Budget Resolutions and Economic Situation — Amendment of the Law

Ways and Means – in the House of Commons at 12:33 pm on 18th March 2015.

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Motion made, and Question proposed,

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.—(Mr George Osborne.)

Photo of Ed Miliband Ed Miliband Leader of Her Majesty's Official Opposition, Leader of the Labour Party 1:34 pm, 18th March 2015

Never has the gap between the Chancellor’s rhetoric and the reality of people’s lives been greater than it was today. This is a Budget that people will not believe from a Government who are not on their side. Because of the Government’s record, because of their instincts, because of their plans for the future and because the Chancellor, most extraordinarily, made no mention of investment in our national health service and our vital public services, this is a Budget that people will not believe from a Government they do not trust.

This Chancellor has failed the working families of Britain. For the first time since the 1920s, people are earning less at the end of a Government than they were at the beginning. [Interruption.]

Photo of Lindsay Hoyle Lindsay Hoyle Chair, Panel of Chairs, Deputy Speaker and Chairman of Ways and Means, Chairman of Ways and Means

Order. Quite rightly, I expected the Chancellor to be heard, and I certainly expect the same courtesy to be extended to the Leader of the Opposition.

Photo of Ed Miliband Ed Miliband Leader of Her Majesty's Official Opposition, Leader of the Labour Party

People are £1,600 a year worse off. The next generation has seen wages plummet and tuition fees treble. The Government have built fewer homes than at any time in the past 100 years. It is certainly not a truly national recovery when there are more zero-hours contracts than the populations of Glasgow, Leeds and Cardiff combined. That is the reality of the lives of working people. These are the facts. These are the inconvenient truths of this Chancellor’s record. It is a recovery for the few from a Government of the few.

The Chancellor chose to make a number of references to me today. Let me just tell him that we are not going to take lessons on fairness from the trust fund Chancellor and the Bullingdon club Prime Minister. Not for the first time, this is a Budget from this Chancellor that simply will not be believed.

We support the change on the personal allowance, but on tax he gives with one hand and takes far more away with the other. Nobody believes this Chancellor when he says that he will cut their taxes, because that is not what has happened. Not only are wages down by £1,600, but taxes are up—24 tax rises. As a result of his measures, families are worse off by £1,127 a year, on average, which is equivalent of 8p on the basic rate of income tax. That is the reality behind a Budget that cannot be believed. Everyone knows what is coming if the Government get back in charge: another rise in VAT, the tax the Tories love to raise. Of course, in the finest Tory tradition, the lesson is this: deny it before an election and jack it up afterwards.

On living standards, which the Chancellor made much of in his speech, he knows that, as the official measure from the Office for National Statistics shows, people are clearly worse off under him, so he had a bright idea: invent a new measure of living standards to prove that what people know from their wallets and pockets to be true is somehow not true. People do not need a new measure that pretends they are better off; they need a new Government to make them better off. That is the reality behind a Budget that cannot be believed.

What about low pay, which the Chancellor also talked about in his speech? He poses today as the friend of the low-paid. You could not make it up, Mr Deputy Speaker. [Interruption.]

Photo of Lindsay Hoyle Lindsay Hoyle Chair, Panel of Chairs, Deputy Speaker and Chairman of Ways and Means, Chairman of Ways and Means

Order. There is too much noise coming from the back row. Mr Shelbrooke, do not think that I cannot see you just because you have moved position. The last thing I need is for you to explode. That would be good neither for you, nor for the Chamber.

Photo of Ed Miliband Ed Miliband Leader of Her Majesty's Official Opposition, Leader of the Labour Party

I am bound to ask, whatever happened to the promise of a £7 minimum wage this year? The Chancellor made much of that 18 months ago, but he has broken that promise. The idea of this Chancellor boasting about a 20p rise in the minimum wage, expecting low-paid workers to be grateful: that is the reality behind a Budget that cannot be believed. Of course, the Chancellor does not just claim to be a friend of the low-paid; he now claims to be a friend of the north. [Interruption.]

Photo of Lindsay Hoyle Lindsay Hoyle Chair, Panel of Chairs, Deputy Speaker and Chairman of Ways and Means, Chairman of Ways and Means

Order. I will not keep saying that I want to hear the Leader of the Opposition; I expect everybody to hear the Leader of the Opposition.

Photo of Ed Miliband Ed Miliband Leader of Her Majesty's Official Opposition, Leader of the Labour Party

On the specifics, we are pleased that the Chancellor has adopted our policy of councils being able to keep 100% of business rates, but why not for every council right across the country? Why is he doing it for just one? [Interruption.] Oh, he has done it for two, says the Chief Secretary, helpfully. Is it not great? The Liberal Democrats locked in the boot of the Conservative party.

Let us talk about what the Chancellor has done to the north of England. Let us test whether he is a friend of the north—75% bigger cuts to local government budgets in the north than in the rest of the country. In the north-west, 400,000 working families have seen their tax credits cut. That is more than any other region. In the north-east the Chancellor is spending £1 on transport for every £25 he spends in London. He spent time in his speech praising northern councils. Let us see what northern councils have to say about him. He talked about Leeds. This is what the leader of Leeds council said—[Interruption.] Yes, Labour. The Chancellor was praising northern councils in his statement. Let us see what they have to say. The leader of Leeds council says that the Chancellor “fails to deliver the devolution we need. This Government is no friend of the north.”

For the interests—[Interruption.]

Photo of Lindsay Hoyle Lindsay Hoyle Chair, Panel of Chairs, Deputy Speaker and Chairman of Ways and Means, Chairman of Ways and Means

Order. This is getting seriously out of hand. [Interruption.] Just a moment. He can shout all day. I have already looked at Mr Hands. He may hide behind Sir Tony, but we all know where he is. His voice carries and I know where he is sat. Sir Tony may move, but I recognise the voice. [Interruption.] I do not need any more help. All I will say to those on the Government Benches is let us listen. Let us get to the end because, as I said earlier, our constituents want to hear what both sides wish to say.

Photo of Ed Miliband Ed Miliband Leader of Her Majesty's Official Opposition, Leader of the Labour Party

Joe Anderson, the mayor of Liverpool, said that the Chancellor has “bludgeoned Liverpool. We’ve had 58% of our funding taken away. Even Dick Turpin had the decency to wear a mask when he robbed people.” That is what he thinks of the Chancellor. [Interruption.] Hon. Members ask why I do not quote Conservative leaders. In the interests of balance, I would have liked to quote a Conservative leader of a northern city, but there are none, and with these two—the Prime Minister and the Chancellor—in charge, there never will be.

The Chancellor spoke about tax avoidance in his statement, but the gap between what is owed and what is collected is up, not down, and no wonder. He has not acted on tax havens, despite the Prime Minister’s promises. He did not act on HSBC. In fact, he appointed the chairman as a Minister. What about hedge funds? Those were strangely absent from the Chancellor’s statement. Where was the action on stamp duty avoidance? It is costing well over £l billion a year. Of course the Government cannot act on hedge funds because they bankroll the Tory party. The Chancellor cannot act because they own him, lock, stock and barrel. The Conservative party is now just the political wing of the tax avoidance industry.

The biggest sleight of hand of all is on the deficit. The Chancellor was rewriting history today. Five years ago, the Prime Minister said: “We will balance the books in five years”—no ifs, no buts, no maybes, just like the immigration pledge. Today, the Chancellor comes along to boast that he has halved the deficit, but that is not what the Prime Minister used to say about halving the deficit. He said that would be “completely inadequate”. Let me get this straight—it has gone from completely inadequate to a great triumph. I do not think that will wash with people. The only thing long-term about the Chancellor’s plan is that it will take nearly twice as long to balance the books. And it cannot be believed—[Interruption.]

Photo of Ed Miliband Ed Miliband Leader of Her Majesty's Official Opposition, Leader of the Labour Party

It cannot be believed, because we have heard it all before—five years of promising a recovery for all, five years of delivering a recovery for the few, and now the Chancellor asks us to believe it all over again. The most unbelievable thing of all is the Government’s claim that we are “all in it together”. They say yes to the bedroom tax, no to the mansion tax.

Food banks are on the rise, bank bonuses are in the billions. Taxes are up for working families, taxes are cut for millionaires. The best thing one can say about the Chancellor and the Prime Minister is that when the removal vans turn up, they will be in it together.

The Chancellor’s failure on living standards, on tax and on the deficit are all linked. That is because our economy is too unproductive, too unbalanced and too insecure. There are some things that he did not mention in his statement today. Our productivity gap with the rest of the G7 is now the worst for quarter of a century—on his watch. He talked again today about rebalancing, but the rebalancing that he promised has not happened. The Chancellor’s target for exports is set to be missed by over £300 billion. On this Budget’s figures, he has overseen the slowest recovery for 100 years. That is the reality behind the Budget that cannot be believed.

For all the window dressing today, the Government cannot tackle insecurity at work, because they think that is how we compete. They cannot make work pay, because they believe low pay is the way that we succeed. They cannot build an economy for working families, because they think wealth flows from the top. Not for the first time, the chairman of the Conservative party perfectly summed up Tory philosophy in his celebrated handbook, “Stinking Rich 3”. I am not sure what happened to “Stinking Rich 1 and 2”.

The Chancellor announced a number of measures on savings and it is important that we look at the detail of these changes. We want people to have more flexibility, including on annuities. He talked about advice in the annuity market. It is incredibly important that advice is available quickly because there are rip-off merchants ready to pounce. We know that it has happened before—[Interruption.]

Photo of Lindsay Hoyle Lindsay Hoyle Chair, Panel of Chairs, Deputy Speaker and Chairman of Ways and Means, Chairman of Ways and Means

Order. Mr Williamson, you are this side of Mr Miliband. I can see you very easily.

Photo of Ed Miliband Ed Miliband Leader of Her Majesty's Official Opposition, Leader of the Labour Party

This is a serious issue. We know that it has happened before. It happened in the 1980s—a dreadful mis-selling scandal—and the Chancellor needs to get proper regulation in place on these issues. We will look at the changes that he spoke about.

The glaring omission from this Budget statement was the national health service and public spending. It was an extraordinary admission. Where was that discussion of the national health service and investment in public services? It is time that we looked at the reality of this Government’s spending plans, because this is the Budget that cannot be believed. The Chancellor does not want us to know it, but he had an extreme spending plan yesterday and he has an extreme spending plan today. It is here in the Red Book in black and white. Page 69 shows his plan for extreme cuts in the next Parliament. Table 2.4 of the Red Book shows that he is trying to hide big cuts between 2015-16 and 2018, so let me tell the House what the Chancellor tried to hide. His plans are for at least as many cuts in the next Parliament as in this one, and the pace of cuts in the next few years will be faster than the cuts in the past few years.

Here is the thing, and it is important that the country knows it: the Chancellor came along today to try and suggest that the pain was over, but if the Conservatives get back, it is not. Their failure on the deficit means that they are planning massive cuts—billions of pounds of cuts—in the next Parliament.

You might ask, Mr Deputy Speaker, what is the evidence for it. There is a lot of evidence. Let us start with what the Prime Minister said in his education speech. He said they were going to cut early years, they were going to cut schools, and they were going to cut colleges: cuts in education spending. Short-changing education today means we cannot build a recovery for all tomorrow.

The position is most worrying of all on the national health service. The massive cuts that the Government have announced—all their Members will have to go and justify this to their constituents—mean that colossal cuts will be planned, and I emphasise “planned”, in defence, in policing, and in local government. But they will not be able to deliver those cuts, so they will end up cutting the national health service. That is the secret plan that dare not speak its name today. The Chancellor did not tell us—[Interruption.] You can tell they are really worried about it. The Chancellor did not tell us that his plans also continue massive cuts to social care. [Interruption.]

Photo of Lindsay Hoyle Lindsay Hoyle Chair, Panel of Chairs, Deputy Speaker and Chairman of Ways and Means, Chairman of Ways and Means

Order. The defence Minister and I do not want to fall out. If there are some letters to sign on her desk, that might be better if she cannot keep quiet.

Photo of Ed Miliband Ed Miliband Leader of Her Majesty's Official Opposition, Leader of the Labour Party

They did not tell us that their plans involve massive cuts to social care as well. We have already, in this Parliament, seen hundreds of thousands fewer elderly people being cared for. What is the lesson? If you devastate social care, you betray the elderly and pile unsustainable pressure on our national health service—and these two are coming along and promising more of the same. That is why they cannot be trusted on the national health service.

Building a truly national recovery needs a new Government. We will not sit by when people are on zero-hours contracts month after month, year after year. Instead we will legislate for a new principle that if someone does regular hours they get a regular contract. The Chancellor talked about the minimum wage. Let us talk about what has happened on the minimum wage. [Interruption.]

Photo of Lindsay Hoyle Lindsay Hoyle Chair, Panel of Chairs, Deputy Speaker and Chairman of Ways and Means, Chairman of Ways and Means

Order. Mr Williamson, be helpful to the Chamber, or I will be unhelpful to you, and I do not want to get to that stage. Let us hear Ed Miliband.

Photo of Ed Miliband Ed Miliband Leader of Her Majesty's Official Opposition, Leader of the Labour Party

The minimum wage has gone up by just 70p in this Parliament. A Labour Government will raise it by more than double that to a minimum wage of more than £8 an hour. And we will have a real industrial policy.

