get paid for work, such as contract cleaners and those who work in the care sector? Is it not the case that when people go on strike it is the low-paid who get hit the hardest?
It is absolutely true that when people go on strike, everybody gets hit, including those on strike. Trade unionists go on strike only with enormous reluctance, because of the impact on services and their wages. The uncomfortable truth for Conservative Members is that improvements in living conditions, health and safety and other workplace situations have been won through the struggle by trade unions.
The campaign for a living wage was a great response to the challenge of low pay. Members on both sides of the House have rightly praised the work of the Living Wage Foundation, but that work has been made more difficult by the Chancellor’s attempt to steal its clothes. We need to be clear. The increase that he proposes to take the wage floor up to £9 for many workers is welcome, but let us not pretend that it is a living wage. Let us call it the over-25s rate or the national minimum wage supplement, or we could just call it the national minimum wage, but he should not damage the brand of the living wage by associating his proposal with it.
We should continue to work to encourage employers to adopt the living wage and to incentivise them to do so. We need to recognise, as the Living Wage Foundation has pointed out, that the rate will need to rise to take account of the cut in tax credits. Here is the rub: although the new rate of the national minimum wage might benefit up to 5 million workers, more than half of them will be worse off—an estimated 3 million families, according to the Institute for Fiscal Studies—by an average of £1,000 a year because of the changes in tax credits. It could not be any other way: an estimated wage uplift of £4 billion is being offset by welfare cuts of £12 billion.
The Chancellor will argue that raising the tax threshold will benefit low-paid workers by taking them out of tax, but he knows that that is not true. He knows that lifting the tax threshold is a regressive tax measure, because it benefits everybody equally except the lowest paid. Six million workers who are already paid too little to pay tax in the first place will not benefit at all from raising the threshold, whereas Members of Parliament will get a tax break. Frankly, in comparison with low-paid workers, we do not deserve one.
Perhaps the hon. Gentleman can explain how people can choose not to take a tax break.
The hon. Member for Braintree (James Cleverly) rightly spoke forcefully about small businesses. I do a lot of work with small businesses in my constituency. They are a driver of growth. When there is any increase in pay, they face a challenge, as does the voluntary sector. They need support, but the Government and the Budget have got it wrong. Support should not have been provided through a greater cut to corporation tax; it should have been provided to small businesses by further cuts to business rates.
The Prime Minister is right that company profits should not be subsidised by the public purse. If he is serious, why not tax listed companies that fail to pay the real living wage to recoup the cost? If he is serious about tackling poverty pay, what about strengthening labour market enforcement? We know, for example, that thousands of workers do not even get the national minimum wage in the care sector because employers refuse to pay for travelling time. We debated that in the last Parliament. Ministers admitted that the practice was widespread and said it was illegal, but nothing is happening to chase down those rogue employers and bring them to book.
I will not because of time—I am sorry.
On the question of the care sector, will the Government find the resources to support local councils—they have been hit harder than any other part of the public sector—in meeting the cost of increasing the national minimum wage and paying workers what they are legally due?
The Government are right to respond to the need to give people a pay rise and have opened a debate, but they will need to do much more to make the difference that working families need, because this Budget fails to do so.
I am grateful for the opportunity to make my maiden speech as the newly elected Member for Linlithgow and East Falkirk. There are so many new Members that I was starting to worry that I might not get the opportunity before the summer recess. Now I need only live up to the high standards set by so many who have gone before me.
I would like to start by extending my gratitude to the parliamentary staff who have assisted Members with directions and procedures. Of particular assistance was my induction buddy, Donald Grant, whose help proved invaluable. May I recommend that the practice of induction buddies be continued for future intakes?
Of course, I would not be making this speech without the trust and confidence placed in me by the local electorate, who returned me with a convincing majority of 12,934 on my first attempt at a parliamentary election. Much as I would like to claim all the credit for my election victory, I am very conscious of the fact that, along with my local campaign team and the wider Scottish electorate, I have played only a small part in the transformational change in Scottish politics. Indeed so transformational has the change in Scotland been that it may better be described as a revolution—a revolution without even breaking a window. Politics in Scotland will never be the same again.
Many long-serving former Members were swept away in the revolution. Such was the fate of my predecessor, Michael Connarty, who had represented the constituency since its creation and the former Falkirk East seat from 1992. It would be fair to say that Michael was a man of deeply held political convictions. While we may not always have seen eye to eye on every issue, one area where we were in agreement was our support for Scottish CND and our opposition to nuclear weapons—I will always campaign strongly against nuclear weapons during my time in office.
Prior to the formation of the current seat, much of the constituency was represented by Tam Dalyell, who was the Member for Linlithgow and before that for West Lothian from 1962. Tam Dalyell can claim some responsibility for my personal journey to this House. As a young lad of nine years, I first visited Parliament as a guest of the Member for West Lothian, as he was then. It took me 35 years and 32,055 votes before my return trip. Tam is well known for the West Lothian question, and given the current debate on EVEL—English votes for English laws—Members would be well advised to review his contributions from the 1970s. I have made a point of reappraising his book, “Devolution: The End of Britain?” in which he looked at all four possible answers to the post-devolution problem of Scottish representation at Westminster and concluded that
“not one of them can be reconciled with Britain’s continued existence as a unitary state”.
He was right then, and he is right now. Perhaps less well known is Tam’s entry in “Guinness World Records” for having contested the same constituency against the same opposing candidate at a record number of successive elections—seven times, against Billy Wolfe, in the old West Lothian seat.
Billy very much modernised the SNP in the 1960s, and led the SNP to its previous Westminster high point in 1974, though he was never successful in his own parliamentary attempts. On a personal note, he was my friend and political mentor and he taught me much about decency in politics. It is therefore a particular honour to have achieved the victory that eluded Billy on so many occasions across much of the same geography. I owe a debt of gratitude for the early groundwork that he, along with many other pioneers of the SNP, put in over the years.
That brings me on to the nature of my constituency. Linlithgow and East Falkirk is a varied mix of county towns and villages across parts of West Lothian and Falkirk districts. From Whitburn in the south to Grangemouth in the north, and from Slamannan in the west to Newton in the east, the constituency has numerous landmarks and attractions as well as many famous sons and daughters. My own hometown of Linlithgow, for example, can boast many famous births. The House may think that the most famous of them all is Mary, Queen of Scots, but it is not. The House may think that, following last year’s referendum, it is my right hon. Friend the Member for Gordon (Alex Salmond), but it is not him either. It certainly is not me: I was born in Falkirk. It is in fact Scotty from “Star Trek”, who will be born in the town in 2222!
