Debate resumed (Order, 23 March).

Question again proposed,

(1) That 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.

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Nigel Evans (First Deputy Chairman of Ways and Means; Ribble Valley, Conservative)

Before I call Mr Vaizey, may I implore both Front Benchers to show incredible time restraint due to the number of Back Benchers who wish to take part in today’s debate?

5:12 pm
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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

Your instructions have been noted, Mr Deputy Speaker.

May I begin by apologising to the House for the absence of my right hon. Friend the Secretary of State? As I am sure that the House will know by now, his wife gave birth to a beautiful baby girl last week—appropriately enough, during Department for Culture, Media and Sport questions—and so he is enjoying his paternity leave. I am sure that the whole House will want to join me in passing on our good wishes to the whole family. I, for one, wish that the Secretary of State were here, because this is, I believe, the first time that DCMS, as a Department, has opened a Budget debate, and it is a testament to his skill and vision that he has put the Department at the heart of the Government’s strategy for growth. DCMS is now an important economic Department that is responsible for broadband and digital infrastructure, internet and media policy, and our world-beating creative industries. Policies pursued by this Department will contribute significantly to the growth of the UK economy.

I want to use today’s debate to remind the House of how well placed this country is to take advantage of the technology revolution. The Chancellor has set out our ambition to turn Britain into Europe’s leading technology hub, and we are well on course to achieving that. According to a Boston Consulting Group report published this month, the UK is the top internet economy in the G20; we purchase more online than Germany, the United States and South Korea. We have a huge range of successful technology companies in this country. It is worth reminding the House that BT, for example, is a global technology company with a presence in 170 countries. ARM supplies the chips for smartphones and tablets. Imagination Technology provides the graphics for Apple

products. Ubiquisys in Swindon sells femtocells to the French and the Japanese. Neul, based in Cambridge, is developing new wireless network technology. In Tech City, we have a rapidly growing technology hub in the heart of London’s east end, which in just three years has grown from about 15 companies to more than 300.

My personal favourite is the motor sport industry, which is worth £5 billion a year and exports 70% of its products. I was particularly tickled by an anecdote—[ Interruption. ] I cannot believe that Opposition Members are groaning at an anecdote. I feel rather deflated. When a German formula company launched its German engine, branded by Mercedes-Benz, with Michael Schumacher, a German driver, I was told that it was designed and manufactured in the UK. [Hon. Members: “Hear, hear!”] I thank Government Members for approving of my anecdote.

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Andrea Leadsom (South Northamptonshire, Conservative)

I am delighted about that, because it was made in my constituency.

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

Is it not a wonderful coincidence that I also get to suck up to one of the most important Back Benchers in the House?

Next week, a BDO report will say that telecoms, media and technology industries will be the success stories of 2012 in the UK, with software investment growing and investment last year at an all-time high. Innovations such as cloud computing are set to create more than 200,000 jobs in the UK in the next three years.

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Tristram Hunt (Stoke-on-Trent Central, Labour)

Is it because the Department for Culture, Media and Sport is no longer interested in art and culture that it has purged Dame Liz Forgan from the Arts Council?

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

That gives me a chance to respond to one of the Labour party’s most important Back Benchers. If he thinks that we are not interested in art and culture, why is he never out of my office talking about art and culture and, in particular, our joint campaign to save the Wedgwood collection?

To support technology and innovation businesses we have protected the science budget and are funding new science capital projects, including £158 million for e-infrastructure. The total increase in capital funding since December 2010 is £495 million. I feel that point keenly because tomorrow is the 10th anniversary of the agreement between the previous Labour Government and the Wellcome Trust to build and site the Diamond synchrotron in my constituency. I must say, in a moment of cross-party unanimity, that the last Labour Government had two of the finest science Ministers we have seen in Lord Sainsbury of Turville and Lord Drayson. We have, of course, gone one better by appointing our own Minister for Universities and Science, who has two brains.

We will have increased the level of the small company research and development tax credit from 175% to 225% by April 2012. That is the largest programme of support for business innovation in the UK and will provide support of more than £1 billion a year. We have

made it more attractive to invest in smaller high-risk companies by raising the tax relief available under the enterprise investment scheme. We have established 24 enterprise zones throughout England. We have introduced catapult centres, which will form a new elite national network to act as a bridge between academia and business. They will cover sectors such as high-value manufacturing, cell therapy and offshore renewable energy. The Technology Strategy Board is investing at least £200 million in the current spending review period to make that happen.

We need to build on that success and I am pleased to say that the Budget maintains the momentum. We are cutting taxes on patents through a 10% patent box corporation tax worth some £900 million, which will be introduced next year and phased in. We are extending enterprise zones to Scotland, Northern Ireland and Wales. We are investing £100 million, which will leverage a further £200 million, in new university research facilities. We are introducing transport systems and future cities catapult centres. In a country with the world’s second largest aerospace industry, we have announced an investment of £60 million in a new aerodynamics centre to encourage innovation in aerospace design and the commercialisation of new ideas. Those measures will ensure that our world-leading universities and innovative small businesses can come together with global companies to commercialise new technologies, ideas and inventions in a wide variety of sectors.

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Ian Lucas (Shadow Minister (Foreign and Commonwealth Affairs); Wrexham, Labour)

Will the hon. Gentleman tell the House where the aerodynamics centre is to be based?

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

May I congratulate the hon. Gentleman on his iPad cover, which is the same colour as a ministerial red box? It looked like he was using his ministerial red box. That is a rather nice conceit for an ex-Minister.

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Ian Lucas (Shadow Minister (Foreign and Commonwealth Affairs); Wrexham, Labour)

It’s the Budget.

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

Oh, it was the Budget book. It looked like an iPad cover. Forgive me; I keep mistaking the hon. Gentleman for somebody who is on top of new technology. We have not yet decided where the aviation centre will be sited, and it may not even be in one place. It may be sited in two or three different areas.

To become Europe’s technology hub, we need world-leading digital infrastructure. The average broadband speed in the UK is already 7.5 megabits a second. In Northern Ireland, almost all the population have superfast broadband, and in England almost two thirds of the population do. In England, Northern Ireland and Wales, roughly three quarters of the population now have broadband. UK broadband coverage is in fact almost universal, with 91% of the country having access to speeds above 2 megabits a second, putting us in the top 20 countries worldwide. We are far ahead of many countries, including Morocco, where only one in 10 of the population have access to fixed-line broadband.

We have come a long way, but we need to go further. We are already investing £530 million in rural broadband, which will deliver superfast broadband to 90% of the country by 2015, two years earlier than Labour planned. More than half of our local broadband projects have

been approved, and all will be approved by the end of this year. Procurement for some projects will proceed in the next few months.

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Anne McGuire (Shadow Minister (Work and Pensions); Stirling, Labour)

Would the Minister like to come to the village of Balquhidder in my constituency and tell people that they might be better off living in Morocco? I see that the Chief Secretary is trying to tell him where Balquhidder is. In that village people still have dial-up, not even slow broadband, never mind fast or superfast broadband.

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

First, that is why we are spending the money that we are, and secondly, we are working in partnership with the Scottish Government, so the right hon. Lady should have a word with them if she wants to put her constituency at the forefront of broadband roll-out in Scotland.

We will have provided universal coverage by 2015 without Labour’s telephone tax, which in any event would not have raised sufficient money to do the job. Not only do we have the most ambitious rural broadband programme, but the Chancellor announced in the Budget new measures to upgrade the coverage in our cities. The UK’s four capitals, Manchester, Birmingham, Bristol, Newcastle, Leeds and Bradford will share a £100 million pot to ensure that they are among the best-connected cities in the world.

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Jim Dowd (Lewisham West and Penge, Labour)

On that subject, will the Minister have a word with the London borough of Bromley—it is allegedly in London, although it is not—which is obstructing the implementation of superfast broadband simply because it is an out-of-London, Tory-controlled borough that does not know any better? Will he exhort it to wake up to the idea of tomorrow rather than living in yesterday as it always does?

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

Without adopting the hon. Gentleman’s language—I would certainly never describe Bromley or its council as out of touch or living in the past—I accept that he makes an important point that is worth labouring. It is vital that local authorities work with broadband providers to ensure the roll-out of broadband, and we are providing the money and working with local councils. We understand why planning regulations are in place, but if they are used in a way that restricts broadband roll-out, councils will be denying their residents the opportunity to access a very important service. It is vital that local councils take a proactive approach and ask not how to apply the planning rules but how to make it as easy as possible to get broadband to as many of their residents as possible.

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Bob Blackman (Harrow East, Conservative)

Will the Minister elucidate further on the benefits to the whole of London of the roll-out of ultrafast broadband, which will happen much faster as a result of the new initiatives in the Budget?

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

Ultrafast broadband will of course benefit London, and across the 10 cities that I mentioned, the Chancellor’s Budget means that 40,000 businesses and 200,000 households will get ultrafast broadband. London is also getting it through private sector providers, to which I will turn in a moment. It is also worth noting

that Virgin Media will provide free wi-fi on the London underground during the Olympic games. Some 3 million people will be able to get access to high-speed wi-fi in the 10 best-connected cities. The Chancellor also announced in the Budget an additional £50 million, which will be available to ensure that ultrafast speeds are available to the UK’s smaller cities.

I said in reply to my hon. Friend that the private sector is doing a huge amount to speed broadband roll-out. I can announce that this week, Virgin Media, after £110 million of additional investment—investment over and above the £600 million it invests every year—will complete the upgrade of its network, so all 13 million premises covered by it, which is about half the premises in the UK, will be able to access speeds of up to 100 megabits a second. Average speeds are set to be around 40 megabits a second, which makes Virgin Media’s broadband network the fastest in the world. [ Interruption. ] From a sedentary position, an hon. Lady accuses Virgin Media of bribing me to say that. I am not sure she will say that outside the Chamber.

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Ian Lucas (Shadow Minister (Foreign and Commonwealth Affairs); Wrexham, Labour)

Virgin broadband is not available in north Wales. The problem, as the Minister will hear from Government Back Benchers, is access to universal broadband, which the Government delayed from 2012 to 2015. What will he do about increasing services to ensure that we have universal broadband, the absence of which is preventing businesses from making progress in large parts of the country?

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

I first need to get the hon. Gentleman an iPad—[ Interruption. ] He has one. At last he has an iPad! We have given £10 million to north Wales to put in place superfast broadband. As he well knows, we will get superfast broadband to 90% of the country two years before the Labour Government promised. We are not going to impose Labour’s telephone tax, which would have hit consumers and businesses. We will have the best superfast broadband in Europe by 2015—[ Interruption. ] My colleagues are saying from sedentary positions that that sounds excellent; it is excellent.

Having praised Virgin Media, let me also say that BT is investing £2.5 billion in rolling out broadband. Indeed, it has accelerated its plans so that it will deliver fibre to two thirds of the UK by 2014, a year ahead of schedule. It has already delivered to 7 million premises, and is currently adding an additional 1 million premises—the equivalent of the number in Singapore—every three months.

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Alun Cairns (Vale of Glamorgan, Conservative)

Following the point made by Ian Lucas, does my hon. Friend the Minister recognise the added complication because of the delays that the Welsh Government have introduced in the roll-out of superfast broadband, despite the money being made available swiftly by the UK Government?

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

My hon. Friend makes a very good point. Because we believe in devolution and localism, the implementation of the plans is down to the Welsh and Scottish Governments. It is therefore up to them to roll them out as quickly as possible. I am sure Ian Lucas will send an e-mail from his iPad to the leader of the Welsh Assembly Government to tell him to pull his finger out.

Ten million premises will be covered by BT by the end of the year in one of the largest engineering projects the country has ever seen. Those areas will get speeds of up to 80 megabits a second.

Mobile broadband is becoming increasingly important, with more people purchasing smartphones. Last year, the Chancellor announced an additional £150 million to help with mobile broadband coverage. By 2015, that will extend mobile coverage to 60,000 rural homes that have no mobile connection whatever, including, perhaps, villages in the constituency of Mrs McGuire, as well as along at least 10 key roads. We will also continue to look at how we can improve coverage on our railways.

At the end of this year, we will auction spectrum that will allow mobile companies significantly to increase their capacity, as well as offer faster speeds to their customers, and we continue to make progress on our plans to release some 500 MHz of the public sector spectrum.

World-leading digital infrastructure is the cornerstone of economic growth in the 21st century. Some estimates show that a 10% increase in broadband penetration can deliver a boost of up to 1.4% of gross domestic product. By the end of this Parliament, at least 90% of the country will have superfast broadband; our great cities will have ultrafast broadband; and 60,000 rural homes and businesses will have mobile coverage for the first time.

As the House knows, the UK has some of the most successful creative industries in the world. I know the whole House will wish to congratulate One Direction on topping the US charts with their debut album—a feat not matched by either the Rolling Stones or the Beatles. Adele’s “21” is the best-selling digital album of all time, and for the first time in 25 years, UK acts were at Nos. 1, 2 and 3 in the US charts. We have the second- biggest music exporting industry in the world, and our UK animation industry has a huge impact worldwide. In 2010, Peppa Pig’s UK licensing and merchandising sales were £200 million alone.

Last year saw the most UK film production activity ever—it grew by 7% to £1.16 billion. UK television formats dominate television schedules all across the globe, accounting for two in every five global programmes, and of course “Downton Abbey” has continued UK success at the Globes. Exports of UK television content are the second highest in the world, worth more than £1.3 billion per year, having grown by more than 20% a year for about the last decade. [Interruption.] David Miliband looks astounded by this success. I urge him to get out more and see what some of our successful creative industries are doing.

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David Miliband (South Shields, Labour)

I was actually wondering how many more pages of this drivel we had to sit through. The hon. Gentleman said that infrastructure is the seedcorn and the basis of future prosperity. How, then, does he explain the fact that 45% of the infrastructure investment that the Chancellor announced in the autumn statement will not happen until 2014-15?

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

I have just spent two or three minutes talking about the success of the UK music, animation, film and television industries, and the right hon. Gentleman,

who was meant to be the Labour leader, describes that as utter drivel. Let the message go out to the UK creative industries that one of the most senior members of the Labour party regards their success as drivel. And I make no apology for continuing to list some of those successes.

BBC Worldwide increased international sales by almost 10% last year. We are the European hub for the video games industry, with 35% of video games software sold in Europe being developed by UK studios, and almost half of the world’s top 100 development studios based in the UK, generating sales of almost £2 billion a year. The visual effects hub in Soho is home to four of the largest visual effects companies in the world. We have one of the most innovative and successful advertising industries in the world, and it is growing despite the recession. We have one of the most successful and creative fashion capitals anywhere in the world, with Burberry, a UK company, increasing its sales by a quarter. And, of course, our largest creative industry, the UK publishing sector, has a turnover of almost £20 billion.

We want to build on this success. We do not regard it as drivel. We regard it as vital to our economic success. That is why we will introduce a tax credit for our video games and animation industries and our high-end television production sector. We are confident that this will bring increased investment and growth in these sectors too.

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

I give way to an hon. Gentleman who normally does not spout drivel. I hope that will remain the case.

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John Mann (Bassetlaw, Labour)

I thank the Minister for generously giving way. I would not regard his speech as drivel at all. It is a superb enunciation of the successes of the last Labour Government. Given the lead time required for investment and innovation, I look forward to hearing what he predicts his legacy will be in two, three and four years. Will it be as good as that of my right hon. Friend Tessa Jowell and her colleagues who worked in the Minister’s Department so assiduously over the past decade?

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

They cannot make their minds up. On the one hand, the success of the UK’s creative industries is drivel; on the other, the success of Adele and her biggest-selling digital album in history is down to the Labour party. I would not claim that, but I would claim instead that we are putting in place the infrastructure for broadband investment to support high-tech innovation in this country. Through a series of initiatives, such as catapult centres, investment from the Technology Strategy Board, research and development tax credits and the patent box tax credit, we continue to support investment in our technology industries. Specifically through our tax break for video games, animation and high-end television production, we will support our creative industries and spur them on to greater success. I have already heard from some of the UK’s most successful animation companies. They are now planning to increase investment in their businesses, recruit more staff and make more programmes here in the UK. [ Interruption. ] Mr Deputy Speaker, there is a Labour Member standing next to you shouting at me. Could you encourage him to make a formal intervention at some point?

American studios are lining up to work with our talented production staff and amazing studios. British developers will be able to take advantage of the 8% growth in the worldwide video games industry.

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Jim Dowd (Lewisham West and Penge, Labour)

I am not sure whether my hon. Friend Tom Blenkinsop—to whom the Minister refers—wants to intervene, but if so, I am taking his slot. I do not want to make a partisan point, because although our understanding of the importance of the creative industries to this country and this economy, starting under the last Government, is well established, I congratulate the current Government on continuing that process, with the patent box and all the benefits that it will create. However, will the Minister prevail upon the Secretary of State for Business, Innovation and Skills and his colleagues to understand just how important creativeness and ingenuity are to this economy? In the light of the Hargreaves review and the role played by the Intellectual Property Office, it is not just product being made available free to consumers that is important, but ensuring that those who create and innovate get the best deal possible. That is a supreme role for this Government to perform.

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

I thank the hon. Gentleman for that intervention—I hesitate to say that it is good to hear from somebody who knows what they are talking about, in case he makes a hostile intervention in a minute. I absolutely hear the point he makes. The protection of intellectual property is paramount. We need to bring the intellectual property regime up to date, but I for one do not want to rob Peter to pay Paul. It is absolutely right that content creators are paid for what they create.

Let me say something at which the whole House will rejoice: I am coming to the end of my remarks. However, if all those who said that they wanted to make an intervention still want to, they have a small window, as I perorate towards my conclusions.

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Sarah Newton (Truro and Falmouth, Conservative)

I am grateful for my hon. Friend’s cue. Creative industries are vital to Cornwall, but so is creating high-quality food products. There is growing concern throughout Cornwall about the possible unintended consequences of the Budget and about the undoubtedly real threat to the Cornish pasty of the pasty tax. May I seek my hon. Friend’s reassurance that the concerns of pasty makers in my constituency are being listened to and that a solution can be found?

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

I thank my hon. Friend for that intervention, which I know the Chief Secretary to the Treasury will respond to fully when he winds up. I congratulate her county on receiving the award for being Britain’s best tourist destination for the third year, and I congratulate her on the extraordinary energy with which she represents her constituency. She and I have had many meetings to discuss various issues in her constituency. [ Interruption. ] You are looking at the clock, Mr Deputy Speaker, so I shall wrap up; however, let me tell my hon. Friend that I hear what she says about the Cornish pasty issue, and I am assured that the Treasury is looking at it seriously.

With a Budget that introduced the largest ever increase in personal allowances, so as to reward work, the lowest corporation tax rate in the G7, so that Britain is open for business, tax reliefs for our creative industries, increased

investment in science and technology, and plans to create the best broadband network in Europe, we are well placed to realise the Chancellor’s ambition of making Britain the technology hub of the UK. I do not think that our success to date is “drivel”; I think that Britain is known around the world for its creativity and the success of its creative industries. We on this side of the House intend to ensure that we maintain and increase that success.

5:39 pm
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Harriet Harman (Shadow Deputy Prime Minister and Shadow Secretary of State for Culture, Media and Sport; Camberwell and Peckham, Labour)

Let me begin with a double congratulation: to the Secretary of State and Lucia on the birth of their daughter, and to the shadow arts Minister and Rachel on the birth of their daughter. I congratulate both Members on their new babies, and also on taking paternity leave, which is a thoroughly good thing—mind you, I imagine that the Secretary of State feels well out of the debate today. Clearing up after a baby is much easier than clearing up after the mess of this Budget.

This is a Tory Budget, backed by the colluding Lib Dems—two parties that told us they were coming together in the national interest. How can it be in the national interest to fail on jobs, to fail on growth and to fail on fairness? Let us tell it how it really is: two parties coming together to give a tax bonanza to millionaires and a kick in the teeth to pensioners.

This is a Budget built on economic failure, with more than 1 million young people looking for work, economic growth at just half what can be seen in the US and the Government set to borrow £150 billion more than planned. What was needed was for the Government to come up with a Budget for jobs and growth, and they have failed.

It is good that today’s debate is focused on the creative industries, because they must be at the heart of economic growth in the future. We are good at them; they put Britain on the map; we are renowned for our arts and our culture, our film, TV and video games and our music, design and fashion. There is huge potential for growth there—growth in jobs, in exports and in contributions to gross domestic product. We needed the Government to come up with a plan for jobs and growth in the creative economy, but they have not.

The Government announced a tax break for high-end television, animation and video games, but these measures are strangely familiar. As my hon. Friend John Mann said, it is something of an “homage” to the policies of the last Labour Government. It was, of course, the Labour Government who introduced the first tax breaks for the creative industries with our film tax relief, which has been hugely important for getting films made in Britain, helping our pioneering special effects industry and backing our studios such as Pinewood and Shepperton. The only original film policy this Government have come up with is axing the Film Council.

As for the tax break for video games, who first proposed this for the games industry? It was Labour.

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Edward Vaizey (The Parliamentary Under-Secretary of State for Culture, Media and Sport; Wantage, Conservative)

To continue the “homage” theme, it was the policy of the last Labour Government to merge the Film Council with the British Film Institute.

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Harriet Harman (Shadow Deputy Prime Minister and Shadow Secretary of State for Culture, Media and Sport; Camberwell and Peckham, Labour)

But certainly not to do what this Government have done—without any consultation or any discussion at all. We certainly promoted the film industry.

To return to the tax break for video games, we first proposed a tax break for the games industry, and we put it in our Budget in 2010, but what did the Tory Chancellor say in his very first Budget? He said:

“we will not go ahead with the poorly targeted tax relief for the video games industry.”—[Hansard, 22 June 2010; Vol. 512, c. 175.]

And what did he do? He axed it. For the UK games industry, it could have been game over. He is introducing the tax relief now, but this misjudgment and delay have come at a price. Our video games industry was the third biggest in the world and has now fallen to the sixth. Many jobs have been lost, with nearly half going abroad to countries such as Canada, lured by its tax relief.

This policy, then, is not an original; it is a cover version—and like most cover versions, just not as good as the original. Although tax credits are worth while on their own, they are not enough to ensure that Britain fulfils its potential as a global hub for the creative industries. Just as this Government do not have a plan for jobs and growth in the economy, they do not have a plan for jobs and growth in the creative industries.

Where is the long-awaited communications Green Paper? The Minister did not say a word about it—not one word. Perhaps it is still waiting for some high-level policy input from a premier league Tory donor.

Where, too, is the action on protecting intellectual property? This is a fundamental issue for the creative industries—the bedrock of the knowledge economy. A tax break helps to boost investment, but more investors would be more confident if they knew that the product to which they were committing was not vulnerable to theft on an industrial scale. If an industry has been given a tax break, it makes it even less sensible to stand by and watch any of the value drain away through IP theft. The last Labour Government recognised that, which is why in 2010, we passed the Digital Economy Act with cross-party support. It needs to be implemented now. We already have the Digital Economy Act; it would be good to go with it. Professor Hargreaves has conducted another review of the same issue, but what the industry and economy are crying out for is action.

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Don Foster (Bath, Liberal Democrat)

I have listened to a lot of drivel in my time, but is the right hon. and learned Lady seriously telling me that she recommends going ahead with all aspects of the Digital Economy Act when Ofcom has shown that part of it was simply unworkable, as Liberal Democrats pointed out during the passage of the Bill?

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Harriet Harman (Shadow Deputy Prime Minister and Shadow Secretary of State for Culture, Media and Sport; Camberwell and Peckham, Labour)

But it needs to be implemented now, with a clear timetable and a code of conduct so that notification letters can be issued. We want the Government to show leadership by ensuring that search engines such as Google play their part, and, if there is no agreement, to carry on and legislate in the forthcoming communications Bill.

Where is the action on young people and skills in the creative industries? The future of our creative economy is built on our young people—young people who are consumers, and many of whom want to work in those industries. We must ensure that there are opportunities for creative development from primary school to the

workplace, but the signs are not good. Creativity is being stifled in schools, and since last year the number of applications for degree courses in creative arts and design has fallen by 27%. We all know why that is: it is because of the Liberal Democrats’ shameful betrayal on tuition fees. The Liberal Democrats were meant to be a brake on the Government—remember that?—but it is obvious that they have zero influence on policy. Perhaps they just did not have enough money to buy dinner with the Prime Minister.

Where is the action on access of finance for the creative industries? London is a global financial capital and Britain’s creative industries are world leaders, yet they struggle to obtain the finance that they need in order to grow. Most creative businesses are small or medium-sized, and they need the banks to lend to them to help them get started and grow. However, as has been pointed out by the British Chambers of Commerce, credit easing

“will not help the smaller, younger, and high-growth firms that have trouble getting credit in the first place.”