The Chancellor has been a particularly malign influence in this Government on climate change. The Prime Minister used to claim that he believed in climate change. I have to say that it is extraordinary, even by his standards, to put a wind turbine on your roof and then want a moratorium on wind turbines. I know he is a stranger to consistency, but even by his standards that is going some. We will end the dabbling with climate change denial and have a proper green investment bank.

A Labour Government will support the young, not make them pay the price of hard times. We will ensure that every major Government contract will guarantee apprenticeships. We will cut tuition fees to £6,000 to reduce the burden of debt on young people—and let the Deputy Prime Minister defend his broken promises on the doorstep.

All of this will be underpinned by a balanced plan that cuts the deficit every year, protects education and health, and has fairer taxes—yes, I do believe in a progressive tax system—by reversing the Chancellor’s millionaires’ tax cut, introducing a mansion tax to fund the NHS, and abolishing the vindictive, unfair bedroom tax that he imposed. That is what a Labour Budget would do, from a Labour Government who know that Britain succeeds only when working families succeed.

Now we know the choice at the election. We have seen five years of falling living standards, young people paying the price of hard times, and the NHS going backwards. This Budget did not solve the problems facing working families; it confirmed them. Britain needs a better plan—a plan for working families. Britain needs a Labour Government.

Several hon. Members:

rose—

Photo of Lindsay Hoyle Lindsay Hoyle Chair, Panel of Chairs, Deputy Speaker and Chairman of Ways and Means, Chairman of Ways and Means

I suggest to the House that I do not put a time limit on, but I expect Members to take up to 10 minutes and no longer, and then we shall get everybody in. I call Andrew Tyrie.

Photo of Andrew Tyrie Andrew Tyrie Chair, Treasury Sub-Committee, Chair, Treasury Committee 1:54 pm, 18th March 2015

Thank you very much, Mr Deputy Speaker.

The Leader of the Opposition has to make the most difficult speech of anyone’s in Parliament: he has to respond to a Budget that he has not even seen. I congratulate him on his effort, and I can assure him that those bits of the Budget that he argued should be scrutinised carefully we will scrutinise on the Treasury Committee. It is a tall order to make that speech when the economy is weak, but when it is strong, it really is an impossible task—and the economy is strong, with the best growth in the G7 last year.

Chancellors should be judged on the performance of the economy during their tenure. We should all now accept that this current Chancellor deserves a good deal of credit for the improved performance of the British economy. Five years ago, Britain’s prospects were pretty bleak. The UK was saddled with a deficit of over 11% of GDP, and the developing euro crisis was shrinking the UK’s export markets and creating a massive risk of financial contagion. Above all, the UK was afflicted with a crisis of confidence. Five years later, as the Chancellor has announced, the deficit will be 4% of GDP next year—only a little over a third of what was inherited. The banking system, which he did not discuss at great length, is much better equipped to handle a euro crisis if it comes, particularly the risk of a disorderly exit by Greece. Confidence is returning. The evidence for the returning confidence is overwhelming from survey data.

A great deal of that success—

Photo of Michael Connarty Michael Connarty Labour, Linlithgow and East Falkirk

The hon. Gentleman makes an assertion that every analyst I have read denies. The lack of investment—the amount of money held in corporate bank accounts that is not being invested—is a major problem for this economy, so where does he get the evidence of this rising confidence in investment?

Photo of Andrew Tyrie Andrew Tyrie Chair, Treasury Sub-Committee, Chair, Treasury Committee

I have not brought all the survey data along with me, but I can supply it to the hon. Gentleman if he is interested. He makes a valid point, which is that there is a lot more work to be done fully to restore confidence to the point that is needed to unlock cash piles on the balance sheets of some of Britain’s larger businesses. For smaller businesses, investment is often not taking place at the level we would like, although it is much better, because the small and medium-sized enterprise lending market is still relatively weak. The banks are not supplying them with the resources they need. We desperately need to break down what still amounts to a banking cartel on lending. We need to get to the point where these small firms—the new firms that create so much wealth in Britain—can get access to the lending they need.

Photo of Mark Garnier Mark Garnier Conservative, Wyre Forest

Does my hon. Friend agree that a very good indication of confidence is the extra 2 million-plus jobs and 450,000 new businesses created in the past five years?

Photo of Andrew Tyrie Andrew Tyrie Chair, Treasury Sub-Committee, Chair, Treasury Committee

I agree entirely, but I will not linger on the point, because I am sure that my hon. Friend will be making his own speech in his own way very shortly.

What has also happened is that many people have found ways of improving quality and value for money in the goods and services they provide, whether in the public or the private sector. That has generated a good deal of force for the recovery—something that is not fully captured in productivity statistics. Governments do not create wealth; they either get in the way of it or create the conditions for it.

Photo of Andrew Tyrie Andrew Tyrie Chair, Treasury Sub-Committee, Chair, Treasury Committee

If the hon. Gentleman will forgive me, I would like to make a bit of progress now.

This Government have helped to create those conditions for growth in at least three important ways. First, in the early part of the Parliament, they authorised £175 billion of extra quantitative easing. That was crucial. Secondly, they allowed the so-called automatic stabilisers to kick in—that is, allowing the deficit to widen as eurozone demand collapsed. It is important to recall that the Chancellor was faced, right at the start, with a weakening of demand for our exports in European markets. That caused a great deal of difficulty for British industry. Thirdly, in my view, the Chancellor showed a good deal of tenacity. The coalition has contributed a great deal to restoring confidence. Few predicted that it would last five years. To be frank, I did not think that the Liberal Democrats had it in them to stay the course, but to their credit they have stuck with it, and for that they deserve a good deal of praise.

Photo of Robert Smith Robert Smith Liberal Democrat, West Aberdeenshire and Kincardine

I thank the hon. Gentleman for his recognition of the coalition, which the broadcasters have lost sight of in reporting what happens in the

House. The Budget specifically talked about how Government can get in the way of business, but has it not shown how the Government can, with the right engagement, take positive action, as they have with the North sea oil and gas industry? Entering into dialogue and bringing in incentives will see the industry through the downturn and enable it to reach maturity so that we get a long-term benefit; without the industry, the oil would be left in the ground, and we would get no tax.

Photo of Andrew Tyrie Andrew Tyrie Chair, Treasury Sub-Committee, Chair, Treasury Committee

I wonder where the hon. Gentleman represents.

Broadly speaking, the hon. Gentleman is right, although I wonder whether we needed quite as many changes to the North sea oil tax regime during this Parliament, particularly since we began it by announcing there would be stability for the medium term in the overall fiscal regime. It can be argued, however, that North sea oil is a special case, and not like the rest of the tax system. Frequent changes in the tax system nearly always have an economic cost in the bottom line for growth.

My colleagues on the Treasury Committee and I will collect as much evidence as possible on the Budget before prorogation. We will hear from the Office for Budget Responsibility, the Institute for Fiscal Studies and the Chancellor. One measure that was effectively announced before the Budget is the extension of pension freedoms to those who already possess an annuity, and we will take evidence on that major change. Likewise, we will look at the savings measures that have just been announced, not least the savings allowance and the change to the structure of individual savings accounts. Both of those measures sound extremely significant, given that we must revive the savings culture. The Committee will ask about other measures that the Chancellor announced today, including making sure we can be confident that £3 billion will be made available by the tax avoidance measures, the North sea tax regime to which Sir Robert Smith referred, and of course the increase in the personal allowance. There is a great deal for the Committee to do in a short space of time before the election, and we will get on with it as best we can.

We will hear a lot more argument about who is better off. A key recommendation of the Committee in 2010 was that the Treasury and the Chancellor should be required to provide much more information about the distributional impact of tax and benefit changes—who wins and who loses—and, to their credit, they now provide much more detailed analysis at each Budget and autumn statement. For decades, successive Chancellors—my right hon. Friend’s predecessors—were very reluctant to provide that analysis, but they now do so. We will consider the published distributional analysis in the light of the debate, about which we have already heard, about who is better off and who is worse off. It is already clear from the data that almost everybody has borne some of the burden of austerity one way or another, but also that everybody has now almost certainly gained overall, and I will come on to that if I get the chance.

Photo of Debbie Abrahams Debbie Abrahams Labour, Oldham East and Saddleworth

In relation to the distributional analysis, is the hon. Gentleman concerned that the Institute for Fiscal

Studies has quite clearly shown that the situation for families on the lowest incomes has worsened, and that the Equality Trust has said that £39 billion has been taken out of the economy as a result of such inequalities?

Photo of Andrew Tyrie Andrew Tyrie Chair, Treasury Sub-Committee, Chair, Treasury Committee

An answer to that would need to be quite long and involved, but I invite the hon. Lady to come to our hearing with the IFS because that is a central issue. I am not at all sure that the IFS got it quite right on the basis of the published data. In any case, if I may say so, it did not quite say what she purports it to say.

Photo of Helen Goodman Helen Goodman Shadow Minister (Work and Pensions)

The Chairman of the Select Committee is trying to make the case that there have not been distributional problems, but as I am sure he knows, the truth is that according to the Government’s own statistics, there are 2 million more households living in absolute poverty in this country.

Photo of Andrew Tyrie Andrew Tyrie Chair, Treasury Sub-Committee, Chair, Treasury Committee

We will be looking at such issues. I was not trying to make that case, or if I was, I was also pointing out that, in the early stages of the recession created by the financial crisis, almost every sector of society had borne some of the burden. I think that the Hansard record will show that I made that point.

We have to rely on conflicting survey data from the Office for National Statistics. The Bank of England has complained about the quality of data, and a heap of other people have said that the data need to be improved. The Treasury Committee ought to look at that in the next Parliament. Some data suggest that the man in the middle is not much better off even in nominal terms—the point was made by the Leader of the Opposition—which is based on the annual survey of hours and earnings. However, another ONS annual survey shows that the man or woman in the middle who has been in continuous employment has done well since 2010, both in nominal and real terms. Those data need to be considered very carefully, because the overwhelming majority of people in work have been in continuous or near continuous employment for the past five years. The data look quite persuasive as an overall picture of living standards. In answer to the hon. Lady’s intervention, the Treasury Committee will certainly consider that matter.

Whoever wins the next election—I hope the whole House will understand that I am very biased about who I think will win—all these tricky issues will need to be considered carefully. The Committee will need to set to work on further research into some of the points and policies covered in this Budget and over this Parliament. Competition in lending and banking has already been mentioned, and we must find a way of getting much greater competition in the banking sector. In relation to doing more to encourage long-term savings, the measures announced today are only a start, because something has been seriously wrong with the savings culture in this country for a long time. The Committee has already said a good deal about reforming and simplifying the tax system, and more needs to be done. The fact that some parts of the tax system are still hopelessly complex provides an opportunity for tax avoidance and evasion, reduces the yield and is bad for overall economic performance. There are also the economic effects—by no means all good—of current energy policy, among many other important energy issues, its reliefs, allowances and public spending subsidies.

What matters most are the measures that will succeed in releasing the energies of the British people. That used to travel under the name of Supply side reform. The next Parliament, with the next Government inheriting a more stable economy, will be an opportunity to get more Supply side reforms under way. I have a clear view, as do many other Members, about how to accomplish that, but it is absolutely essential to move on from the deficit reduction task to that of ensuring we improve the overall economic performance of the British economy in the long run.

Photo of Alison McGovern Alison McGovern Shadow Minister (Education) 2:08 pm, 18th March 2015

It is an honour to follow Mr Tyrie. I have listened to his speeches during this Parliament, and he has offered us his wisdom and made a serious contribution. I am very glad that he finished by talking about deficit reduction, because that is how I want to start my speech.

I am afraid that I must begin with what I see as the Chancellor’s failed record on deficit reduction. We must not let people in this country forget what he promised when he came in and wrote the emergency Budget in 2010. He told people in this country that he would close the budget gap by the end of this Parliament, but he has failed to do so. Despite the most severe cuts to some of our communities in this country, he has failed in the objective he set himself. That will leave the next Government, whoever they are, with a serious and significant challenge. I will say more about the right way to meet that challenge.

The Chancellor has also failed on two of his other targets. Let us not forget the target he set himself on protecting our credit rating, which he failed. Given that the Chancellor’s target was to get debt falling, not rising, in this Parliament, do we really expect the British public to accept that a mere 0.2% is good enough to meet that target? That is meeting the target by the merest technicality. We have sort of and a little bit turned the corner on reducing debt, and that is supposed to be okay with the British public. Well, that might be okay for the Tory party, but it is not okay for my constituents.

The Chancellor has failed the tests he set himself, but—much more importantly—he has failed the test that the country set for him, which was to put money in the pockets of British people. I want to set out four ways in which the next Government will get that right. On the deficit, we will close the gap in the right way. We will not do as the Chancellor did and claim that severe austerity will do the job and that we just need to cut indiscriminately to fix the gap.

Photo of Caroline Lucas Caroline Lucas Green, Brighton, Pavilion

With those cuts decimating some of the poorest people in society and the need to leave at least two thirds of fossil fuels in the ground if we are to avoid dangerous climate change, does the hon. Lady agree that handing out yet more eye-watering tax breaks to multinational oil and gas companies is a deeply irresponsible use of public money?

Photo of Alison McGovern Alison McGovern Shadow Minister (Education)

I am glad that the hon. Lady focuses on those with the least. I have been to Brighton and seen people rough-sleeping, and it worries me greatly that the council there is insufficiently focused on those with the least. She also mentioned wrong choices, and I want to say a little more about the right choices. First, we need to focus on the financial services industry, because it worries me that the Chancellor has defended bank bonuses on many occasions, not least in Europe. That is why I want to see us raise more through a bank levy, which we will invest in the next generation through our pledge for free universal child care for three and four-year-olds from working families.