Scotty is not the only science fiction connection from my constituency. David Tennant, who played Doctor Who, was born in the neighbouring town of Bathgate. For my part, I did not need a TARDIS to travel backwards in time—it only took my election to Parliament. Arriving here has reinforced my belief that we need electoral reform and modernisation, and a good place to start would be with abolition of the House of Lords.
Linlithgow and East Falkirk lies between a rock and a hard place, being situated midway between Edinburgh and Glasgow, and enjoys good transport links across the central belt of Scotland. Ironically, the weakest link in local transport connections lies at the very heart of the constituency at the Torphichen bridge over the Avon gorge. The inadequacy of the bridge was described by one of my predecessors, Manny Shinwell, when he was MP for Linlithgowshire in 1922 as being
“unfit for the horse and cart”.
It is scantly better today.
The area was of course the heart of the shale industry and is now subject to much speculation regarding fracking. Let me make my position clear: I just dinnae like it. I will work with local groups in the constituency to oppose fracking applications across the local area.
The villages of Westfield and Torphichen, at the heart of my constituency, can lay claim to being the birthplace of the modern SNP, having been continuously represented at local government level since 1963. I myself was one of the SNP councillors for a number of years in that area. Of course, the claim to the birthplace of the modern SNP will also be hotly contested by the neighbouring towns of Armadale and Bo’ness, which were returning councillors as far back as the 1940s for the SNP. My stint as a councillor has now ended after 16 years on West Lothian Council.
Every Member will tell the House that theirs is the best constituency to visit and so will I, but they do not just have to take my word for it: so attractive is my constituency that other Members are trying to claim parts of it. Take the Falkirk Kelpies for example, which my hon. Friend the Member for Falkirk (John Mc Nally) tried to claim. I can understand why, but just for the record the Falkirk Kelpies are in Grangemouth and lie just within the boundary of my constituency. Perhaps, in the spirit of cross-constituency relations, I could offer to share this magnificent attraction with my hon. Friend and promote the wider local area together.
As well as impressive tourist attractions, the area in general is outstripping Great Britain and Scotland across a number of indicators, including population growth and economic activity. The real level of unemployment in the constituency depicts a falling trend in recent years. However, it remains largely a low-wage commuter economy, and the Budget’s proposed minimum wage con-trick will see many families in Linlithgow and East Falkirk on average £1,000 a year worse off.
Let me end with an apocalyptic reminder that my constituency also has the distinction of being the scene of the first modern political assassination, when Regent Moray was shot by a firearm in 1570 while riding through Linlithgow high street. So let us be under no illusions as to what fate may befall any of us should we fail to meet our constituents’ expectations. Therefore, to my constituents, family and friends I give this commitment: I will work tirelessly as your representative; I will not go native; and I will not be seduced by the political bubble, but I will enjoy my stint behind enemy lines working on your behalf.
I congratulate the hon. Members for Paisley and Renfrewshire South (Mhairi Black), for Airdrie and Shotts (Neil Gray) and for Linlithgow and East Falkirk (Martyn Day) on their three excellent maiden speeches. I grew up around Airdrie and Shotts, so I know the area very well.
Let me remind the Government that Labour certainly did not cause the deficit. It was caused by events in the United States. Many people have heard me say that before so I will not go over old ground, but listening to Conservative Members we could think that they had been brainwashed into trying to brainwash us into thinking that we did it. We have fought the general election and that one should be put to bed.
Conservative Members also talked about visiting Rover and about Jaguar Land Rover. Let me remind them that we saved Rover when it collapsed in 2001. The previous Labour Government encouraged Tata to invest in Jaguar Land Rover, so we do not need any lessons from Conservatives about who did what in relation to manufacturing.
I have listened to Conservative Members make an argument on productivity two or three times now, but there is a difference between efficiency and productivity. Productivity is what we actually produce and efficiency is how we get people to do that. The Government should understand and distinguish between the two. The other issue is that of skills. I would support the Government on anything they do in relation to skills. If we look at Germany’s economic recovery, we see that there was a training levy on most of the businesses in Germany. We have had debates on that for many years and the Government have just woken up to the fact that if they want to improve productivity in this country, this is one of the areas that has to be looked at.
We should remember that the Budget did not provide for public sector workers. The Government talk about the value of nurses and doctors in the public sector, but they never put their money where their mouth is. They should have given them a decent wage increase. In the past five or six years, we could argue that the 1% increase is actually a 6% cut in their living standards. Of course, in general terms there has been a 6% or 7% cut in wages throughout the public and private sectors. We should bear these things in mind when we listen to what the Government have introduced in the Budget.
Does the hon. Gentleman agree that the Chancellor also appeared to miss the geographical distribution of private sector jobs? The problem in the UK is that so much of our economy is concentrated in the south-east of England. The regions of the UK need to see the benefits from this and future Budgets.
I agree with the hon. Gentleman. The Government, and sometimes previous Governments, have governed on the basis of what London and the south-east think, forgetting there are about 45 million people in this country outside London and the south-east. Any Government pursuing an economic policy should remember that.
As many Members have mentioned, the Budget contains cuts to tax credits that leave the poorer worse off. I will not waste everybody’s time repeating the figures that others have already mentioned, but I thought it interesting that, despite the Government’s talk of manufacturing, only once in the Budget did they talk about exports. This country, being a trading nation historically, thrives on exports, so I am surprised that a Government who want to improve the economy did not talk much about exports.
I am listening intently to my hon. Friend, but there is another side to it: the UK is being flooded with cheap imports subsidised by overseas Governments. This Government are not acting strongly enough to deal with the issue at the point of entry or to address the safety of some of these imports.
I am sure you will remember, Mr Deputy Speaker, that when we were on the Trade and Industry Committee, we discovered that the Americans were using their defence budget for research and development. The private sector benefited from that because it did not carry that overhead of research and development, which can be at least 50% of any company’s budget and even more than wages. I agree with my hon. Friend, therefore, that the Government should be looking at that.
The Chancellor’s boast—if you want to put it like that—about the living wage is, when we actually analyse it, a con. The living wage as proposed by the Living Wage Foundation is 60p an hour higher than the Chancellor’s proposed amount, and much more inside London—although I do not have the exact figure for London. His proposals have even been criticised by the Living Wage Foundation. The cost of living varies between regions, and for those on low pay, each penny matters. We can only assume that he is rebranding the national minimum wage to muddy the waters. It is political smoke and mirrors to avoid comparisons with the recommendations of that independent charity and to avoid criticism of his low-pay economy. Once again, he has also ignored young people by excluding under-25s from the proposals.