Operation Merlin figures show that banks are still failing to meet their lending targets. Net lending to small businesses fell by £10 billion last year. Banks must start lending to creative businesses rather than throwing money away in bankers’ bonuses, and the Government must start making that happen rather than throwing money away on tax cuts for rich bankers.

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Alun Cairns (Vale of Glamorgan, Conservative)

The right hon. and learned Lady says that creative industries are struggling to gain access to capital. Will she give us a specific example?

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Harriet Harman (Shadow Deputy Prime Minister and Shadow Secretary of State for Culture, Media and Sport; Camberwell and Peckham, Labour)

There are many. We need only listen to all the arguments throughout the industry, whether they concern films, video games or music. If the hon. Gentleman does not realise that small and medium-sized businesses are having trouble obtaining loans so that they can start up and grow, he does not realise what is going on in the real world.

Where is the regional strategy that supports the creative industries all over the country, not just in London? The Government have abolished the regional development agencies, they have cut local government, and they have squeezed the BBC, which is bound to hit the independent sector that it supports. The Culture Secretary says that philanthropy will make up for his cuts. If that is his policy, how does it accord with the announcement in the Budget of a cap on tax relief for charitable donations? Was the Secretary of State consulted? Did he even know about it?

There is even more bad news for the arts. Not only have the Government cut the Arts Council’s budget by 29%, but they have now sacked its chair, Liz Forgan. That was a petty political act, and I am disappointed that the Minister did not take the opportunity to pay tribute to Liz Forgan. Those in the arts sector feel that she was doing a tremendous job for them, particularly in managing incredibly difficult cuts, and I want to pay tribute to her today.

Key to a regional strategy is a truly national broadband infrastructure. A digital economy needs digital infrastructure—

Photo of John Mann

John Mann (Bassetlaw, Labour)

Before my right hon. and learned Friend moves on to the subject of digital infrastructure, may I ask whether she is as disgusted and shocked as I am by the news that in 12 minutes’ time the Bassetlaw Youth Theatre will give its last performance because it has been cut by the Tories on Nottinghamshire county council, who have failed to invest in young people and their future? People who could have had a vocational future in the creative industries have had it taken away tonight by the Tories.

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Harriet Harman (Shadow Deputy Prime Minister and Shadow Secretary of State for Culture, Media and Sport; Camberwell and Peckham, Labour)

I am very sad indeed to hear that. Although the Government have squeezed councils, Labour councils up and down the country are determined to do what they can to protect the arts in the community against a Government who are cutting while telling them that philanthropy can step in and take the place of funding, which it will not.

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Mary Macleod (Brentford and Isleworth, Conservative)

Will the right hon. and learned Lady give way?

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Harriet Harman (Shadow Deputy Prime Minister and Shadow Secretary of State for Culture, Media and Sport; Camberwell and Peckham, Labour)

I am going to get on with my speech now, because I know that many other Members wish to speak. Key to a regional strategy is a truly national broadband strategy. There is a growing digital divide between the haves and have-nots—between urban areas with superfast broadband and rural areas with none. That is from the party that said it cared about rural areas. In Labour’s digital Britain strategy, we guaranteed 2 megabit broadband speeds to the whole country by 2012. The Tory Government scrapped that, and now it will not happen until at least 2015. The Government boast of the £100 million for its super-connected cities, re-announced from the autumn statement, and the £50 million for a second wave of smaller towns and cities, but that will not happen until 2015, if then. The Government can talk about ultrafast and superfast and hyperfast and megafast all they like, as the Minister did, but what is happening is the creation of a digital underclass—those in rural areas, the unemployed, and older people, who are already so squeezed by this Budget and by this Government.

For many, broadband access will be made all the more difficult by cuts to libraries. According to the Chartered Institute of Library and Information Professionals, almost 600 libraries are threatened by this Government. Where does that leave the Government’s “race online” campaign, which is supposed to be about libraries playing a key role in getting people online? The Government should tread carefully here: it is a well-known fact that libraries are very popular with many older people—unlike the Chancellor of the Exchequer. This was a Budget that failed on jobs, failed on growth and failed on fairness, especially for older people.

How can it be fair to give a £40,000 tax cut to millionaires and pay for it by taking £3 billion from pensioners? There is no justification. There can be no excuse. The Government’s claim that this is not a cut but a “simplification” is an absolute joke. They have invented a wholly new meaning for the word, but perhaps we should all go along with it: when I went to the hairdresser on Saturday, I asked for a simplification and blow dry, and yesterday I failed to persuade my hon. Friend Jack Dromey to simplify the lawn. But when it comes to

simplification, the Culture Secretary had better watch out—I have heard that there are many on his side who would love to simplify his Department entirely.

Despite the fanfare ahead of this Budget, it has turned into a disaster. They wanted the centrepiece of the Budget to be “Downton Abbey”, but it turns out to be more like “Titanic”: the rich get the lifeboat, the rest sink or swim. This was a Budget that rearranged the deckchairs but did nothing for jobs and growth; a Budget which was based on economic failure and grossly unfair. Goodbye to detoxification: this Budget tells us everything we need to know. The clocks may have gone forward yesterday, but this Government have turned the clock back: wrong choices, wrong priorities, wrong values—same old Tories. The only people to benefit from this Budget were those rich enough to buy access to the Prime Minister.

Several hon. Members:

rose —

Photo of Nigel Evans

Nigel Evans (First Deputy Chairman of Ways and Means; Ribble Valley, Conservative)

Order. I thank both Front-Bench speakers for demonstrating time restraint. There is a five-minute limit on Back-Bench contributions, but if Members can speak for less than five minutes, we will be grateful.

5:53 pm
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David Ruffley (Bury St Edmunds, Conservative)

I believe in low tax. Low tax fosters personal responsibility and generates the incentives that create greater wealth and greater national prosperity, in which all can share.

I therefore welcome the tax-reducing measures in the Budget, such as reducing corporation tax to 22p by 2014, so that we will have one of the lowest corporate tax regimes in the G20. I also welcome the fact that we have reduced the 50p income tax rate to 45p, as all the evidence demonstrates that lowering high marginal rates results in the rich paying more tax. In the early 1980s, when the marginal rate of income tax was 83p, the richest 1% contributed only 10% of the income tax yield, but a 40p rate generates just under a third, so the top 1% pay more tax. This is a truth that the Labour party does not understand. The third welcome measure in the Budget is the increase in the basic personal allowance. That will protect living standards at a time when the cost of living is increasing.

Colbert said that the art of taxation is to pluck the goose in such a way as to obtain the largest number of feathers for the lowest number of hisses. The Chancellor almost achieved that trick, with the exception of the pensioner tax. I believe that he will come to think that the granny tax was a mistake. Pensioners were already angry about lower annuity rates, and about lower rates of interest on their savings, which was not the fault of this Government. They also feel that their savings income should not be taxed twice. Overall, however, this was a good Budget. It was not a Lawsonian Budget, grand in its ambition and its tax-cutting sweep, but many of us believe that the Chancellor will be able to deliver that in future Budgets.

I know that some Members, including those on the Government Benches, argue that the economic circumstances are not propitious for talking about further tax reductions. They will observe that the Office for Budget Responsibility figures suggest that from 2013

onwards the prime drivers of higher GDP will be net investment and trade. We know that they are both sensitive: trade is sensitive to EU zone growth, which is inherently uncertain; and higher business investment is highly sensitive to the easing of credit conditions, yet credit has remained at stubbornly low levels in the early stages of this nascent recovery. Given all of that, how can we talk about further tax cuts? We do so for the simple reason that tax reductions will get the economy going, and we can fund them by reducing public expenditure over and above the totals in the last comprehensive spending review.

Real-terms spending in this country increased by more than 50% during the Labour years. The plans in the Budget imply a real-terms reduction of 3.4% over the five years of this Parliament. There is plenty of fat in those spending numbers, therefore, and I urge the Chancellor to reopen the spending round this year, rather than wait until next year. He will find a surprising amount of support for funded tax cuts to get the economy going, financed and fully funded by further and deeper cuts in bloated public expenditure.

5:57 pm
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Alistair Darling (Edinburgh South West, Labour)

I want to return to the “nascent recovery” in just a moment, but first I should say that I was particularly pleased to hear the Minister refer to a number of successful growth industries including publishing, and in that connection I should draw the House’s attention to the Register of Members’ Financial Interests.

Before turning to the question of growth—or, more accurately, my concern about the lack of it—I want to say a word about the 50p rate of tax, since I introduced it. At the time, I said it was a temporary measure. I did not particularly want to introduce it, but I took the view that, at a time when we were asking many people in this country to share the burden of meeting the increased cost of the downturn, it was right that those who had done well over the previous 10 years or so should bear their fair share of it. I do not have a philosophic attachment to that rate at all, therefore, but this is not a Budget in which I would have returned to the topic, simply because the incomes of many other people in this country are currently being squeezed and they are going to lose out this year. I would have tried to have done something about their position first.

The documentation that the Treasury has produced on the measure reminds me of the stuff that was produced for the five tests in respect of the euro, in that so much evidence has been adduced in support of the Government position. Why did they not just say that they philosophically did not want the 50p rate so they were going to cut it? As the OBR says that its calculations are highly uncertain and it is very difficult to estimate behavioural effects, especially after only a year, and given that there are so many uncertainties and there will be so much forestalling, it is difficult for the Government to say, “Look, this wasn’t actually raising anything.” At a time like this, I think the fact that the rate brought in £1 billion and that we are talking about smaller sums in relation to some of the welfare reforms means that the Government cannot simply write it off. If they want to bring the rate down to 45p, that is fine, although I am bound to say that

I have never understood the argument that someone will still work harder if the rate comes down to 45%, yet they will also work harder if they are told at the same time that they will be paying five times as much tax in the future. That seems a very odd argument to run.

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Harriett Baldwin (West Worcestershire, Conservative)

I thank the right hon. Gentleman for making these interesting points. Was he as shocked as I was to see that, as a result of the measures that he introduced as Chancellor, there was £16 billion to £18 billion-worth of forestalling in 2009-10?

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Alistair Darling (Edinburgh South West, Labour)

Inevitably, there is some forestalling and there will be an awful lot more of it this year when people realise that they will pay a lesser tax rate next year. The hon. Lady makes a point, but perhaps not the one she intended.

The real problem we face as a country is the lack of future growth. I am concerned about that, because our borrowing levels are still high. The Chancellor is still having to borrow £150 billion more than he set out to borrow in his first Budget, in 2010, and his room for manoeuvre is very slight. He has given away about £2 billion this year. He says that he is going to get that back in two years’ time, but £1.5 billion of it is coming out of the reserve. That is not normally what we would expect a Chancellor to be doing if he is saying that he is conducting his finances in a prudent manner.

Of course, a lot of what the Chancellor is saying is dependent on cuts still to be specified—he used to criticise us when we did not specify these things. An awful lot more cuts are yet to be implemented and yet to be specified. When the Budget figures show that borrowing will be only £1 billion less than the Government thought, it is easy to see that we are right on the margins at the moment and that, unless we get growth going, the chances are that that borrowing will increase, not decrease. The need to get growth going is paramount.

We are already on plan B, in that what the Chancellor announced in his autumn statement last year was rather different from the course he set out on 12 months earlier. We are also relying heavily now on monetary policy—on quantitative easing and the Bank of England continuing low interest rates—to try to bring about a recovery. I welcome some of the things that the Government have done, but it is sobering to read the OBR analysis that the Budget will have a limited effect on growth. The best it can say is that the cutting of corporation tax will get us 0.1% of growth, which shows how much more the Government have to do.

I do welcome some of the measures the Government announced. Of course we are in favour of the patent box, which we introduced. It is very impressive that GlaxoSmithKline was, within hours, suddenly able to decide that it would open new factories and new production. It is just a pity that some of the new investment will take three or four years, if not longer, to be put in place. I also certainly welcome what was done for the creative industries. The deputy leader of the Labour party, who spoke for us earlier, made the point that I introduced a number of these proposals in 2010. They were rubbished by the coalition in 2011, but they are back again in 2012, and I wholeheartedly support them. I am also glad that the Green investment bank is coming to Edinburgh, and I hope that it will be up and running fairly quickly.

Turning to the other end of the country, the Government’s recognition that they have to look again at airport capacity in the south-east of England is welcome. It is a difficult issue, it is 10 years since we looked at it and we need to get a move on with it. However, a lot of the measures that have been announced are small or will not be implemented for a long time. Public investment is set to drop. I hope that the private sector comes in on infrastructure and so on, but unless we do more we are simply not going to get the investment we need.

Lastly, I wish to discuss the cloud hanging over us all—Europe. At the moment, we have something of a lull, as it has gone out of the headlines, but the problems have not gone away. We should all be grateful for what the European Central Bank has done, as it almost certainly prevented at least one, if not two, banks in continental Europe from getting into trouble earlier this year. However, the deep-seated problems that Spain has, that Italy has and that Greece has have not gone away. I hope that we will use whatever influence we have to try to engage with the eurozone, so that, for once, they get ahead of the game, because until that happens, that situation will hold back our prospects of growth even more.

6:04 pm
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Andrea Leadsom (South Northamptonshire, Conservative)

This has been a great Budget for business growth, for work incentives and, as the Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend Mr Vaizey rightly says, for technology, too. However, I shall focus my comments on a huge potential opportunity for growth by using technology, which would transform the banking system, put people and small businesses first, and shatter the comfortable oligopoly of the big banks in our banking sector.

Bank balance sheets in Britain amount to 500% of our GDP, which compares with about 300% in Germany and France, and only 100% in the US. Britain is uniquely at risk from this highly profitable sector. Financial services employ 1 million people in the UK, including 250,000 in Birmingham alone, and generate 11% of our total tax take. However, banks in the UK are so highly concentrated that four or five players have 80% of the small and medium-sized enterprises lending market and 80% of the personal current account market, and only about 2% of that on their vast balance sheets is lent into the real economy—the bit that gives us our jobs and helps businesses to grow. We saw in 2008 how the crisis in banking could bring our economy to its knees. Our unique British dilemma is in deciding what to do about this critical industry which has the ability to make or break us. The Chancellor was right to set up the Independent Commission on Banking to look at how to improve the industry, but it missed a big opportunity, as it did not address the massive barriers to entry into the UK economy for new challenger banks.

When I was director of Barclays Financial Institutions Group in the 1990s, an incredible consolidation took place in the financial sector. Banks merged with fund managers, broker dealers, private banks and building societies, creating today’s oligopoly of banks that are simply too big to fail.

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Ian Lucas (Shadow Minister (Foreign and Commonwealth Affairs); Wrexham, Labour)

The hon. Lady is making an interesting speech, and she is talking about the 1990s, when she was at Barclays. Does she agree that one of the major errors

of the late 1980s was the incredible centralisation that took place through the privatisations and the ending of local building societies, and that that is a major reason why it is impossible to get local access to finance now? That issue needs to be addressed.

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Andrea Leadsom (South Northamptonshire, Conservative)

I completely agree with the hon. Gentleman.

Before Virgin took over Northern Rock, Metro Bank was the only company to have been granted a full banking licence in 100 years. I have met entrepreneurs who would love to finance and set up new banks, and we have seen the launch of some new financial services products through the likes of Tesco and Marks and Spencer, but competition remains woeful. At the latest meeting of my business breakfast club, members made it clear to me that switching their business between banks is nearly impossible. Banks that lend money to SMEs require that their customers also do their everyday banking and personal current account banking with them. Some banks even require businesses to switch from a floating-rate loan to a fixed-rate one—that is profitable for the banks, but it forces the business into a loan that it cannot pay back early without enormous expense.

One specific policy would be a game changer for Britain, radically transforming our banking sector in terms of choice and competition, for business and personal accounts alike. We should introduce full bank account portability; we should be able to change banking provider at the flick of a switch. As with mobile telephones, when we change our bank we should be able, if we so wish, to take our account details with us. The ICB has proposed a costly seven-day switching service, where banks undertake to assist customers to move their banking within seven days but customers will still have to change all their direct debits, cheque books and debit cards, and all their documentation. Instead, we could insist on the creation of a shared payments clearing system, where all banks participate and customers have a unique bank account number with a code that simply identifies which bank holds the account. Switching would then be simple because nothing, other than the identifier code, would need to change when someone changes banks. This would vastly transform competition in the sector. Of course the big banks will resist it, arguing that the costs outweigh the benefits, but I want to highlight five very real advantages of full account portability.

First, it would cut barriers to entry for new challenger banks. Increased competition would force banks to differentiate themselves to retain customers. This would lead to enormous improvements in customer service and differentiation of bank offerings. Secondly, new challengers would mean more banks and, over time, a reduction in the risk of banks being too big to fail. The US has more than 3,000 banks and when a retail bank fails there is hardly a ripple. We need diversity of financial services providers, and this would enable it.

Thirdly, industry experts claim that the impact of creating a new shared clearing infrastructure would mean the banks sorting out the problem of their multiple legacy systems that date back to the consolidation of the 1990s. New systems could lead to a reduction of up to 40% in the bank fraud that costs the sector billions each year and is passed on to customers.

Fourthly, multiple legacy systems within banks make it hard properly to evaluate business ideas. Banking is essentially a technology business and improving the single customer view would have a positive impact on banks’ ability to evaluate credit risks and lend more successfully.

Finally, account portability offers the potential for orderly resolution of a failed bank. The potential to close down a bank and move accounts overnight to a solvent bank could be a valuable tool in a future financial crisis. The Chancellor has been kind enough to tell the Treasury Committee that he would consider full account portability if the ICB’s preferred option of a seven-day switching service fails to improve the current low switching levels. I urge him to grasp the nettle now. Technology has the potential to drive a fundamental change in our banking system.

6:10 pm
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David Miliband (South Shields, Labour)

The Minister did not manage to mention in his speech the export potential of football, but I am happy to refer the House to my declared interest as the vice-chairman of Sunderland football club.

Since last Wednesday, the consensus has formed that the Budget spin was cack-handed. I want to make the case that the substance was dangerously complacent about growth and youth unemployment. Growth in our economy has tanked since the Chancellor’s Budget at this time last year. Mr Ruffley said that we had had a nascent recovery, but the truth is that we have had a non-existent recovery. We have had stagnation. British business is sitting on £750 billion-worth of cash, but it is not investing. It is not refusing to invest because of the planning laws or tax rates or because of public sector pay rates; it is not investing because there is no demand in the economy for the goods and services it wants to produce. No wonder the OBR has slashed its forecast not just for growth but for business investment down from nearly 8% to less than 1%.

I have never believed the argument that without the austerity programme Britain was about to become Greece; neither do I believe the Chancellor’s argument from last Wednesday that it is essential to keep austerity to keep international investors buying British gilts. Why? Some 89% of conventional gilts issued by the Debt Management Office in the past year have been bought by the Bank of England, not by international investors. Even within the fiscal straitjacket that the Chancellor has set, he could have done more. He found £1 billion to support business. We all want to support business. His corporation tax cut will add to the corporate cash pile, but it will not change the arithmetic of demand. Meanwhile, far from increasing investment in capital allowances that would do so, he is cutting them by £1.7 billion. Instead of focusing on regional policy, the Treasury has abolished its regional policy unit. Instead of the strength of higher education being exploited, higher education visas are being cut. Instead of tackling the finance gap for small and medium-sized enterprises, a British investment bank was nowhere to be seen in this Budget. No wonder the OBR concluded, after studying each and every one of the Chancellor’s plans that had been announced

since the autumn statement, that the plans will do nothing for growth this year and that it will have to reduce its forecast for growth next year.

We have learned, since the Chancellor’s new definition of simplification last Wednesday, that the price is to be paid by the old. There has been a lot of commentary on that, but there has been far less commentary on the price to be paid by the young. By the Government’s own admission there is a crisis of youth unemployment, with more than a million under-25s out of work, with 1.4 million not in education, employment or training, with 250,000 young people having been unemployed for at least a year and with 200,000 more having been unemployed for more than six months. The net present value cost of all that has been independently calculated at £28 billion. In my constituency, there has been a 250% rise in long-term youth unemployment, with 590 young people having been looking for work for more than six months.

This Government did not invent the problem, but they have made it worse. The Budget was their chance to make a difference, but while the Chancellor insulted the elderly he ignored the young—he spent longer talking about taxing hot snacks. Ministers say, “Look at what we have already announced,” but the flagship Work programme covers only one in 10 of the young unemployed. By the Government’s own admission, the Work programme itself, according to the voluntary sector group that comes together to discuss these things, will help only one in five of those on the programme. So, in total, the Government’s programme will help only one in 50 of the young unemployed get into work.

The Government’s wage subsidy programme, which starts in April, is designed to help 50,000 young people but that number could be doubled by bringing forward the spending for 2014 when the Government say that unemployment will be falling. What about the apprenticeship programme? We all support apprenticeships. Some 75% of the increase in apprenticeships is going to the over-25s. The administration of the £120 million plan for 16 and 17-year-olds is putting at risk precisely the voluntary organisations that the big society was meant to help.

The Deputy Prime Minister has said that he cannot think of a better use of money than creating jobs, hope and optimism for young people. The Prime Minister and the Chancellor say we are all in it together, but the truth is that they got lost in the endless tactical dance about how to dress up the cut in the top rate of tax and in the endless leaking about who would claim credit for raising the personal allowance. They have completely flunked the issue of how to get our economy back on its feet. The loveless coalition will say anything but will do nothing. That is the true story of the Budget and that is the tragedy for the country.

6:15 pm
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Don Foster (Bath, Liberal Democrat)

I am delighted to follow David Miliband who said quite clearly that the coalition Government were not responsible for and had not invented the problem. I might ask him to consider who did. Our country has had to face the biggest boom and bust, with the biggest deficit in the G20, and has had to cope with the biggest banking failure and the biggest crisis among our European neighbours. As a result, we have seen, under Labour, manufacturing falling and personal and

national debt rising to a situation in which for every £4 we spend, we have to borrow £1. Every single day, we are spending £120 million just to pay off the interest on the country’s debt. Of course this coalition Government did not create the problem: we are trying to put it right and we are now in the early stages of recovery.

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Jonathan Edwards (Shadow PC Spokesperson (Treasury); Carmarthen East and Dinefwr, Plaid Cymru)

The hon. Gentleman is making some pressing points, but in light of everything he has said is he seriously saying that the priority at this time should be a tax cut for those earning more than £3,000 a week?

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Don Foster (Bath, Liberal Democrat)

Let me come to that in a moment. First, let me tell the hon. Gentleman what I thought this Budget needed to do. First, it needed to continue the process of reducing the deficit. It needed to continue to maintain confidence in the international markets not least to keep interest rates low and it needed to develop a fair taxation system. I believe that the tax policy that was introduced through this Budget is a fair one. It has moved us more rapidly than many of us could have hoped to a Liberal Democrat aspiration to achieve a tax threshold of £10,000. As a result of what this Government have done by lifting that tax threshold to more than £9,000 by April next year, we will have taken 2 million of the lowest paid out of paying tax altogether and 24 million people will have been given a tax cut of more than £500. That is in marked contrast to the 5 million low-paid people who had to pay more under the Labour Government who cut the 10p income tax band.

Jonathan Edwards seems to suggest that the rich are getting off lightly, but if he looks at all the figures, he will see that that simply is not the case. Under the measures that have been included in the Budget with the 7% increase in capital gains tax, the 15% on stuff that is owned offshore by foreign companies and the measures on tax loopholes, the figures demonstrate that those who are best placed to pay will be paying even more as a result of this Government.

Several hon. Members:

rose —

Photo of Don Foster

Don Foster (Bath, Liberal Democrat)

I will not give way because I want to make progress.

I was pleased with the comments of my hon. Friend the Minister because he was able to put at the heart of what the Government are doing some of the really important work of the Department for Culture, Media and Sport. He showed how the work being done there can help to deliver the growth in the economy that is really necessary, particularly in relation to the creative industries. As he said—and I am grateful to the deputy leader of the Labour party for agreeing—we have in this country some of the brightest and best people working in our creative industries. We need to give them as much support as we can. Even before the Budget, work had been done to try to achieve that, such as the establishment of the creative industries council, which is already making valuable recommendations on the skills and training needs of the sector.

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Tristram Hunt (Stoke-on-Trent Central, Labour)

Is the right hon. Gentleman happy that as a result of the tuition fees introduced by his Government, we are seeing a massive collapse in the numbers studying modern languages, humanities and the creative industries?

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Don Foster (Bath, Liberal Democrat)

If the hon. Gentleman looks at the figures on applications to our universities, he will see that the predicted fall-off has simply not happened. As we heard earlier in the debate and in the Budget statement, investment in science is being increased. The creative industries want a better base than what is taught in our schools. Because of this coalition Government, the way computing is taught in schools is to be changed, and because of the work of the Henley review, we are going to put culture and creativity back in schools. That will be crucial to the sector. The former Chancellor talked about young people; I hope that he has looked at the real benefit that will be produced by the enterprise loan scheme for young people introduced in this Budget. Work is now being done to roll out high-speed broadband and ultra-high-speed broadband in many of our cities. Everyone in the creative industries will benefit from measures such as the cut in corporation tax, the simplification of tax collection, the loan guarantee system, the enhanced business finance partnership and so on.