Photo of John Redwood John Redwood Conservative, Wokingham

In the final year of the five-year forecast, the Chancellor will increase public spending by £38.1 billion in a single year. Does the hon. Lady think that is enough? If not, how much more would she like?

Photo of Alison McGovern Alison McGovern Shadow Minister (Education)

If the right hon. Gentleman had been listening to my speech, he would have heard me say that we need to make the right choices and show our priorities. As I was saying, the right way to close the budget deficit is to focus on taking money through a bank levy on the financial services industry and investing that money in the next generation and in hard-working families in Britain. I am pleased that we have confirmed that the next Labour Government will have no requirement for new debt for our election pledges. That is the right way to go about managing the British economy.

The right investments matter. It matters whether we choose to invest in infrastructure for the long term. I am sorry that the rhetoric about investment is still not matched by the reality on the ground, and is still so heavily focused—as it has been over the past five years—on London and the south-east. Of course steel in the ground matters, but we also need to think about our education system as part of our country’s infrastructure. I am concerned that we have not heard a pledge from the Chancellor to match our commitment to fund education properly and to ring-fence that budget all the way through children’s lives.

While we are talking about the right balance and right investment, I want to talk about the north of England. I am in politics because I grew up on Merseyside in the 1980s and 1990s and I knew that the then Governments did not care very much about families like mine. I wanted to see a future for my friends and family in Wirral South in which they did not have to leave the place that they loved to have a successful career. Under the last Labour Government, that was happening. We had “The Northern Way”, which saw regional development agencies investing in the north. That was the right way to rebalance the economy, and it was working. Labour investment was working.

Today the Chancellor has tried to use rhetoric and spin to talk about a northern powerhouse that nobody in Merseyside believes in for a second. We have been living with the Chancellor’s true political priorities—a level of cuts not seen in the wealthier parts of the country. That is despite historical deprivation and the fact that we are still living with the consequences of a Tory Government who deindustrialised the north and provided no other options. “The Northern Way” and the regional development agencies were working under the last Labour Government, and that was the right way—not soaring rhetoric about northern powerhouses, but actual investment in the north—

[

Interruption.

]

If the Under-Secretary of State for Transport, Claire Perry, wants to intervene, she is more than welcome. As she does not seek to do so, I take it that she has nothing to say about the north.

Photo of David Rutley David Rutley Conservative, Macclesfield

I am a Member from the north-west and I have shared platforms with the hon. Lady in the past. Does she not accept that, under the Northwest regional development agency and the infrastructures that her party put in place, the jobs that were created were public sector jobs? We now have a more sustainable platform of private sector growth. From memory, unemployment in her constituency is down by more than 30% in the last year—does not she welcome that?

Photo of Alison McGovern Alison McGovern Shadow Minister (Education)

I bow to no one in my applause when unemployment falls, but to say that Wirral, Merseyside and the rest of the north-west have not suffered from huge cuts to local government is to ignore the facts. I know that that is an argument that almost everyone in the north-west—perhaps with the exception of members of the Tory party—will recognise.

We need not just the right investment but the right protections. We have seen family budgets hit radically and hard, we have seen child poverty rise and, on the relative measure, we have seen people in the middle of the income distribution fall back towards the bottom. That is not offering families in our country the right protections—

Photo of Alison McGovern Alison McGovern Shadow Minister (Education)

I will not take any more interventions, because I might be here for a long time if I did.

We need a bank levy to fund 25 hours of free child care for working families with three and four-year-olds. That pledge alone will help 51,000 children in poverty and will be a real boost to their families’ incomes, which have been hit hard. Whatever the Chancellor says, and whatever the Tories try to convince themselves of, it is not only the London School of Economics and its analysis of the past five years that shows that the incomes of the bottom half have fallen while those of the top half have risen; the Treasury’s own figures now say that the bottom fifth has done worse. We need the right protections to ensure that when economic growth happens, it is not just for the few but real growth for the many. Rather than failed austerity, we need a truly progressive Government in favour of the many, not the few, and more than anything else we need a Labour Government.

Photo of Mark Hoban Mark Hoban Conservative, Fareham 2:18 pm, 18th March 2015

May I first refer Members to my declaration in the Register of Members’ Financial Interests?

I commend the Chancellor for his Budget, which continues the themes of economic reform and fiscal consolidation that we have seen in each of the Budgets and autumn statements in this Parliament. It is that twin-track approach that has led to a fall in the deficit, putting the nation on a path towards a surplus in 2019-20, with one of the strongest growing economies among our competitors, falling inflation and a job-rich recovery confirmed by today’s unemployment figures.

It is absolutely vital that we continue the programme of deficit reduction. The previous Government spent beyond the nation’s means, increasing the deficit even when the economy was growing. In his speech, my right hon. Friend the Chancellor mentioned the fact that debt as a proportion of GDP increased in each year of the previous Labour Government. Even in the good times, Labour continued to spend more than the country could afford. The problem we inherited was not that the UK was under-taxed, but simply that the Government were spending too much. It has therefore been right that the bulk of deficit reduction has been borne by spending cuts.

I am pleased the Chancellor has reconfirmed our commitment to tackling the deficit after the next general election. It is wrong of both the Labour party and the Liberal Democrats to seek to slow the pace of deficit reduction. The longer the deficit takes to tackle, the more debt we will incur. Labour has failed to mention—I notice the Leader of the Opposition failed to mention it in his speech today—the £30 billion of cuts it has already signed up to. It is also pledging to spend £50 billion more than we are, which would require increased borrowing or increased taxes. The people of this country cannot afford borrowing on that scale, and to continue would be inequitable. There are three reasons why I think it is wrong.

Photo of John Redwood John Redwood Conservative, Wokingham

I would just like to point out that although we have cut the planned spending increases of the previous Government, public spending has actually been going up. As the Red Book confirms, Government spending went up by 1.5% in real terms in 2014, and by another 1% this year.

Photo of Mark Hoban Mark Hoban Conservative, Fareham

That demonstrates the challenges we face to get the pace right. One thing we should be absolutely clear about is the importance of sticking to the course. There are three reasons why it is important to stick to the course of reducing the deficit and reducing debt. It is inherently unfair for future generations to bear the cost of debt we have built up.

Photo of Mark Hoban Mark Hoban Conservative, Fareham

Let the hon. Gentleman answer this question: is it really fair for our children and grandchildren to pay the cost of debts we have built up? Let him answer that question.

Photo of Geraint Davies Geraint Davies Parliamentary Assembly of the Council of Europe (Substitute Member)

Does the hon. Gentleman agree that since 2010 debt as a share of GDP has grown from 55% to 80%, and that the Tories have borrowed more in five years than we did in 13 years even though we had to bail out the banks? Is that not a complete failure of economic management?

Photo of Mark Hoban Mark Hoban Conservative, Fareham

That is a remarkable argument. Is the hon. Gentleman saying that we should have cut further and faster? That is not the prescription of the shadow Chancellor or the Leader of the Opposition. They always said we were cutting too far, too fast. They cannot have it both ways. That is the problem and that is why the Labour party has no economic credibility: it has no coherent argument on the economy or on the deficit.

While interest rates are at historically low levels we can afford to service those debts, but when interest rates return to more normal levels, money that could be better spent on schools or hospitals will have to diverted to meet higher interest payments. The Chancellor today talked about the £35 billion we have saved as a consequence of lower interest rates. If we return to the economic chaos of the previous Government, will interest rates remain low? Will we not see an increase in the cost of interest payments cutting the amount of money that can be spent on health and social care?

Photo of Andrew Love Andrew Love Labour, Edmonton

I was struck by the hon. Gentleman’s comments about economic credibility. What credibility do the current Government have, given that they insisted they would eliminate the deficit in this Parliament but have achieved only half that

Photo of Mark Hoban Mark Hoban Conservative, Fareham

I am surprised by what the hon. Gentleman says, because he is a member of the Treasury Committee and has looked at these things very carefully. He will have seen what happened in the eurozone in the first half of this Parliament. The headwinds from the eurozone—the OBR confirmed this—had a negative impact on the UK economy. We cannot ignore the impact of turmoil abroad on the strength of the UK economy. It is surprising that a respected Member fails to recognise the lessons of what has happened over the course of this Parliament.

Photo of David Rutley David Rutley Conservative, Macclesfield

I congratulate my hon. Friend on the powerful speech he is making. Does he also recall that the OBR spelled out very clearly, a year or so after 2010, that it had underestimated the real impact of Labour’s recession?

Photo of Mark Hoban Mark Hoban Conservative, Fareham

My hon. Friend is absolutely right. The problem for Labour Members is that when they are confronted with the facts, they hide. That is the problem they will all face in the course of the next 50 days. They have clearly not developed economic credibility, because their plans and message are confused. They have no idea how they would deal with the economy. All we know about Labour is that it will spend more and borrow more and tax more, the way all Labour Governments have behaved in office.

The final reason we should be moving towards a surplus and reducing the national debt is that if we continue to lock in debt at high rates, we are reducing the capacity of future Governments to withstand future economic shocks. One of the challenges we faced in this Parliament was that the high levels of debt racked up by the previous Government made it increasingly hard to put in place the measures to turn the economy around.

We cannot simply pretend to ignore, or rack up, unfunded spending cuts. We need to work hard to tackle the deficit to ensure debt falls as a proportion of national income, as it will at the end of this Parliament, to get the right messages across. Let us be responsible about how much we spend. Let us be responsible on taxation and spending. Running a surplus in the good times will help the economy when difficult times lie ahead.

Photo of Angus MacNeil Angus MacNeil Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Constitutional Reform), Shadow SNP Spokesperson (Scotland)

Does the hon. Gentleman not accept that this has been the slowest recovery from any recession just about ever? Research from the National Institute of Economic and Social Research shows that, had it not been for the austerity cult and the Government choosing austerity, GDP would be 5% higher and extra tax revenue would be about £32 billion—about a third of the current deficit. Cuts and austerity have cost not just the economy but people’s opportunities.

Photo of Mark Hoban Mark Hoban Conservative, Fareham

I am really not going to be lectured by a Member from the Scottish National party about economic realities. We heard in the Budget today that because the United Kingdom is together, we are able to support the North sea oil sector in a way it could not have been supported if the SNP had achieved independence, so I am not going to take any lessons on economic credibility from the SNP.

In preparing for this speech, the last I will make in this House, I looked back to my maiden speech. Unsurprisingly, it touched on the local economy. I highlighted the strength of the business community in Fareham and its low unemployment rate. I also talked about the pressures on public services and infrastructure from house building. Perhaps it is with this frame of reference that I should talk about the economic reforms the Government have introduced in the past five years.

Fareham’s economy is still strong. In 2010, unemployment was 2.2%; today it is 1%. Strong businesses have helped to contribute to that and they have benefited from the Government’s reforms. Lower employment and corporate taxes have helped businesses to recruit locally. The apprenticeship reforms introduced in the past five years have meant that Fareham businesses have taken 740 apprentices in the past year, compared with just under 600 in 2010-11. The reforms have led to a renaissance at Fareham college where, thanks in part to taxpayers’ money, it has opened a specialist advanced manufacturing centre to meet the growing needs of local business, as well as refurbishing its campus in Fareham.

In my maiden speech, I criticised the top-down housing quotas that characterised the old-fashioned approach to planning. They had failed Fareham. The Government’s planning reforms, focusing on securing consent through a bottom-up approach, have secured widespread consent for 6,500 homes to be built in the new community of Welborne. This new settlement has benefited from the local growth deal funding infrastructure improvements, such as the new all-ways junction at junction 10 of the M27. Whereas in the past infrastructure never quite met local needs, I am more confident now than ever before that new development in Welborne will not harm the quality of life of local residents.

One of the challenges we face in Fareham is getting young people on the housing ladder. The Help to Buy ISA announced today by the Chancellor in the Budget will help to make it easier for many young people in my constituency to get a home of their own.

The economy of south-east Hampshire is dependent on good infrastructure, which is why I am pleased that the M27 is scheduled to be upgraded to a smart motorway in the next Parliament. I encourage my hon. Friends on the Treasury Bench to ensure that that is delivered in the first half of the next Parliament, not in the second half. Poor road and rail infrastructure makes it harder for those out of work in the older urban areas of south-east Hampshire to access employment opportunities in Fareham.

In taking forward the economy in south-east Hampshire, we have benefited from the abolition of regional development agencies and the introduction of local enterprise partnerships. I always felt that the South East England Development Agency neglected south-east Hampshire and focused its money and efforts elsewhere. The Solent LEP has had a relentless focus on economic growth in our community, playing an outstanding role in delivering all aspects of economic infrastructure in our community. I believe that our economic reforms and long-term economic plan have benefited Fareham and its residents and provided a route for further prosperity and security for local families. It has been an honour to serve those families over the last 14 years as their Member of Parliament, and I am grateful to them for the trust they have shown in me.

Through you, Madam Deputy Speaker, I would like to thank the staff of this House for the support they provide to Members of Parliament. Their work over the past 14 years has been invaluable and has supported me in becoming a more effective Member. It is ironic that I am making my last speech in front of you, Madam Deputy Speaker, as we sparred many times on Finance Bills under the last Government. One of the most important roles of any Government is economic stewardship. We need to provide jobs and growth for families and economic stability, which is vital to people’s confidence and well-being. I leave Parliament at the next election knowing that the economic future of my constituency is much more secure than it was five years ago. We should not squander those hard-won gains by losing the next general election.