The massive cuts to tax credits will utterly undermine any positive outcomes from the increase to the minimum wage and leave 13 million families worse off, according to the independent Institute for Fiscal Studies analysis, which has also shown that the poorest will be negatively impacted far more than the well-off. Once again, the low-paid suffer. Much is paid in tax credits because of the Chancellor’s low-pay economy, but slashing tax credits will not make the problem of low pay go away.
Thank you, Mr Deputy Speaker, but you have now put me off my stride.
Given that we have had tax credits for so long and that low pay is becoming endemic, tax credits have clearly not incentivised employers to increase pay. Why then is the hon. Gentleman opposed to their reduction to encourage employers to do just that?
The hon. Gentleman is entitled to his opinions. I do not think tax credits are endemic. Most people I have ever come across prefer to work for a decent wage. They do not want a subsidised wage, but the employer is never going to pay that decent wage on the basis of the Government’s proposals. If they really believe that, they are deluding themselves, because quite frankly employers do not like spending money.
The Chancellor has announced plans to scrap maintenance grants and replace them with repayable loans. These grants are offered only to the poorest students, so that will saddle more debt on those who already get the least help and support, while well-off students remain unaffected. This, along with the under-25s not receiving the new minimum wage and the under-21s not receiving housing benefit even if they have no parental support, shows that the Chancellor is not interested in helping young people to succeed and get on in life.
The Budget shows, once again, the Chancellor’s contempt for the west midlands. He mentioned the northern powerhouse three times in his Budget speech and the north more generally seven times, yet he mentioned the midlands only once, with no distinction made between east and west and no mention of the vital infrastructure investments required to ensure a balanced economy across the UK. Once again, the west midlands has been overlooked in favour of the Chancellor’s pet projects. This is a Chancellor who cares more about press headlines than pressing need. A future west midlands combined authority would represent the second biggest economic area after London, yet the Chancellor ignores it at every turn.
The rise in the minimum wage is welcome, but the fall in tax credits will leave millions worse off. The Chancellor’s changes to inheritance tax also benefit the wealthy few at the top of society, not those at the bottom. He has made scant proposals to remedy the housing crisis. The number of homes and the cost of rent and mortgages have been ignored. Rent has become a very big issue in this country.
This is a Budget that ultimately fails young people. Once again, the Chancellor has failed to give the west midlands either the time or support it deserves. All his changes are an attempt to paper over the cracks of a low-pay economy that only works for the few.
This was a shambolic, shameful, pitiful Budget, more interested in grabbing headlines, trying to get the Chancellor in the slot for a future place in No. 10 and trying to lay political traps. This was not a Budget for the future of Britain. My right hon. Friend the Member for Oldham West and Royton (Mr Meacher) had it down to a T: this is a Budget to provide cover for the Chancellor to shrink the size of the state. That is all that this has been about.
The Secretary of State for Business, Innovation and Skills talked about security, but security for who? There is certainly no security for the working poor of this country, those on zero-hours contracts or the people who provide care on the minimum wage who do not get paid for their travelling time or travelling costs, who have to provide their own uniforms and who quite often have to contribute towards any training they receive, if they are lucky enough to get any. In short, this was a Budget providing no security whatever for the poorest, the most vulnerable or the weakest in our society, but plenty of security for multimillionaires looking to pass on assets and for other people.
The Secretary of State also talked about this great plan that the Government have got. They had a great plan in 2010 that was supposed to pay down the deficit over five years. That great plan failed to do that because it stalled the economy for three and a half years—three and a half years to get back to the same level of growth we had in May 2010. So much for hard work rewarded. No matter what the Chancellor thinks, there are people who work very long hours who can only dream of limiting their hours to those in the working time directive and who can only dream of a decent wage and being able to come back to a home that they can afford to live in. Hard work rewarded? There has been a lot of hard work from those people and very little reward for what they do.
I want to take a quick canter through some of the measures in the Budget. Much has been made about the supposedly national living wage. What an absolute con! The living wage has been put at £7.85 or £9.15 in London. The aspiration over the term of this Parliament will be to reach £9 by 2020.
So talk about this being a living wage is simply not the case. The proposal for it to be set at £7.20 is already well short of the necessary £7.85. As has been said many times, including by my hon. Friend the Member for Sheffield Central (Paul Blomfield), setting the living wage takes into account tax credits and additional support. Actually, the real living wage should be recast at a higher figure now that so much of people’s tax credits has been wiped out. This aspiration for what amounts to a rebranded minimum wage is nonsense.
To pick up on an earlier exchange, many employers have, sadly, seen the national minimum wage as a reason to dumb down wages rather than to use it as a baseline. Here there is an issue with tax credits because some employers have indeed said, “Hang on, let the state subsidise our profits and we’ll pay the minimum wage.” Those self-same employers will not now say, “Well, we should not have done that even though we did, but we are now going to put the minimum wage up to a proper living wage level”. Of course not. They will keep people working on the same minimum wage and see that their workforce are worse off on account of the reduction in tax credits.
Yet again, this is all about pulling the rug from under the working poor. The Chancellor makes great play of how the Government want to help people in work. These are people in work; they are people who are doing their best and working very long hours, but they are having the rug pulled from under them.
We hear talk about tackling aggressive tax avoidance and evasion, yet this Government have made various attempts to deal with it. We have seen various attempts to introduce general anti-avoidance type provision, but none of them had teeth and none was really designed to address the situation. I remember from when I was a tax and finance adviser in a previous life that people were capable of coming up with schemes to get round legislation within minutes. The Government have known about this for a long time; this is not new. To be fair to the Government—I rarely try to be fair to this particular Government, but I will be on this occasion—from time immemorial, Governments have not seized the opportunity to provide for proper anti-avoidance measures that will have teeth and will work. There are simple ways of achieving that.
As we have heard, reductions in public spending are about trying to take us back to a small state. The proposal to increase personal allowances, much heralded at the Dispatch Box, sounds wonderful, but it is all jam tomorrow. It is a £400 increase in the personal allowance, which is nowhere near the level it should be and nowhere near the level necessary to provide a genuine living wage in the sense of a basic amount that people need to live on. People will continue to earn less than they need to survive—and will be taxed on it, thrown into the bargain. Raising the threshold for higher rate taxation and raising the personal allowances has provided double help for those on higher incomes, who will see less of their income taxed.