I welcome many of the measures that have already been introduced and those that are in this Budget, but of particular importance are the tax breaks for producers of computer games, high-end television productions and animation. They will bring real benefits to those elements of the creative industries, helping the UK economy and increasing employment and opportunities for innovation and investment. As many have said, their effect is already being felt. Only a couple of days ago, I received an e-mail from an animation company, Blue-Zoo, saying that it

“has scrapped all planned moves abroad and intends to make shows 100% in this country”

It also says:

“not only that, we are now planning to invest further in our infrastructure, creating jobs, and growing our industry”.

There are many other examples.

Having been very positive, in the few seconds remaining let me raise three concerns about the Budget. First, the Budget introduces a change in gaming machine taxation, the broad thrust of which is welcome, but the failure to take account of irrecoverable VAT in the calculation will, I believe, be to the disadvantage of some aspects of the gaming industry, particularly bingo. I am also concerned about the impact of tax relief changes on philanthropy, and of VAT changes on work done on listed buildings. With those three—

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Nigel Evans (First Deputy Chairman of Ways and Means; Ribble Valley, Conservative)

Order.

6:23 pm
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Ronnie Campbell (Blyth Valley, Labour)

I received a letter this morning from my local county council, Northumberland, saying how pleased it was to have got £7 million for the roll-out of broadband. I take from that letter that the council is quite satisfied. I know the council ran a campaign and met with the Minister, and I wrote to him as well. We will have to wait and see how it all pans out. I am not sure that £7 million is enough to cover rural Northumberland—it is a big county and sparsely populated, so we will need some money to get it right—but I hope it works out.

I am disappointed that we did not get our enterprise zone on the River Blyth. The Chancellor mentioned in the autumn statement that he would look at the

programme—we submitted a programme for 100 hectares on the river and port of Blyth—but it was not mentioned in the Budget statement. There are to be two enterprise zones in Scotland, up the road from us. I hope that he has not forgotten us and that we are still in with a chance. We have high unemployment in Blyth Valley, south-east Northumberland and Wansbeck.

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David Anderson (Blaydon, Labour)

Perhaps my hon. Friend should get some wealthy Northumberland business men to pay quarter of a million pounds to have lunch with the Chancellor. Then he might get an LEZ in Blyth.

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Ronnie Campbell (Blyth Valley, Labour)

The only place I could take them is the canteen. I might get something there, but I am sure I would not get anything in Downing street.

The 50p tax rate has been widely discussed since the Budget statement. We were told it does not do anything and that no one is paying it, which makes me wonder why we have it. We have just heard the previous Chancellor explain why he put it on, but I have to ask: if people can fiddle a 50p rate, surely they can fiddle a 45p rate? And if they are fiddling the 50p rate, what else are they fiddling?

In the Budget statement, we heard the Chancellor say he opposes people fiddling their taxes. I have been here 25 years—I suppose I am an old man compared with some—and I have heard that time and again. Every Chancellor in history—certainly while I have been here—has said, “I’m going to come down heavy on tax evaders,” but what do we see? People making profits in this country and swanning off with their swag to some tax haven—an island somewhere. They cannot go to Switzerland now, because the Swiss will give the show away, but the Government should remember the old saying, “There’s honour among thieves.” There is honour among bankers as well, so I doubt they will be getting much information from the Swiss.

The Liberals have been telling us how wonderful the Budget is, but 14,000 people in this country are going to get a £40,000 tax rebate at the expense of £3 billion from old people—pensioners. I always thought the Liberals had a little heart in them. I do not know what deal they did to get what they wanted, but I am getting a weary feeling in my bones that they sold out the health service to what they think is a good deal. I am sure, when it comes down to it, that is what they did. They sat round the table and told the Tories, “We’ll get your health Bill through Parliament, but we want this and we want that.” Well, they have come unstuck, because in fact they are getting nothing.

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Don Foster (Bath, Liberal Democrat)

I do not know whether the hon. Gentleman has looked at the detail of the OBR’s calculations, but if he does, he will see that the additional money going to pensioners totals £1.75 billion and the cost of the removal of the age-related allowance is £360 million. That means a net increase to pensioners—

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Lindsay Hoyle (Chairman of Ways and Means; Chorley, Labour)

Order. The hon. Gentleman has made his speech and there are many Members who will not get in. It is fine to intervene, but I certainly do not want a second speech.

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Ronnie Campbell (Blyth Valley, Labour)

We will just have to wait and see what happens when the country goes to the ballot box and the pensioners know what the Liberals have done.

There is another thing, which is that right at the end of his speech, the Chancellor said he had to find another £10 billion from welfare. There we are: people out there are already being hit, with their benefits cut from one end to another, and now another £10 billion has to be found from welfare next year. Where are the Government going to cut? They are cutting deeply now—the poor, the sick, the old and the disabled have certainly been hit.

Finally, let me say something about pay. We Members of Parliament are public sector workers and, like everybody else in the public sector, we have the three-year pay freeze, but since this Government came to power, there has been a 3.4% drop in wages in this country. That is the wages of people who are working—and who probably voted Liberal, too. When they find out who has been pushing those policies, the Liberals might not get so many votes. Then again, what has happened to executive pay? Let us look at the figures. In 2009 executives were reported to be getting, on average, £888,000. Under the Tories, two years on, they are getting £3 million, and that is without the bonus. We have not yet seen what the bonus is. It is reported in the paper that the bonus has been kept back because of the 50p. They are all going to get a bonus that is linked to the 45p. That is the most obscene orgy of greed that I have ever seen in my life, and I hope the Liberals get what they deserve—nothing at the polls.

6:30 pm
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Mary Macleod (Brentford and Isleworth, Conservative)

It is a pleasure to follow Mr Campbell, who is passionate about his enterprise zone, unlike Ms Harman, who went on a tirade of negativity about growth and business in this country. In the House hon. Members should be talking up British business to encourage people to invest in this country because it is a great country to invest in.

Even in these difficult economic times there are some great news stories in the national economy. London has retained its status in the global financial centres index as the best place to do business, ahead of New York, Hong Kong, Singapore and Tokyo. Business confidence has jumped to a nine-month high, according to a confidence index by BDO accountants group. This confidence index leapt 3.9 points to a score of 98 in February. Over half of members polled by the Federation of Small Businesses expect to grow in the coming 12 months.

West London is the place where I want people to invest. In my local area, Brentford and Isleworth, there are great local success stories of growth. Aker Solutions, which provides engineering and construction services to the energy, mining and power generation industries, has come back to the UK to Chiswick, and the reason is the highly skilled work force. International SOS has started up in Chiswick, helping organisations manage health and security risks. Otis, QVC and Swarovski are all moving to Chiswick. Starbucks headquarters in Chiswick has announced a major apprenticeship scheme to help young people get into work and develop skills for the future.

BSkyB, based in Osterley, has major expansion plans, with an increase in the number of jobs based there and an extensive programme of increased work in schools, developing skills and aspiration for the future. Fullers Brewery, London’s last remaining traditional family brewer, announced revenue figures up by 6% in its half-year results in November 2011 and like-for-like sales growth of 3.9%.

My hon. Friend Andrea Leadsom spoke about banking, and I agree with what she said, but Handelsbanken has already moved into my constituency and Metro Bank is about to open in my constituency. In the jobs fair that we are having on Friday in Isleworth there are hundreds of jobs available to people who are out there looking for work.

I applaud the Government for the fact that the Budget was one for business growth and exports. Corporation tax is dramatically down and is now lower than in the US, Japan, France or Germany. That is what will make us more competitive than ever before. We are backing potential winners—for example, through tax relief to the video games industry, which will help Sega in my constituency and other similar organisations. Helping companies export is key to growth in the future. Lord Green has been doing a lot of work at a local level as well to encourage businesses to expand abroad. If we exported more, more than £36 billion could be added to our UK economy.

This is also a Budget for small and medium-sized enterprises, encouraging investment and creating an enterprise-led recovery. The national loan guarantee scheme, the enterprise management initiative scheme, the enterprise investment scheme and the seed enterprise investment scheme will help small businesses, and we have helped to simplify tax for so many small businesses. I encourage the Government to do more for SMEs by simplifying employment legislation, as we are doing, helping small companies bid for Government contracts and keeping that process as simple as possible.

This is a Budget to encourage young entrepreneurs. Enterprise loans, which we heard about in the Budget, will help young people believe that they can aspire and set up a new business. It does not matter what age they are; they can do it and achieve great things in business. Linked to the work that we have been doing to try to get more women on boards in the City, we need to encourage more female entrepreneurs. If women were setting up businesses at the same rate as men, we would have 150,000 more businesses.

In conclusion, Britain is a great place to do business. The signs of change are being seen locally and nationally. Each Member can do their bit for growth by helping to build aspiration in schools and/or in businesses. This Budget will deliver real results for this country and allow British business to grow and succeed in the future.

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Lindsay Hoyle (Chairman of Ways and Means; Chorley, Labour)

Before I call Mr Jim Cunningham, let me say that I do not want to drop the time limit any more, but if each Member could be generous to others and shave a little bit off their speeches, we will try to make sure that we get everybody in.

6:35 pm
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Jim Cunningham (Coventry South, Labour)

I will try to be as quick as I can, but I want to highlight some of our concerns. In response to the right hon. Member

for Bath (Mr Foster), who flung out a challenge about where the economic crisis started, I am sure he knows that it started in the United States. People will remember Fannie Mae and Lehman Brothers, for a start. How he thought the then Labour Government could tell the American Government what to do beats me. He should also remember that George W. Bush, the outgoing American President, who would be a Conservative in our terms, pumped $260 billion into the American economy.

I remind the right hon. Gentleman of that, but more important to me is the effect of this Budget and previous Budgets on the west midlands, where one in 10 people are unemployed. There has not been any coherent effort or real strategy from the Government to do anything about the restoration of manufacturing. If the Government point to what is happening at Jaguar, let me make it clear that that was well and truly under way under the Labour Government. At that time, we had a stimulus and we also had a scrappage scheme. That set Jaguar on the road and enabled it to recover. Incidentally, Jaguar is not doing very well in this country, but its exports are doing very well, as are those of other motor car companies. That is not a result of anything that the Government are doing here.

The Government’s new idea of driving down regional pay is a concern to many west midlands colleagues. I always thought it was a good thing to lift people up, not to take people down. The measure reflects the Government’s thinking on economic policy and the regions. At the same time, they are cutting public sector salaries and they are cutting pensions. Salaries have already been cut by inflation and workers will be hit very hard. The Government are also reducing the money going to local businesses which rely on pay increases to revamp the local economy. From the perspective of Coventry and the west midlands, there is no change in the policies of this Government. The policies pursued by their predecessors in the 1980s have been dressed up with a different veneer, but it is the same old approach.

Police and fire services in the west midlands have been cut. It is difficult to get information about what the police and the Government mean by outsourcing. As I have always understood it, outsourcing means buying in goods and services. Leaving the police aside, does that mean that other services are to be privatised? We cannot get a clear answer on that. Over the next four or five years we are going to have a 25% cut in the fire brigade. That raises questions about the quality of services that will be delivered.

A large number of families in my constituency will be hit hard. More than 12,000 families claiming child benefit will either lose it or be affected by the freeze. There are 360 families who will lose their tax credits. Tax credits cut, child benefit taken away, and fuel duty rising—before the general election, this was the Government who were going to do something about fuel duty. Instead, they have started to increase it, which may affect the purchasing power of pensioners and families up and down the land. That means, in effect, that their standard of living will be drastically cut as the increase feeds through to food prices. The latest gimmick is VAT on hot food. Will that be extended in next year’s Budget to VAT on clothes and other goods that people buy? I am worried and chary when the Government start to go down that road.

In Coventry, we saw an 87% increase in long-term youth unemployment last year, and slapping VAT on regular purchases sends out a very sinister signal indeed. I have tried to cut my speech down as much as I can, so there are some issues that I shall not raise. The granny tax has been well documented, and I shall not go into it again tonight. In the west midlands, there are 390,000 income tax payers over the age of 65. Whatever did the pensioners do to the Tory party—

6:40 pm
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Chris Kelly (Dudley South, Conservative)

Thank you, Mr Deputy Speaker, for calling me to speak in this important Budget debate. It is a pleasure to follow Mr Cunningham, a fellow west midlands Member. Before I begin my remarks, I wish to draw the House’s attention to my declaration in the Register of Members’ Financial Interests, as I am company director.

I broadly welcome this radical, reforming Budget. We are fortunate to have a Chancellor of the Exchequer and a Treasury team who have been able, over the past two years, to steady the markets and instil a sense of confidence once again in Britain’s ability to earn its way in this globalised world and to repay its debts. My right hon. Friend the Chancellor’s emergency Budget in June 2010 was crucial in signalling to the international markets that the British Government were serious about addressing our structural deficit and debt situation. His Budgets in June 2010 and March 2011 have played a significant part in the crucial task of ensuring that Britain will not be weighed down by crippling rates of interest and spiralling costs for servicing our debts; we have shown that Britain is able to reform its economy, earn its way out of recession and pay off its debts.

Last week, my right hon. Friend reaffirmed his unwavering commitment to dealing with the debts Labour left behind and that mean that we are spending over £120 million every day on debt interest. He is rightly sticking to the plan. Our country’s credibility is helping to keep interest rates low for households and businesses in my constituency and around the country. If we listened to Labour’s calls for more spending, more borrowing and more debt, we would risk a sudden loss of confidence and a sharp rise in interest rates.

One of the most important things that this Budget has done is to provide even greater support for working families on middle and lower incomes. I welcome the largest ever increase in the personal allowance, which will provide a tax cut of up to £220 for 24 million income taxpayers, from next year. Taken together with previous increases, this means that the coalition Government will have taken 2 million of the lowest paid out of tax altogether, and basic rate taxpayers will be up to £526 better off. Thousands of families in Dudley South will keep more of their income in their own pockets to spend on their own priorities for their own families. I am pleased that the Chancellor has listened and decisively dealt with the cliff-edge issue in relation to the payment of child benefit while ensuring that 90% of families will still be eligible for the benefit, again helping working families in my constituency.

On more than one occasion, I have taken my right hon. Friend to visit manufacturing and engineering businesses in Dudley South. I know that he has taken a great deal of time to visit businesses the length and breadth of this country to listen to their concerns and to see at first hand some of the innovation and creativity that is happening every day in the UK economy. So I am pleased that this Budget has unashamedly backed business, large and small.

The Government are right to be simplifying small business taxes and to have cut corporation tax again. This means that we are on our way to a 22% corporation tax rate, which will be one of the lowest in the world. There is a great big “Open for business” sign now hanging over the UK. As founder chairman of the all-party parliamentary group on family business, I know that that support will be widely welcomed in the family business sector, which is responsible for employing four in every 10 people working in the private sector, representing 9.5 million jobs throughout the UK and almost a quarter of our gross domestic product.

We cannot spend what we have not earned, and this Budget will help Britain to earn its way out of the disastrous financial situation that we inherited from the last Labour Government. The Chancellor has had to make many difficult choices, including on personal allowances for pensioners, but this is a radical, reforming Budget that will help Britain to earn its way in the world. It is a Budget that rewards work, backs businesses and puts Government Members firmly on the side of those who aspire to do better for themselves and their families.

6:44 pm
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Simon Danczuk (Rochdale, Labour)

Much has been said over the past few days about how the Budget will adversely affect pensioners, those on middle incomes and the less well off. There is no doubt that the vast majority of people living in Rochdale will be worse off, rather than better off, as a result of the Budget. But it is not just individuals who will be worse off; there is no doubt that businesses, especially small businesses, could have received much more assistance from the Chancellor. I want to concentrate on that subject this evening.

We are all aware that the small and medium-sized enterprises are the ones that create the most jobs in our economy. Given the present record levels of unemployment, I would have hoped that the Chancellor would do more to help small businesses, rather than just the larger corporations. The Government’s actions to stimulate the economy so far have failed, and if the Office for Budget Responsibility is to be believed, little in this Budget will improve growth. It is predicting growth of 0.8% this year, as opposed to its initial prediction of 2.5%. The cut in corporation tax might well encourage additional investment by larger corporations, but it will do little, if anything, to help SMEs to grow their businesses and create jobs.

I accept that there is some potentially good news in the Budget. Tax simplification for small businesses could work, enterprise loans for young people sound promising, and the expansion of UK export finance is a good thing in principle.

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Jim Dowd (Lewisham West and Penge, Labour)

My hon. Friend mentions tax simplification. What does he make of the tax simplification for pensioners?

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Simon Danczuk (Rochdale, Labour)

My hon. Friend is absolutely right to mention pensioners and the disadvantages to them of the Chancellor’s proposals.

The Government could get things right for small business by simplifying the processes, but none of those proposals will be enough to stimulate the economy. It is also fair to say that a number of this Government’s initiatives to help business have not worked. It has been pointed out that Project Merlin has failed to hit the mark, for example. It failed to provide £10 billion of investment for SMEs. The regional growth fund continues to fail to pay the money that it should be awarding. There is nothing to suggest that the Government initiatives—of which there are certainly many—will actually work. The Budget has also done nothing to allay the fears expressed by small businesses about fuel duty and fuel costs, which continue to go up. Related to that are the Government’s proposals to privatise the road network, which could place further costs on businesses.

Probably one of the biggest disappointments in the Budget relates to business rates. This April, they will increase by 5.6%, the biggest increase in 20 years. Business rates are the elephant in the room—one of what I would call the big three: costs to businesses are about wages, accommodation and business rates. Greater Manchester chamber of commerce recently carried out research which showed that the 5.6% increase will add £54.4 million to the business rates that businesses across the region will have to pay, which equates to 2,407 jobs. In Rochdale, businesses will have to pay an extra £3.3 million, over and above what they are already paying, which will equate to 141 jobs. This is a real concern for local economic growth.

It is therefore not surprising that the British Retail Consortium, the British Independent Retailers Association and the British Chambers of Commerce are all calling for the hike in business rates to be revised downwards. It is no coincidence that retailers in particular are calling for reform of business rates, because they are the ones that carry the greatest burden. It is also worth pointing out that it is retailers that provide much of the employment for young people and women, so the Government could have done much more to help to stimulate employment for those two groups by reforming business rates. They could have used the Budget to really support and encourage small businesses, but they failed to do so. Instead of taking an active approach, they used the Budget to take a laissez-faire approach.

6:50 pm
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Esther McVey (Wirral West, Conservative)

I would like to use my time in this debate to talk about how Wirral and the wider Liverpool city region can benefit from the Budget and how the rest of the UK in turn can benefit from Wirral’s advances and successes.

The Budget is a Budget of growth. It is concerned with repositioning the UK as a place to do business, to set up in business and to relocate big business. It sets out policies offering help to new start-ups, with the simplification of regulations and taxes, a Government loan guarantee scheme and the promotion of self-employment opportunities for all. It offers guidance and support to those businesses going through the new enterprise allowance.

The Budget also set about reducing corporation tax, going further and faster to make it the lowest in the G7. Members do not need to listen to me on this; they can

just look at the actions of industry. GlaxoSmithKline has announced 1,000 new jobs for Cumbria, Nissan is creating 2,000 new jobs in Sunderland, and Jaguar, with 1,000 new jobs in Halewood on Merseyside, has increased its number of jobs to 4,500, trebling the number of employees in the past three years. That is because it is a good place for business. We have the “Open for business” sign up, as my hon. Friend Chris Kelly said.

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Esther McVey (Wirral West, Conservative)

I am sorry, but I will not.

The Budget also offers clear support and incentives for firms taking on apprentices and young employees as well as support for key infrastructure projects, including roads, rail, ports and broadband. It is also supporting the construction industry, with housing development getting Britain building. As the debate was opened by the Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend Mr Vaizey, I would like to quote from the Liverpool Daily Post, whichthis week carried the following headline: “Merseyside video game companies welcome Budget tax credits”. That was Sony, Evolution Studios, Rebel Play and Lucid Games referring to not only the tax credits, but the research and development tax credits and changes to enterprise investment schemes. The Budget is the beginning of a shift from the downward slide in enterprise, manufacturing and exports to an expansive vision and the aspirational upward mobility of UK plc, from which everybody in the UK should benefit. It is a seismic shift saying that we are open for business, and now we have the tools, infrastructure and tax system to enable it.

On Wirral specifically, Wirral Waters is one of the biggest and most visionary regeneration projects in the UK, and it has been enabled only because it became an enterprise zone at the last Budget. The scheme will create over 20,000 permanent new jobs in Wirral, help to create skills and apprenticeships for young people, giving them a future on their doorstep, and help to encourage new housing projects and international trade and investment. Last week I was with some of the Chinese developers hoping to come to the UK, including Stella Shiu, chair of the Sam Wa group, which will produce a 50% investment on the site, starting with the £175 million investment. None of that would have been possible had we not had an enterprise zone, the reduction in corporation tax or the new enhanced UK Trade and Investment—my hon. Friend Margot James is helping with its rejuvenation—and the local planning scheme, because had this been called in to the Secretary of State, the private company, Peel Holdings, would not have been able to pursue it. All in all, this was a catalyst for regeneration and jobs on the Wirral.

There is much to applaud in what has gone on, because we know that we have to strive, to move forward and to reposition the UK as a place to do business. We are starting here, we are starting now, and with further support from Ministers we hope we will be starting in Wirral, too.

6:54 pm
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Jim Dowd (Lewisham West and Penge, Labour)

I congratulate Esther McVey on reading out her speech. I am not sure whether she got it from the Whips or those on the Government Front Bench, but it is patently obvious that it was completely—

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Jim Dowd (Lewisham West and Penge, Labour)

No, I will not—[ Interruption. ] No.

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Lindsay Hoyle (Chairman of Ways and Means; Chorley, Labour)

Order. The hon. Gentleman cannot be made to give way, so the hon. Lady must resume her seat. It is up to him.

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Jim Dowd (Lewisham West and Penge, Labour)

I have reflected upon the error of my ways and will give way. I will not respond to whatever point is made, but I will gratefully receive the extra minute.

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Esther McVey (Wirral West, Conservative)

I appreciate the hon. Gentleman giving way. As the Wirral is somewhere I have lived all my life, and as this is something I have given great thought to and know inside out, and it comes from the heart, I know that it is a part of the country where we need to succeed, and these are the sorts of tax incentives and the sort of Budget that we need in order to be able to do that.

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Jim Dowd (Lewisham West and Penge, Labour)

Yes, indeed, and as for the next bit, I do not know. None the less, I will go on to make a few points.

All Budget statements are a spectacle. When I first came to the House, people used to dress up for the Budget and it used to be more of a spectacle. Some used to put on national dress and dress in top hat and tails and all the rest of it. They do not do that anymore, and perhaps it is just as well, but what has replaced it is an altogether more depressing sight, because the Budget statement has become something of a pantomime—this does not just apply to this Government and this Budget, because it has become like this over time—with the Chancellor and his acolytes sitting on the Front Bench and making a few statement and the simpletons behind them simply responding, cheering and making completely idiotic noises, whether or not they know what the Front Benchers are saying. As I said, I do not limit my criticisms to this Government because it has happened over a number of years, although I think they are the worst example of it. I do not exempt Members on the Opposition side of the Chamber, because when our Front Benchers get up there are Pavlovian responses from this side as well.

What we really need to do is look at what the Budget means today, tomorrow and, more particularly, for the next few years. All Budgets are a mixture of imperative and choice, and this Budget is no different, but what is most striking about it is the choices it makes. The Tory party has never been an egalitarian party; it has always been an elitist party. It is not just that the Government are a Government of the rich, by the rich and for the rich; what is more telling is just how right wing the

Liberal Democrats are, given the opportunity—I exempt Mr Foster because he is a decent sort of chap living in a world of his own creation. None the less we cannot get away from the fact that, were it not for the support of the Liberal Democrats, the Government would not get this Budget through tonight, they would not have got their reforms—or deforms—to the national health service through and they could not get through their reforms in the Legal Aid, Sentencing and Punishment of Offenders Bill. They would not be able to do anything.

The Opposition Front Benchers—I criticise them for this—are a bit addicted to terminology and cliché. We are apparently told to refer to the “Tory-led Government”, but I will not do so because I do not think that that shares the responsibility anywhere near widely enough. This is a Tory-Liberal Government, and were it not for the support of the Liberal party they could not carry through the sort of distortion they have made with this Budget. The Tories are trying to pretend that they are leopards who have changed their spots. Not only that, but they are pretending that they have traded in their spots for presentable and attractive stripes and become vegetarian. I do not believe a bloody word of it. They are what they always have been, which is a party of the privileged with a role to demonstrate to those beneath it that they know their place.