Photo of John Healey John Healey Labour, Wentworth and Dearne 2:30 pm, 18th March 2015

It is a pleasure to follow Mr Hoban in his last speech to the House. Like you, Madam Deputy Speaker, I faced him through the long hours of many long Finance Bills when he was on the shadow Treasury Front Bench. His reflective and loyal speech this afternoon was characteristic of the way he has served his party and Government. It is a shame he is not on the Front Bench this afternoon, because perhaps then he would not be leaving the House come Dissolution.

However, the hon. Gentleman has a problem, because, as the Leader of the Opposition said, this is a Budget that cannot be believed. I shall pick just two things that the Chancellor said during his Budget statement. He said that living standards were higher than when they entered office and that our economy was fundamentally stronger than it was five years ago. The gap has never been greater between their rhetoric and the everyday reality of people’s lives. I want to pursue two arguments that expose some of the rhetoric we heard from the Chancellor and some of the reasons why their long-term economic plan is failing and why the structural and cyclical weakness of our economy remains five years after they entered office.

There are two principal arguments. First, the Government’s economic policy directly choked off the recovery under way at the last election in May 2010, leading to the slowest economic recovery from recession in this country for 100 years. Secondly, the economic recovery is unbalanced, unequal and unsustainable. The structural weaknesses are still there, despite the rhetoric from the Chancellor—the rabbits coming out of the hat—and the underlying failures of the long-term economic plan are unchanged by this Budget.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

I am listening carefully to the right hon. Gentleman, as are many Members opposite. Would he at least acknowledge that running a deficit of more than 10% was unsustainable? It might have fuelled some growth in the short term, but in the long term running a deficit in excess of 10% was not sustainable, and something had to be done about it.

Photo of John Healey John Healey Labour, Wentworth and Dearne

There are not many Members opposite, as the hon. Gentleman says. [Interruption.] He will remember, however, that after 10 years of the last Labour Government, before the global financial crisis and recession hit, borrowing and debt were lower than when we entered office. We have a deficit to deal with because of how the Government intervened to pull the country through that deep recession, to keep people in their homes and jobs and to keep firms in business. Of course there is a deficit, and of course it needs to be dealt with. The difference between the parties is that we will deal with it in a more balanced way. There is a choice. We can do it with tax rises that are fair, spending cuts and efficiencies. We will do what we need to do in a more balanced way.

Photo of John Redwood John Redwood Conservative, Wokingham

Is it not the case that the most significant change after 2008 was the plan, which Labour backed and which the coalition continued with for its first two years, of taking the RBS balance sheet down from £2.2 trillion to £1.5 trillion? Was that not what provided the mighty shock to the British economy? It was something that Labour wanted to do.

Photo of John Healey John Healey Labour, Wentworth and Dearne

The intervention in the collapsed and failing banking system was a necessary step that the last Labour Government took with support from others, and most of the RBS and other bank intervention is dealt with differently in the national accounts. I would have thought that the right hon. Gentleman would have realised that.

Photo of Andrew Love Andrew Love Labour, Edmonton

Has my right hon. Friend seen the damning report from the National Audit Office on infrastructure spending, clearly showing the massive cutbacks in roads, education and housing? So much for a long-term economic plan—it is driven by short-term considerations.

Photo of John Healey John Healey Labour, Wentworth and Dearne

My hon. Friend characteristically anticipates one of the points I was going to make. He will know, because he will have seen the papers published alongside the Budget, that those papers confirm that over this Parliament public sector capital investment has fallen by 44%. His point is spot on.

I want to turn to some other facts. When the Government took office, the economy was growing quarter on quarter at a 4% annualised rate. The combination of policies introduced in the emergency Budget in 2010, which the Chancellor reminded us of, meant that by the end of 2010 growth was zero and that over the years 2011 to 2014 the annual rate was just 1.7%, not the 2.4% we were told we would get when he made his Budget statement. They choked off growth because of the policies and cuts they introduced. This has been the slowest recovery from a recession in this country in 100 years.

On public finances, I remind the Government Front-Bench team of that 2010 Budget speech. The Chancellor claimed that

“fear about the sustainability of sovereign debt is the greatest risk to the recovery”.—[Hansard, 22 June 2010; Vol. 512, c. 166.]

National debt then stood at 62% of GDP. Today’s figures confirm that it will be about 80% next year. On the deficit, the Chancellor issued his binding formal mandate in 2010 that the books

“should be in balance in the final year of the five-year forecast period, which is 2015-16”.—[Hansard, 22 June 2010; Vol. 512, c. 167.]

The failure here is astonishing. Far from balance, the Budget figures tell us that we will be in deficit by £75.3 billion. The point of balance is not next year; it is at least three years later than that. It is a comprehensive failure of long-term fiscal and economic planning.

What has gone wrong? The OBR says that the severe cuts and the significant VAT hike—let us not forget that—resulted in a loss to GDP of 2% in those first two years. Other estimates put the figure at 3% to 5%, at least, over the Parliament. The most productive spending in a downturn is capital spending. That is why organisations from the International Monetary Fund to the OECD and the OBR itself have all said that reducing investment spending has the most serious effect on negative economic growth, yet that is exactly what the Chancellor did, as my hon. Friend Mr Love has just said. Over the Parliament, public capital investment has almost halved. When the Chancellor was faced with the choice either to spend money on, for example, short-term income tax cuts for millionaires or to invest in the infrastructure this country needs for the long-term future, he chose the tax cuts for the millionaires.

The unprecedented wage squeeze has come partly from the cuts in services, tax credits and benefits. It has come, too, because of the inherently weak demand for labour in this country. Before a Government Member jumps to their feet and asks, “What about the headline unemployment rate?” I would say that it is good that it is down, but the weak demand for labour has meant that people cannot get the hours or the wages to meet the bills that they are struggling to pay. Weak growth has been reflected in real declining wages. The area of South Yorkshire that I represent has seen the average full-time worker take home £2,500 less than in 2010.

Back in 2010, the Chancellor said he had a long-term economic plan. He said in that Budget statement:

“Our policy is to raise from the ruins of an economy built on debt a new, balanced economy, where we save, invest and export”.—[Hansard, 22 June 2010; Vol. 512, c. 167.]

Photo of John Healey John Healey Labour, Wentworth and Dearne

The Minister says, “Hear, hear”, so let me tell her that household debts increased over this Parliament and are set to rocket over the next five years. Ministers have halved public investment over this Parliament, despite a pledge to protect it; and on exports, the balance of payments gap at the end of 2014 stood at 6% of GDP—the biggest since records began in 1955.

At the same time, our country has grown further apart. After 10 years with Labour’s regional development agencies in England, when the poorer English regions were able to achieve almost the same rate of gross value added growth as the richest regions, the gap has grown every year since 2010. The income of the UK’s richest region is now over 10 times that of the poorest, and real output per head has shrunk since 2010 in the north-west, Yorkshire and the east of England.

Let me remind my Front-Bench team of what the Chancellor tried to claim. He tried to claim that the north had grown faster than the south and he was talking about last year, but if we talk about the five-year period of the Parliament, the north has grown by 6% on his watch, while the south has grown by 10%. This is a Budget that cannot be believed.

Finally, at the heart of the Government’s failure is the dogma of pursuing a small state. We have seen less investment despite the consequences for productivity and growth; cuts to benefits and tax credits to fund millionaires’ tax cuts, despite the consequences for living standards; no serious export or industrial strategy, despite the consequences for our balance of payments; and no serious plan for balanced regional growth, despite the consequences for the inequalities in our country.

This Budget provides a warning to people about what is to come in the next Parliament. This Budget tells us that if the Conservative party is re-elected on 7 May, we will have a continuation of an economy and country for the few from a Government of the few.

Photo of John Redwood John Redwood Conservative, Wokingham 2:43 pm, 18th March 2015

I remind the House of my declaration in the Register of Members’ Financial Interests, as I offer advice to an industrial and an investment company.

I rise to correct some of the myths emanating from the Opposition, who do not seem to read the figures. I hope they will catch up with the Budget detail from the Red Book now that it is more commonly available. We are talking about a set of plans for a five-year period that demonstrate that the Government think that, given the growth in the economy, they can afford to spend £60 billion a year more by the final year of the forecast period than is currently being spent.

The biggest change announced in this Budget is a very substantial increase in the planned amount of spending for the end of the period, 2019-20, at which time the Chancellor proposes a £38.1 billion increase in total managed expenditure—well up on the figures in the autumn statement. This is good news. It shows that the Chancellor is reflecting the confidence in the economy, the reduced cost of interest charges as the cost of borrowing comes under better control and the lower rate of inflation, which will have a beneficial impact on the cost of providing public services.

Photo of Angus MacNeil Angus MacNeil Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Constitutional Reform), Shadow SNP Spokesperson (Scotland)

The right hon. Gentleman is giving an impression of a growing state, when what is happening in real terms is clear from page 112 of the Red Book—that, as a percentage of GDP, this Chancellor and his party are cutting the state by 13%, which will affect the poorest in society most. That is the legacy of a Tory Government.

Photo of John Redwood John Redwood Conservative, Wokingham

I am giving the cash numbers, which are clearly set out on page 111. If the hon. Gentleman is patient, I will come on to deal with the argument about real terms and the percentage of the economy.

Let us start with cash. The £60 billion increase in the annual spend at the end of the period is a big increase, and if we can keep inflation of costs down, it could provide a real increase. We had these arguments at the beginning of the last Parliament. When I quoted the cash figures, people said it would amount to a real decline, yet we have had a real increase, with the last two years seeing real increases in total general public spending, as I indicated in a recent intervention and as this Red Book makes very clear. If Mr MacNeil reads it he will see the real increases in general Government current spending over the last couple of years. Those have been affordable and the lower rate of inflation is helping.

If we look at public spending as a percentage of GDP, we see that, yes, it will fall, but that is extremely good news, because it means people will be able to keep more of the money they earn from their productive activities and as the economy is growing we can have better public services.

One of the cruellest myths being put around by the Opposition at the moment is that if we took public spending to 35% of GDP, we would be cutting it to 1930s levels. That is complete nonsense: for most of the 1930s, public spending as a percentage of GDP was well below 35% in any case, but I recently looked at the numbers and found that, in real terms, public spending this year is nine times the level of real public spending in the early 1930s—nine times in real terms.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

It is statistically worth pointing out that the direction in which we are heading is towards 35.2% of GDP, but that when Mr Brown was Chancellor he was spending about 35.8% or 35.9% of GDP. There is not a huge difference between where we are going and where he was.

Photo of John Redwood John Redwood Conservative, Wokingham

To make the point, the Chancellor has said that he will spend a little bit more in the last year of the period so that we reach exactly the percentage of GDP that Labour thought appropriate in 2000. We cannot say that because we are spending the same percentage of GDP we have cut spending or that it is down in real terms. If we have a healthy, growing economy, public spending is well up in real terms, as is the general size of the economy. We should welcome that. What we want is growth in the economy, so that we can have affordable growth in the range and quality of public services. That is exactly what this illustrates. I hope that Labour Members will stop trying to con people into believing that if we ended up with 35% of GDP—1% lower than the Chancellor intends—we would somehow have 1930s levels of public services. It is so absurd that I cannot believe that they even dare to repeat such nonsense day by day.

What we want from this Budget, and what I think it helps to deliver, is more growth. It is great news that we now have such good employment figures, which show record highs. It is good news that unemployment is reducing and good news that youth unemployment in particular is reducing.

What has happened over these five years is quite remarkable if we consider two important background points. The first is the state of the banks inherited in 2010. This House has never really understood or grappled with the magnitude of what happened to the banking system under Labour, or the magnitude of the changes between 2008 and today, particularly with respect to RBS and HBOS. If we had asked most economic forecasters what would happen to the UK economy if we took about £1 trillion of assets off the balance sheets of two leading banks, they would probably have forecast that the economy would crash in a remarkable way. What is fantastic for our country is that after the initial crash over which Labour presided in 2008-09, we have managed to get the economy back to growth while mending the banks and going through the extraordinary shrinking on the banking balance sheets. [Interruption.]

I find it remarkable that Labour Members will not listen to what I am saying. They lived through this dreadful experience and their regulators allowed the banks to over-expand their balance sheets, when many of us were saying that it was going too far. [Interruption.] Indeed, we did. We constantly said that regulation was too lax. I remember writing in the report of the economic policy review undertaken by the Conservative Opposition that, while in some areas there was far too much regulation, the regulation of the things that really mattered—cash and capital—was far too lax, and needed to be tightened. However, the Labour Government and their regulators then made the worse mistake of over-tightening in a hurry, and precipitated a major crash. Labour needs to learn from that. Indeed, we all need to learn from it, because we do not want it to happen again. We need to understand why there was such a big crash in output and in people’s living standards and real incomes, and why it took time, between 2008 and 2013, for growth to resume. The reason was that the banking system was so badly damaged that, obviously, it took time to get it back into shape.

As the Chancellor said himself, there was another reason for our problems. In 2011 there was an extremely unpleasant euro crisis, which had an impact on Britain because we live by foreign trade as well as by our domestic activities. We had to shelter ourselves from the worst of that. We are now in the process of orientating our trade much more strongly towards Asia and the Americas, the growing parts of the world, and away from the European area, which is mired in recession and is still experiencing enormous difficulties. It decided to create a single currency without creating a single country to back it and love it, and is having to live with awful strains and stresses as a result.