Absolutely. That could well be one of the motives behind it: it is certainly not about giving a genuine living wage to people, and it is certainly not about ensuring that people who work 40, 50 or 60 hours a week just to make ends meet will actually be able to secure a decent living wage. As I say, £7.20 from next April is already short of the £7.85 needed to take tax credit changes into account.
Let us move on to some of the Chancellor’s real friends in all this and consider inheritance tax and the increase to a £1 million threshold. How many people will benefit? It will be a tiny number, and that has to be set against the millions of people who are, to quote the Secretary of State’s words, “hard work rewarded”. It is nonsense, and it shows where the Chancellor’s thoughts lie and who he is really concerned about.
The reduction in corporation tax is another issue. On the face of it, it might seem very good. We already have one of the most competitive rates of corporation tax, but what about the small businesses that are not corporations or not incorporated companies? What about those small businesses that, as sole traders or partnerships, are the lifeblood of our country? What of the small businesses that do not pay corporation tax, for which it is not an issue?
Another item on this long list of measures is the introduction of a supplementary tax on banking sector profit versus the bank levy. I suspect—and I fear that I am right—that more smoke and mirrors has been going on in respect of what the levy was levied on and what profits will be subject to the supplementary tax; I suspect that this will work in favour of the banks.
The increase in insurance premium tax is another measure that will hit those on the lowest incomes. The Minister shakes his head, but there are no two ways about it. People who are already stretching their budgets to try to afford their contents insurance, for instance, will then be hit by a massive increase in insurance premium tax, from 6% to 9.5%.
As for the proposals for the Chancellor’s good friends, those with non-domiciled status, they are welcome on the face of it, but how soon will it be before someone comes up with a great ruse to get around the “15 of the previous 20 years” residence rule? How soon will it be before someone says, “That is OK; I will go abroad for a year, and then restart my clock”? How soon will it be before someone takes advantage of some scheme or other? Why not be more assertive, and take much stronger action?
I am conscious that time is beating me again, Mr Deputy Speaker, but I want to draw attention to a few more points. There are to be more apprenticeships, but the question is the quality of those apprenticeships. The ending of student maintenance grants will hit the poorest yet again—in this instance, the poorest students. I have already made my point about the public sector pay increase.
Buried among these measures is the reduction in the backdating of housing benefit from six months for working-age claimants and three months for pensioners to a maximum of four weeks. It is not really about reducing benefit; it is about saying, “If you were not quick enough to spot the benefit that you were able to claim, or if the paperwork was not processed, or if you are a pensioner who struggles with paperwork, you will lose out.” That will save £10 million, which is outrageous.
I thought it important to put that point on the record, Mr Deputy Speaker. As you will have noted, I have just discarded most of my speech.
Let me say just four more words. Well, eight: infrastructure spending, fuel duty, investigation of immoral or illegal economic issues such as the farming of dogs and cats, and a huge shortage of commercial drivers. Where was the Government’s help when it came to putting more drivers into the economy?
Thank you for your patience, Mr Deputy Speaker.
In that case, let me very briefly congratulate those who have made their maiden speeches today, before turning to the subject of the steel industry.
Let me begin by thanking the Minister for Small Business, Industry and Enterprise for being so helpful last week by voting to retain anti-dumping measures for wire rod. The steel industry is being flooded out by a massive increase in imports from China, and it is important for us to work with other EU countries on anti-dumping measures. I hope that the Government will take the same approach to measures in relation to steel reinforcing bar, grain oriented electrical steels, and cold rolled steels.
Let me now say something about the EU compensation package. As we know, the Government set the carbon floor price too high, thus causing considerable difficulties to the steel industry. They have now come up with a compensation package for energy-intensive industries, but it is still a long time until April 2016. Will the Government think again about whether the date could be brought forward, and will they make absolutely certain that the package will not be cut?
As well as the problem of the carbon floor price, the steel industry faces the challenge of the EU emissions trading scheme. I firmly believe in working with the EU to create a level playing field, and I believe in the need to reduce our carbon emissions, but the energy-intensive industries need special consideration. It is important that the Government work with them so we actually achieve those goals, rather than achieving what is called carbon leakage—manufacturers going elsewhere where they are allowed to get away with higher emissions levels. There is a lot of work to be done here.
Business and industry need absolute certainty as they plan ahead and invest, and I am disappointed at the infrastructure projects that have been scrapped. The cancellation and postponement of rail projects and other infrastructure projects is very serious both to our skills base and our manufacturing industry. I am pleased that electrification is still planned for the railway line to Swansea, although I would like to see it come a lot further west, but it has still not started. I urge the Government to make sure that goes ahead with full speed.
I would like the Government to make greater efforts to maximise the UK input into the supply chains for such infrastructure, too. It is possible within EU regulations to include in tendering criteria a recognition of the benefit to the local community. Other EU countries manage that very effectively, and we should do a lot more in this regard.
Roger Evans from Schaeffler in my constituency of Llanelli is working with the Swansea tidal lagoon to maximise the proportion of supplies for the construction of the lagoon that is sourced locally in Wales and the UK. He is to be applauded for his efforts and I hope the Government will take note and do likewise, and that they will also strike the right price for the tidal lagoon to make it economically viable.
Business and industry need absolute certainty. We saw the Government cut the feed-in tariffs unexpectedly sharply without consultation, resulting in manufacturers and installers—many of whom had spent a lot of money training up as solar panel installers—going out of business, and now the Government’s sudden cut to the wind turbine incentive is again threatening manufacturers. When such decisions are made, they should not be knee-jerk, politically motivated decisions; there should be proper consultation with the industry and sensible lead-in times for any changes. There will now be a massive knock-on effect on the manufacturers and installers of wind turbines.
On the financial changes in the Budget, I welcome the national minimum wage going up to £7.20 next April, but it is, after all, a national minimum wage and it is high time it did go up to that amount—and the Chancellor promised ages ago it would go up to £7. I am very concerned, however, that it does not apply to those under 25, and I am extremely concerned about the loss of tax credits. They are an important part of our current taxation system. As has been mentioned, a couple on the current minimum wage with two children gain £1,500 but lose £2,200 in tax credits. We must raise the wages first, before scaling down any tax credits. This hits those on the lowest incomes who are often dealing with problems of insecurity, juggling more than one job to make ends meet, and working antisocial hours.
We still need a crackdown on zero-hours contracts as well. It is not enough to do what the Government did, which was say “You shouldn’t be prevented from taking another job.” They must do a lot more to try to ensure people can have proper contracts. USDAW has done a lot of work in this regard by getting annualised contracts that allow flexibility for employers and employees, but guarantee an agreed number of hours, so offering some security and chance of planning ahead for workers.