The idea that the Tories are going to simplify the tax system by taking from pensioners has resonance only if we believe that they are taking equally from everybody. To the Liberals who talk about a Robin Hood Budget, I say, “Wake up. Get real.” Robin Hood, incidentally, was a myth, remains a myth and—although I do not wish to upset any colleagues and friends from Nottingham who are here this evening—originally came from Wakefield. The idea of his taking from the rich to give to the poor is, rather like this Government, complete and utter baloney.

I have two points to make in the odd few seconds that I have left. One is on child benefit, and the other is on stamp duty. If the Government had been serious about reforming stamp duty, they would have reformed the whole thing. I am not against people on £2 million paying 7%, and I am not against companies that use their machinery for purchases paying 15%, but the measure is very unfair on those at the bottom of the scale, who have to pay 1% or 3% on the whole cost of valuation. If the Government had been serious about reforming stamp duty, they would have addressed that.

On child benefit, the Government have introduced means testing. They can means-test universal benefits, that is right, but what is next? Winter fuel allowance? Freedom passes? If they undermine universal benefit, they undermine many things that benefit millions of people throughout the country. This Budget, like this Government, is a complete and utter fraud.

7:01 pm
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Glyn Davies (Montgomeryshire, Conservative)

I congratulate the Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend Mr Vaizey, who is not in his place, on putting growth in the creative industries at the very heart of the Budget. It is a hugely beneficial development.

I will speak very much from a Welsh perspective. The Budget that the Chancellor presented to the House is of course concerned with the UK economy, but since

devolution and the establishment of Governments in Scotland, Wales and Northern Ireland, differences have emerged. There are differences in our perspective on the Budget and its impact, and I will focus on the three significant announcements on tax, two of which have been wholly welcomed by my constituents, and one, the age-related taxation for pensioners, to which there has been a mixed response. I hope to address that later.

First, and in my view most fundamentally in the Budget, there is the raising of the income tax allowance. When this Government came into power, the threshold was below £7,000, and now it is heading towards £10,000. This year we took a massive step towards that, with an increase of about 14%, which is a huge jump and will make a huge difference. The measure is particularly welcome in Wales and, certainly, in rural Wales, the area that I represent, because that is where wages are comparatively low. The impact of raising the tax-free allowance is rather bigger in low-wage areas than in other areas, so it is to be hugely welcomed, and to be welcomed throughout the House.

The second fundamental step in the Budget is the one we are taking to make Britain open for business. At its heart is the level of corporation tax, and the Government’s strategy throughout this Parliament is to reduce it from 28p to 22p. This year we have accelerated that process with a 2p reduction, and, as my hon. Friend Chris Kelly said very clearly, that sends out the message that Britain is open for business. It was terrific to see the GlaxoSmithKline announcement coming so soon after the Budget, and of course there are various reasons why it was made, including 1,000 jobs and £500 million of investment, but one narrative that the company used was the competitiveness that this Government want to introduce to British business.

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Jonathan Edwards (Shadow PC Spokesperson (Treasury); Carmarthen East and Dinefwr, Plaid Cymru)

Does the hon. Gentleman agree with me and his party’s own economic commission in Wales that what we really need is differential rates of corporation tax throughout the British state, so that investment is directed at the poorest parts, rather than concentrated down here in the south-east?

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Glyn Davies (Montgomeryshire, Conservative)

I do not believe that that is the right way for us to go at this stage. There is an ongoing discussion about the issue in Northern Ireland, but we have not yet reached the stage of devolving taxation. We are talking about the issue, but we will have to see where we get to.

The central part of my speech is about how we can build on the UK Government’s business-friendly approach, and about the way in which the Welsh Government and the Government here can work together to build on it. We can do so in several ways and in a close, constructive partnership.

First, this Budget introduces capital allowances in enterprise zones, work on which has already taken place in Wales, and one area where the measure will be introduced is Deeside, where the Welsh Government have already suggested it might lead to 5,000 new jobs. We want to see that happen and to build on it in other parts of Wales, and by working together we can do so.

Secondly, there is the commitment to pursue railway electrification. Electrification to Cardiff has already been confirmed, and the crucial next step is electrification of the valleys lines, but only if the Welsh Government

and the Government here work together on that objective will we reach that target. It is absolutely vital that we do so.

Thirdly, there is broadband and the super-connectivity of Cardiff. Cardiff, the capital of Wales, is a hugely vibrant city, and when I was there last weekend, as Wales defeated France and won the Grand Slam, I found the sheer vibrancy of the city something to behold. We need to recognise that we have a wonderful capital city in Cardiff, and we can build on that, but we can do so only by the two Governments working together and building on the business-friendly climate that the Government here have put in place.

Last of all in this part of my speech, on the enterprise loans to small and medium-sized enterprises which are being promoted, the Welsh Government have Finance Wales, and it has many characteristics of a bank. If we combine Finance Wales and the various initiatives being taken at Westminster, we can make a dramatic difference in the development of small and medium-sized enterprises in Wales.

Finally, there is an issue with age-related pensions, and inevitably, if we raise the personal income tax threshold at the massively accelerated rate that we are doing, the two taxes will eventually merge. It is a difficult issue, which we have all had to think about, but the Government have been right to take that step.

7:07 pm
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Anne McGuire (Shadow Minister (Work and Pensions); Stirling, Labour)

During the Minister’s opening speech, I asked him about a community, running along one of the spiral routes in my constituency, which still has dial-up—or wind-up—broadband. If I did not mistake him, I think he advised me to speak to the Scottish Parliament, but I find that a somewhat strange response, because the Red Book mentions a Scottish trunk road, the A82. Coincidentally, that happens to run through the constituency of the Chief Secretary to the Treasury, Danny Alexander. It is interesting that, if someone is the apologist in Scotland for this Government, they need to get their trunk roads mentioned in the Red Book.

Prior to the Budget and against the background in my constituency of unemployment among women and young people that was falling in 2010, and a dramatic increase in the claimant count of 35% in young people and of about 22% in women in 2012, I conducted a survey to see whether there was any advice that the Government could take on board. It suggests that my constituents are completely out of tune with the Budget, because 93% said that it was a good idea to have a tax on bankers’ bonuses to fund employment for young people in Stirling and throughout the UK; 85% agreed with a temporary reduction in VAT on the tourism and hospitality sector, an important industry in my constituency; and 87% supported a one-year reduction in national insurance contributions to give every small firm on my patch the incentive to take on extra workers. There was no mention of the reduction of the 50p rate for those earning £150,000, no mention of a raid on the age allowance for those of state pension age—a measure that has been in place since the 1920s—and certainly no mention of the so-called pie tax.

The latter proposal crystallises the chaotic thinking at the centre of the Government’s financial strategy. It must have sounded like a jolly wheeze—“We’ll tax pies

and rotisserie chickens and so on”—but I have an image of us all wandering round Tesco doing our shopping with thermometers in our hands to check the ambient temperature of the chicken from the rotisserie. Will the VAT be put on to the chicken when I take it out of the hot cupboard, or will I find when I get to the checkout, having wheeled my trolley around the supermarket, cooling the chicken with the soft winds of Tesco or Sainsbury’s, that it has become a cold chicken, which means that the VAT will not be charged? This does not apply only to supermarkets. My hon. Friend Tom Greatrex tells me that yesterday or the day before he went into a bakery shop in Callander in my constituency and got bread rolls. It is a very good bakery shop called Mhor Bread. In future, he might have to ask the person behind the counter, “Can you wait until the bread rolls cool down because I don’t want to pay 20% more for them?”

It is a mish-mash of a policy. However, I will try to give the Government some comfort and save Her Majesty’s Revenue and Customs tens of thousands of pounds on the consultation by pointing out that the European Court has already ruled on this issue by saying that where the level of service is minimal, the purchase should be considered as a simple food sale and not be subject to extra tax. I ask the Minister and the Government to abandon this foolish, mish-mash piece of financial thinking. It did not make sense when the Chancellor said it last Wednesday, it does not make sense tonight, and it will not make sense when hundreds and thousands of us roll our trolleys around supermarkets to cool down the chickens.

7:12 pm
Photo of Alun Cairns

Alun Cairns (Vale of Glamorgan, Conservative)

It is a pleasure to follow Mrs McGuire and, I hope, to support my hon. Friends in introducing an element of reality into the situation, bearing in mind the financial situation that we face. I pay tribute to the Chancellor and to the Treasury team, and to the Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend Mr Vaizey, for the way in which he introduced the debate. I shall come to the Budget’s focus on the creative industries shortly.

The starting point of such a debate must relate to the state of the nation’s finances. We must consider the debt of the nation and the deficit of the nation, as well as the structural deficit and the interest on that debt. As we know, £120 million a day is paid from the public purse to service the nation’s debt. I have heard the groans that come from the Labour Benches when we repeat these figures time after time, but they are still true, and that is the context in which the Chancellor and the Treasury team have to work. It has been said before and needs to be said again that the financial position is unprecedented, and any tax cuts in any Budget have to be funded. It is simply not an option to continue to borrow money time after time as the previous Administration did.

Photo of Karl Turner

Karl Turner (Kingston upon Hull East, Labour)

If the hon. Gentleman believes that his Government’s policy is working, why has the Chancellor borrowed a further £147 billion?

Photo of Alun Cairns

Alun Cairns (Vale of Glamorgan, Conservative)

I cannot believe that the hon. Gentleman asks that question, bearing in mind the scale of the debt that was left, which is the reason for the borrowing. When this Government came into office, a quarter of all spending—a quarter of every teacher’s, doctor’s and nurse’s salary—was being borrowed. Any individual, business or family knows that one cannot continue to spend and spend when the income is not coming in.

There are also economic uncertainties on the European scale, as Mr Darling underlined, as well as global uncertainties. I fail to understand the logic of any Labour Members who have called for tax cuts without saying from where they should be funded. We cannot spend our way out of a debt crisis. Doing so would risk the triple A rating that the Government have managed to maintain and increase the interest rates not only paid by individuals and home owners with mortgages, but that the Government have to pay on the scale of the debt that was inherited. In the next five years, almost £700 billion has to be rescheduled, so the risk to the triple A rating cannot be overstated given the cost that could be added to the nation’s inherited borrowing. Those are the parameters within which the Chancellor has had to work.

Let me turn to some of the specifics in the Budget. Initially, Labour Members focused on the reduction of the top rate of tax from 50p to 45p, and one could ask why they have now changed tack to focus on the age-related allowance. Some might say that they missed it previously, or that they know about their record in that regard. Labour Members are the masters of freezing allowances. The personal allowance was frozen in 2000-01, in 2003-04 and in 2010-11, so the arguments they made last week about the age allowance being frozen would apply to taxation for all workers when the rates were frozen at those times.

Labour Members are showing rank inconsistency. I appreciate that it would be wrong of me to call them hypocritical—I would not be able to do that under the rules of this House—but people outside may well draw their own conclusions. Perhaps the right hon. Member for Edinburgh South West did not mention the age-related allowance because when he was Chancellor of the Exchequer at the time of the last Budget of the previous Administration, he froze the age-related allowance. All Labour Members’ criticisms of the Budget could equally be made against themselves and the right hon. Gentleman. [ Interruption. ] I will happily take an intervention if any Labour Member wants to make a point about the freezing of the age-related allowance at that time. I think the silence speaks for itself.

In the time remaining to me, I underline and welcome the pro-growth Budget, the pro-growth approach to the creative industries and the allowances that have been introduced. I only wish that there was more time to underline the strong message that has been sent out to the whole world: "Britain is open for business. Britain is a place to invest and to work, and you will be rewarded.”

7:18 pm
Photo of Margaret Ritchie

This Budget will not deliver on growth and it will not deliver on fairness, and it does not surprise me that it has been met with such a degree of concern and resentment. It has demonstrated missed opportunities, misplaced priorities,

and a distinct lack of imagination. Ultimately it may hinder, not help, the families and businesses right across Northern Ireland who are struggling at this difficult time.

Now is the time to stimulate growth in our economy, not the time to hand a £42,000 a year tax cut to millionaires through the 45p rate. Aside from that, my party has three primary concerns about the Budget—the refusal to act on fuel prices, the attack on pensioners’ incomes—

Photo of Jim Shannon

Jim Shannon (Shadow DUP Spokesperson (Health); Strangford, DUP)

With the prices of diesel and petrol in Northern Ireland at the highest ever level and rising even higher, as they are across the United Kingdom, does the hon. Lady feel that the Chancellor and the Government have missed an opportunity, for example with the VAT increase, to help those who are under pressure because of fuel prices?

Photo of Margaret Ritchie

I thank the hon. Gentleman for that useful intervention. I agree with him and will come on to that.

The other area that concerns me is the proposal on regional rates of pay. All these measures will hurt low and middle income earners and do nothing to stimulate and grow our economy.

Rather than handing out a massive subsidy to the wealthiest in our society, the Chancellor should have focused on growing the real economy, starting with mitigation measures against record fuel prices. As Jim Shannon stated, the problem of high fuel prices is striking in Northern Ireland where, since the turn of the year, we have had the highest diesel prices in Europe and higher overall prices than in any comparable region in the UK or the south of Ireland. Duty prices must be lowered to mitigate the rising cost of imported fuel. Ultimately, while we rely on such a volatile imported commodity, we will always face such pressures. However, short-term measures are necessary to help those who are in need now. High fuel prices are hurting our people and are hurting our economy by restricting growth.

I will now turn to the so-called “granny tax”. The elderly should not be forced to pay for the systemic problems in our economy—problems that were in part brought about by the same high-salaried workers who have benefited from the Chancellor’s tax cut. The impact of this proposal will be widespread across Northern Ireland, with almost 100,000 people affected and many new pensioners potentially losing more than £200 a year. It represents a further blow to the elderly, who have been particularly impacted by inflation, which has effectively wiped out years of savings and pushed up food prices, while high fuel costs have put a severe strain on the affordability of home heating.

Finally, I will address the issue of regional pay that has been put forward for consideration. The Government are saying that people can do the same job in the public sector, but that those who live in the devolved jurisdictions or the northern reaches of England will be paid less. That is a scandal. Public sector workers in what are already the most disadvantaged regions will earn less and those same disadvantaged regions will suffer the loss of spending power that follows. Things may be different in the world of big donations, but in the area of public sector pay for workers doing the same job,

whether in England, Scotland, Wales or Northern Ireland, there should be no premier league. I put the Chancellor on notice that my party will oppose, both in this place and in the Northern Ireland Assembly, regional pay proposals that would further impoverish Northern Ireland and other less well-off regions.

The Budget will not deliver the necessary growth in Northern Ireland and will leave those who are most vulnerable in the current economic conditions, namely the young, the unemployed and the elderly, even more vulnerable. Those people did not get us into this situation and the Budget provides no signal that the Chancellor will steer the economy out of it.

7:24 pm
Photo of Paul Uppal

Paul Uppal (Wolverhampton South West, Conservative)

The Budget and the coalition Government will ultimately be judged on how well we recover from the economic mess left to us by the last Labour Government, many of whose Ministers occupy senior positions in the shadow Cabinet. To quote the Prime Minister, the coalition will

“give our country the strong, stable and determined leadership that we need for the long term.”

That is something that I often argue about in this Chamber. There are many ways in which this Chamber divides. In essence, I am a passionate believer in the long-term view, as opposed to the short-term view. There is more to do and more that we can do, but the Budget continues the work that the Government have done in their first two years and shows that we are building the long-term foundations that the economy needs.

That was demonstrated by the World Economic Forum’s most recent competitiveness report, which returned Britain to the top 10. It cites the lack of access to finance as one of the top factors that discourages business. I will make two points about that. I am pleased to see the extension of the enterprise finance guarantee, which will ensure that we get finance for the small and medium-sized businesses that need it the most. Secondly, it is good to see the details of the business finance partnership, which involves co-operation between the public and private sectors in lending directly to mid-sized businesses.

The Budget gives our economy a strong and stable long-term future by addressing the factors that are contrary to growth and that are thus making Britain uncompetitive in an increasingly crowded global marketplace. By reducing the complexity of our tax code and the rates at which businesses are taxed, we are signalling that we are again in a position to build on what Britain does best: creating innovative products that are attractive to consumers on the world stage. The Chancellor has shown the leadership that we need for the long term by aiming to double exports to £l trillion by the end of the decade. We have demonstrated that we are not only rebalancing the economy from public sector growth to private sector growth, but rebalancing our trading position to one that is led by exports rather than imports.

The Government are expanding UK export finance and setting out new plans to help smaller firms in new markets. We are right to concentrate on the BRICs—Brazil, Russia, India, and China—because they account for more than 40% of the world’s consumers and because, in recent decades, rising incomes in those countries have created a growing aspirational middle class. It will not be an easy task to get British products into the homes of

those people. A recent letter to the

Financial Times

illustrates the problems that we face in exporting British products to those developing and expanding markets:

“Last month we had an opportunity to export some of our UK-manufactured products as we were more competitive than a Chinese competitor, only to find that there was a 22 per cent import duty to add to our cost, taking away our advantage. Yet when Chinese goods are brought into the UK there is no duty to pay.”

We are right to never allow protectionist rhetoric to creep into our political system, but we must also continue to challenge protectionism abroad. We must continue to work with our trading partners to negotiate fairer treaties and, where necessary, submit complaints to the World Trade Organisation and similar institutions.

By pushing for the abolition of import duties and the liberation of foreign markets, we are again building the foundations of an export-led recovery, with job creation, sustainable investment and economic growth. It is right that the Budget focuses not just on short-term gains through artificial stimuli, but on proper policy planning to assess the barriers to growth and tackle them head-on.

Many people have said in the Chamber that there are winners and losers from the Budget. They are right. The winners are common sense, long-termism and opportunity. The losers are those who try to make political capital and who always take the short-term view.

Photo of Fiona O'Donnell

Fiona O'Donnell (Shadow Minister (Environment, Food and Rural Affairs); East Lothian, Labour)

Hear, hear!

7:27 pm
Photo of Graeme Morrice

Graeme Morrice (Livingston, Labour)

I thank you, Mr Deputy Speaker, and my hon. Friend Fiona O’Donnell.

Over the past few days, I have been speaking to people in my constituency about the Budget, gauging their opinion and gathering their views. Everybody I spoke to was clear that, once again, the Tories have shown their true colours with a classic Tory Budget under which millions will pay more so that millionaires can pay less. That is evidenced by the facts, as we have heard throughout this debate, with 14,000 millionaires receiving a tax cut worth more than £40,000 a year, while 4.4 million pensioners lose an average of £83 a year.

It is a classic Tory Budget, but with a difference—it was possible only thanks to the support of the Liberal Democrats. Those same Lib Dems publicly opposed any change to the 50p rate of income tax until just a few weeks ago; those same Lib Dems, before the last general election, repeatedly stated their opposition to immediate public spending cuts, only to support a Budget reduction of more than £6 billion within two weeks of forming the coalition; and, lest we forget, those same Lib Dems promised not to raise VAT and then raised it. The Opposition will not forget the sycophantic sight of Lib Dem Members waving their Order Papers in glee last Wednesday at a George Osborne Budget—yes, a George Osborne Budget. I am sure the country will not forget that sickening display at the local elections in six weeks’ time. We can safely say that any lingering uncertainties

about the Liberal Democrats’ wholesale abandonment of their progressive roots have finally been laid to rest by this Budget. British Liberal Democracy RIP.

Photo of Stephen Lloyd

Stephen Lloyd (Eastbourne, Liberal Democrat)

Does the hon. Gentleman agree that the Liberal Democrat policy of increasing the personal tax allowance to £10,000 by 2015, which was in our manifesto, is not only being delivered but being delivered quicker than that? It will take 2 million of the poorest people out of paying tax altogether.

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Graeme Morrice (Livingston, Labour)

I have been told that I am not getting an extra minute, so I will just press on with my speech.

I want to say a few words about the 50p tax rate and about the granny tax, which has angered many people in my constituency, before finishing with the Government’s failure on jobs and growth.

The 50p rate raised about £1 billion in its first year, and its continuation could have been used to cut fuel duty, about which many of my constituents have written to me, to reverse the Government’s damaging cuts to tax credits or to help reduce the deficit. Instead, the Chancellor has chosen to give the richest 1% of earners a huge payout. People on middle and low incomes are already being squeezed by rising fuel, energy and food prices, and now their tax credits and child benefit are being cut. Yet again, the Government have made the wrong choice and proved how totally out of touch they are.

Photo of Jim Shannon

Jim Shannon (Shadow DUP Spokesperson (Health); Strangford, DUP)

Will the hon. Gentleman give way?

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Lindsay Hoyle (Chairman of Ways and Means; Chorley, Labour)

Yes, but somebody else will end up losing it.

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Jim Shannon (Shadow DUP Spokesperson (Health); Strangford, DUP)

I thank the hon. Gentleman. Does he feel, as I and many people outside the House do, that as the threshold for a single person will be approximately £50,000, which will affect their tax credit, but for two people earning £40,000 each there will be no cut to their—

Mr Deputy Speaker:

Order. If you want to put your name on the speaking list, do so by all means, but interventions have to be short.

Photo of Graeme Morrice

Graeme Morrice (Livingston, Labour)

I agree with the hon. Gentleman.

The aspect of the Budget that has undoubtedly caused the most anger among my constituents is the decision to freeze the personal allowance of pensioners, which will help subsidise the Chancellor’s bumper tax cut for the rich. Buried in the Budget’s small print, the Government tried to make out that that was a tidying-up exercise, but nobody is fooled by that. The public are clear that it is actually a £3 billion tax raid on pensioners. No wonder it was the only aspect of the Budget that was not leaked in advance. In Scotland, there is a song that goes:

“Yi canny shove yer grannie aff a bus”—

the reason being, the song explains, that “she’s yer mammy’s mammy”. It seems to me that the Tories are quite happy to forgo a compassionate approach to our collective grandparents by shoving them all off the nation’s bus.

How will the Chancellor’s tough talk about cracking down on tax evasion and aggressive tax avoidance, which he says is morally repugnant, be put into action if the resources provided to Her Majesty’s Revenue and Customs continue to be cut, including 240 processing jobs at Pentland House in my constituency?

Finally, on growth and jobs, it has become increasingly clear that the Government are failing to deliver for business and drive forward growth. The reality simply has not matched up to the rhetoric, with record unemployment and flatlining growth. When even the Business Secretary describes Government initiatives to drive forward growth in key technologies as “rather piecemeal”, we know that they are in deep trouble.

My constituency has an excellent track record of attracting and sustaining innovative high-tech employers, but I know from speaking to some of those companies that they are frustrated by the lack of Government support and strategy. Many of them are doing well overseas and would like to expand and recruit new employees, but the toxic mix of a UK Government who are failing to create a supportive environment for sustained growth and a Scottish Government stoking up economic uncertainty with their obsession with breaking up the UK is making many firms think twice. Labour’s five-point plan for growth offers an alternative vision, and if the Government followed our advice and implemented a £2 billion tax on bank bonuses to fund 100,000 jobs for young people, we would begin to see some progress in tackling the scourge of youth unemployment.

Several hon. Members:

rose —

Photo of Lindsay Hoyle

Lindsay Hoyle (Chairman of Ways and Means; Chorley, Labour)

Order. I am going to drop the time limit to four minutes, because we have 30 speakers to get in. If some Members wish to withdraw I will leave it at five minutes, but that does not seem to be the case. I am trying to be fair by everybody, and I say to Members who keep intervening that trying to be fair to each other would be very helpful.

7:34 pm
Photo of Harriett Baldwin

Harriett Baldwin (West Worcestershire, Conservative)

This is a Budget that rewards work from a Government who are making work pay, and I want to express on behalf of the small businesses in Malvern and the surrounding cyber valley in my constituency the enthusiasm that exists for taking advantage of the opportunities for growth and the lower taxation rates for small businesses.

Since today’s debate is the technology debate, I point out that in my constituency we have a growing cyber sector. There is an enormous amount of business growth, and it is estimated that 500,000 jobs will be created in the sector over the next decade. Those jobs are great for young people. There is enormous demand among firms in my constituency for teenagers who may have spent a lot of time in their bedrooms on their computers and have become ethical hackers. People in my constituency with those skills are snapped up by local businesses. Perhaps that is why the number of unfilled jobcentre

vacancies in West Worcestershire rose by 70% last month, which shows that there are a lot of businesses with the confidence to take on an additional employee.

As a member of the Select Committee on Work and Pensions, I wish to make a point about the Government’s introduction of universal credit. We have talked a lot in these debates about the top rate of tax, but let us think about the rate that those on the lowest incomes had to pay for 13 years under Labour. Page 95 of the Red Book shows that the marginal deduction rate for a lone parent with one child working more than 10 hours was 100%. We are changing such disincentives to work by moving to universal credit, which will be very powerful in helping those on the lowest incomes into work and out of poverty.