As we meet today, this Budget is an important event. It is certainly a very important event politically in the United Kingdom. However, a far more important set of events is taking place on the continent, where hectic negotiations are taking place between Greece, Germany and the rest over whether Greece can stay in the euro. It is not easy to see a happy outcome in either direction from those very pained discussions, but are we not glad that we are not having to live with that awful experience in this country, thanks to some of us who urged very strongly that we should stay out of the euro?

[Interruption.]

Helen Goodman thinks it is funny that Greece has a youth unemployment rate of 50%, but I do not. I think it is a disgrace. I also do not think it is funny that several countries on the continent have a general unemployment rate of 25%. That is quite unacceptable, and the Labour party would rightly condemn it every day of the week if it were happening here, but it is not happening here because we ran our own economic policy, and we have done a much better job that they did on the continent.

Photo of Angus MacNeil Angus MacNeil Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Constitutional Reform), Shadow SNP Spokesperson (Scotland)

Does the right hon. Gentleman accept that most of the problems of the European Central Bank are to do with a fixation on inflation—a fixation that he shares?

Photo of John Redwood John Redwood Conservative, Wokingham

I have no fixation on inflation, but neither do I think that runaway inflation creates prosperity. It is necessary to manage inflation, and to manage growth, and to have an economy that can expand. I am very pleased that this Budget helps to create and preserve the expansion that is now under way in the United Kingdom. I think it is good news that it contains measures to promote more home ownership and saving, and I think it is good news that it contains measures that will help enterprise and business to promote more jobs, because what we want are more jobs and better-paid jobs.

I was pleased to hear the Chancellor say that most jobs now are full time, and that many are highly skilled. That is what the country needs: more skills, more opportunity, and the chance for individuals to train, work and educate themselves well so that they can get better-paid jobs. That is what we all want in the House. It is sometimes suggested that the Conservatives do not want it, and I find that regrettable. We want it as much as anyone else. We want more jobs, better-paid jobs, and more skilled jobs. We know that we have to earn our money, and we want to create opportunities for people to earn theirs.

The Budget contains some sensible judgments on how much the country can afford in increased public spending. I think that £60 billion is a perfectly good judgment of the amount of extra public spending that will be possible by the end of the next Parliament. It also contains a judgment on how we can finally get rid of the deficit and start to cut the debt. I find it a bit odd that Labour has been telling us that too much was cut in this Parliament, and is now saying that the deficit is too high. I have news for Labour. You have to cut if you want to lower a deficit; it does not just magic away. The question is, how do you get that judgment right?

Photo of John Healey John Healey Labour, Wentworth and Dearne

It is possible to deal with a deficit simply by cutting, which is largely what the right hon. Gentleman’s party has done, but it is also possible to deal with it in a more balanced way by cutting where cutting is needed, raising revenue where it is right to do so, and ensuring that there is enough growth to bring in the revenue. That was the fundamental problem with the policies that existed at the beginning of the current Parliament.

Photo of John Redwood John Redwood Conservative, Wokingham

The right hon. Gentleman has just described the policy of this Government. They put some taxes up, they went for growth—which is now coming through, and is helping to tackle the deficit problem—and they reduced the over-optimistic spending plans of the outgoing Government.

We have been told that it was wrong to cut capital spending. Well, I seem to recall that the only bit of spending that the Labour Government cut in detail before leaving office was the capital budget. They made massive cuts in capital. The Chancellor has restored some of those cuts, but because of the parlous state of the overall finances, he could not restore all of them.

The Budget presents a good package. There is good news on home ownership, good news on employment and good news on growth. A great many myths need to be put back into the dark room, because they are not going to con the British public.

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury) 2:55 pm, 18th March 2015

Let me begin by making it clear that my party has no political axe to grind when it comes to whether one party performs better than the other, although Crispin Blunt has been on local radio in Northern Ireland telling people to vote for anyone but the DUP. We will not hold that against the Conservative party. We want the United Kingdom to succeed, and we want its economy to succeed. I think it is in the interests of all my constituents that the Government of the day—whoever they happen to be—get the policy right, because that means that people will have jobs, a good standard of living, and good public services.

The Chancellor began his speech today by saying that Britain was now walking tall, and he quoted some impressive figures. We had better growth than the rest of Europe and the other G7 countries, we had lower unemployment, we had rising living standards, and we were selling shares in banks that were bankrupt six years ago. However, while we may be walking tall in some respects, there are still people in the United Kingdom economy who are not walking tall, but are stooped under the burden of parts of the economy which are ailing. The growth that the Chancellor has talked about has not been universal. He cited impressive rates of growth in northern areas, although I note that he did not mention Northern Ireland. As I often used to say to economics students, “Look at the base from which you are starting.” Which areas were hit most by the recession? The northern areas, including the north-east and the north-west.

Photo of John Redwood John Redwood Conservative, Wokingham

What Northern Ireland clearly needs is more private sector industry and activity. Does the hon. Gentleman not think that a good way of promoting that would be a much lower rate of corporation tax, which is just what the Government are giving him?

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury)

I shall come to that point. I am not suggesting that everything that the Chancellor has done is wrong. What I am trying to do is paint a picture of a country in which not every region and not every individual is walking tall. Not only some regions, but some groups of people, are still suffering and stooped under the burden of an ailing economy. Young people in my constituency are suffering as a result of youth unemployment; other people are in the lower wage brackets, or are in jobs in which there is uncertainty or the effect of the economic downturn has depressed wages the most. Those people are not experiencing the improved living standards that the Chancellor has described today.

I welcome the fact that, as of the last year, 542 fewer people are on the dole or on welfare in my constituency. Nearly every week, however, people come and talk to me about the effects of the recession and the way in which it has changed employment practices, Many are uncertain about their incomes. Some are earning the minimum wage, some have jobs that are insecure, and some are not always paid because of the nature of their contracts. The Chancellor has said today that the minimum wage will be lifted and that some people will be lifted out of taxation; nevertheless, that has to be set against the fact that, for many people, those gains by Government action are depressed by employment practices that are becoming more prevalent in parts of the economy. Banks may be selling shares, but some of that growth and improvement—this is certainly the case in Northern Ireland—is being achieved by banks quickly foreclosing on those to whom they recklessly lent and by suppressing businesses instead of giving them the chance to grow.

Although the economy may be walking tall in the Chancellor’s eyes, there are many obstacles along the road that could cause us yet to stumble. I hope we avoid them, but let us look at some of the information even in the Red Book. Productivity growth is weak, which of course makes it difficult for real living standards to increase—if productivity does not increase, there is not the same chance for wage increases. Exports have not been growing in the way that the Government anticipated; indeed, the fact that the balance of payments deficit is 6% of GDP will have a deflating impact on the economy. Despite what the Chancellor has said, his own figures show that he is still dependent for future growth primarily on consumer spending. In other words, we are still dependent on people taking on the very debt that we have said brought about some of the problems we are now experiencing.

At the same time, growth in investment is weak. Growth in private sector investment is going to go up. That is quite right; however, according to the OBR forecasts, over the period of the next Budget, public sector infrastructure investment will be reduced by 17% as a percentage of GDP. That is one of the problems I have with the current policy. While I understand and, in fact, probably have more sympathy with the arguments put by Government Members—about getting the deficit down and making sure that we do not have huge debt interest, that we have confidence in money markets and that we do not have to pay more for the debt we undertake—there are ways that the Government can stimulate the economy. One way that can be done is through infrastructure investment.

I cannot understand why the money markets are more confident about lending us money to pay for welfare benefits than they are about lending it to pay for infrastructure development. There have been infrastructure developments in my constituency, such as the new road from Carrickfergus to Belfast. The improved travel times have led to investment by companies already in the town, which was isolated because of the difficult roads. The return to the Northern Ireland economy from the Titanic project in Belfast, with £90 million of investment and the return in tourist numbers—nearly 1 million in the first year and a half, with the impact that has on local pubs, hotels, restaurants and so on—has been terrific. At a time when we need to stimulate the economy, I cannot understand why the Government are planning to reduce infrastructure investment, which could produce real returns.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Human Rights)

One way of helping, which was announced by the Chancellor today, is the plan for farmers to spread their profits and losses over five years. As my hon. Friend will know, in Northern Ireland the dairy industry in particular is having a difficult time. It had to reinvest because of the EU regulations on slurry retention and disposal and also deal with a clear problem with the price of milk. The Chancellor’s announcement will enable the farming industry to at least balance its books over a five-year period. Does my hon. Friend welcome that as a way forward for the farming industry in Northern Ireland and for those in my constituency and, indeed, his own?

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury)

I do not want to be churlish about this Budget, because there are a number of things—my hon. Friend has led me on to them—that I welcome. Given the way that farming income changes, it is important that farmers should have the ability to look at their income and spread their profits and losses, and the tax they pay on them, over a five-year period rather than a two-year period. I welcome the announcement of a requirement to have a universal service obligation for broadband, although I see that there is no timing for it, so maybe the Minister can give us some indication of that. I know that in my constituency smaller businesses that want to set up in rural areas are held back because they do not have that easy means of communication.

Photo of Margaret Ritchie Margaret Ritchie Shadow SDLP Spokesperson (Environment, Food and Rural Affairs), Shadow SDLP Spokesperson (Energy and Climate Change)

The hon. Gentleman is making a compelling argument about the need for investment in infrastructure, part of which is this whole area of investment in broadband. Does he agree not only that the time scale to be specified is an important consideration, but that we have to see geographical locations? He, like me, will have talked to constituents, particularly those in rural areas, who cannot get access for topographical reasons.

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury)

Hopefully, a universal service obligation will mean exactly that and the investment in the infrastructure will include all parts, regardless of how difficult they are—I notice that one of the things that will help is satellite broadband where fixed line broadband cannot be used.

I also welcome the Government’s promise to improve incentives for people to save for the deposit for their first home—especially given the number of young people who come to me looking for ways to get their first home—and to give additional support of up to 20% for those savings. As one who supports the fair fuel campaign and represents a rural constituency where many people do not have the opportunity of using public transport, I also welcome today’s announcements on fuel duty.

I suppose the fears we have for the future, especially in Northern Ireland, are these. I welcome the fact that the Government have made available to us the devolution of corporation tax and the impact that I believe it can have on our economy. Nevertheless, as we seek to rebalance the economy, that must not be counterbalanced by serious public sector expenditure cuts, especially for an area that is still dependent on the public sector. It must not be offset by huge cuts in infrastructure. We have already suffered a 40% reduction in public infrastructure investment in Northern Ireland, with devastating effects on the ability to deliver on many of the things that we wanted to deliver on. I hope that the optimism that the Chancellor has expressed today comes to fruition, but I believe there are obstacles. They are highlighted in the Red Book and in the speech today. Some of them are in the Government’s control and some are outside it. I hope we will walk tall and not find that there are many people and many areas of the United Kingdom still stooped under an economic policy that is not doing its best for Britain.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree 3:09 pm, 18th March 2015

I am delighted to follow Sammy Wilson, who is a powerful advocate for his region of the United Kingdom. He raised many important points. It has not been a balanced recovery; he is absolutely right. The south has done a little bit better than perhaps Northern Ireland and some of the areas of the north. However, as the Chancellor pointed out during his speech, recoveries are never linear. Sometimes some regions grow faster than others. Sometimes we get recoveries that are slow and then there is a U-bend and suddenly the recovery accelerates a little more. I suspect that what we are seeing now is a little bit of the J-curve—we have had a much slower recovery than we expected, but it is now moving much faster, as we have seen from the Red Book.

Photo of Damian Collins Damian Collins Conservative, Folkestone and Hythe

I wanted to intervene on Sammy Wilson but he was reaching his conclusion. Is it not a cause for positive reflection that job creation in Northern Ireland at the end of last year was growing at its fastest rate for more than 20 years? That shows that there has been growth throughout the United Kingdom.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

My hon. Friend and the hon. Member for East Antrim are both right. The hon. Gentleman’s point was that at the beginning things were a little slower than he would have liked for his constituents, but as he said—this is my point—recoveries are never linear. In the past five years, we have seen slower growth than we would have liked, but we have far more accelerated growth through 2014-15, and certainly beyond to 2016-17 and 2018-19. That is good news.

In 2010, in Labour’s great recession, we faced economic meltdown. As UK plc, we were literally teetering on the brink of bankruptcy. What we needed at that time was an emergency Budget. The Chancellor, working with our coalition partners—I give credit to the Lib Dems—came up with a long-term economic plan. In producing that long-term economic plan, we had to deal with one important issue: the structural deficit. The deficit, which was running at roughly 10.2% of GDP, needed to be dealt with. We particularly needed to deal not just with the general deficit but with the structural deficit, which was an enormous problem in terms of our ability to achieve sustainable borrowing.

That was the challenge posed by John Healey. He wanted an unsustainable deficit of 10%-plus. Perhaps he meant 12%; perhaps he wanted more borrowing. I do not know what direction of travel he would have liked to take, but if we had gone in that direction, we would have been in France’s position today.