The cuts to tax credits will have a massive knock-on effect on local economies. People on low incomes out of necessity use their money immediately, putting it back into the local economy. There are wards in my constituency where Government changes over the past five years have already led to a loss in income of an average of £800 to £1,000 per person per year. Add to that the new cuts to the tax credits and we will see even more money sucked out of local economies. That is bad news for local business and could lead to further job losses.
I was shocked a fortnight ago to hear the Secretary of State for Work and Pensions say that the way for families to get out of poverty is through education and getting higher paid jobs. Of course it is, but in the meantime they need help. They cannot get that education and move into higher paid jobs in two minutes; we are talking about very long-term goals. What we are seeing in this Budget is a cut to what was a grant and has now become a loan for going into higher education for those very families on the lowest incomes.
We are also worried that the Government are removing the cap on the £9,000 fees for what are probably going to be the most sought-after and prestigious universities. Again, they are creating disincentives for people from less well-off homes to achieve the best and go to the very best universities. These are extremely worrying features of the Budget. Obviously, people want their children to do well—
Thank you, Mr Speaker.
Very briefly, tax credits are extremely important for those who work part time, who have to juggle childcare responsibilities or who simply cannot find enough hours’ work, and I would have liked the Government to ask those with the broadest shoulders to bear a great deal more of the burden, perhaps by putting up the 45p tax rate to 50p for those earning more than £150,000 a year. Instead, I believe that there is to be legislation that will limit income tax rises for millionaires. It is completely the wrong priority that it is those with the least money, rather than those with the broadest shoulders, who will be bearing the greatest burden.
The Budget we have just seen was a masterclass in presentation, but a poor one for facing up to the real problems of the British economy. Before we begin, it is worth recalling the recent history of these debates and the economic state of the nation. Both major political parties went into the 2008 financial crisis with identical spending plans, because this Chancellor had pledged to match the Labour Government’s spending plans of the time. The UK’s banking regulation comprehensively failed in 2008, but then so did the system of banking regulation in nearly every other country. Both parties then backed the bail-out of the banks, to protect the people from the banks’ mistakes.
The only other major point of difference between the parties was that on our side we favoured a stimulus, a decision replicated in most other countries at the time, and which I believe was correct, but which the present Chancellor and the Conservatives opposed. The Chancellor also made a serious error of judgment in opposing the nationalisation of Northern Rock.
It is worth saying all that because I believe that the standard of debate on the economy in the last Parliament was fairly poor, given that it was the major issue of that Parliament. The partisanship of Government Front Benchers and Back Benchers reached moronic levels at times, reducing serious questions about the prosperity of the UK to slogans with no real content. I hope that we will see a change in this Parliament.
This Budget has proved one thing above all—there really is no long-term economic plan for this country. Deficit elimination has been put back a further year, which is no surprise to any of us who were here in the last Parliament, because that is what happened every time the Chancellor gave us one of his set-piece presentations.
I will not give way, because of the direction from the Chair. I hope that the hon. Gentleman will forgive me.
It is surely worth noting that the Chancellor has now failed to match either the Darling plan or the original Balls plan for deficit reduction, mainly because his emergency Budget in the last Parliament damaged the economy so much. We are now debating an emergency Budget in this Parliament, and let me say that there are some good things in it: the apprenticeship levy; the super-tax on bank profits; the reforms to the non-dom rules, creating just one tax regime no matter how wealthy someone is; and of course the increase in the minimum wage. That is all good social-democratic stuff. I hope we will see those commitments maintained, and that we can soon implement the actual living wage, now that the intellectual argument for it has been so comprehensively won by those of us on the left. I also have no hesitation in welcoming the sustained fall in the unemployment rate in the last few years. Like most people, I am concerned about the relatively poor pay and conditions of some of those jobs—that is a very valid point—but work is a very good thing and the more people who are in it, the better.
However, I put it to the House that if we look seriously through the Chancellor’s presentation, we find some fundamental problems with the British economy that he does not seem eager to address. For instance, we are a country with a terrible current account deficit. We simply do not export enough, but even more worryingly we do not have many sectors of the economy that look as though they could substantially increase exports. There have been many warm words from the Government on this matter, but there has been little improvement over the past three to four years, and the sectors that could provide growth, such as the green economy, have been consistently undermined. We need a proper industrial strategy and a smart interventionist state, with the kind of policies pioneered by the Labour Government during the financial crisis, to address that.
We also have poor productivity, as has been fairly well documented, yet the Government are pausing key infrastructure upgrades, such as the electrification of the trans-Pennine rail line through Stalybridge and, even worse, are making it even more expensive for people to go to university and get a degree to improve their skills.
The replacement of university grants with loans is one of the changes that I absolutely abhor. Of course, students should make a contribution—that issue is now settled—but £50,000 of debt for a three-year degree is surely far too high. I do not feel that Government MPs really understand what that means. It is effectively a 3% rise in income tax for some young people for the first few decades of their working lives. At the same time, they face much higher pension contributions and housing costs than their parents’ generation. There are limits to how hard those people can be squeezed and choosing to squeeze young people simply because older people are more likely to vote is the height of short-term political cynicism.
Housing is surely the most dysfunctional part of our economy. Whether someone is on the right or the left of British politics, how can it make sense that buying a house as an asset will always be a better investment than starting a business or investing in their skills and training? Housing costs for British workers are absurd compared with those in other European countries and we must not only build more houses but start to tax assets more and income less.
That brings me to the part of the Budget that I completely oppose, which is the inheritance tax cut. To put it quite simply, if somebody has mediocre talents but wealthy parents, this is most certainly a Budget for them. In his speech, the Chancellor said that wanting to leave a house worth £1 million to one’s children was a thing that the left would never understand. My hon. Friend the Member for Blaydon (Mr Anderson) also made this point. What I say back to the Chancellor is that what the right needs to understand is the anger and resentment of hard-working and talented people from modest backgrounds who find their paths regularly blocked by the less able but more gilded sons and daughters of the very wealthy. I believe that even right-wingers should oppose inheritance tax cuts on grounds of meritocracy and instead support a society in which hard work and ability make a difference to one’s life, not inherited wealth.
We have had much talk of tax credits today. There is some evidence that in some sectors and with some employers, such as the big supermarkets, tax credits have subsidised employers, but the scale of what the Government are doing is extremely worrying. Families with two earners but a modest income and with two children face eye-watering reductions in their household budgets. I would certainly notice if someone took more than £2,000 a year from my household income and there needs to be some acknowledgement from the Government that this will cause real pain. In addition, and crucially, it could also cause a disincentive to go out to work. One of the most compelling reasons for the tax credit system in the first place was that it made work pay. Tax credits also served as an incentive to hire and there could be a negative affect on employment figures as a result of the changes.