I want to make the rather controversial statement that despite the bad press on behalf of pensioners on Thursdays, this Government have done more to help pensioners and future pensioners than any other Government in history that I can remember. First, there is the triple lock on the state pension, which will increase pensions every year by the higher of inflation, 2.5% or earnings. That is worth an enormous amount to today’s pensioners—no more 75p increases.

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Steven Baker (Wycombe, Conservative)

Did my hon. Friend, like me, hear the shadow Chancellor appearing on the Vine show during the week? The first person who came on after he had spoken was a pensioner, who denounced him and his measures.

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Harriett Baldwin (West Worcestershire, Conservative)

My hon. Friend will also have heard in the Budget that we are abolishing the means test, which has been such a disincentive to saving for low-income pensioners, and bringing in a powerful simplification of the state pension. That will be worth much to future pensioners.

The Government are also introducing auto-enrolment, which will bring 5 million additional savers into the occupational pensions market. That is a most important step to strengthen the pensions system, and it has cross-party support.

Most important was what the Budget did not do. It did not make further changes to pension taxation and regulation, such as the amount that people can defer from their salaries to take as future retirement income. That is an important point for the overall stability of the system. Did you know, Mr Deputy Speaker, that under the previous Government it was possible to put £250,000 into your pension fund? That was absolutely extraordinary, and I welcome the fact that this Government have lowered that limit substantially so that pensions provide fewer tax reduction opportunities for those on the highest incomes.

Finally, the Government have taken some difficult decisions on overall pensions policy and made some sensible changes that will stabilise the pensions system and make it more sustainable for the future. This is a Budget that rewards work and is good for business, and I urge all hon. Members to walk through the Lobby this evening to support it.

7:39 pm
Photo of Ian Mearns

Ian Mearns (Gateshead, Labour)

It is clear from today’s contributions that the Budget impacts in very different ways in different parts of the country. Members in the south, who mainly represent the Conservative party and the Liberal Democrats, tell us about the benefits of the Budget, but those benefits are few and far between in my neck of the woods.

On behalf of my constituents, I congratulate the Leader of the Opposition, who last week hit the nail on the head, when, in response to the Chancellor’s Budget statement, he said, “Same old Tories”. He was absolutely right, and that point has been magnified by what we have seen this weekend. It is absolutely the same old Tories. But now there is an added dimension. It is the same old Tories but aided and abetted by their accomplices, their partners in crime, the Liberal Democrats.

In the Chancellor’s millionaires’ Budget, it is clear who will suffer the most—the people of the north, the poorest, and those looking for work. With few jobs available, it will be pensioners, families, the hard-working, the squeezed middle and the working poor who will suffer the most. It was notable that the Chancellor consigned to the dustbin of history the phrase, “We’re all in this together.” He is not saying it anymore. Owing to the imbalance in the Budget, it is clear that most of us are in this together, but that the few at the top of society will be exempt from it all.

The regional disparity is all too plain to see. In the three south-east regions— London, the south-east and the eastern region—nearly 195,000 people will benefit from the cut in the top rate of tax. In the north-east, that figure is 5,000, and in Wales, it is 4,000. That is a massive disparity.

The people of the north-east will be forgiven for thinking that the Government have developed exactly the same approach as William the Conqueror—a 21st-century scorched-earth, slash-and-burn policy for the north. In just two years, they have abolished our Minister for the north, our local authorities have taken massively disproportionate cuts and the regional development agency has been abolished. My own authority of Gateshead has lost 1,500 jobs, and 67,000 public sector jobs have gone in my region while only 5,000 new jobs have come in the private sector.

We are clearly not in this together. There is no plan, no investment, not a sausage—not even a Greggs sausage roll. The Government’s plan to add VAT to warmed-up pasties could jeopardise Greggs breakfast club scheme for 65 primary schools in my region, four of which are in my constituency—not to mention knocking £35 million off Greggs’ share value last week. It is obvious that we are not all in this together.

Let us consider regional pay. We do not have a credible policy for growth, and now the Government are offering us regional pay.

Photo of Nick Smith

Nick Smith (Blaenau Gwent, Labour)

Does my hon. Friend agree that it will be people such as police officers, nurses, and fire and other emergency staff who will be most affected by this attack on them in the form of the introduction of regional pay?

Photo of Ian Mearns

Ian Mearns (Gateshead, Labour)

I could not agree more, and of course there will also be a depressing effect in the private sector. Last weekend, private sector bosses in the north-east came out clearly against regional pay.

If we are to look at regional pay, can we also look at regionalised utility bills for gas, electricity, telephone, water and vehicle fuel—and, while we are at it, council tax and grocery bills? If the Chancellor or the Prime Minister fancy paying £250,000—shall we say?—to have dinner with the chief executives of Asda, Morrisons, Tesco and Sainsbury’s, perhaps they could ask them to reduce the cost of grocery bills in the regions. Or they could ask the east coast main line to implement regional level funding for fares for people travelling up and down the country to get to work from far-flung fields. And why not go the whole hog and establish regional Parliaments and re-establish our RDA? Let us do things on a regional basis properly and fundamentally, but I really do not think that will happen. The people of the north-east will never forgive the coalition. In particular, they will never forgive the Liberal Democrats for their hand in it. Quite frankly, the Budget is shocking.

There is one last thing. As One North East, our RDA, winds up and prepares to close its doors for the very last time, may I formally, in the House, record the thanks of the people of the north-east for the work of our RDA and, in particular, Alan Clark, the chief executive, Paul Callaghan, the chairman, and his predecessor, Margaret Fay? They did a great job for the north-east.

7:44 pm
Photo of Margot James

Margot James (Stourbridge, Conservative)

This is a Budget for long-term growth set out in extremely difficult economic conditions. The lowering of the corporation tax main rate to 24% and of the small profits rate to 20% will give us one the lowest rates of corporation tax in the OECD. Combined with the reduction in the top rate of income tax to 45p, that presents the UK as a lower tax country that rewards enterprise and will attract the sort of investment we saw just last week from Nissan and GlaxoSmithKline.

There has been much talk recently of the need for an industrial strategy. Lord Heseltine wrote in The Times today on this subject. Industrial strategy got a bad name in Britain because of the damage that such policies wreaked in the ’60s and ’70s, but the world is a different place now, and I believe that the risks of getting industrial policy wrong are much reduced. The quality and extent of real-time information on the performance and prospects of different sectors of the economy is far superior to what it was. Multinational companies have replaced nationalised industries. As large employers, they are far more mobile, and the UK is now in competition, for export markets and inward investment, with many more countries falling over themselves to be open for business. The status of Singapore, with its state-of-the-art education system and infrastructure built around the needs of global companies, such as GSK, has shown that it is capable of becoming a science hub for the whole of south-east Asia in less than 20 years. That is an example of what the UK is up against.

I was delighted, therefore, that my right hon. Friend the Chancellor announced new finance packages in the Budget to promote trade and exports. Until recently, UK Export Finance, formerly the Export Credits Guarantee Department, was focused on larger companies, mostly in the defence and aerospace sectors. That changed with last year’s relaunch, and the organisation, now known as UK Export Finance, has a brief to support smaller companies. Export insurance policy is being widened to

cover all products and services, including contract bond support for small and medium-sized enterprises, and it is vital that we now promote awareness of these new services among medium-sized companies in our constituencies.

We are making huge progress in this regard. The west midlands saw the largest increase in the number of exporters in the final quarter of 2011 compared with a year earlier. That followed a number of months in which the west midlands had experienced decreases in the number of exports. The improvement is most welcome. It is excellent that so many local firms are looking to sell to new markets outside the EU. Some 55% of west midlands exports are now going to non-EU countries. That must extend beyond the BRICs, as outlined by my hon. Friend Paul Uppal, to the next 11 countries, such as Bangladesh and Nigeria, which have huge growth rates. I am delighted that many companies in the west midlands and the black country are taking advantage of those opportunities.

7:48 pm
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Pat McFadden (Wolverhampton South East, Labour)

The most significant thing about last week’s Budget is that it did not move the dial on economic growth. The Office for Budgetary Responsibility has confirmed that and said that it has not revised its expectations for growth or employment. On the basic problem facing the country—the need for jobs and growth—the Budget changes precisely nothing. If there was an argument within the Government about a plan for growth, it has been lost. Indeed, the pre-Budget discussion was not about jobs and growth but about which party in the coalition could claim credit for which tax rate they felt related to their own manifesto.

The Treasury Committee recently took evidence from the permanent secretary to the Treasury. He confirmed that regional policy work in the Treasury has been wound up. In fact, the only regional policy the Government have left is to cut public sector pay in the regions. The permanent secretary spoke of “intrinsic scepticism” about policies to drive growth beyond the fiscal measures that we know about. The Budget is the evidence that that scepticism has won through. The Government have hung their flag firmly on deficit reduction alone, abandoning the effort for a convincing plan for growth and jobs alongside it. The Government are persisting with a hit on manufacturing companies, through cuts in investment allowances, to pay for their corporation tax cut. It is not so much the “march of makers” as the levy on the makers to pay for the non-makers. Rhetoric and policy are pulling in two entirely different directions. It is not enough to say that we want to be open for business; the Government have to play their role in helping business to grow and succeed.

If the Budget changed nothing economically, it certainly sent strong political signals. At its heart is a tax cut for those earning over £150,000 a year, paid for by two groups: pensioners, through the freeze in the personal allowance, and also—this has been under-commented on—middle-income earners who are being dragged into the 40% tax bracket, and there are 300,000 of them. Reference has been made to the allowances being frozen before, but Budgets have to be taken in the round. The central message of this Budget is that pensioners and middle-income earners will now pay for a tax cut for

people earning far more than them—four or five times more. That is what the Government have signalled politically in the Budget.

Let us think a little about the low-paid. The Liberal Democrats have claimed great credit for the increase in the personal allowance. It is true that it will be of help to some of the low-paid, but there is something else, which we should not forget. There are 300 families in my constituency, and hundreds more in constituencies represented in this House, who will be plunged into poverty by cuts to tax credits, of up to £3,800 a year, unless they can find more hours of work. The money that could have ameliorated that change has gone to a tax cut for people earning more than £150,000.

It is claimed that the Budget is fiscally neutral overall. However, although we know what the measures in it cost, we do not know what they will raise. In the end, the real picture might not be a fiscally neutral Budget, but a gross tax give-away to the richest in the country. That shows the political colours of the Government more than anything else.

7:52 pm
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Jeremy Lefroy (Stafford, Conservative)

For me, the most significant figures in the Budget are in tables D.3 and D.4 in the Red Book, which set out receipts and expenditure over the next five years. Total tax receipts are increasing by £153 billion, from £550 billion to £703 billion. At the same time, cash expenditure will rise from £696 billion to £756 billion—a rise of £60 billion. However, of that increase, £17 billion alone will be down to the increase in debt interest. The cost of public pensions is rising by £7 billion, to £15.4 billion, net of contributions, while net expenditure on social security and state pension will rise by £25 billion. In broad terms, over the next five years we have to raise an extra £150 billion a year in taxes to eliminate the deficit and pay for the increases in interest, social security, pensions and, of course, health.

The only way to raise such additional revenue—which will be an extremely difficult task—and tackle the curse of unemployment is by being completely open for business. The Budget, as this week’s cover of The Economist says, gives that clear sign. We have a reduction in the corporation tax rate, the patent box, above-the-line research and development tax credit reliefs for the creative sector, deregulation and, indeed, better regulation. Is that enough? No, it is not enough. The loan guarantee fund will also be extremely important, but again, we will have to watch that carefully—not every six months in statements, but every month—to find out whether our businesses are getting the credit they will need for growth. My hon. Friend Margot James mentioned exports, which are vital. The improvement in the export credit guarantee scheme is important, but it is still a fraction of the help that the Germans give their exporters. There need not be a cost to the Treasury; rather, the money can be recouped through the premiums on the scheme.

I have a number of brief suggestions to make in the last couple of minutes available to me. First, there has been concern about the effect of the reliefs on charities. At present, the tax relief fund for the excess above the standard rate is returned to the taxpayer—in the form of a tax refund—who can then keep it. It should surely be possible to require that this tax refund be paid to a charity; indeed, if it were paid in that way, it could be taken outside the suggested cap. As for the age-related

allowance, it is important that fair notice be given—as it is with anything to do with retirement, whether changing the retirement age or changing tax arrangements. Although I understand the argument for bringing tax allowances into line over a period, the Government might consider letting personal allowances catch up with the age-related allowance. The additional cost of doing so could be paid for—I believe we must always pay for the things we suggest—by further restrictions on tax relief for higher rate pension contributions.

That brings me to a further suggestion. In the summary of Government receipts, income tax receipts are shown as net of everything except tax credits, yet the reliefs given on income tax are, in effect, a major item of expenditure. We should be explicit in the Government accounts about the cost of such reliefs—whether they are against pension or charitable contributions, or are enterprise reliefs—and not just net them off against income tax.

Finally, I have a couple of caveats. The first is about regional pay, which I suggest should be considered carefully. I am sceptical about its value, but I am willing to listen to the arguments. However, I am extremely sceptical about the value of relaxing Sunday trading rules during the Olympics, and I am firmly opposed to any permanent relaxation. This is not simply a question of keeping Sunday special as a time for families, friends or worship, although I for one consider that to be important; it is also about protecting the interests of those who work in the retail trade. However, in general, I welcome what this Government are doing to make Britain open for business.

7:56 pm
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Ian Lucas (Shadow Minister (Foreign and Commonwealth Affairs); Wrexham, Labour)

I am pleased to follow Jeremy Lefroy, who made some valid points.

The focus of last week’s Budget should have been on encouraging business and consumer confidence, because the failure of this Government is above all the failure to facilitate demand in our economy. On the contrary, their policy has led to a lack of demand in the following ways and policy areas. The first has been by reducing public expenditure on capital projects, which is especially telling in those parts of the UK that depend significantly on the public sector rather than the private sector for investment. The effect is especially evident in the construction industry, which is still in dire straits because of the lack of demand from either the public sector or the private sector.

In addition—we must not forget this—this Government, of the Tories and the Liberal Democrats, have increased taxes on consumer spending by increasing VAT, which has reduced the income going to local businesses. When people spend money, that difference between 17.5% and 20% is taken out of the local economy. It does not go into local businesses; it goes straight to the Exchequer. Again, that is money being taken out of the economy. The Government are also reducing employee confidence, because they repeatedly talk about reducing jobs in the public sector, which diminishes demand—for example, by affecting the decision to move house, which has an impact on the housing economy and developments in the construction sector.

In all those ways, the Government are cutting demand at the very time we need demand in the economy to facilitate work for our young people. Indeed, we hear a roaring silence from the Government about our young people, who were barely mentioned in the Budget. The problem is that we have seen all this before. In the 1980s, when I was politically forged, I saw all that happening in the north-east, where I was brought up. For example, we saw 3 million unemployed, twice. [ Interruption. ] I am sorry that those on the Government Front Bench find that amusing, but that is what happened. A generation claiming benefits are still suffering the consequences of the Tory Government of the ’80s, and now we are seeing it again. That is why I feel passionate and angry about what this Government are doing—because what those policies did was drive people on to the dole, which at that time was paid for by two things: privatisations and North sea oil. We remember Harold Macmillan saying that the family silver cannot be sold off twice, and privatisation means it has now been sold. North sea oil returns are diminishing, so the Government are simply running out of money because they are not facilitating growth in the economy. One of the major reasons for that is that people and businesses cannot borrow money.

The root cause of this difficulty is the incredible centralisation in the banking sector, to which I referred to earlier, which prevents businesses across the country from accessing demand. Again, we go back to the 1980s. Then we saw the demutualisation of great institutions such as the Northern Rock building society. It was based in the north-east where I was brought up, but it ended up a horrific behemoth in the mid-west of America, losing money and going out of business as a result of the American sub-prime mortgage crisis. The result is that a local organisation that had provided homes and jobs for local people was there no more. We need to go back much further than the last Labour Government to understand why all this happened. It happened because of what happened in the 1980s, as I have explained. We need a radical change of course.

8:00 pm
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Steven Baker (Wycombe, Conservative)

I refer the House to my interest in Cobden Partners.

This is a Budget of fiscal conservatism and monetary activism. It is a Budget, above all, of economic expectations, setting out to people that we will reward work, support families, help those looking for work, back business and back aspiration. In the short time available to me, I would like to speak directly to the point of monetary activism, which is one of the Budget’s key pillars. I hope the Government will not take it as a criticism, because the Chancellor has emphasised that the Bank of England is independent and, of course, its policies are symptomatic of those followed all around the world.

Over the past 13 years under new Labour, the money supply expanded from about £700 billion in 1997 to £2.2 trillion in 2010. That was through a massive expansion of bank balance sheets—a huge amount of monetary activism led by central banks, with the Bank of England keeping interest rates too low for too long. That goes to the heart of points that Opposition Members have made. It has redistributed wealth towards the south-east and the first recipients of new money. I would say that it is at the heart of our difficulties. The scatter chart in the

Red Book shows how the balance between our fiscal position and the bank balance sheet position is interlinked, and has placed us as an outlier.

When many people look at monetary activism, and quantitative easing in particular, they get worried about inflation—and why not? It would, however, be hysterical to worry about hyperinflation at this stage, when the asset purchase facility is at £325 billion—just one seventh of the money supply. I would nevertheless like to sketch out something that troubles me in my darker moments.

Right now, there is not a problem, but a housing bubble became a banking crisis—at least not a problem of inflation—which became a sovereign debt crisis, which has now been turned into an asset bubble in the bond market. The Bank of England has deliberately inflated bond prices in order to suppress long-term interest rates—interest rates that our constituents cannot do without because they are so indebted. The problem is that, as we know, all bubbles burst; the questions are when and what might burst the bond bubble. Inflation expectations might do it. If we were to look at M4 and M4ex from the Bank of England, there is no reason to doubt its inflation forecast. If we look at my preferred measure of the money supply, however, which is Kaleidic Economics MA, we can see that from July last year, year on year money supply growth was minus 2%; today, money supply is growing by that measure at plus 6%. We should thus be very cautious indeed about the Bank’s forecasts.

If the bond market bubble bursts, there will be pressure on the Bank of England to continue to prop it up. That will lead to further quantitative easing and create an expectation of rising interest rates. That could cause a flight from the bond market into cash; and it could cause the public, as they see QE continuing, to lose faith in cash itself, which could lead them to start spending.

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Karl McCartney (Lincoln, Conservative)

Will my hon. Friend give us an idea of when he thinks this bubble might burst—in the near or the distant future?

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Steven Baker (Wycombe, Conservative)

I am grateful to my hon. Friend, as this is a critical problem. It is a problem of expectations; it about the human mind, which is extremely difficult to predict.

I was saying that, as we go through, we could find that people lose faith in cash. If they do that, they will spend it, and move into real value. Keynesians could end up celebrating an apparent boom, but actually one that is a crack-up of the currency. I sketch these events not to frighten, but to set out a perspective for the House of which we should be aware when we know that the central banks and the Bank of England have deliberately inflated this bond market bubble.

We could end up facing a choice: if prices and wages are accelerating, but less quickly than the money supply, the Bank of England will have to choose whether to supply more money or whether to abandon that monetary inflation and reveal the underlying havoc created by decades of inflationary money. Perhaps new money, instead of real resources, can be used to paper over the cracks. Perhaps expectations can be managed to avoid the bubble bursting. If I were to quote with just a little adaptation something that Hayek wrote in 1932, I would say: “We must not forget that for the last 86 or 88 years, monetary policy all over the world has followed the

advice of the monetary activists. It is high time that their influence, which has already done harm enough, should be overthrown.”

8:06 pm
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Mary Glindon (North Tyneside, Labour)

Last Wednesday, the Chancellor began his Budget statement by saying:

“This Budget supports working families and helps those looking for work. It unashamedly backs business, and it is on the side of aspiration—of those who want to do better for themselves and for their families.” —[Hansard, 21 March 2012; Vol. 542, c. 793.]

That was a bold statement to make, and, unfortunately, not one borne out by the rest of his speech. As the Chancellor went on, I was thinking of my constituents—those working, the unemployed, families, pensioners, the disabled, young people and those in business—all of whom stood to lose or gain by the Chancellor’s Budget and all of whom had the same aspirations to do better, not just for themselves and their families but for their communities, too.

It was bad news from the start. The Chancellor’s warning of further cuts in welfare of up to £10 billion by 2016 simply means a further attack on some of my most vulnerable constituents, who through no fault of their own have to depend on welfare benefits. For most of them, there is no way out of their current situation, so this means that they will have to face further hardships.

The Chancellor’s proposals for the future of those reaching retirement and for those who have already reached it were no better. He might be proud to announce the largest ever increase in the basic state pension, but that brings little joy to the pensioners in North Tyneside who, because of massive cuts in support to local government finance, will see among other things their rents go up by 9%. For those living in sheltered accommodation, that all but wipes out the pension increase. The Chancellor’s inference that the age-related allowances need to be simplified as pensioners do not understand them is an insult to all older people, and a poor excuse for taking away this allowance. The move has, quite rightly, provoked a public outcry, especially when compared with the new lower level of top-rate tax, which will see the richest l4,000 people benefit by up to £40,000.

There was little in the Budget for the 1 million young people currently unemployed, unless they have the confidence to start up their own business. The news last week that the minimum wage for young people is to be frozen and that the maximum rate is to rise by only 11% shows this Government’s contempt for that safeguard for hard-working people, which was one of the greatest achievements of the Labour Government.

The Chancellor’s announcement that local pay agreements should be introduced for the public sector is a further attack on hard-working people in the north-east. Regional pay will create a two-tier economy between the south-east and the rest of the country. As women make up half the work force in the public sector, they will be disproportionately affected by this move. Since the system was introduced in the Ministry of Justice, it has created inequality and tensions, and it has needed to be reformed. This issue could spark a whole debate in its own right. The fact that an area such as the north-east with more than 300,000 public sector workers would lose £78 million a year if there were a reduction of just

1% in public sector earnings surely demonstrates that such a move would be unfair and would have disastrous and far-reaching problems for the economy—and especially for the position of women in it.

The media have seized on not only the granny tax but the pasty tax, which, despite its flippant title, will have serious economic consequences for bakers throughout the country. I am pleased that the Minister is to meet me and representatives from Gregg’s. Let us hope that that is a move in the right direction.

I have presented a very dim view of the Budget, but it will have very dim consequences for the people of the north-east.

8:10 pm
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James Morris (Halesowen and Rowley Regis, Conservative)

I believe that this Budget will support the economy of the black country, part of which I represent, and, in particular, the skilled manufacturing and high-tech industries on which so many of my constituents depend for their jobs. I am especially pleased about the Chancellor’s proposals for an above-the-line tax credit for research and development, about which I wrote to him at the end of last year.

We want to create a high-skill economy. Research and development is a crucial area of activity in my constituency, and at local centres of excellence such as the nearby Aston and Wolverhampton science parks. It is a perverse system that ensures that only those who are already in profit can benefit from the relief for R and D. Switching to an above-the-line tax credit in the form of a payable tax credit for large companies, irrespective of their corporation tax position, is critical to the safeguarding of the R and D that we have locally, and to attracting inward investment in R and D.

There was also good news for the large number of my constituents who work in Birmingham. Many local businesses supporting thousands of local jobs will applaud the £10 million that is to be invested in turning Birmingham into a super-connected city with ultra-fast broadband connections and a high-speed wi-fi service. The announcement came the day after BT’s announcement that it would upgrade the exchange at Cradley Heath in my constituency to support fibre broadband, and I know how much that will benefit local technology firms in particular. I hope that, having announced that funding for super-connected cities, the Chancellor will consider extending the next phase of the scheme further to include city regions such as the black country, so that businesses and residents can gain the full economic and social benefits of ultra-fast internet connections.

The Chancellor’s announcement of £150 million of tax increment financing to help local authorities to promote development has the potential to make a massive difference to our local economies. Having been born in Nottingham, gone to university in Birmingham and run my own businesses, I understand the attraction of focusing on the regeneration of our major cities. However, I ask the Chancellor to ensure that the finance that he announced is available to all local authorities, as areas such as the southern black country desperately need access to such funds if they are to transform the local economy and create the jobs that our communities need.

One of the local authorities covering my constituency has, to an extent, pre-empted the Chancellor’s announcement. Two weeks ago, the leadership of Conservative-run Dudley council agreed to pursue Dudley’s very own council-led local enterprise zone, centred on the Waterfront and Harts Hill areas in Brierley Hill in the constituency of my hon. Friend Chris Kelly. The council hopes that the project will create up to 10,000 jobs—particularly high-tech and high-value jobs—and will attract a number of major companies.

It was initiatives of exactly that sort that the Chancellor had in mind when he made his announcement on Wednesday. I hope that he, and Ministers in the Departments for Business, Innovation and Skills and for Communities and Local Government, will do all they can to make it easier for local authorities to use mechanisms such as tax increment financing to stimulate growth and development in our towns.