Photo of William McCrea William McCrea DUP, South Antrim

Does the hon. Gentleman accept that in Northern Ireland the construction industry is still having difficulties? Many of our major construction companies and the people working for them are having to come to the mainland to get contracts rather than staying in Northern Ireland. We need to encourage that industry.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

The hon. Gentleman makes a good point. In introducing things such as the increased investment allowance—it was £25,000 and went up to £250,000—the Government have done a lot to help to turbo-charge investment. I shall come to the rate of investment and investment growth a little later in my speech.

The important thing was that we dealt with the deficit up front and brought it down by more than 50%. It is now trailing at around 5%. Do we have further to go? Absolutely, but bringing it down from 10.2% was very important.

The important thing about bringing down the deficit and dealing with the structural deficit was bringing back market confidence. Doing so allowed us to maintain low interest rates. Confidence means low interest rates. It is not just a matter of the Bank of England’s confidence in setting them—there is a worldwide market out there. Low interest rates mean low mortgage rates and low business rates for small businesses. All those things were important in helping to create growth in the UK.

Photo of John Healey John Healey Labour, Wentworth and Dearne

When the hon. Gentleman intervened during my speech, I made it clear that the deficit was caused after the global financial crisis by the Government stepping in to help the country through. That is what Governments can do. I said clearly that that caused the deficit and we had to deal with it. Any Government would have done so. What counts is how they deal with it. Will he remind us what Labour’s plan in the 2010 election was, as set out by my right hon. Friend Mr Darling, the Chancellor at the time? Our plan would have reduced the deficit faster and further than the Chancellor has managed in the past five years.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

I do not want to use the expression ceteris paribus—all things being equal—but the Chancellor at that time was probably right. Unfortunately, he too would have faced a euro crisis, and things would have been very different from what he originally projected, just as things were different for my right hon. Friend the Chancellor when he made his original prediction.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

I am trying to stick to Mr Deputy Speaker’s instruction to keep roughly to 10 minutes.

Time and again, Labour Members talk about borrowing. Page 22 of the Red Book shows us that public sector net borrowing is coming down annually. That is the point. Labour Members look at the gross figure, but the important thing is that we are bringing borrowing down annually. In 2015, it will go down to £90 billion. It will then go down to £75 billion next year. Hopefully, by 2018-19 we shall be in some sort of surplus.

It is also important to look at cyclically adjusted net borrowing, which is also decreasing—we will be showing a surplus in 2018-19. The borrowing figure has been and is a problem. Are Opposition Members right to point out that the gross figure is growing? Absolutely. The point is that we are tackling the deficit to bring down the annual amount of borrowing. That is what the Government have done very well.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

No, I am not giving way.

I talked about the J-curve. Growth was slower to begin with, but the OBR is forecasting that growth will be much faster than originally predicted. In 2015, GDP growth goes to 2.5%. In 2016, it goes up another 2.3%, and 2.3% beyond that.

It is important to note, as the Chancellor did, that we have rebalanced growth—we have growth in the north as well as in the south. Has the north faced more pain than the south? Absolutely. The facts are there. The important thing is that we are now seeing balanced growth. The service sector is growing hugely, but the manufacturing sector is growing equally fast.

The OBR forecasts business investment growth—this is important—of 5.1% in 2015 and 7.5% in 2016. Hopefully, some of that will benefit Northern Ireland, to support what the hon. Member for East Antrim said.

The critical thing about growth is unemployment and employment. Unemployment has decreased from 7.8% to 5.7%. That has happened much faster than the Governor of the Bank of England projected when I sat on the Treasury Committee. Most importantly, for my constituents unemployment has dropped from 3.7% to 1.5%, and youth unemployment has dropped from 5.4% to 2.6%.

We have a record number of people in work: 30.9 million people in work is a remarkable figure, but even more remarkably, more men and more women are in work than ever before. Some 1.85 million new jobs have been created. I started the Million Jobs campaign to try to address the problem of youth unemployment. I was delighted that the Chancellor took our recommendation to abolish the jobs tax for young people. The Million Jobs campaign supported the abolition of national insurance for under-21s, which will kick in this year. I hope that one year the Chancellor will extend it to 24-year-olds. We are already beginning to see the benefits for the under-21s.

On taxation, I never imagined that we would do this—I thought at the time that it would be costly—but the personal allowance has gone from £6,500 to £10,600.

That has meant that we have been able to benefit the average family to the tune of something like £905 per taxpayer. That is good news for taxpayers. Increasing the personal allowance to £12,500 in the next Parliament is a great ambition: it would take something like 4 million people out of tax altogether.

Raising the minimum wage from £6.70 to £8 an hour is another good and important move, because it stops the state subsidising the private sector, which is what has been happening as a result of a very low minimum wage. Raising the minimum wage will ultimately benefit taxpayers overall and ensure that businesses take on the responsibility to pay their own employees a fair wage.

On business tax, corporation tax coming down from 28% to 20% has not only encouraged people to set up businesses, but encouraged businesses to come across from continental Europe and set up in the United Kingdom. We now have the lowest corporation tax rate in the G8.

I have mentioned the abolition of national insurance for young people. It is also good news that the employment allowance is saving about £2,000 per business, because it encourages small businesses in particular, which live on the margin, to perhaps take on an extra one or two people.

The freezing of fuel duty has also benefited almost all our taxpayers: my constituents save about £10 every time they fill up their cars. Energy costs coming down will benefit the elderly in particular, so it is all good news on that front.

Most importantly—Opposition Members have been making this point for a while—when inflation was running higher than pay, people were in effect losing money; the ordinary, average earner was suffering. Now, however, pay is up about 2.1% and inflation at 0.9%, so real pay is going up.

As an ex-charities Minister, I am particularly pleased that an extra £75 million will be available for charities from the LIBOR fines. I certainly pushed for that and wrote to the Chancellor asking for support for Essex Air Ambulance, which is based in my constituency. I am delighted that the Budget will provide support from the extra LIBOR fine money for Essex Air Ambulance, because that means it will be able to provide an emergency support service 24 hours a day, seven days a week.

The Labour party was financially reckless in government, but its promises in opposition seem to be even more so. It has promised something like £20.7 billion in unfunded commitments, which is something like an extra £1,200 per household. Labour is indeed the party of tax and spend and borrowing. It has not changed and, if elected, it would still not change and it would damage this country.

What would a future Conservative Government do? They would be committed to raising the personal allowance to £12,500 by 2020; cutting tax for 30 million people; taking 1 million more people out of tax altogether by raising the personal allowance; balancing the books beyond the next Parliament; and reducing Government spending to 35.2% of GDP.

In conclusion, the Chancellor has delivered on his long-term economic plan. He has reduced spending, the deficit, taxes and unemployment. Compared with five years ago, he has also overseen reductions in inequality, child poverty and pensioner poverty and a smaller gender pay gap. In the words of Christine Lagarde, head of the International Monetary Fund,

“this is exactly the sort of result that we would like to see: more growth, less unemployment, a growth that is more inclusive, that is better shared, and a growth that is also sustainable and more balanced.”

This is a Budget that the Government can be proud of. The Government’s long-term economic plan is working, and we hope that on 7 May the electorate will not give the keys back to the guys who crashed the car.

Several hon. Members:

rose—

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. May I remind Members that, at the beginning of the debate, the Chairman of Ways and Means asked for each Member to take up to 10 minutes? We have had six speakers and only one has responded to that plea. That was Alison McGovern; everybody else has spoken for longer. That means that there are Members in the Chamber who will not get to speak if others do not comply with the request to speak for no more than 10 minutes. It is very easy to tell 10 minutes on the clock—it is a nice round figure—so I ask Members to keep an eye on the clock and to speak for only 10 minutes. If not, we will have to have a time limit, which would be unfortunate, so please try to stick to 10 minutes.

Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby 3:25 pm, 18th March 2015

I will not follow Mr Newmark into his fantasy world; the Government seem to be in danger of moving into a fantasy world where it is as if all the nation’s problems have been solved by the miraculous efforts of this Chancellor. The Budget seemed to me to be a matter of the Government moving furniture around a room in which they have just had four years of a very painful S and M party and inflicted 50 shades of austerity on the country, and they are now trying to clean up the mess for presentation to the electorate. It is a Budget of pathetic measures backed up by endless promises of a glowing future.

The fact is that the economy is better—we have to concede that—but not because of any Government long-term plan. I am getting fed up of hashtag politics and the endless mentions of the Government’s long-term economic policy. It is as if they think that, if they mention it for long enough and as many times as they can, people will believe that they actually had a long-term economic policy. But they did not: they came in with a fiscal policy of slash, cut and burn, and to roll back the state. It was an ideological policy, not an economic policy—that was the essence of what they offered the British people. The policy was designed to reward the rich, because if the state is rolled back and welfare and public spending cut, then taxes can be cut to reward the rich and start the trickle-down effect, but the trickle-down effect is what horses do to roads. That was the Government’s hope for the British people as a result of the money going to the rich.

On the basis of those expectations, the Chancellor made two promises right from the start: to pay off the debt, which he has singularly failed to do; and to eliminate the deficit, which he has also failed to do.

Those two priorities have given us four wasted years of futile austerity in particular, and of pain, which has hit the poor and the north and cut the living standards and household incomes of people in this country. It has been four years of misery.

Growth in that period has now come about not because of the Government’s long-term economic plan but thanks to the efforts of the Bank of England. The Bank of England has been doing what the Government were not doing and has saved the Government’s bacon. If interest rates are kept flat to the floor for six years and £375 billion is pumped out, printed and shoved into the banks without any revival or economic benefits, the patient is dead. That is what has produced the economic revival, not the Government’s measures. It worked and now the Chancellor is trying to claim credit for it, by giving us a few pathetic tax cuts which he claimed were impossible a few years back; by benefiting the north, which he has been hitting for four years; and through glowing promises of a better future that has now been postponed until 2020. I have news for the Chancellor: that future will not come under this Government, fortunately, and it could not come from this Government’s policies. The Government are essentially the trade union of the rich, implementing policies to benefit the rich, and they will be thrown out by the people who have not benefited from those policies.

The Chancellor tells us that we are better off, but the nation does not believe him. The nation feels squeezed, as its living standards are being cut. It feels that it is still suffering and that it has been betrayed, and it does not like the spectacle of rewards being showered on the rich as a result of cuts to benefits and penalties on the poor. This has been the slowest recovery ever from any recession in this country and it has essentially been slowed by the cuts and reductions in demand introduced by the Government. The Government will not produce a glowing future because their policies cannot work. This is not a real recovery. A real recovery would involve building up British manufacturing strength so that Britain was able to pay its way in the world, and that has not happened and is not happening at the moment.

All the Government have done is repeat some old tricks for making people feel better off. For example, with rising house prices, everybody who owns a house feels better off, whereas the people who do not own houses feel and are worse off. Rising house prices, stoked by the Help to Buy scheme, have helped to produce a better feeling, as has the high pound. The pound is grossly overvalued at the moment, which means cheaper imports, even if it damages exports on a considerable scale. Falling food and fuel prices are transient factors and we can add the spending bonanza that the Government hope to see having given pensioners the freedom to spend their pension pots. Whatever the consequences in the future, that would produce an economic boost and a stimulus now.

This is not a recovery that will work and be sustained. It cannot, because the productivity gap has widened and investment is lower than it needs to be, in the private sector and, in particular, in the public sector, where it has been slashed. Programmes that were cut in 2010 have not yet been fully restored. This is not a real recovery because there is no substantial manufacturing revival on the scale that we need and it will not lead to a real recovery because we are still not paying our way in the world. The deficit has been 4%, 5% or 6% of GDP and has been rising. It came down in the past month, but that was a small dent in a long-term rise. We are paying our way only by importing capital, wealth and businesses and by people buying up British businesses, British land, British houses and the country in general. The profits from those buy-ups will eventually have to be exported. Those people will not want to stimulate demand here and it will be exported, dragging down our economy. Investments will be dictated by the long-term needs of overseas boards that take less account of the needs of this country.

Effectively, this has not been a revival in our ability to pay in the world and to stand proudly on our own two feet. The only march of the makers that has taken place seems to me to be the march of the Chancellor and the Prime Minister around factories, wearing hard hats and appealing pathetically for support from factory workers whose living standards have been reduced by their Government.

It is true that we are doing better than Europe, but that is because Europe has embarked on the folly of deflation to make the euro work. Europe has become the low growth, high unemployment blackspot of the west, so to be doing better than that is no great advance or commendation.

The Budget will not lead to the prospects the Chancellor was holding out. We need a real recovery in manufacturing and jobs. Let us remember that, although unemployment is falling, it still stands at 1.86 million, which is very high, and that people who are receiving benefits are not paying taxes. So unless we get a real recovery and a substantial increase in earnings to boost demand in the economy, it follows as night follows day that this Government—if they are re-elected—will have to go in for a massive programme of cuts to achieve their promise to get rid of the deficit by 2020.

This Budget foreshadows an enormous programme of cuts. Welfare cuts of £30 billion have been talked about, and defence cuts have also been mentioned. The Government are not committing themselves to maintaining the defence spending target of 2% of GDP. They have, however, committed to making cuts in local government spending. The Public Accounts Committee has stated that the cuts in welfare and social security are not sustainable.

That is the future that this Government are offering the country if they win the election, but the country will reject that future. It is instead going to accept Labour’s offer to invest to grow, to put people back to work so that more people are paying taxes and fewer are receiving benefits, and to bring down the deficit in that way by reviving the economy. I think that people will accept that offer at the election because they have been so badly bruised and betrayed by this Government, and because they want a party that will offer them hope.