One of the Government’s plans that I want to succeed is the northern powerhouse initiative. I must admit that the branding of the policy amuses me somewhat as when I was a teenager growing up in the north-east, the Northern Powerhouse was the name of the biggest gay club in Newcastle, although I am sure that the Chancellor did not mean to name his policy after it. The premise behind the policy is strong. As a country, we are far too geographically concentrated—much more so than comparative European nations—to the detriment of both north and south. The centralising of the British state has not just led to poor decision making but has, in my view, infantilised the great northern cities that were once the masters of their own destiny and the drivers of British prosperity. The Government must be aware that there is a great deal of cynicism in the north about this plan, which has been compounded by the recent pause in the rail electrification programme. If the Government want to show that they are serious about the policy, they need not just warm words but an announcement and some progress in the months ahead. I for one would be happy to work with them to make that happen.
We have a Chancellor whose political skills are largely unmatched but whose economic credentials for promoting the national interest are much more questionable. I hope that in this Parliament and in subsequent Budgets we will start to see a much more effective focus on the real economic problems our country faces, which I believe can be overcome. In all seriousness, I believe that in my lifetime the UK could become the biggest economy in Europe and in doing so could create a society in which wealth and opportunity are much more readily available and much more widely shared. The Budget did not contribute to that and in some ways made it even harder to achieve, and I hope that we will start to see better in the future.
I thoroughly enjoyed listening to the passion and wit of the new Members who spoke today. Such speeches are a fantastic way to learn about other constituencies and we should all listen. I particularly enjoyed the comments of the hon. Member for Paisley and Renfrewshire South (Mhairi Black) about the weathercock and signposts, although perhaps not for the right reasons. She and I are not necessarily on the same page.
I thought that when I left Stormont I had moved away from trying to get nationalism and Unionism working together and to agree. In my first few weeks here, listening to Members speak, I began to wonder whether left and right would ever learn from each other. I was impressed when, in the Budget, the living wage was introduced and to see signs that, actually, people do listen to each other. Today, listening to people’s detailed speeches, I have found it wonderful to see that there is a lot of input and a lot of detail. I think we can all learn from it.
From the point of view of the Ulster Unionist party and many others, the biggest concern is that the Budget measures will be brought in without proper safeguards and that provision will be taken away before the new system is in place. Given the farce of the welfare reforms in Northern Ireland, my fear is that we will not be able to look after people because the old system has been taken away. This morning, at a meeting of the all-party group on social science and policy, I was appalled to hear about a woman on this side of the water who had had no benefits for four and a half months, and who had turned to prostitution. That is a complete disgrace. We must have back-up all the way through the system, so that no one is ever let down and has no money.
I share colleagues’ concerns about tax credits being reduced and the effects on SMEs and, in Northern Ireland, on families with more than two children. Those changes could work very much against us. I welcome the lowering of corporation tax—we have the powers in Northern Ireland to do that and I wish we would get on with it, but we do not necessarily have the will and understanding that are needed. However, we need a lot of other things as well. When I was at Stormont, I was briefed by manufacturers who said that the basic costs they struggle with are high energy costs, high labour costs and high rates. We need to look at business rates, as action there could lift the whole British economy. I am pleased that there was no rise in fuel duty, and there are many other measures in the Budget that I like, but what really concerns me is not having back-up and safeguards.
From the Union point of view, I am concerned that as we focus on devolving government and giving more powers to cities, countries and everyone else, we will all be forced into just fighting our corner. We have to remember that we all need to work together all the time while we fight our corner.
In Northern Ireland, unemployment is running at 6.1%. That is way better than in my younger days, when it was about 18% in some places, but there are two aspects of those figures that I want to mention. First, a large number of the people in that 6.1% do not have the skills that the world of modern technology requires; they may never have them. We need to find some way of bringing large numbers of suitable jobs to the Province, because without employment, the planned welfare changes will never work. We need apprenticeships and assistance. I know the matter is devolved, but we must not adopt the attitude of “devolve and forget”. We all need to work together. Years ago, I worked at Short Brothers in Belfast. I remember visiting Harland and Wolff to see a model of that company building seven aircraft carriers. I know we should not hark back to the past too much, but we need to find jobs—the sort of jobs that the people can do.
I hope that the Government will keep the basis of the Stormont House agreement in place, whether it fails or succeeds, because it contained many measures agreed to help the Province. We are very grateful for them, but we must find a way to move forward. I hope the Minister will promise that those measures will stay. I hope also that the Barnett formula will remain in place and will certainly not go down.
The second matter that I want to raise in relation to the 6.1% unemployment rate is mental health. Last week we rightly heard praise for all those who helped after the bombings in London and learned how to look after those who had lost limbs, lost family or witnessed something awful that still affects them today. Think of the number of people affected by 45 years of the troubles in Northern Ireland. I hope the Minister will put funding in place to enable us to continue learning how to help people cope with the mental issues and difficulties in their lives.
I hope some funding, which is not in the Budget, will be put aside for the victims of the guns and Semtex supplied by Libya. The Americans, the Germans and the French all received compensation, yet nothing has happened for the British. Enough resources should be put in place to make sure that the grit and determination are recognised.
I mentioned “devolve and forget” when it comes to the Northern Ireland governing process. I do not think Members in this place know what is going on. We have Departments in Northern Ireland that do not even work with each other. When I was working on education in the past few years, the Education Minister would not share the funds and the spending reviews; he kept them all to himself. That is the sort of problem we have in Northern Ireland. I thank the House for all the help that it has given us. I hope it will keep the pressure on and get Northern Ireland working. The Budget is one way of doing that.
Over the past few days there has been a great deal of debate and analysis of the Budget. Some who would not necessarily be expected to do so have praised proposals to increase the minimum wage and to increase the personal allowance. However, it is extremely important that we do not lose sight of the fact that, despite those measures, as the Institute for Fiscal Studies confirmed, the Budget is regressive. Contrary to the Chancellor’s rhetoric, it is those with the least broad shoulders who must carry the burden of reducing the deficit.
Cuts to tax credits will have a significantly detrimental impact on families on very low incomes. Neither the increase in the minimum wage nor the increase in the personal allowance will make up for these losses. The changes mean that working parents eligible for child tax credit will lose more support more quickly than previously, from the moment they move into work or their salary starts to increase. Many parents will be worse off when the full impact of the Budget is taken into account. Barnardo’s has calculated that a single parent with two children working full-time on the minimum wage will lose £1,200 a year from April 2016, even when the increase in the minimum wage is accounted for.