As the BVCA said last week, the measures announced in the Budget

“should make for a more entrepreneurial economy and for a stronger society.”

Those thoughts will be echoed by the many businesses in Halesowen and Rowley Regis that will be assisted, and by the even greater number of people who will benefit from the new jobs that those businesses will help to create.

8:14 pm
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Stuart Bell (Middlesbrough, Labour)

Given the shortage of time and the fact that some of my colleagues wish to contribute, I will confine my remarks to my constituency interests.

It was good to hear in Budget week that an outsourcing company that had shed 170 Barclaycard staff on Teesside last year would be taking on 580 new workers, and would be recruiting both at Fountain Court in Middlesbrough and at the bank’s contact centre in nearby Thornaby.

The Chancellor mentioned local enterprise partnerships in his speech. That theme has been taken up throughout the Budget debate, notably by Brandon Lewis, and tonight by my hon. Friends Alison McGovern, and for Blyth Valley (Mr Campbell).

We in the north-east regret the passing of the regional development agency. My hon. Friend Ian Mearns made a powerful speech on the subject, with which I fully associate myself. However, it has been said of Michelangelo “Had he worked with clay and not marble, who would remember him?” We must work with what we have, and we in the Tees valley must work with our local enterprise partnership and regional growth fund. Tees Valley Unlimited has worked with business to deliver projects that have created and safeguarded more than 1,800 jobs, securing private investment of £138 million. My hon. Friend Simon Danczuk spoke of difficulties in the distribution of the regional growth fund, but Tees Valley Unlimited secured more than £68 million for Tees valley companies in rounds 1 and 2 of the fund, and will be hosting a series of business engagement events to promote the fund locally and support company applications. The first will take place in Middlesbrough next month.

In his speech, the Chancellor declared that the country must confront the lack of airport capacity in the south-east of England. Those in my area are concerned about the future of Durham Tees Valley airport. I was glad to hear my hon. Friend Phil Wilson tell the House that he had arranged a meeting between the Minister responsible for aviation—the Minister of State, Department for Transport, Mrs Villiers—and all Tees valley Members of Parliament to discuss how the future of the airport could be assured.

In his speech last week, my hon. Friend Mr Wright pointed out that the Chancellor was favouring Mayfair over Middlesbrough. It was nice to be mentioned in dispatches, but I can only buttress my hon. Friend’s point by saying that the Budget should have focused more on growth, long-term business support, and a modern industrial partnership between business and industry.

This Budget does not cast a broad light across the economy; it casts a deeper shadow. In a year’s time, all the confidence that is emanating from the other side of the House will be seen to have been misplaced, and we will suffer accordingly.

8:17 pm
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Penny Mordaunt (Portsmouth North, Conservative)

My constituents welcome many measures in the Budget, particularly the raising of the personal allowance. The average wage in my city is less than the benefit cap, and it is the very people who were clobbered by Labour’s abolition of the 10p rate who will benefit most from that measure. The news of £100 million for service accommodation improvements and other welfare measures for armed forces personnel in theatre is especially welcome in the home of the Royal Navy. Today, however—with my hat as co-chairman of the all-party parliamentary group for ageing and older people firmly on—I want to focus on the Budget measures that relate specifically to that demographic.

This April, pensioners will receive the largest ever cash increase in the basic state pension, and the complex means-testing system will be reformed to create a new single-tier system set above the means test for future pensioners. That is great news. Many of us have campaigned for such a reform for a long time. I was a critic of pension credit because of the massive “under-take-up” caused by its obscurity and bureaucracy, as a result of which thousands of pensioners in my city are living in poverty. It is better to have a bigger state pension for all.

The second measure that I welcomed was the move towards a simple single-person allowance regardless of age. Half of those pensioners pay no tax, and a high proportion of those who do, do not make use of this allowance. In that respect, the situation is like that of the flawed pension credit. This move will ultimately mean 150,000 pensioners no longer have to fill in self-assessment forms. The Institute for Fiscal Studies argued that this was reasonable and that pensioners had been protected from benefits cuts and tax increases and had lost considerably less than any other demographic group. I accept that.

What I have found harder to swallow is the inter-generational comparisons drawn in the media. We cannot expect younger generations to bear the burden of the economic crisis into which Labour spent us. That burden

has to be shared, of course, but the notion that pensioners’ incomes are excessive because they exceed those of younger workers is bizarre. Our attitude towards pensioners is critical, not just in how we deal with the current crisis, but in how we inspire younger generations to make provision for their older age. I think we are also sometimes in danger of missing the opportunities that a greater focus on the aspirations of older people could bring. Historically, the Treasury and many other Departments have been guilty of that.

Local government, too, have not protected budgets for older people. They have not been focused on unmet need, and they have not been smart about advising people to pre-empt the exhaustion of older people’s assets by helping them to plan for the costs of care.

It is not just in these more obvious areas that older people are disadvantaged, however. Let us consider, for example, the everyday frustrations of ordinary businesses applying for credit in the current straitened times, and then imagine how much more difficult it is for a grey entrepreneur with a brilliant idea for a second career, but who encounters ageism from the local bank manager. Meeting older people’s unmet needs and aspirations will not just benefit today’s senior citizens: it would make a contribution to getting UK plc back on its feet, it would lessen the burden on the public purse, and it would lighten the load for younger generations.

So how can we ensure that the Treasury is firmly focused on these opportunities? Earlier this Session, I helped the Grey Pride campaign deliver a petition with 140,000 signatures to Downing street. It asked for a Minister for older people. In my opinion, that should be not another name on the Government payroll, but a new responsibility allocated to a Minister already enjoying the view both from the Treasury and the Cabinet table. I appreciate that the Chancellor has quite enough to do clearing up after his predecessor but one, so I think that the Chief Secretary to the Treasury should assume this additional role. He might relish the savings for the national health service from a reduction in hospital admissions, the increase in capital mobility through targeted equity release schemes, and the substantial additional tax receipts from successful older workers.

We are used to hearing about sending for the men in grey suits, but now is the time for us all to listen more closely to the people with grey, or greying, hair, and there is a delicious irony in the fact that the current Chief Secretary is both the youngest Cabinet Minister and certainly the least grey-haired. I shall propose this for debate at the next Backbench Business Committee meeting.

8:21 pm
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Pamela Nash (Airdrie and Shotts, Labour)

It may surprise Members to learn that I shall begin by saying something positive about the Budget. I welcome its announcement of a range of measures—such as improving gift aid—that are designed to encourage more people to give to charities, including those working in the arts. However, I agree with Mark Pemberton, chief executive of the Association of British Orchestras, who has urged that any increase in private donations is not used to replace sustained local and national public investment, especially now that tax reliefs have been capped. At a time when public funding is being slashed, local projects—such as Reeltime, a community music project in my

constituency—are in a very vulnerable position. The Westminster Government, the devolved Assemblies and local councils must protect and sustain these valuable projects, not view them as easy targets.

That was the good news. Unfortunately, the rest of the Budget was bad news. Last week’s Budget—and, indeed, the plentiful newspaper reports that preceded it—laid out a plan that will burden the many, not the few. On Friday, I was joined by my right hon. Friend Mr Murphy during a visit to New Wellwynd church’s lunch club in Airdrie. Many of the people there were senior citizens, and it soon became clear just how angry they were about the Government’s new granny tax. Some 370,000 pensioners in Scotland will be affected by the personal allowance change, while a mere 16,000 will benefit from the removal of the 50p top rate of tax.

Perhaps my constituents would understand such measures if they could see that the Government’s “austerity plan” was actually working. However, it is delivering nothing but pain for hard-working families and vulnerable people across the UK. It is certainly not delivering growth, and the Chancellor is now being forced to borrow £150 billion more than he had planned in his spending review. He might need to arrange a few more dinner parties.

Most importantly, the Government’s plan is not delivering jobs. Young people are facing employment prospects that are as bleak as in the darkest days of Thatcher’s “price worth paying” economic policy. More than 1 million of them are now out of work. Long-term youth unemployment has more than doubled in my constituency in the last year.

It is therefore left to the Labour party to fight for jobs. Our national five-point plan includes a tax on bank bonuses to fund 100,000 jobs for young people, and a tax break for small and medium-sized businesses. That is exactly where our focus should be: on keeping Britain working. Labour’s real jobs guarantee would help 115 young people in my constituency. Locally, it is our Labour council that is the last line of defence against the cuts. North Lanarkshire council has an action plan, which will get 5,000 people back into work over the next three years, and it is already helping local SMEs. This is the action Labour takes when facing a jobs crisis.

This Government, however, take a different path. They take one that is not fair on women, who are disproportionately affected by this Budget; not fair on young people, many of whom are being left to linger without education, employment or training; not fair on families, who are facing a reduction in child benefit and tax credits at a time when the cost of living is spiralling out of control; and not fair on pensioners, who have now been saddled with additional taxation. So who is it fair on? The answer is the Chancellor’s chums and the Prime Minister’s pals—their dining buddies. This Budget, sadly, contained the same old damaging policies from the same old Tories, helping the rich get richer and the poor get poorer.

8:25 pm
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Gemma Doyle (Shadow Minister (Defence); West Dunbartonshire, Labour)

Like so many in the country, I had hoped for a Budget that would put jobs and growth first. Instead, again, we have been left with one that puts the few above the

many, and the millionaires above the millions, and that does nothing for my constituents—those looking for work and those in work whose living standards are being squeezed and, in some cases, slashed. More than 4,000 people are out of work in West Dunbartonshire and, only last week, we had the shock of being named the most difficult local authority area in the whole of the UK in which to find a job, with 31 people chasing every vacancy. This Budget does nothing to help those people.

The Government have taken jobs out of my constituency, through the moves on the Driver and Vehicle Licensing Agency and jobcentre staff, and now they want to close our Remploy factory. Not only that, but they are cutting tax credits, housing benefit and opportunities for people to get back to work. Fuel costs and energy prices are rising, and the Government sit on their hands and do nothing. But with so much of the Budget leaked in advance, there was very little news left on Budget day, except for the granny tax. What is the message there? It is work hard, pay your taxes, plan for your retirement and then lose out to this Government.

Instead of recognising that government has a role to play in spreading wealth and economic prosperity to all parts of the United Kingdom, and supporting public sector jobs in constituencies such as West Dunbartonshire, the Chancellor’s plans for regional or localised pay will exacerbate the problem of wealth being concentrated in the south-east of England, with pay being driven up there and down everywhere else. The answer to the problem of low wages is not to help to drive them down.

The Prime Minister visited West Dunbartonshire on Friday. He visited Aggreko, one of six companies in Scotland in the FTSE 100 and a world leader in temporary power generation. I am delighted that he did so, because it is an excellent company, but I am very disappointed that he did not stop for an extra 15 minutes to talk to some of my 4,000 unemployed constituents whom this Government are hurting. If he could give us just a little advance notice the next time he visits, we will have a whip round and perhaps get access to some of his time.

The Chancellor’s plans are bad for our economic prosperity, and I live in hope that one day the Secretary of State for Scotland, and perhaps the Chief Secretary to the Treasury, will do the right thing, stand up for the people they represent and oppose these plans. One of the first things the Labour party did after coming to government in 1997 was to deliver devolution and the Scottish Parliament, which should give Scots protection from the worst excesses of the Tories while ensuring that Scotland remains a strong part of the United Kingdom. What is the Scottish National party doing now that it has a majority in the Scottish Government? I am very disappointed that SNP Members have not been in the Chamber today. There is no doubt that my constituency is suffering; it has the highest number of jobseekers per vacancy and the second highest youth unemployment rate in Scotland, but just in recent weeks we have been excluded from the Scottish Government’s new enterprise zones and allocated exactly no money from their youth unemployment strategy fund. I really hope that my eyes are deceiving me and that the allocation of that grant is not linked to the upcoming Scottish elections. For too long, the SNP has been promising that everything would be fine if Scotland were to separate. The truth is that the SNP is not helping the people of West Dunbartonshire now and will not do so in the future.

Finally, I wish to say that this Government are, unfortunately, as blinkered as the Scottish Government when it comes to their plans for broadband. Yet again, they are overlooking areas such as mine, which is not a city and not a rural area; yet again, it is falling between the cracks.

8:29 pm
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Michael McCann (East Kilbride, Strathaven and Lesmahagow, Labour)

I am very grateful for this chance to speak, Mr Deputy Speaker, as I was beginning to lose the power in my legs from sitting for so long.

I get the feeling that a collective amnesia is setting in on the Government side of the Chamber. I thought that after the weekend the realisation would have sunk in that the Chancellor’s Budget took twice as much from pensioners as it did from the rich, but apparently it has not. As a result of the Budget, 4 million pensioners will face a real cut in their income. The rebuttal line I heard yesterday on television programmes from Tory central office was that there is no need to worry because a record increase in pensions is coming along. That piece of spin fails dramatically, however, when one considers that the rise is driven by high inflation. That is why the £5.30 increase will be introduced. That cancels out the benefit and leaves us with 4 million pensioners facing a cut in their income and paying for the cut in the 50p tax rate.

The most difficult part about the Budget is the Chancellor’s lack of humility and stubborn refusal to accept that his economic policy is just plain wrong. The Chief Secretary to the Treasury is here, so I hope that he can take this message back. If we look back at the figures in the March 2011 Budget, we see that the Chancellor said he was going to borrow £146 billion that year and forecast borrowing levels for the next six years. In this Budget he revealed that he is going to borrow £126 billion this year and again put forward his forecast for how much would be needed. All those forecasts were upgraded, which leads us to a situation in which this Government are going to borrow a further £150 billion-plus to feed their economic policies. If that is the Tories’ idea of clearing up a mess, I would not like to see them mucking things up. I must tell hon. Members that in the first draft of this speech the language was slightly different.

The situation brings to mind Winston Churchill’s words, which are particularly appropriate. He said that a politician needs

“the ability to foretell what is going to happen tomorrow, next week, next month and next year. And to have the ability afterwards to explain why it didn’t happen.”

Our Chancellor cannot even do that. Last week, he had the brass neck—a Scottish coalfield term—to boast that this year’s borrowing would be £126 billion and would be £1 billion lower than the forecast in autumn 2011. What he failed to tell us was that on the original Budget figures it was £4 billion more than he originally thought he was going to have to borrow. The Tory Budget is a straitjacket for a flawed economic policy. Unemployment is up, borrowing is up and growth is down. We have only to look across the pond to see a different economic model working. The United States of America have taken a different approach to their economic problems and are succeeding with more than double the growth that we expect to see this year.

I am doing a lot of pruning here to keep within the four minutes, Mr Deputy Speaker, but let me finish with what will be my abiding memory of last week’s Budget—the sight of Liberal Democrats cheering wildly at the Chancellor’s tax cuts. A few weeks ago they sat with their heads bowed and then walked through the Lobby to vote through a Welfare Reform Bill that contained cuts in benefits to cancer patients. They must be very proud. In the words of the American actor, writer and comedian Albert Brooks,

“It is better to be known by six people for something you’re proud of than to be known by 60 million for something you’re not.”

For that reason, I will be voting against the Budget tonight.

8:33 pm
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Yvonne Fovargue (Opposition Whip (Commons); Makerfield, Labour)

I would like to address an area that has been eagerly awaited since it was heralded by the Chief Secretary to the Treasury—the advice fund. What we actually got was two lines in the Budget, with £20 million for the next two years to help the sector to adapt to the change in the funding environment. Given that a loss of £100 million is anticipated over the next two years, that £20 million does not even cover the 77% reduction in legal aid funding. As the Law Society said, it is a sticking plaster that will not heal the savage wounds caused by these cuts. What the sector needed was sustainable strategic specialist funding. It would have been good if it had been linked to the long-awaited advice review and if real needs had been taken into account; it would have been good if there had been acceptance that early advice saves money—but, no. What we got was a token amount with no strategy and I predict that the number of advice deserts will increase.

The increase in the personal allowance does little for the poorest, who rely on benefits to supplement low-paid work. Council tax benefit and housing benefit claimants will get just £33 a year, for as their income goes up, their benefits go down. Their weekly gain is less than the price of a loaf of bread—63p a week. That is coupled with changes to the working tax credits, whereby some of my constituents will lose £3,870 year. To truly benefit the poorest and to make work pay, the Government should increase the disregards for council tax benefit and housing benefit and scrap the changes to the working tax credit that will affect thousands of hard-working families.

Moving on to the granny grab and the effect on pensioners, I have to declare an interest: my mum is 83. Every year she calculates her tax, and most years she gets it right and HMRC gets it wrong. I do not know what she felt most insulted by: the freezing of her personal allowance, for which she had saved over a long period of her life, or the excuse that it was a simplification. She asked me to put a comment to the Chancellor that although she may be anniversarily challenged, she is not numerically challenged. As the Chancellor likes simplification, I will tell him what she said. She said, “I might be old, but I’m not stupid.” To do what he did while at the same time reducing the 50p tax rate is the wrong measure at the wrong time.

So much more could have been done in the Budget. The Government could have looked at VAT levels, they could have cut fuel duty—a measure that would have

helped motorists and the hard-pressed hauliers in my constituency—or they could have looked at jobs for young people. Instead, taxes have been cut for the richest 1% of earners. This Budget has the wrong priorities at the wrong time. It is a Budget of failure, not of success. The biggest failure of all is this out-of-touch Government’s failure to understand the priorities and the struggles of the millions of ordinary people who live in areas such as my Wigan constituency, and instead to prioritise giving rewards to the rich.

8:36 pm
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Fiona O'Donnell (Shadow Minister (Environment, Food and Rural Affairs); East Lothian, Labour)

I am delighted to have the opportunity to speak in today’s debate, having been out yesterday in sunny Gillan in my constituency, speaking to voters. Gillan has more than its fair share of millionaires, but the people I met and who needed help were mainly young people searching for work.

I give some credit to the Government for a positive element of the Budget in the form of loans for young people to set themselves up in business, and I hope that many of the enterprising young people in East Lothian take advantage of that. I have concerns, however, because in Scotland to be successful people will need, first, skills and, secondly, support. The reality, however, is that the Scottish National party Government are making swingeing cuts to further education, reducing access and opportunities for young people, and at the same time making cuts to local government, which has responsibility for delivering the business gateway. I hope that the Government will enter into discussions in Scotland to make sure that young people are not saddled with debt and bad experiences of failing—

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

Will the hon. Lady give way?

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Fiona O'Donnell (Shadow Minister (Environment, Food and Rural Affairs); East Lothian, Labour)

I will, but I will not take the extra time.

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

I agree wholeheartedly with what the hon. Lady just said. Does she agree with me that the increasing centralisation of services in Scotland stops councils and communities such as hers and mine taking the action needed to support young people back into work?

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Fiona O'Donnell (Shadow Minister (Environment, Food and Rural Affairs); East Lothian, Labour)

In my area the greatest inhibition to young people gaining work is the lack of work—the lack of available jobs. That is something for which the Chief Secretary must take some responsibility. The number of young people in my constituency unemployed for more than six months has increased more than 120% in the past year. Although the numbers are small, that is starting to have a real effect in East Lothian, with young people not feeling that they have a future.

Culture, the arts and tourism are also important to our local economy. There is a relevant measure in the Budget. I will not take another intervention, but I hope that the Chief Secretary will respond to my concern about the effect of the removal of exemption from VAT for listed buildings. We have some beautiful villages. Will it be only the rich who can afford to live in a listed building? The churches in many of our villages, which

are so important to community life, will also be affected by the measure. I hope that we will at least learn the rate at which VAT will be charged on listed buildings.

Like my hon. Friend Graeme Morrice, I watched the sickening sight of the Lib Dems waving their Order Papers at the announcement of the increase in the threshold for tax on Wednesday. It is as though the Lib Dems can hold on to only one policy at a time, and the almost sadistic parent, the Tory partner in Government, distracted them with this one policy. In the meantime the child, who almost has an obsessive compulsion to focus on this one policy, failed to see the overall impact of the Budget on families in my constituency, who have little to celebrate.

If the Deputy Prime Minister is going to think about who he will invite to dinner, I would like him to invite the 225 families in my constituency who will be worse off because of the change in the rules for entitlement to working tax credit. To think that these families can go out and find those extra hours to keep their entitlement is simply not to understand the real world. At the same time, they are seeing their child benefit frozen. I wonder whether the Chief Secretary can give us some clarification on the—well, it is not a simplification in child benefit for high earners, that is for sure. What will happen in a family when one parent earns £51,000 and one earns £151,000? Which income will be considered? Is it the higher income in every case?

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

indicated assent.

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Fiona O'Donnell (Shadow Minister (Environment, Food and Rural Affairs); East Lothian, Labour)

That is even more unfair. Two parents earning just over the threshold will be disadvantaged compared with two parents earning incredibly high incomes.

The morning before the Budget, I listened to Radio 4’s “Thought for the Day”. The appeal that was made to the Chancellor was that this should be a Budget which— I believe it was a quote from holy scripture—left those who have much not with too much, and those who have little not with too little. I regret that the Chancellor clearly was not listening to that message and that he has let down the most vulnerable in my constituency.

8:42 pm
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John Mann (Bassetlaw, Labour)

Mr Speaker, can you believe it? I do not mean the fact that the price of my petrol is going up and the price of my pasty is going up. No, I am asking whether you can believe how many or how few are here. Of course, SNP Members are not here yet again. We have a Budget only once a year and there are two Tory Back Benchers and two Liberal Back Benchers. They have probably come in a taxi. Looking at them, you might see Tories and Liberals, but I see Lincoln, Burnley, Redcar and Stafford—I see four Labour gains. Those four hon. Members are enjoying their last days on those green Benches. Why are the rest of them hidden away? I will tell you. It is because there are only two things that resonate in this Budget, and the first is growth.

Last year the Chief Secretary and the Chancellor told us that growth this year would be 2.5%, but they have reduced it to 0.8% in a year. Something tells me, therefore, that the policies are not working. They said last year that the national debt would come down—all the cuts

were to bring the national debt down—but this year they say the national debt will go up next year, the year after and the year after that. That is the policy that they have put forward. It does not need any more complication. Growth is virtually not happening.

But there is something far worse for our communities. The cuts that we have heard about, the cuts that we have fought against, have hardly begun. The real cuts come next year. This is the Government’s Achilles heel, but it is also ours because it will hurt people across the country, including in my constituency. It will be the market towns, the traditional Tory areas, that take the brunt of the cuts because what that lot are doing, like most Governments, is make cuts and centralise. They are removing jobs from towns such as Retford in my constituency. For the first time those small market towns are taking a disproportionate number of the cuts, with jobs going and the relocation of people in order, allegedly, to save money by putting them in one office. Who is going to spend to support the small businesses that are trying to make a living, or for the potential new small businesses, in those market towns?

That is one Achilles heel, but the Government have another that they have hidden and that has not been exposed: draw-down pensions. Most of the 300,000 pensioners who will be affected do not realised that, because of quantitative easing and the failure to put a counterbalance in the Budget, and because gilts are at an all-time low, draw-down pensions are being hugely cut. Let me give an example from my constituency.

A fairly well-to-do couple who have worked hard over the years have been retired for 14 years on a good pension. Their private pension of £30,000 a year between them has been cut overnight in the past month to £13,000 by the Government Actuary’s Department. That is a 60% cut in their pension. That is what the Government have done, but they have failed to address the problem in the Budget. It is a nightmare for pensioners such as those. Most of the 300,000 draw-down pensioners do not know that this reduction is coming because they are informed of changes on a three-year cycle. I challenge the Chief Secretary to the Treasury on this point. What are you going to do about it? Are you going to sort it out, or are those people going to lose 60% of their pension because of your being in power this year?

8:46 pm
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Michael Meacher (Oldham West and Royton, Labour)

The central aim of this Budget should clearly have been to get growth going again in this country at all costs, and to do it in the fairest way possible. However, the Office for Budget Responsibility has made it clear in its predictions that the Budget will have no material effect on the prospect of stagnant growth. The difference between here and the United States is that the Obama Administration stimulated the economy in exactly the way that Labour did in its last two stimulatory Budgets in 2009-10, and the US economy is now growing and unemployment is falling.

The fact is that there are two ways of cutting the deficit. The Chancellor’s way involves weaker growth, which means lower tax receipts and higher benefit spending. Dragging down aggregate demand—a crucial factor—pulls down growth another notch, and the whole downward

spiral starts again. There is a real risk of that happening, because only 6% of the benefit cuts have taken effect; 94% are still to come. Indeed, that is exactly what happened when the ridiculous experiment with expansionary fiscal contraction was tried, twice, during the past 100 years of this country’s history. The Geddes Axe in 1923 and the May Committee in 1931 stifled growth, made unemployment rocket and stalled recovery all the way to the second world war.

The alternative is a jobs and growth strategy, which many Labour Members are continually emphasising. Such a strategy would put the unemployed directly back to work, reduce benefit spending and have a direct impact on growth in a way that quantitative easing and credit easing will never do. The only argument that the Chancellor has used against that proposal is that the bond markets would never stand for a rise in expenditure that increased the deficit.