Photo of Damian Collins Damian Collins Conservative, Folkestone and Hythe 3:35 pm, 18th March 2015

Listening to the speech by Austin Mitchell was a bit like getting a lecture from the captain who crashed the ship on the subject of how well the emergency services conducted the salvage operation.

No one will believe Labour Members. When the Labour Government were in office, they ran up deficits in the good years while the economy was still growing, but Labour has now suddenly become the hawkish guardian of the balanced budget. It has become the party that shuns deficit and debt, saying that if it had been in power, none of this would have happened. We all remember the shimmer of growth that the last Government thought they had created after the banking crisis, but it was merely an artificial stimulus that they had not budgeted to continue. The money was not there, and Labour would have had to take the difficult decisions on spending, a fact that it consistently and conveniently chooses to ignore.

Looking at the Budget today, we can now see the benefits of the Chancellor of the Exchequer’s long-term strategy. We can also see coming to fruition many of the smaller initiatives and policies to increase investment in the economy, including from overseas, and to back entrepreneurs and growth in the regions. I want to talk about some of those policies today.

I shall start by talking about my own constituency, however, as have all the previous speakers in the debate. The hon. Member for Great Grimsby closed his speech with the word “hope”, and there is now undoubtedly much more hope in my constituency and the local economy in east Kent, based on the policies of this Government. We have seen substantial and consistent falls in unemployment, and that has been backed up today by further falls in the unemployment figures. The unemployment rate is now nearly half what it was at the peak of the recession. That means that there are typically 1,000 fewer people out of work each month than during the recession, which is a remarkable turnaround.

My area, like those of other hon. Members, has also seen substantial falls in youth unemployment. We have to remember that youth unemployment had become a problem in the British economy that was counter-cyclical. It ran through good years and bad, and seemed to be a problem to which there was no answer. However, we are now seeing solid, consistent falls in the youth unemployment figures too. That has certainly been backed up by the Government’s investment in the apprenticeship programme. In my constituency, we now have nearly double the number of young people entering and starting an apprenticeship—learning and earning—and entering the workplace. People were missing out on those opportunities in the past. That change is certainly having a dramatic impact.

These changes are not happening by accident. They are being supported by the Government’s policy of cutting taxes on business, and by the investment in east Kent and other regions through the Government’s regional growth fund. Tens of millions of pounds has been awarded to local businesses. That money has been spent and it has created new jobs in businesses that were wondering, five years ago, where growth was going to come from and how they were going to get support from the banks. Those businesses have now invested in themselves and they are employing more people. They are looking forward to the future. That is the change we have brought about.

That local growth, which has certainly taken place in east Kent, is backed up by good and big infrastructure, which is why I continue to support the Chancellor’s commitment to infrastructure, to improving the economy of the north and to investing in the northern powerhouse. There is no doubt that the economy of east Kent is being accelerated by the infrastructure of high-speed rail, which is bringing more investment and more jobs into our communities. Other communities in the UK will benefit from that commitment and that investment, too. Putting money aside for big infrastructure projects of that nature is long-term decision making and planning at its best.

There is also no doubt that the creative economy has been one of Britain’s great success stories for a number of years, particularly the past five years. Exports from Britain’s creative industries are growing at a rate of more than 11%, and their job creation rates are faster than those of the rest of the economy. The gross value added of the creative industries in the British economy is growing as a proportion of the size of the economy as well. That has been supported by decisions such as the investment in the production tax credits for TV drama, for children’s programmes and for animation. I am pleased that that investment is being continued into other sectors of the creative economy, particularly theatre and orchestras. By backing Britain’s productive and creative talent we are not only supporting the underlying strength of the industry, but bringing more revenues into the Treasury. That shows that if we cut the right taxes and provide the right incentive and support, we bring in more revenue for the Treasury and create more growth in the economy. There is no better example of that than there is in the creative industries.

The creative industries are a very important part of the regeneration and growth in towns such as Folkestone, but we see this all around the country: in Manchester we see the fastest growing media city in Europe; film and TV production are a key part of the growth of Belfast and the Titanic quarter; we have the video games industry in cities such as Dundee and many different locations around the country; and we see the growth and importance of creative industries in the regeneration in Digbeth and Birmingham. Right around the country we can see that growth in place, supported by the skills, ingenuity and creativity of the British people, and backed up by the Government and their policies.

Tech city in London is a global centre. After Silicon Valley it is arguably the global centre of tech industries, and it certainly backs up the commitment the Chancellor made at the start of this Parliament that London should be the European centre for creative and digital industries—it certainly is that. The enterprise and investment schemes that this Government put in place have been a key driver in the growth and success stories of many of those small businesses. The continuation of those policies makes London and makes the UK one of the best places in which to invest and start a business in this fast-growing, dynamic sector of the economy.

I particularly welcome what the Chancellor had to say about ultrafast broadband and the commitment to try to bring investment in that, starting with some of the harder-to-reach communities. Members representing areas that are both rural and urban will all have pockets in their constituencies that are hard to reach with superfast broadband. In questions a few weeks ago, the Prime Minister set out that the key challenge would be, once 95% of homes have superfast broadband, reaching the extra 5%. Today, the Chancellor set out a bold strategy and vision for how we can reach that final 5%. Delivering ultrafast broadband by satellite into hard-to-reach communities is an excellent way of doing that. We know that that broadband and the internet are not just a “nice to have” service, but an essential tool for homes and businesses, particularly those in rural areas. It enables people to trade, market and sell their goods anywhere in the world from the place where they live and work—it is a necessary tool. That commitment to the future investment in that vital piece of infrastructure is very welcome.

Finally, I wish to discuss what the Chancellor said about consulting on a review of business rates. Many people would agree that that is the right step to take. The nature of the economy has changed substantially; it is no longer based on just the square footage of a building. The nature of someone’s work, be they a tech entrepreneur or a traditional manufacturing company, can be very different, as can the revenues they generate. I just ask the Treasury to consider one thing when conducting that review: the role that business incubation units play in supporting micro-businesses and tech start-up businesses. We see that all around the country. We have seen a successful incubator running in Folkestone—it is called the Workshop—and new incubator spaces are being created. In most of the tech hubs around the country we see incubators as a key part of supporting new business growth. It will be interesting to look at whether business rate reductions or exemptions for genuine incubator spaces for very new start-ups and fledgling companies would incentivise the creation of more space. Equally, we could consider whether companies that have an excess of office space could give up some of it to support an incubator unit and, in return, offset that against their business rates or receive a reduction in their business rates. That would be a very low-cost way of supporting micro-businesses in the start-up economy. I would be interested to see that considered when the Government lead their review of business rates.

There is no doubt that this was a Budget to support the growth in the economy, and to give hope to anyone who is saving, working, or starting a business and looking to get on. It sets out a clear strategy for the next five years.

Photo of Stewart Hosie Stewart Hosie SNP Chief Whip, SNP Deputy Leader, Shadow SNP Spokesperson (Treasury), Deputy Leader, Scottish National Party 3:44 pm, 18th March 2015

Since this Government came to power, funding for the Scottish Parliament has been cut. Since 2009-10, it has been cut by around 11% in real terms, but, within that, capital expenditure has been cut by around 25%, and that is a common story around the country. Decisions taken by this Government so far mean that the Scottish Government have some £3.5 billion less in real terms to spend than they otherwise would have had.

The changes announced today will make no substantive improvement to the fiscal position in Scotland. Indeed, the cumulative impact of today’s announcements will lead, over the next five years, to a real-terms cut of around £12 billion. This is very much an austerity Government.

What this Budget and the Red Book also tell us is that the Government and the Chancellor have failed on all the substantive targets that they set for themselves. They promised that debt would fall as a share of GDP by 2014-15, that the current account would be in balance by 2015-16 and that the public sector net borrowing that year would be some £20 billion. The debt will not now fall as a share of GDP until the next financial year. The current account will not be in the black for two more years, and the £20 billion borrowing promise will be almost four times that at £75 billion for 2015-16.

In essence, the Chancellor has failed to meet all of his own targets. With Tory and Liberal Democrat policy having strangled recovery in 2010 and 2011 and with some £50 billion of cuts to come—that is the difference between the £106 billion achieved and the £126 billion of cuts promised and the other £30 billion threatened today—we are on track, unless there is a change, for a decade of austerity. And still not a single one of the Chancellor’s major targets has been met.

Amid the rhetorical flourishes, the Chancellor talked about recovery and suggested he was lifting some of the burdens on working people. I notice that he did not apologise for trying to rebalance the economy on the backs of the poor. In essence, this was a political platform for an election. We know that because if we look at the impact not of the threatened future cuts but of today’s Budget announcements we see that the Government will take an extra £1 billion either in tax rises or in cuts to services over the next three years. Not only was the Budget not fiscally neutral, it did not provide any stimulus that we need.

Of course the Chancellor did say a deal about tax, particularly about increasing thresholds, which I welcome. I was intrigued by the notion of increasing the 40p threshold, not least because the number of people paying the 40p rate has increased by 2.5 million over the past 25 years, 1.5 million of whom have emerged in the period of this Parliament. We now have almost 5 million paying a rate of tax that used to be for the rich. There is a question over the affordability of that change and the time scale on which it will be delivered, but we will come to that later.

The Budget also confirmed that for some of the poorest in society the misery of the austerity programme will continue. We know that the proportion of cuts to tax rises has moved from 4:1 to 9:1, which is the clearest indication that the Government are trying to balance the books on the back of the poor. We know that the pain of that will be felt in Scotland by the 145,000 households affected by the changes to incapacity benefit, with people losing about £2,000 each. It will be felt by the 370,000 households who have seen tax credits reduced by almost £1,000 a year. It will be felt by the 620,000 families hit by the child benefit freeze, who are losing £170 a year. It will be felt by the 120,000 people losing, on average, £2,500 a year as disability living allowance is removed. It will be felt by the 835,000 households hit by the 1% cap on benefit increases—almost 1 million people in Scotland alone are hit by that one measure.

That is important in the context of this Budget, because there is now a growing body of opinion, including not least the OECD, that suggests we do not simply need a growing economy to fund our welfare provision; we need to squeeze inequality out of the system to help to deliver a growing and booming economy. Once again, I suggest that the Government are swimming against the tide of informed public opinion.

Many of those austerity measures will have to be mitigated using the precious resources of the Scottish

Government: £114 million on the Scottish welfare fund, £69 million on the council tax reduction scheme and £90 million to mitigate the bedroom tax—almost £300 million to mitigate the dreadful decisions of this Government. Why do we not devolve welfare so that rather than having to use our precious resources to mitigate bad Tory decisions, we simply do not make them in the first place?

What the Chancellor did tell us today was that he finally expects to see some substantive and prolonged growth, which of course is to be welcomed, but others have noted that we still have the drag-back from the impact of the balance of trade, which appears to be negative for the entire forecast period. I welcome what he said early in his statement about help for UK Trade & Investment with regard to exports to China, but China is only one of many countries and I fear that, in and of itself, that will not be enough to turn the negative impact of the balance of trade into a positive one.

I am also glad that the Government have U-turned on their North sea policy, particularly in relation to the reduction in the supplementary charge—an increase early in this Parliament that should never have happened—but that, in and of itself, does not make for a long-term economic plan. A long-term economic plan would require the Chancellor to change course, away from a further £30 billion of new austerity cuts, away from an approach that continues to put the recovery at risk and away from a further attack on public services and the poor; in short, away from an approach to fiscal consolidation that has damaged not only the public services but the economy and undermined attempts to improve the public finances.

How much better it would have been, as a genuine alternative, had the Government recognised that their plans have failed, which they have, and adopted a stance that, rather than inflicting further cuts, allowed for a modest 0.5% increase in public spending, which would see a real end to austerity and, essentially, see the deficit continue to fall, see debt fall as a share of GDP and deliver up to £180 billion of investment across the UK over the next Parliament, rather than the miserable plans and additional austerity cuts we have seen today.

Our judgment is that this was neither a Budget to strengthen a recovery, nor a Budget for fairness or for tackling inequality. There was no long-term economic plan, merely a long-term austerity plan. It was a political Budget, as ever, from an all-too political Chancellor. As I am sure many of us have said in the past, the Tory Back Benchers might have waved their Order Papers today, but they will pay the price at the ballot box on 7 May.

Photo of Jeremy Browne Jeremy Browne Liberal Democrat, Taunton Deane 3:53 pm, 18th March 2015

I have heard it said that I was the only Minister in history to have been sacked for being too supportive of the Government. Although the decision to determine my future may or may not have been wise—others can judge that—I remain unequivocally enthusiastic about this Government, as I am about the Budget statement made by the Chancellor today. That is what I want to speak about in what will be my final speech as a Member of Parliament.

The reason I am an enthusiast for this Government and their record over the past five years is that we came into office in 2010 in remarkably difficult circumstances. Our country was in a catastrophic position. At our worst point this Government were borrowing £420 million every day. It is straightforwardly delusional of Labour Members of Parliament to think that if only we had borrowed even more, we would not have the problem of a deficit today. We saved the country—the Conservative party and the Liberal Democrat party, working together in the national interest, pulled our country back from the brink when our deficit was more than 10% of GDP. Far from going too far and too fast, as has been charged by the shadow Chancellor and others, if I am critical at all, I think we have done the minimum of what was required, rather than over-extending ourselves, and we can do even more in the future. But it is a good record.