It gets worse: from April 2017 some of the very poorest families—those with more than two children—will face further reductions in income. They will not be able to get financial assistance through tax credits or universal credit to account for the costs of having a third child, or any child beyond that. We are talking about a significant amount of money for families on very low incomes—about £2,700 a year, or £53 per child per week. New claimants of universal credit will also be affected by this change. A family who already have three or more children and are currently earning above the earnings threshold but lose their job or find themselves unable to work due to ill health will, after April 2017, be able to claim support for only two of their children. As a result, there is no escaping the fact that, from April 2017, families with more than two children will be more likely to live in poverty. Children with more than one sibling are already 40% more likely to be in poverty than their peers.
To illustrate that point, let me give just one example from a Barnardo’s children’s centre. Sarah is a working mother of three whose husband, John, looks after the children, one of whom is not yet of school age. John asked the centre for some nappies. When a project worker visited their home, she noticed that the only food in the cupboard was biscuits and crisps. Sarah and John said that their finances had become unmanageable after their house was deemed too big for their family and they were hit by the bedroom tax. That pushed them over the edge. Now the parents are skipping meals so that the children can eat, and they are too proud to ask for help.
Cutting tax credits will hit some of the poorest and most vulnerable the hardest. The Government keep telling us that it is about making work pay and incentivising those on out-of-work benefits to move back into work. We know that more than six in 10 children are currently living in poverty, with at least one parent in work. It is absolutely absurd that in 2015, and in the fifth largest economy in the world, parents are having to decide who can eat and whether they can afford to put the heating on.
I will finish with two questions for the Government. First, how do they intend to monitor the impact of the cuts to tax credits, and of the Budget as a whole, on child poverty? Secondly, given that they have said that the income measure of child poverty is to be scrapped, to ensure transparency and fairness in relation to measures announced in the Budget and in legislation such as the Welfare Reform and Work Bill, how will they continue to monitor levels of child poverty?
The Chancellor’s Budget, far from fixing the roof while the sun is shining, will send roof tiles flying while the storm clouds gather. Economic growth is crucial. It brings tremendous benefits. Between 1997 and 2008 it lifted millions of people out of poverty. An economy that is not growing is failing, but the question is: what kind of growth do we need?
The fact is that Britain in 2015 is more unequal, divided and insecure than it has been at any time since 1945. We know that inequality between rich and poor in the United Kingdom has widened in recent years. We also know that inequality is bad for economic growth because the majority of the population are not feeling the recovery at all and so are unable to contribute to it.
If the Chancellor wishes to do away with state support for the working poor, he must commit to investing in a genuine, broad-based and deep recovery that works for everyone, based on a real industrial strategy and a plan for long-term economic growth. That has to start with a renaissance in our manufacturing sector. In 1970 manufacturing accounted for one third of the British economy, and now it accounts for barely 10%.
The need to drive such a renaissance is imperative for three reasons. First, the manufacturing sector achieves far higher levels of productivity than the service sector. Secondly, it produces much higher quality and higher-income skilled jobs than the rest of the economy, as well as a far greater geographical spread of skills and jobs than the financial sector produces. Thirdly, it enables us to pay our way in the world. Our balance of trade deficit is currently higher than it has ever been since the 1830s. That is a huge drag on our economy, and it can be dealt with only by increasing manufacturing for export.
Given the central part that manufacturing has to play in building that new kind of growth, it is absolutely imperative that the Chancellor now sets out a new industrial strategy, which I think should be based on six key pillars. First, we must produce highly motivated and skilled young people who are capable and willing to enter manufacturing, engineering and wider industry.
Secondly, the UK has a strong research capability, but we struggle when it comes to driving our new ideas and technologies into the business sector. A proper industrial strategy would provide enhanced support to the Catapult centres, which have provided a welcome boost to the commercialisation of research and development, but much remains to be done and they need more resources.
Thirdly, on energy, there is a pressing need for a 10-year plan that lays out the investment path required to build a secure, competitively priced and clean energy supply. The growth of clean energy is a huge opportunity for the UK economy, with projects such as the Swansea Bay tidal lagoon promising to deliver thousands of high-paid, high-productivity jobs.
Fourthly, there is the UK’s inadequate transport and digital infrastructure. This is particularly important, as it contributes to the chasm that exists between London and the rest of the country. There is a pressing need for a long-term infrastructure plan that would properly connect the country and provide a launch pad for a nationwide manufacturing renaissance.
Fifthly, on finance, the UK’s banking system is fundamentally skewed towards the stimulation of private consumption, asset value inflation, and personal debt. It is essential to create a new financial support system for manufacturing that is geared towards enabling the growth of the manufacturing sector. Germany’s Sparkassen should be the model—truly local banking that is an integral part of the regional economy, focused exclusively on lending to start-ups and small and medium-sized manufacturing businesses.
Finally, on procurement, the Government manage a multi-billion-pound budget for the procurement of everything from care services to steel for major infrastructure projects, and their approach is far too laissez-faire. Far more can and should be done to ensure that UK products and services are prioritised for procurement. This can be done without violating EU competition rules simply through tighter definition of value-for-money clauses in tender documents. It is right that contracts funded by the British taxpayer should be won and delivered by British companies.
This industrial strategy sounds wonderful on paper, but it is worthless if not underpinned by strong support for the steel industry, which is the critical foundation industry for our manufacturing renaissance. Steel plays into every aspect of the long-term strategy we need. As the Member of Parliament for Aberavon, which hosts the largest steelworks in the country, I must draw the House’s attention to the importance of the steel industry. No longer can Government-tendered projects such as the refurbishment of the Severn bridge be allowed to go ahead using French steel when the best steel in the world is British.
This Government also need to take into consideration the importance of compensating heavy industries such as steel for the cost of the carbon tax, which eats into productivity. Going back on promises that were made in the previous Parliament would leave steel companies exposed to 70% of the cost of the EU renewable levy policies. That would be seriously detrimental to the steel sector and wider manufacturing, and ultimately harmful to the UK economy.
The time has come for a Government who are prepared to plan for a new type of long-term, sustainable growth that produces high-wage, high value-added jobs and gets the country making and exporting rather than perpetuating the agenda for the status quo of growth fuelled by debt and consumption. Until we have such a plan, I cannot support this Budget. I exhort the Chancellor to go back to the drawing board, roll up his sleeves, and come back with a strategy for a new kind of growth that will build a United Kingdom of strength, purpose and resilience.