In this Budget, however, it is simply not fiscally neutral to give away £3 billion to the super-rich, when there is not a shred of evidence to support the Treasury myth that tax avoiders will meekly come flooding back home from Bermuda and Monaco to pay their taxes because of a 5p cut. The Chancellor has chosen to give away another £1.5 billion to big business through the 2% cut in corporation tax, although the businesses are already sitting on an unprecedented stash of £700 billion. That equates to half of Britain’s GDP, which they are not spending. Why? Because there is no growth, and no demand in the economy. That £4.5 billion that the Chancellor has wasted on his super-rich friends and businesses could have been used instead, without any disturbance to the bond markets, to generate 250,000 jobs. That could have begun to mark the beginning of the turnaround of the British economy, which everyone, including the City, is now desperate to achieve.

I want to say one last thing about fairness. Before the election the current Chancellor said that he would not dream of cutting the 50p rate of tax if he expected people to accept a pay freeze in order to protect their jobs, but after the election the façade was dropped. It is not just the common or garden rich earning merely £3,000 a week who will be getting it; it goes right the way up to Bob Diamond on £300,000 a week.

8:50 pm
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Tristram Hunt (Stoke-on-Trent Central, Labour)

The preamble to the Budget was brilliantly set out by the Business Secretary, Vince Cable, when he suggested that the Government have no “compelling vision” and no plans for a strategy for growth. Last week, in a remarkable sign of joined-up government, the Chancellor sought to lay out the absence of a compelling vision. We know from the growth projections set out by the Office for Budget Responsibility, which has an unfortunate habit of being optimistic, that this is the slowest economic recovery on record. In terms of recovering our pre-crash levels of output, it is slower even than the great depression of the 1930s.

We have heard much about the Budget being fiscally neutral, but I suggest that it is also a growth-neutral Budget, for we have a clear post-Budget forecast, also provided by the OBR. Its verdict is a paltry revision upward of 1%—[Hon. Members: “0.1%”] That is even worse—one tenth. The contrast with countries taking the challenge of recession seriously could not be starker.

In America, employment and business confidence is up, with the economy growing at twice the rate of our own, thanks to the interventions of the Obama Government. We know that the Prime Minister likes to be tucked up tight on Air Force One, but I suggest that he should also ask for a bedtime story from the President on how to grow an economy out of recession.

Instead, we have the fiscal stimulus of a cut in the 50p top rate of tax, based on some dodgy assumptions about economic behaviour and incentives. While millionaires and dining companions of the Prime Minister will get a £40,000 tax cut—“Bosh”, as Mr Peter Cruddas might put it—hard-pressed families will be pushed into poverty. In Stoke-on-Trent there are 1,220 hard-working families who, in less than a fortnight, stand to lose all their working tax credit if they cannot extend their hours from 16 to 24, and that is before we get on to the raid on pensioners. Like the previous Labour Chancellor, I am not wedded to the 50p tax rate. Governments generally should not be in the business of taking half the earnings of their citizens, but now is not the time to make this cut. It is the wrong choice at the wrong moment.

The Budget also fails to help our manufacturing base. What manufacturers in my constituency need now is support for investment, capital allowances for energy-efficient technologies and support for co-fund technology demonstrators. We are still waiting for details from the autumn statement on the package of measures for energy-intensive industries. We must ensure that our leading manufacturers, such as ceramics firms in my constituency, are not driven out of the UK.

I have a few last points. First, I welcome the decision on place-of-consumption reforms for internet gambling. This is big news for Stoke-on-Trent and we are happy to host Bet365.com, which pays its taxes in the UK rather than going offshore. However, there is no need for this reform to wait until December 2014; it should come in earlier. On the negative side, the decision to remove the zero rate of VAT on approved alterations to listed buildings is a real error. When that is combined with forthcoming planning reforms, it speaks of a Government with little feel for the natural and historic environment of this country. What we needed was a pro-growth plan, not a growth-neutral Budget, and the Government failed to deliver it.

8:54 pm
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Paul Blomfield (Sheffield Central, Labour)

This Budget is based on the old Tory adage, “If you want to make the rich work harder, pay them more; if you want to make the poor work harder, pay them less”, with the added twist of clobbering the old at the same time. But its real disgrace is the way in which the Liberal Democrats rolled over and agreed to the cut in the 50p tax rate.

When The Daily Telegraph 500 first wrote their infamous plea for a cut in that rate—

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Paul Blomfield (Sheffield Central, Labour)

No, I will not give way—any more than Mr Foster did when I tried to intervene on him on that point.

When that letter was written, Lord Newby, the Liberal Democrat tax spokesperson, was quick to reject the appeal, but unfortunately the Orange Book clique that now runs the party won the day, and we should not be surprised. Back in March 2010, before the general election, the now Deputy Prime Minister boasted to The Spectator that his politics were defined by his belief in “freedom from tax” and in a smaller state.

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Paul Blomfield (Sheffield Central, Labour)

No, I will not give way.

What happened to the party of Paddy Ashdown, who I remember celebrating taxation as

“the subscription we pay to live in a civilised society”?

The Liberal Democrats are hiding their shame for backing the tax handout for the rich behind the fig leaf of the rise in the tax threshold. They claim, as the right hon. Member for Bath did earlier, that it helps the poorest—

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Paul Blomfield (Sheffield Central, Labour)

No, I will not give way. The Liberal Democrats would not give way to me on this point earlier.

The Liberal Democrats claim that the rise in the tax threshold is a progressive measure that helps the poorest; the truth is that it is not and never has been. We were reminded by Nick Boles at Prime Minister’s questions last week that the cause was originally championed from the right of the Conservative party by Norman Tebbit, but it was rejected even by the Thatcher Government as unjustifiable. It gives the same cash benefit to somebody earning £10,000 as to somebody earning £100,000—[ Interruption . ]Members should listen to this point. It gives a tax handout to, for example,every Member of this House. We, frankly, are not among those most in need; at this time, people such as us and those who earn more do not need a payout. The cruellest trick is to pretend that it is a progressive measure.

The Institute for Fiscal Studies looked at the impact of lifting the personal allowance and stated, first, that

“the poorest third of adults do not benefit at all”;

secondly, for families, that

“the highest average gain occurs in the second-richest tenth of the income distribution”;

and concluded that the assertion that increasing the personal allowance is progressive

“is not true if one considers the gains across all families”.

This Budget fails the test of fairness, it fails the test of growing the economy and it should fail to win the support of this House.

8:57 pm
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Debbie Abrahams (Oldham East and Saddleworth, Labour)

Last week’s Budget did little to address the current issues of a flatlining economy and rising unemployment. In my constituency long-term youth unemployment has increased by 137% in the past six months, with 13 people chasing every job, and there is the highest unemployment rate for women in 17 years. Housing repossessions have increased by 10%, with more than 300 mortgage and landlord repossession claims this year. Those are the tragic consequences of that devastating economic policy and ideologically driven cuts.

The Chancellor put a positive spin on a worsening economic and fiscal forecast, when in reality he is meeting his borrowing forecast this year only because the £5 billion lost in tax receipts has been offset by a more than £6 billion under-spend in Government. He failed to disclose last week that, at a time when nursing posts are being cut, waiting times are increasing and there is an unprecedented top-down reorganisation costing billions of pounds, that figure includes £500 million being clawed back from the NHS.

According to independent analysis, the Budget includes £900 million less for the NHS than the 2010-11 comprehensive spending review, with £500 million being used on the deficit reduction programme. With increases in debt interest, rising public sector pension costs and social security payments, it is estimated that annual management expenditure will grow by 1.8% a year in real terms, leaving the total pot for public services falling by 3.8% a year in real terms in 2015-16 and 2016-17.

The Chancellor appears to be storing up further pain for an already beleaguered public sector while failing to address the real issues of the financial sector, and he has also failed small businesses. Instead of cutting corporation tax, which benefits the largest companies, in the hope—and it is just a hope—that that will lead to business investment, why did he not delay the rise in business rates? His latest scheme to boost credit to small businesses whereby banks pay a fee to the Treasury to access £20 billion-worth of funding at a low rate, in turn passing it on to SMEs for cheaper loans, suffers from serious design flaws. First, the £20 billion is to be released over two years. Secondly, the scheme has no targets. The previous attempt to boost lending to small business, Project Merlin, under which the UK’s five biggest banks agreed to make £76 billion of credit available, did not achieve the Government’s goals, even though it had targets attached, and the new plan is not compulsory. HSBC has already said that it will not be taking part. The scheme’s biggest flaw is that it does not address the real problems facing businesses. It will not be available to SMEs that have already been refused finance.

I want to put on the record my dismay at the Chancellor’s priority of cutting from 50% to 45% the highest income tax rate for those on incomes of over £150,000. His explanation for doing so was that, because people were so successful in avoiding paying this tax, HMRC had recouped less than anticipated. In other words, he was saying, “Let’s not bother with collecting the tax at this level; let’s reward these people’s behaviour by cutting the rate by 5% and just hope that they see the light.” The Chancellor may say in response that he is clamping down on stamp duty avoidance. However, his commitment to address what he refers to as “morally repugnant” tax avoidance rings hollow given that on the day before the Budget he did a deal with Switzerland to block the EU savings tax directive, which is specifically designed to help to deal with tax evasion. Through that bilateral deal, the Chancellor has, in effect, set up a tax loophole that any dodgy accountant would be proud of in allowing people to carry on evading paying their tax.

9:01 pm
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Richard Burden (Birmingham, Northfield, Labour)

In my constituency at the weekend, I found that the thing that really stuck in the craw of my constituents was not that the Government had avoided making choices but that they had made the wrong choices, on the wrong

things, in a really unfair way. Last week, Government Members were not waving their Order Papers in support of a Budget that redistributed from the have-a-lots to the have-nots. The have-a-lots did very well out of it, as we know from the changes to the top rate of tax. To the extent that there was any redistribution to the have-nots, it was from the have-a-bits, and when that happened, the have-nots got hit anyway by the fact that the VAT increase is still in place and by the cuts in services that will be taking place in the coming years. Government Members might think that they avoided a cliff edge in relation to child benefit, but I rather suspect that over the coming months and years they will witness a slow-motion car crash as the anomalies and inequities become clearer.

On growth and innovation, the Government did not get it all wrong; they have done some useful stuff in relation to the creative industries. I am pleased that they have listened to the motor manufacturers and others who have been calling for an R and D tax credit above the line and for that to be expanded. The Government have got that right, and I welcome that; I just hope that they get on and do it quickly. However, they could be doing so much more to stimulate and innovation and growth. I do not share the view of Mr Peter Cruddas, who thinks that the way to make one’s business awesome is to give £250,000 to the Conservative party and allow the party to trouser it. There are other ways to do it, such as making more significant changes to credit or getting demand up. Government Members need to think again about whether blanket cuts in corporate tax are going to add to growth, because that treats businesses that make things and innovate in exactly the same way as businesses that only make profits. Just saying that the bank levy has gone up does not address that fundamental problem.

I take it with a pinch of salt, therefore, when the Chancellor boasts that the corporation tax changes leave our corporation tax rate 8% lower than Germany’s. We have a lot to learn from what Germany had done over many years. It has networked industrial and finance capital, and has had consistently higher investment and consistently higher rates of growth. That will happen in the future as well. When the Chancellor boasts of protecting the science budget, I want to know why Britain cannot ensure that there is a 10% increase in the science budget, as Germany will do in the years ahead.

The director of the Campaign for Science and Engineering has said that

“simply reversing cuts isn’t going to be a game-changer for the UK. We need to be far more ambitious if we’re serious about having a high-tech future.”

I am serious about that, as are Opposition Members. The Budget, frankly, is not serious about that.

9:05 pm
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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

Let me be clear from the outset that this is a Budget from a Government who are intent on dividing Britain, pitting the private sector against the public sector and one part of the country against another.

However, I congratulate the Chancellor on one thing: he did not divide the press on the Budget. Remarkably, he united the press in universal condemnation of its unfairness. At a time when my constituents are seeing their living standards decline, it beggars belief that the

Government are prioritising a tax cut for the richest people in our country. Some 14,000 millionaires will be more than £40,000 better off. I wonder whether it is really a coincidence that many of those in the Conservatives’ “premier league” Downing street dining club have done so well out of the Budget.

I want to tackle head-on the arguments that the Chancellor has made to justify the tax cut for the wealthiest. I do not think that the tax rate should be set in stone, but any decision to change it should be based on the evidence, not on ideology.

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

No.

As the Institute for Fiscal Studies has said, it is impossible to judge the effectiveness of the 50p tax rate on the basis of one year alone. Many high-income earners brought forward a lot of their income to avoid the higher tax burden. Having pored over the document by Her Majesty’s Revenue and Customs on the effect of the 50p tax rate, I can tell Government Members that it is a really good read. The conclusion is that the behavioural responses to the 50p tax rate are highly uncertain and hard to assess. When changing the tax rate, the taxable income elasticity is particularly difficult to estimate. The evidence that Government Members posit with such confidence simply is not there.

The Chancellor claims that the rich will pay five times more than they do at the moment. However, the much-trumpeted increase in stamp duty and the new revenue from behavioural change will fall short of that. He is not only living on a different planet; he is living in a different universe. If the Government are serious about shifting the tax burden from income to wealth, that is something that we will look at. However, if they are serious about it, why did the Chancellor not introduce something systematic? Indeed, why did the Liberal Democrats not push harder for a mansion tax?

The last fantastical claim by the Chancellor is that top earners will suddenly unleash jobs and growth in our country because of the tax change. That is patently absurd. It is an ideological double standard to claim that to incentivise the rich to work harder we have to make them richer, but to incentivise the poor to work harder we have to make them poorer. [ Interruption. ] If the Minister of State, Foreign and Commonwealth Office, Mr Browne wants to go back to the Foreign Office, it would make it better for all of us.

The Budget not only fails the fairness test, but fails to tackle the unemployment crisis that my constituents and millions of people across the country are facing. When we left office, unemployment was falling. Now, tragically, youth unemployment is at an all-time high with more than 1 million young people unemployed. European Governments in Austria and Finland have brought in a youth guarantee fund like that proposed by the Opposition.

The Budget has failed the fairness test and will create a divided Britain. The mask of compassionate conservatism has definitely slipped off. The Budget brings into sharp relief what we have known all along—it is the same old policies and the same old Tories.

9:09 pm
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Jenny Chapman (Shadow Minister (Justice); Darlington, Labour)

I want to use the brief time that I have to talk about the effect that regional pay will have on my constituency in the north-east.

Regional pay fixes the wrong problem and addresses the symptom, not the cause, of some of the problems in our region. The pay gap in the north-east is not the result of a thriving public sector but the legacy of industrial decline and the loss of high-wage jobs in recent decades. The biggest employer in Middlesbrough now is not the steel industry or the chemical industry but the university, which is investing in skills and the future of our young people. That is the right balance for us at the moment. We need to improve skills and build new enterprise, and we cannot do that by cutting public sector pay.

What the Government are doing is classic policy wonkery. They have found an idea from a think-tank and are going to implement it with no research, no investigation and no long-term consideration of its impact.

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Jonathan Edwards (Shadow PC Spokesperson (Treasury); Carmarthen East and Dinefwr, Plaid Cymru)

Will the hon. Lady give way?

Photo of Jenny Chapman

Jenny Chapman (Shadow Minister (Justice); Darlington, Labour)

I am afraid I will not.

The Government have managed to do something quite staggering in the north-east—they have united our business community with the trade unions in Darlington and across the region. James Ramsbotham, the head of the north-east chamber of commerce, agrees with the trade unions and says of regional pay:

“The major issue with this is that the Government should be working towards making the economy more equal across the regions and not entrenching further disparity by reducing spending power in the North East.”

He hits the nail on the head. The fact is, regional or localised pay just will not work. It will not even fix the problem that the Government think they have identified. Why would a private sector company benefit from cuts to the pay of public sector workers in the north-east, who are their customers and the people from whom they gain their income? Where will the money come from to level up private sector pay to the level of the public sector? I notice that Ian Swales, who was so desperate to intervene earlier, is in his place and is now not attempting to intervene. I wonder whether he will vote to lower his constituents’ pay when he gets the opportunity.

Regional pay will take between £500 million and £1 billion out of the north-east each year. It fixes the wrong problem. The private sector does need to grow, with new enterprises, investments and skills, but regional pay will cause new problems. We already have recruitment difficulties in the north-east for senior public sector posts, and we have lost health services in Darlington because we have been unable to recruit consultants with the right skills mix for the town. That situation will only be made worse.

A graduate doctor coming out of university with considerable debts will want to maximise their income and locate themselves where they can earn the most money and get their debts paid off as quickly as they can. That will probably not be in my constituency in future. The mobility of public sector workers is often regarded as a problem. How will regional pay improve it?

This Budget provides tax cuts for the rich and pay cuts for the north, and it will cost more in tax credits and benefits to supplement the incomes of many workers in the public sector who are not well paid. Regional pay is also a bureaucratic nightmare, as the very policy think-tank that came up with it recognises. In the north-east, average pay is £19,000 a year. Just how low do the Government want it to be?

9:13 pm
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Michael Connarty (Linlithgow and East Falkirk, Labour)

We had a culture-themed—if not cultured—introduction to the debate, and this is a remake Budget. It is certainly not “Chariots of Fire”, more “Upstairs Downstairs”. Upstairs, a £3 billion handout and the tax level down to 45% from 50% for those earning more than £150,000 per annum. That is £10,000 for 300,000 people and £40,000 for 14,000 millionaires. What does that buy? I refer Members to the fees for the Conservative party donor club. It is £10,000 for basic entry, but for £50,000 people can get a seat at the captain’s table. They get to meet the Prime Minister himself. I do not know why people were being asked for £250,000, because those figures were in the statement from Tory party headquarters.

Downstairs, there is the highest unemployment for 17 years. As for the working poor—they are what downstairs is all about—many, many people will lose more in benefits than is offset by the rise in the basic tax allowance. Then there are the changes in housing benefit such as the bedroom tax—a cut of up to 25% for having more than one bedroom. I know a widow who has been waiting eight years for a smaller house near her family. She has two extra bedrooms and so faces a 25% cut in her housing benefit because of this Government.

Then there are tax credits. I was on the Committee that debated the Tax Credits Up-rating Regulations 2012 on 8 March. Section 4 provides that if an income falls by £2,500, no increase in tax credits will be paid. So if someone is on short time or their company has problems and they lose £2,500, they will get nothing extra. That means poverty for many people and will leave them unable to feed themselves and their children. There is also a general tax credit cut of £3,700 for most people and child benefit cuts for middle-income families. There is also the threat of regional pay for public servants.

That is all in this Budget package. Not content with attacking working people, the Government have also introduced the gran and grandad tax—not just granny tax—through cutting £3 billion of support in tax allowances for over-65-year-old citizens. That is what they are—citizens who have paid into this country for all that time. I am talking about 370,000 Scottish pensioners. It will not just be a Tory wipe-out at the next election; it will be a Liberal Democrat and Tory wipe-out in Scotland next time round.

And of course there was a sleight of hand. There have been £500 million in NHS efficiency savings. Is that going back into the NHS to pay for increased services? No. It has been taken by the Treasury. That will mean a £50 million cut in the Scottish budget because of the Barnett formula and the £500 million reduction in spending on the NHS in England.

These attacks are not justified by any benefits to the economy. The Government admitted that they will have to borrow £150 billion more because of the rising level

of unemployment and the failure of the economy to grow. On the Budget prescriptions, credit easing has been running for six months and not one single business has taken up the credit easing that is now the Budget’s panacea for businesses.

What about operation Merlin? Some £10 billion less than was borrowed before has actually been borrowed in the last year by small businesses. I have found in my constituency that banks are foreclosing on deals they have already made with small business to get some of their debts back.

The Budget will not stop the crash. The Office for Budget Responsibility says that business investment will fall by 6.8% this year and by a further 2.5% next year. This might, in fact, be a remake of “Titanic” rather than just “Upstairs, Downstairs”.

9:17 pm
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Jonathan Edwards (Shadow PC Spokesperson (Treasury); Carmarthen East and Dinefwr, Plaid Cymru)

Any speech on the Budget must begin by reminding Members of what was not mentioned in last Wednesday’s statement: the fact that real economic decisions were made years ago, when the London parties began to introduce major cuts and participate in their own Dutch auction in the run-up to the 2010 general election.

The Chancellor has argued that it is possible to achieve something called “expansionary financial contraction”, under which the economy grows while Government spending is cut. The poster boys for such a strategy are rare. Commentators have pointed to Canada in the 1990s and the Republic of Ireland before that. What these examples had in common, however, was that their fiscal contraction came at the same time as others were enjoying growth. Our major trading partner, the EU, is in some difficulty, and therefore this is a very risky strategy. If we need any proof of that, let us remember that when the coalition in London began in 2010 expected growth for this year, according to the then newly founded OBR, was 2.8%. On Wednesday, however, the OBR said that growth this year would only be 0.8%. And all this with 90% of the cuts still to come!

Our solution, right from the start of the crisis, was to call for infrastructure spending on roads, hospitals, homes and schools to get people into jobs now and help us in the future. Low interest rates mean that borrowing is as cheap as we are ever likely to see, and that should be used to invest. We welcomed the announcement in the autumn statement of the national infrastructure plan, which included several elements of what we included in our build for Wales programme. I note, however, from the announcement on Wednesday, that the purported figure of £25 billion in the pot to be raised on pension funds has been knocked down slightly.

Something that is likely to hit the Welsh economy in particular is the continued progress of plans towards regional pay for public sector workers. Major employers, such as the Driver and Vehicle Licensing Agency and the Department for Work and Pensions, will apparently be in a position to make such a choice later this year. We saw from the pay bands introduced in the Courts Service by Labour in 2007 that Wales and other low-wage economies in the British state are likely to be hit. Although I fully agree that the private sector needs to be helped in Wales, I do not think we will do that by cutting public sector pay.

It was disappointing that the Chancellor once again ignored our calls for a meaningful fuel duty regulator to stop price hikes at the pump. Working families and rural families spend more of their disposable income on travel, so we need to give them all the help that we can, while at the same time developing greener travel alternatives. Sadly, much of what I would have liked to have seen in the Budget is not there—ideas to create jobs through investment, a windfall tax on energy profits to improve housing and a U-turn on the major cuts. I would also like savings to be made by ending the higher rate relief on pensions, and a Twm Siôn Cati tax on international currency transactions should raise about £16 billion, which we could invest. I would predominantly like to see the Treasury scrap the unjust housing revenue account subsidy scheme in Wales—the only part of the British state where it operates—which means £80 million being taken from the poorest communities in Wales.

The last three decades have shown that the alternative to the austerity cuts will not come by changing the colour of the Government down here in London. The only hope for the people of Wales is for us to break the economic cycle and take on greater responsibility for our own future—to develop our economy, invest where we think is right and fight for a better Wales.

9:20 pm
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Nia Griffith (Shadow Minister (Wales); Llanelli, Labour)

Time is short, so I shall not repeat what my hon. Friends have said about the disgraceful robbing of pensioners to pay for a tax cut for the rich or the terrifying lack of a growth strategy to help the unemployed, or about how Government Members have avoided saying that raising the personal allowance is costing a lot of money, much of which will benefit those higher up the pay scales, whereas tax credits, which they are cutting, target money much more effectively on lower-income households.

I will therefore turn straight to my concern about the imposition of VAT on approved alterations to listed buildings, which unfortunately Mr Foster left until last in his speech, which meant that he ran out of time. On Friday, together with other members of the Llanelli Railway Goods Shed Trust, I met the team of architects that will conduct a feasibility study on ways to bring that historic listed building back into use and give it a new lease of life, while on Saturday I joined the Friends of Cwrt Farm to help clear ivy off the walls of that historic building. Both groups are worried about the potential VAT changes, which will affect the preservation of our historic buildings. They are concerned about the change in the Budget—described by the Chancellor as just closing a loophole—to abolish zero rated VAT on approved alterations to listed buildings and instead make such alterations subject to the full VAT rate of 20%.

I contrast that with the zero rating on new build. So much for this Government’s pretence at being the greenest Government yet. It would be much greener to encourage alterations to listed buildings, to make them practical to use in the 21st century. Furthermore, far from stimulating the economy, the change is likely to discourage people from undertaking such work. Having to pay VAT at 20% will mean less money for the alterations and therefore

less work for local builders who undertake the work, and we all know about the difficulties faced by the construction industry at the moment. That is why Labour is calling for a cut to 5% in VAT on all household repairs, precisely to stimulate the construction sector and provide more work for builders, plumbers, carpenters, electricians and so on.

I am glad to see the Chief Secretary to the Treasury in his place, as I am still very concerned that his Government are not succeeding in making banks do anything like enough to help business. In my constituency, I know businesses that have been subject to sudden changes in the terms and conditions of their loans, which they simply cannot cope with and which could easily send them under. My constituent Mr Alun Richards has encountered considerable difficulties with Lloyds bank. In particular, he has raised with me the issue of banks foreclosing on businesses and selling off the assets at way below market value. This is not acceptable to business customers, nor should it be acceptable to the bank’s shareholders—I am talking about Lloyds. Last July, the firm acting as administrators for Lloyds sold one of Mr Richards’s assets—Mansel house in Swansea—for £125,000. The same property is now on the market for more than £300,000, whereas the local economic circumstances have not changed at all. That raises serious questions about such practices, especially as Mr Richards can cite many similar cases that merit investigation and changes to the law.

This Government need to get their act together on bank lending, getting the economy going, providing jobs for our young who are unemployed and thinking about fairness sensibly and properly. They should rewrite the Budget completely.

9:24 pm
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Seema Malhotra (Feltham and Heston, Labour)

This Budget comes at a crucial time for the British economy—at a crossroads, when business and families are looking to the Government to know that they are on their side as the economy stagnates and they face tough times. Some measures in the Budget are welcome. The creative industries tax credit—an extension of the Labour Government’s film tax credit—is a step in the right direction. Video animation, high-end TV and other creative industries—Arqiva in my constituency is an example—are strong in west London. Hounslow’s chamber of commerce is in the process of creating with partners a creative industry cluster. This is, however, only one step in the right direction, and we need to do more to invest in our work force and ensure that we have the designers, technicians, artists and animators of the future.

Local businesses have cautiously welcomed changes to corporation tax, although not without apprehensions. More than 95% of the nearly 3,000 businesses in Feltham and Heston are small businesses, and it is the worry of many that the Budget will disproportionately benefit larger firms and not our innovators. As the director general of the British Chambers of Commerce said last week:

“Smaller firms will be disappointed George Osborne did not do more to support confidence and growth in the real economy.”

There are wider concerns about the Budget, as it missed the opportunity to maximise the creation of jobs and growth, which this country so badly needs. There is

no necessary connection between cuts in corporation tax and growth. Businesses will just sit on assets if they do not believe that demand exists, as my right hon. Friend David Miliband so effectively argued. There is no overall coherent plan.

The losers of the Budget are the young, the old, people on lower and middle incomes and charities. An estimated 855 families in my constituency are set to lose their working tax credits, and nearly 18,000 families are to be affected by changes in child benefit—and this is the 13th worst-affected constituency in the country.

At a time when people on middle and low incomes are being squeezed by rising fuel prices, and with families seeing cuts to their working tax credits and child benefit and long-term youth unemployment in Feltham and Heston is up by 208% in the last year, it is the wrong priority to cut taxes for people earning over £150,000. We could instead have seen a cut in VAT to stimulate spending and make life a little easier for so many people. Local businesses have told me that they would have liked to see more to support them in employing young people—for example, a reduction in national insurance contributions for employers. The Chancellor’s announcement that charities will not be able to claim tax relief on higher rate gifts is also sending shockwaves through the third sector. The Government need to work with philanthropists and those involved in encouraging giving to explore ways of reducing this impact.

The Government promised change, but things have got worse, not better. Their policies have failed on jobs, growth and the deficit, and the Chancellor’s new Budget does little to address these grave problems. There are still 1 million young people unemployed, 800 of whom live in my constituency, and the Budget does not do anything to help them. It is not too late for the Chancellor to change his mind and turn it into the Budget for fairness and growth that my constituency so desperately needs.

9:27 pm
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Rachel Reeves (Shadow Chief Secretary to the Treasury; Leeds West, Labour)

This has been an important debate—one that will prove, I believe, to be a turning-point in the history of this Conservative-led government, in the reputation and standing of this Chancellor and most of all in the ongoing national debate about how we as a country meet the economic challenges we face and how we ensure that the burdens of doing so are fairly shared.

It is privilege for me to follow my hon. Friend Seema Malhotra. We have also heard powerful contributions from my right hon. Friend David Miliband, who spoke of the challenges facing young people out of work, from my right hon. Friends the Members for Wolverhampton South East (Mr McFadden) and for Stirling (Mrs McGuire) and from many more of my hon. Friends. It is a privilege, too, to follow my right hon. Friend Mr Darling, who argued forcefully that the tax cut for those on more than £150,000 a year is not and could not be the priority right now.

I could not help noticing one phrase that we did not hear from the Government side this evening—that “we’re all in it together”. It has been forgotten—at least by Government Members. I rather agreed with a man who told us in April 2010:

“When the Tories say we’re all in this together, what they really mean is you’re on your own. Their agenda is to take away help from those who need it, and offer it to those already at the top”.

He was right then, which is why it is so disappointing to see the Chief Secretary to the Treasury defending this disgrace of a Budget today, when he would have opposed it two years ago.

But let us try to be fair to the Liberal Democrats tonight. It is true that they played a big role in the Budget, and they deserve congratulations on winning the inclusion of one of their long-standing policy priorities, to which they have been committed for many years and which will be recognised as one of the Budget’s most important changes. I do not mean the mansion tax or the tycoon tax: the Chancellor cannot stomach those. No, I am speaking of a different policy, a stroke of genius for which the Chancellor should not be allowed to claim all the credit. According to The Daily Telegraph, since as long ago as 1998 it has been Liberal Democrat policy to abolish age-related allowances for pensioners. So there we have it: the granny tax, a Liberal Democrat policy since 1998, has finally been delivered by this coalition Government. I look forward to seeing that in the Liberal Democrats’ leaflets.

It is hard to know where to start with a Budget which contains so much that is wrong, but the big story about this Budget is not what is in it, but what is missing. I am talking about its utter failure to do anything in connection with the major task that faces our country: the need to get unemployment falling and the economy moving, which is essential to dealing with the deficit and securing our long-term economic future. In that regard, the judgment of the Government’s own independent Office for Budget Responsibility is clear. It has stated:

“We have made no other material adjustments to the economy forecast as a result of Budget 2012 policy announcements.”

There is nothing in the Budget to make the Office for Budget Responsibility reconsider its view that the economy will bounce along the bottom, and that unemployment will continue to rise month after month after month.

This is a Budget that fails on growth, but it is also a Budget that fails on fairness. It pilfers £500 million from the health budget at a time when the NHS is under pressure and needs every penny that it can get, and it introduces badly designed changes in child benefit which mean that a one-earner family on £55,000 will lose most of their benefit while a couple on as much as £99,000 can keep all theirs.

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Tom Greatrex (Shadow Minister (Energy and Climate Change); Rutherglen and Hamilton West, Labour)

While my hon. Friend is dealing with some of the measures that are not specified in the Budget, would she care to comment on the £10 billion additional cuts in the Department for Work and Pensions’ budget for benefits, which may well cause severe harm to her constituents and mine, and those of many Labour Members in particular?

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Rachel Reeves (Shadow Chief Secretary to the Treasury; Leeds West, Labour)

I said earlier that the big story about the Budget was what was missing in it rather than what was in it. My hon. Friend has identified another thing that is missing, namely an explanation of how the Government will balance the books after the last two years of the current Parliament. We all know that the Government are now borrowing £150 billion more because of the failure of their policies and their decision to cut

too far and too fast, which choked off the economic recovery. As a result, deficit reduction will have to continue well into the next Parliament, but we have not heard how.

The Chancellor said that the Budget was about rewarding work. A Budget that takes tax credits from low-paid working couples with children, plunges them into poverty and leaves them better off if they leave their jobs is not a Budget for work, is it? As for the notorious hit on pensioners with modest incomes, springing it on people with no notice and then dressing it up as a simplification was not only ill-judged, but profoundly disrespectful to the millions of pensioners who made sacrifices to save during their working lives.

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Alun Cairns (Vale of Glamorgan, Conservative)

Did the hon. Lady make the same protests when her right hon. Friend Mr Darling introduced a granny tax in preparation for the financial year 2010-11?

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Rachel Reeves (Shadow Chief Secretary to the Treasury; Leeds West, Labour)

This is not just about freezing an allowance; it is about freezing an allowance this year, next year and the year after, and for many years to come. It is also about getting rid of the allowance, because it is disappearing for people who will retire next year. Next year people will receive not a reduced allowance but no additional allowance at all, and as a result they will be £323 worse off because of the choices that this Government have made.

I am sure that in a moment we will hear protestations from the Chief Secretary about his great triumph in raising the personal tax allowance for working-age people, but families with children have already lost £450 on average from the VAT increase, and another £530, starting on 6 April, through cuts to tax credits and the freezing of child benefit. Does the Chief Secretary really expect families to be thankful to be getting less than half this back in 2013? Is it not more likely that they will see this for what it is?

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Ian Lucas (Shadow Minister (Foreign and Commonwealth Affairs); Wrexham, Labour)

My hon. Friend rightly stresses the importance of VAT. Charities are among the types of business that are affected by a VAT hike. Chariotts in my constituency provides services to disabled people, and it will have to hike its charges by 20%. That will have to be paid by those disabled people, because of the VAT increase that this Government are pursuing. Does my hon. Friend agree that that is a disgrace?

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Rachel Reeves (Shadow Chief Secretary to the Treasury; Leeds West, Labour)

I agree. These are hard times for the charitable sector, and the VAT increase has hit it hard. That is one of the many reasons why charities, as well as ordinary families and businesses, would benefit from a reduction in VAT back down to 17.5% until the economy recovers. Charities are also affected by changes in tax allowances, and many have expressed fears that that will also create a big black hole.

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Ian Swales (Redcar, Liberal Democrat)

VAT cuts most benefit those who spend the most. Does the hon. Lady think that now is the right time to propose a policy under which the biggest winners would be pop stars, bankers and premiership footballers?

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Rachel Reeves (Shadow Chief Secretary to the Treasury; Leeds West, Labour)

I suggest that after this debate the hon. Gentleman should sit down and read an economics textbook. It is well known that VAT is a regressive tax. The VAT increase has hit those on lower incomes particularly hard, as they have lost the most as a share of income. The evidence for that stands up to scrutiny. If the hon. Gentleman does not understand economics, that is his look-out, not mine.

Returning to my point, is it not more likely that families will see this measure for what it is: giving a little with one hand, while taking much, much more with the other? Warm words from the Government parties will not help families pay the bills, and fine words about fairness demean the very concept of that word.

This month, the Chief Secretary told his party conference:

“It’s only the Liberal Democrats who are brave enough to tell some of the wealthiest people in the land that—at a time when millions of families are struggling to get by—they will have to pay more.”

He seems not to have been so brave when it comes to standing up to the Chancellor. Perhaps I am wrong, however. Perhaps the Chief Secretary is making an even braver choice, in telling families that they will have to pay more while he spends £3 billion on a tax cut for the richest 1%, with a tax cut next year of more than £40,000 each for 14,000 individuals earning £1 million a year.

The people are not fooled, however. They know that they are worse off under this Government. So tonight we will vote against this Budget. It is a Budget that fails the biggest tests: on jobs and growth, a gaping hole where there should have been a plan for action; and on fairness, where millions were asked to pay more so millionaires could pay less.

Is not the truth that this Government have been listening to the wrong people? They have been listening to those who are struggling to get by on more than £150,000 a year, but they should have been listening to those who are suffering from the consequences of their failed economic policies: working families on modest incomes, about to be hit by a tax credit bombshell; small businesses looking to invest, but struggling to balance their books; young people applying for every job going, desperate to start working. These are the people whose lives the Prime Minister needs to understand. Perhaps he should have had some of them round for dinner.

9:39 pm
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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

This has been a fascinating debate and some excellent contributions have been made by Members from both sides. I refer, in particular, to Mr Darling, the former Chancellor of the Exchequer, who made a typically thoughtful contribution, and to my right hon. Friend Mr Foster, who, along with a number of other Members, including Richard Burden, warmly welcomed the package of measures for the creative industries in this Budget. Indeed, a number of other Labour Members welcomed that point, too. Mr Campbell referred to, among other things, broadband funding in his constituency, which he welcomes. My hon. Friend Mary Macleod rightly made

the point that we should be highlighting the positive news for business in this country, and she highlighted some of the positive news in her constituency.

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Therese Coffey (Suffolk Coastal, Conservative)

Will my right hon. Friend confirm what corporation tax rate companies will be paying in this country? Will it be the lowest in the G20?

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

I can certainly confirm that, as a result of the measures in this Budget and the measures that we announced in earlier Budgets, we will have not only the lowest corporation tax rate in the G7, but one of the lowest rates of tax in the G20. That will make a fundamental difference to this country’s attractiveness to investment from overseas.

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

I will give way to the hon. Gentleman in a moment, but first I wish to mention some of the other contributions. My hon. Friend Glyn Davies talked about the benefits of the Budget for rural areas. A number of Labour Members representing Scottish constituencies rightly referred to the absence of a contribution from the Scottish National party and to the damaging policies of the SNP Government in Scotland for the economy. [Interruption.] Stewart Hosie has just come in now, for the very closing speeches. Jonathan Edwards, who represents Plaid Cymru, did make a speech, and I will refer to some of the points he raised.

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Stuart Bell (Middlesbrough, Labour)

Does the right hon. Gentleman believe the corporation tax reduction will lead to growth or to shareholder dividends? Will he confirm that we actually get to that rate in 2014?

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

We have confirmed that we will get to that rate by 2014. The hon. Gentleman should know, as I am sure he has closely studied the Office for Budget Responsibility’s report published alongside the Budget, that the OBR assesses that the cut in corporation tax announced in this Budget will, in fact, lead to an increase in business investment in this country—that is something the OBR has confirmed.

This debate has mainly been significant for the astonishing omissions in speeches from Labour Members. There were no references, except in a few cases, to this country’s fiscal position, to the huge deficit that Labour left us or to the huge debts that this country has accumulated thanks to Labour’s profligacy in office. There was no reference at all to the scale of the mess that the Labour party left this country, far less an apology from any Labour Member to the people of this country for the mess they left this country in. David Miliband, in an otherwise interesting speech, used the phrase “dangerously complacent”. I think that refers to the opinions of the Labour party in relation to this party’s fiscal position.

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Andrew Miller (Ellesmere Port and Neston, Labour)

Talking about omissions, will the right hon. Gentleman explain to the House why it is to the advantage of the Liberal Democrats to vote for regional public sector

pay? The north of Scotland, Northumberland, mid-Wales and the west country will all be losers—is he going to vote for that?

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

If the hon. Gentleman had studied the Budget resolutions, he would know that there is no vote on that subject on the Order Paper tonight, so the opportunity to do so simply does not arise.

To return to the fiscal position, let me be absolutely clear: we on the Government Benches will not return to the model of growth based on unsustainable debt, irresponsible spending and over-reliance on one sector, the City of London, and one region, the south-east of England. Neither will we jeopardise the progress we have made in tackling our debts. That is why this Budget will have a neutral impact on the public finances, and implements the deficit reduction as planned. The Opposition should know that this is their mess but we are clearing it up.

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Elizabeth Truss (South West Norfolk, Conservative)

Does my right hon. Friend agree that investing in physical infrastructure is vital and is being done by this Government? Does he share my joy that people in Norfolk will soon see the new A11 being built from January to March next year?

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

I certainly share the hon. Lady’s joy that the new A11 is being built by this Government. It has been campaigned for by Members from Norfolk for many decades and never agreed to before. I just wish that I could say the same for my constituents regarding the long-awaited investment in the A9 that the Scottish Government still are not delivering.

On omissions, we heard a lot of carping from the Labour party about individual measures but there were almost no references to the single biggest measure in the Budget. Opposition Members should follow the money in this Budget. More than three quarters of the money raised in this Budget is being spent on one policy measure alone—the biggest tax cut for people on low and middle incomes in this country for a generation. We have set the goal of raising the personal tax-free allowance to £10,000—from the Liberal Democrat election manifesto to the coalition agreement to the pockets of the British people in this Budget. Next month, the income tax personal allowance will rise to £8,105. That gives real help to the working people of this country this year. Taken with the previous increase that has come through this year already, it will lift more than 1 million low-income people out of tax altogether, but we are going further and faster.

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Helen Goodman (Shadow Minister (Culture, Media and Sport); Bishop Auckland, Labour)

It is clear that the Government are going further on personal income tax cuts, but it is equally clear that they have not got a strategy for growth. How many jobs will be produced by the cut in the 50p rate?

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

First, I am very grateful to the hon. Lady for at least agreeing that we are going considerably further on the personal income tax allowance. That was sadly lacking from most of the contributions from the Opposition. They will also know that the OBR’s forecast that was published alongside the Budget revised downwards the forecast for the claimant count this year, next year and in every year over this Parliament.

As I was about to say, in this Budget we have announced the largest ever increase in the amount that people can earn tax-free—an increase next April of £1,100 to £9,205. That is a tax cut of £3.5 billion for working families and is the biggest ever increase in the personal allowance. It is the biggest income tax cut for people on low and middle incomes for a generation—a tax cut for more than 23 million people. It means £220 for every basic rate taxpayer, or £170 in real terms. The tax bill of someone who works full time on the minimum wage will already have been halved by this Government.

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Sheila Gilmore (Edinburgh East, Labour)

While he was arguing for the rise in the tax threshold, did the right hon. Gentleman at any time argue for the people who are losing their working tax credit from April this year, or did he just not bother to argue for those very low-paid people?

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

We have argued for measures to ensure that people on low and middle incomes are taken out of income tax altogether. We have made significant changes to the tax credit system, which, frankly, under the previous Government, reached way up the income distribution. The changes we have made are appropriate and fair, and it is right that we have drawn back on a system that was costing many billions of pounds under the previous Government.

Taken together with the previous increase in the income tax personal allowance, this measure means that this coalition Government have reduced tax paid already by basic rate taxpayers by £350 in real terms. It is this coalition Government who, as a result of the measures in this Budget, will have lifted 2 million people out of income tax altogether—59% of them women, to respond to a point made during the debate. That is the right measure on taxation and the Labour party should support it. Labour thought it was right to double the tax on people on low incomes, but we do not; we think it right to halve the tax on people on the minimum wage.

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Brandon Lewis (Great Yarmouth, Conservative)

I thank my right hon. Friend for giving way and being so generous with his time. Does he agree that one of the important measures in the Budget that will help people trying to get into work is the change in the oil and gas taxation regime, especially on decommissioning, which could create huge investment and huge numbers of jobs in areas such as Great Yarmouth?

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

My hon. Friend is absolutely right that the decommissioning relief and the additional field allowances that we announced in the Budget will make a significant difference to investment in the oil and gas sector.

Several hon. Members:

rose —

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

No, I will not give way. I will make some progress.

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

I will give way to the shadow Chancellor.

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Edward Balls (Morley and Outwood, Labour)

Will the Chief Secretary explain why it is fair to take away the personal allowance from low and middle-income pensioners and soon-to-be pensioners—people aged 59, 60 and 61—when he is giving a £10,000 tax cut to existing taxpayers on incomes above £150,000?

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

I will take no lessons on the treatment of elderly people from the man who was responsible for the 75p increase in the basic state pension.

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

Go on then—one more time.

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Edward Balls (Morley and Outwood, Labour)

Will the Chief Secretary explain to the House how it is consistent with Liberal Democrat values to give a tax cut to existing top rate taxpayers worth, on average, £10,000 each? How is that fair?

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

So not one word of apology for the 75p increase in the basic state pension, not one word of apology for the mess that he and his colleagues left this country’s economy in—[ Interruption ]—and not one word of recognition that the costs of reducing the 50p rate are paid for more than five times over by other measures that impact on the wealthy.

Several hon. Members:

rose —

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

I am going to make some progress—[ Interruption. ]

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John Bercow (Speaker)

Order. The House needs to calm down a bit. I was listening intently, because I wanted to hear the Chief Secretary’s answer, and I was struggling somewhat to do so. I want to hear what he has to say.

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

It is no surprise that Labour Members want to drown out any reference to their record in government.

I think I know why the record increase in the income tax personal allowance has not been welcomed by Labour Members today and was hardly mentioned by the two Opposition Front-Bench speakers, despite the fact that Labour used to call itself the party of working people. This debate has also revealed something of lasting significance about the Labour party—

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Simon Hughes (Deputy Leader, Liberal Democrats; Bermondsey and Old Southwark, Liberal Democrat)

rose—

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

But I will give way to my right hon. Friend first.

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Simon Hughes (Deputy Leader, Liberal Democrats; Bermondsey and Old Southwark, Liberal Democrat)

Given that the shadow Chancellor is so keen to talk about pensioners, will the Chief Secretary remind us of the increase pensioners will have next month compared with what they got under Labour, and what they will have by the end of this Parliament in the citizen’s pension compared with what Labour never did in 13 years?

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

My right hon. Friend is, as usual, absolutely spot on. From next month, pensioners will see the largest ever increase in the basic state pension, because we have put in place the triple lock promised in our manifesto to ensure that never again will pensioners be awarded derisory increases of the sort that Labour brought us. Thanks to my hon. Friend the Pensions Minister, who is in his place, we will also be introducing, as the Chancellor announced, the single-tier pension at £140 or thereabouts a week, so that new pensioners will no longer be trapped in the means-testing system that Labour left them in for so long.

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

The full depths of the economic incompetence of the Labour party have been revealed in the course of the debate. [Interruption.] They are opposed to most of our spending reductions. They are opposed to many of the revenue-raising measures in the Budget. They have opposed tax cuts for business. I heard from the deputy Leader of the Opposition that they are opposed to our cap on unlimited tax reliefs for the wealthy. We know what Labour’s economic plan for this country would be—income taxes up, business taxes up, borrowing up, debt up, and interest rates and mortgage rates up. The only thing that would go down under the Labour party would be the British economy. It may seem astonishing that the party that got Britain into the worst economic crisis for a generation now wants to put us right back into the mess that this coalition Government are trying to get the country out of. The Labour party of the 1970s and 1980s is back and I hope the British public have been watching.

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Tom Harris (Glasgow South, Labour)

When the Chief Secretary meets the Chancellor every morning at the Treasury to receive his instructions for the day, has the Chancellor ever once explained to him how his party can possibly blame the spending of the Labour Government for the deficit while having supported every single penny of spending right up till November 2008— 18 months before the general election?

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

There we see it again—a party in denial about the mess it got this country into. [Interruption.] I know the hon. Gentleman is a rational man and has played a great role in Scottish politics, but he ought to have a bit more sense than to pretend that his party has no responsibility whatsoever.

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

The Budget is fair. It raises additional taxes from the wealthiest and asks the wealthiest in this country to pay more. That is why, for example, we are capping—[Interruption.]

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John Bercow (Speaker)

Order. There is so much noise that I am not sure the Chief Secretary can even hear that his right hon. Friend Mr Davis is seeking to intervene. Perhaps he can hear and does not want to give way, but if he cannot hear, he is not able to give way.

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

You are quite right, Mr Speaker. I could not hear my right hon. Friend, but I am happy to give way to him.

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David Davis (Haltemprice and Howden, Conservative)

I will start by saying that I entirely support the growth orientation of the Budget, which is much better than everything we have heard for the past 10 years, but I hope my right hon. Friend will forgive me for raising a narrow issue, because 90% of the effect of one of his tax changes falls in and around my constituency—the VAT change on the production of static caravans. That will have an impact which, he says in his own Red Book, is £40 million positive, but the cost in unemployment will be £45 million negative. Will he review this issue?

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Danny Alexander (The Chief Secretary to the Treasury; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

My right hon. Friend will know that all these measures are consulted on, but I think the measure is appropriate. As he knows, mobile caravans are subject to VAT, but static caravans are not. Static caravans that are used for residential purposes, which people make their main home, will continue not to be subject to VAT. That may be some comfort to him.

I shall draw my remarks to a close by referring to the measures in the Budget that deal with the wealthiest in society. We have capped reliefs on income tax which the wealthy exploit. We have capped benefits; now we are capping reliefs. It is, if you like, a tycoon tax. We have introduced a new stamp duty land tax at the rate of 7% on properties worth more than £2 million. We are increasing the stamp duty charge to 15% for residential properties over £2 million and we are consulting on a new annual charge for people who continue to envelope their properties—a mansion tax on tax dodgers, if you like.

This is a fair Budget. It is for the millions, not for millionaires, a Budget for the many, not the few, and I commend it to the House.

Question put.

The House divided:

Ayes 326, Noes 243.

Division number 503

See full list of votes (From The Public Whip)

Question accordingly agreed to.

Resolved,

That

(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.

9:59 pm
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John Bercow (Speaker)

Before I put the questions on the remaining Budget resolutions, I must inform the House that motion 67 on Stamp Duty Land Tax (Higher Rate for Certain Acquisitions by Companies etc.) has been corrected since the original printing. The version in today’s booklet of Budget resolutions is the correct version.

The Speaker put forthwith the Questions necessary to dispose of the motions made in the name of the Chancellor of the Exchequer (Standing Order No. 51(3)).