I thought that I would use my time in this debate to speak about the real victims of last week’s Budget: children in this country who have suffered because of the savage blows that have been imposed on their services and the support structure that we provide for them. This savage attack is twofold. First, child benefit has been frozen for the next four years, not taking into account the rising cost of living. Secondly, child tax credit is now going to be restricted to families with no more than two children. Have the Government thought long and hard about what impact these changes will have on disabled children living in families, on single mothers, and on families with low and modest incomes?
My problem with these changes is that they will in no way address the deep-rooted problems that we have in our low-wage, low-productivity economy, with the huge discrepancy between the very well-paid and the very poor. These changes will not deal with the problems that we face in the economy.
There is little recognition of how much tax credits have contributed to alleviating child poverty. By the end of the last Labour Government, the proportion of children living in families below the poverty line had fallen from 35% to 19%. It is the Labour Government who can claim credit for lifting more than 1 million children out of relative poverty. Those are things that we are proud of.
The Tories use rhetoric that speaks of tax credits encouraging workshy people, says that people are lazy because they claim tax credits and uses that dreadful word, “scroungers” for people who abuse the welfare state. Well, guess what? The majority of people who claim tax credits are in work. The Government need to realise that. The IFS has pointed out that reducing tax credits weakens the incentives for people to work. At every turn, the Government’s rhetoric on tax credits is wrong. The single largest revenue raiser in last week’s Budget was the scaling back of tax credits, which almost exclusively hits people who are in work.
The Social Mobility and Child Poverty Commission has said that relative and absolute child poverty will increase in the next decade. Given that those figures are about to be released, is it surprising that the Government have said that they will scrap the legally binding child poverty reduction target and are busy trying to redefine poverty?
Ministers do not need to spend time redefining poverty. Instead, they should take the 15 minutes that it takes to leave Parliament and go to my constituency of Hampstead and Kilburn. They should go around the estates of south Kilburn—the most deprived parts of my constituency—and see the families giving up their dignity to queue up for food banks. In winter, those families have to make the choice between eating and putting the heating on. Those are the families who go to work, but for whom work does not pay because we live in a low-wage economy. Those are the things that we have to assess before we make these dramatic changes.
Before we rush through this Budget, which will be damaging to my constituents and constituents across the length and breadth of this country, I ask the Government to consider two things. First, they should think about the impact that the changes to working tax credit and child tax credit will have on women. Child tax credit is claimed more by women, because the main carer in the family tends to be a woman. Working tax credit is needed by women more because there are more women in low-paid jobs, as was demonstrated by the recent debate on equal gender pay in Parliament. Bearing that in mind, they should think carefully about whether they are doing something that takes away the economic empowerment of women in our country. Will the changes mean that women do not feel empowered to go out and work? They must think carefully before making those changes.
Lastly, the Government should think about the impact that restricting child tax credit will have on families with more than two disabled children. At the moment, there is a top-up on child tax credit of £3,000 if families have a disabled child and up to £4,000 if they have a severely disabled child. What will happen to families who have three severely disabled children? What will happen to families who have two severely disabled children and one child who is defined as disabled? We need to think carefully before we rush the Budget through.
My plea to the Government is that they go back to the drawing board, listen to what Opposition Members have been saying and think about the effects that the Budget will have on women and disabled children across the country, and on families who want to work, but who cannot get the right wages from that work.
It is a great pleasure to follow my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq), who made an excellent speech underlining the cruel regressivity of this awful Budget. She particularly mentioned the impact on child poverty, families and women, and the inter- generational poverty that will scar families for life. It is also a pleasure to follow excellent speeches by colleagues from the Swansea Bay city region, my hon. Friends the Members for Aberavon (Stephen Kinnock), for Llanelli (Nia Griffith) and for Swansea East (Carolyn Harris), and a number of maiden speeches, particularly that of the hon. Member for Paisley and Renfrewshire South (Mhairi Black).
This was a Sheriff of Nottingham Budget, robbing from the poor and giving to the rich. In fact, The Economist has commented that taking from the very poorest through tax credit changes and giving to the very wealthy through inheritance tax changes is “indefensible”. That is not some sort of left-wing ragbag but a keenly focused magazine that says it as it is.
We have the Sheriff of Nottingham, the Chancellor, living within his castle walls and feeding his fat noble friends with inheritance tax reductions, while the ordinary people just outside are being hoaxed. With one hand they are being given higher tax thresholds, but with the other they are being pick-pocketed, with something like £16 billion of stealth taxes on things like insurance for housing and cars, and with the vehicle excise duty changes. Even the withdrawal of climate change subsidies will come back and hit them through energy prices, and the withdrawal of BBC funding will hit them through the licence fee.
The Sheriff of Nottingham is also trying to persuade the ordinary people around the castle walls that the poorest people in the forest will not be painfully abused by the tax credit cuts. Instead he is trumpeting the minimum wage increase, which of course will not compensate families on tax credits. In 2012 the Chancellor gave a speech describing the “strivers” and the “skivers” and asking whether it was fair for a shift worker to get up in the morning to go to work and see the closed blinds of his neighbours who live off benefits. Of course, skivers are not eligible for working tax credits and child tax credits, because they are only given to people in work. They are based on the American earned income tax credit, as an incentive to work. Their withdrawal will undermine not only the individuals who are paid the money but business start-ups. The change is thoroughly regressive and counterintuitive to economic growth.
The Budget was more about politics than economics. On the minimum wage, the Chancellor has taken the Labour party’s clothes and hoped that people will not notice what he is doing to working families, and the Opposition cannot support him in that. Of course, the cost of tax credits has grown to something like £30 billion, but that is because productivity in the British economy has been so woefully poor that wages have gone down, leading to tax credits going up. In fact, 800,000 fewer people are earning more than £20,000 than was the case in 2010, which is an appalling failure. That is why this Government have borrowed more in five years than Labour did in 13. The Government should have focused on productivity growth in the Budget, rather than on fiddling around with tax and spend so that the Chancellor can position himself against the flamboyant part-time Mayor of London as the next Tory leader.
There is also the appalling situation whereby the third-born in each family will have their tax credits taken away. I wonder if that will be extended to education and health. When the third child, Johnny, has a broken arm and goes to the NHS, will he be told, “Sorry, we can’t treat that, you’re the third-born. Oh, don’t worry, your oldest sister has just died—so it’s alright now”? What is the change about? Is it an incentive for poorer people in society not to breed? Is some sort of positive eugenics returning to the Tories? It really is appalling.