Interest rates are extremely low. We could easily have had a position where houses were being repossessed right across the country. Inflation is extremely low. Unemployment, including youth unemployment, has fallen dramatically during this Parliament, and the deficit is falling as well. In my view, if this coalition Government put themselves forward for election—they will not, but if they were on the ballot paper on 7 May—they would win emphatically and they would deserve to win because they have an impressive record of taking a country from ruin to relative prosperity, with the prospect of further progress.

The best coalitions are those that are more than the sum of their parts. The worst coalitions are those that operate at the level of the lowest common denominator. This Government have not always functioned as effectively as they might have done, and that is true of all Governments, but more often than not the Government have had the characteristics of the best coalitions rather than those of the worst, and the United Kingdom has benefited from that.

It has also been of benefit that we have had two parties in government. This has been a hugely difficult process, wrestling with the massive deficit and many of the other structural problems that our country faces. Two parties coming together, representing about 60% of the votes cast at the last general election, gave a wider mandate for this Chancellor and this Government. If I am honest about our coalition partners, there would have been greater anxiety about the Conservatives adopting a programme of reducing state spending, had it not been done in partnership with the Liberal Democrats. While I am briefly being mildly critical of our coalition partners, I remember sitting on the Opposition Benches—it seems hard to believe that the Liberal Democrats once sat on the Opposition Benches—and hearing speeches from the now Chancellor promising that the Conservatives would match Labour’s spending commitments, even when we were running a deficit and the economy was growing. So I am pleased that this Government have shown a sober awareness of the predicament that we find ourselves in, and that my party has contributed some of the biggest and most enduring economic policies of this Government, not least the dramatic rise in the point at which people start paying income tax. The Chancellor, I am pleased to say, announced further increases in that threshold today.

There is still a long way to go. Many people in Parliament, the media and elsewhere talk as if this huge task was almost over. Even today the British Government are still borrowing £10 million an hour. Our debt interest is about £1 billion a week. Every week £1 billion of the taxes of our constituents goes not on schools, hospitals or the police, but on paying the legacy of overspending in the past, and that figure will rise because we still have a debt that is increasing. However, huge progress has been made.

Where now? Where do we go next? We have huge strengths as a country. Our top level education is among the best in the world, second only to that of the United States of America. Our labour markets are flexible. We attract inward investment. We are a country with a genuine global disposition and we are admired for our innovation and creativity. Britain can be a success; we have reasons to be highly optimistic.

However, we will be successful only if we address some of our serious weaknesses as a country—and we do have serious weaknesses. Our overall education performance, not at the elite level but the general level, is still not sufficiently good for us to be globally competitive. Our infrastructure, particularly our transport infrastructure but also our energy-generating infrastructure, needs to improve. Our welfare costs and welfare dependency are a problem. Angela Merkel has said—I repeat this from memory without the exact numbers in front of me—that Europe has 7% of the world’s population and 23% of the world’s economy but 50% of the world’s welfare spending. That is a very precarious position. The 7% is falling and the 23% is falling, but the 50% is not falling—or at least, not nearly as quickly as the other two numbers. We still have a very high level of Government debt and a high deficit. This Government, whether on educational shortfalls, excessive welfare costs and dependency, infrastructure or debt, have worked systematically to address the weaknesses that will otherwise hold our country back. We have enduring strengths, but in the past five years we have also had a Government with the wherewithal, talent and vision to address our weaknesses as well.

I want us to have a sense of purpose in politics. I want us to think about how we can become the biggest economy in Europe within a generation, as the Chancellor mentioned in his Budget speech. I want us to be able to think about how we, as a country, with less than 1% of the world’s population, can be relevant in an era of much more intense global competition—how we can be world leaders in innovation, skills, and job creation. All these are possible—they are prizes within our grasp—but we must have the level of optimism and vision necessary to realise those outcomes.

It has been a great privilege for me to represent the constituency of Taunton Deane in Somerset—Taunton for five years, and then latterly Taunton Deane—and to serve 10 years in the House of Commons, and also to support a radical and important Government in the history of our country. I want to make my final comments about politics generally and the role of Members of Parliament.

I was listening to the “Today” programme last week when a person was being interviewed—he was French or perhaps a Swiss French speaker—who was seeking to be the first person ever to fly around the world in an entirely solar-panelled plane. It is an extraordinary plane, because it has a wingspan of a 747 but weighs about the same as a family car, so it sounds like an absolutely terrifying undertaking. The interviewer said that he did not doubt his courage and his sense of adventure but questioned what possible application this feat of adventure would have, given that Boeing, Airbus and the airliners were not interested in the technology and did not think it would have any great future use. The interviewee said, with, I imagine, a shrug—it was on the radio, but it sounded like he was shrugging his shoulders in the way that only French-speaking people can—“That is to be expected. The inventors of the candlestick did not invent the light bulb.” It was a rather Eric Cantona-esque moment. However, he was making an important point, which is that we cannot, in our politics, always be risk-averse and always in the business of preserving the past rather than trying to seize the opportunities of the future. If we allow politics, in all parts of this House, in all parties, to be about how we can frustrate, regulate and tax light bulb inventors, and subsidise and prop up candlestick manufacturers, we will find that world events—in a globalised economy with very rapid technological, demographic and economic change—leave the House of Commons behind and trust in politics subsides further. That would be hugely regrettable.

We have made enormous progress under this Government in this Parliament, but, whichever Government are in office after the general election, I urge the people in that Parliament and the leader of that Government to be visionary and ambitious for our country, because we can have a great future ahead.

Several hon. Members:

rose—

Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means), First Deputy Chairman of Ways and Means

Order. The Chairman of Ways and Means said at the beginning of the debate that a large number of Members wished to speak, and he asked them to speak for less than 10 minutes. Two Members have achieved that, so I now have to impose a time limit of seven minutes on Back-Bench speeches.

Photo of Russell Brown Russell Brown Shadow Minister (Scotland) 4:05 pm, 18th March 2015

Thank you for choosing me as the starting point for the reduced time limit of seven minutes, Madam Deputy Speaker.

I wish Mr Browne all the very best for the future in whatever he does. I will not engage with him in any kind of Eric Cantona-esque thoughts because I would probably do nothing more than confuse myself.

My right hon. Friend the Leader of the Opposition was exactly right to say that any recovery we have seen has not been a national recovery. I will return to that in reference to my constituency. I sat through his response to the Chancellor, and from the Opposition Benches the faces of both the Prime Minister and the Chancellor of the Exchequer were an absolute picture. I just got the impression that they wanted to be anywhere other than on that Front Bench.

When my right hon. Friend mentioned table 2.4 on implied departmental expenditure limits, on page 69 of the Red Book, it became glaringly obvious that there are still some major cuts to come. In fact, the OBR spokesman has said that the cuts will be on a greater scale than anything we have seen. From looking at the Red Book, we know that the return of a Conservative Government means major cuts in 2016 and 2017 followed, surprisingly, by an increase in spending thereafter. That may be just in time for the 2020 election, but perhaps that is just my suspicious mind. What if the long-term economic plan, as it is called, goes wrong, just as the economic plan of the past five years has not got rid of the deficit, as was promised in the Chancellor’s first emergency Budget?

On the issue of savings and annuities, the Chancellor said towards the end of his statement:

“First, we will give 5 million pensioners access to their annuity. For many, an annuity is the right product, but for some it makes sense to access their annuity now, so we are changing the law to make that possible.”

I do not have much of a problem with the policy or the concept, but there is a risk: the public will suddenly be exposed to a risk. I would tell him that such people do not need the right guidance, but they do need good, sound, solid advice. The vultures are circling and waiting to pounce, and the last thing we need is a different form of mis-selling that exposes the most unfortunate in our society.

I said at the beginning that this has not been a national recovery. I constantly share with the House the desperate plight of my constituency and the problems faced by many of its residents—not only the unemployed, but those in working households. Youth unemployment among 18 to 24-year-olds in Dumfries and Galloway has been above the national average every month since this Government came to power in 2010, and February’s figures showed the UK at 3.2%, Scotland at 4% and Dumfries and Galloway at 4.3%. The area is the lowest-paid region in Scotland, and it speaks volumes that the current average wage in the area is lower than when Labour left office. In 2010, the average hourly wage was £11.17, 11.3% below the national average. Last month, that average hourly wage was £10.96, 16.5% below the national average. The number of people in full-time work in 2010 was 34,100, but that has fallen to 33,300. So we are blighted with below-average wages, under-employment and a hard-core group of some 500 young people who are crying out for an employment opportunity and a chance to prove themselves.

Mr Hoban said that we cannot ignore the deficit, and he is absolutely right, but we also cannot and dare not ignore the fact that some local economies are suffering and are not part of any recovery that the Chancellor painted in his Budget today. Once again, great play has been made of the increase in the personal tax-free allowance—going up to £10,800 next year and £11,000 the year after that—but only those working in excess of 31 hours a week and earning above the minimum wage will actually benefit from those increases. The employment profile in my area clearly indicates that many will see no benefit.

Small businesses are the lifeblood of the economy in my area. Some small businesses have made it clear to me over the last few years that it was a great boost to them when the previous Labour Government reduced VAT to 15%. Those businesses saw a real benefit from the reduction, and could employ one or two additional people. That is important, because if every small business in my constituency took on an additional pair of hands, there would be no unemployment. The fact that the

Government have not ruled out a VAT increase, if the Conservatives were to win the next election, will be a worry to small and medium enterprises not just in Dumfries and Galloway, but—I strongly suspect—across the country.

The economy in my area cannot sustain another five years of Conservative Government. That is why May will present the country with an opportunity to take a different direction—a direction and a better plan that puts working people first. It will take a Labour Budget to deliver that.

Photo of David Rutley David Rutley Conservative, Macclesfield 4:12 pm, 18th March 2015

I wish to add my thanks for the great work that Mr Browne has done during his service in the House. I worked closely with him in the Home Office and he did an outstanding job as a Minister. His decision to leave the House will be a sad loss to us.

It is a pleasure to speak in this debate, because the Government’s long-term economic plan is working and Britain is back in work with record levels of employment. We accept that further work remains to be done to achieve our aims, and that is our theme—we have achieved much, but there is still further to go. That is the driving force behind the Budget. It is a go-ahead Budget for those who want to get on, whether in Macclesfield or across the country. It includes support for savers, pensioners and hard-working families—and for small businesses, as Mr Brown pointed out.

In Macclesfield, we have seen unemployment fall by more than 50% since 2010. That is a significant fall that is making a real difference in the lives of many people and I do not want Labour to put that in jeopardy. The Budget shows that we are the optimists. We have realistic plans and we are the party of ideas, leading the agenda that will keep the momentum of the British economy moving forward, with more jobs and greater success. That is particularly important in the north-west—I represent a seat in that area—where gross value added per head has grown by 3.4% per annum according to ONS statistics, a record unsurpassed in other parts of the country. I welcome that. After the disaster of the last Labour Government, and their internationally poor performance, the UK has now got an internationally praised rate of growth—the fastest in the G7, as we heard today. We have improved our position in the important international league of competitiveness, with rates of growth that are sustainable, unlike the unsustainable growth rates that were mentioned earlier.

The Government have delivered, the Budget will deliver more, and the next Conservative Government will deliver more again. No stone has been left unturned by the Government in their attempt to reduce regulatory burdens and enable the financing and growth of British businesses. It is right to continue those important efforts.

Specifically, we need to focus on enabling opportunities in the north-west. Many Members on both sides of the House want to rebalance our economy, which is why we are seeking to create a powerhouse of the north. There will be an extra focus on infrastructure projects in the north, such as the northern hub. We will ensure that there is extra capacity on trans-Pennine rail routes. We will focus on key sectors in the economy, in particular life sciences, which are vital in north-east Cheshire and

Macclesfield. It is vital that we transfer power and finances to unleash civic renewal and to take the concept of the powerhouse of the north forward. That will require strong local partnerships. The Government will work not just in word but in deed to take this forward. We saw that today, with the announcement by my right hon. Friend the Chancellor of a new pilot to retain and pool 100% of additional business rates growth between Greater Manchester and Cheshire East council. That is the sort of strategic partnership we want between city and county to drive growth in the north and across the country. That success breeds growth. This is a pro-growth agenda, a pro-north agenda and, importantly, a pro-small business agenda.

Small businesses are the engine of our economy, particularly in terms of creating jobs. Since 2010, the total number of businesses in the UK has grown by a staggering 760,000 to 5.2 million, the highest number ever. The number of employers has increased since 2010 by 52,000—another fantastic achievement. There are surely more of the 4 million or so small businesses currently without employees—76% of all businesses—that could take on an additional member of staff given the right market conditions. We have been working hard to create those conditions. There are signs that this is happening, as the Federation of Small Businesses stated on the publication of its latest “Voice of Small Business Index”.

To ensure that the economy continues to thrive, we need to keep the focus on optimal conditions for the four Es: the entrepreneurs, the employers, the exporters and the employees. We want to keep the focus on people who are new to those roles. We want to help them to move forward and to get ahead, particularly those who do not have family history in these areas. We want to be the party of opportunity and ambition to help them to achieve their dreams.

We have record levels of self-employment, which is to be celebrated, but there is a lot more that can be done to help first-time entrepreneurs. The new enterprise allowance has helped. Today, we heard in the Budget the announcement of the abolition of class 2 national insurance contributions for the self-employed. That, combined with annual tax returns being fundamentally changed, will help more people to achieve their ambitions.

We have done more to help first-time employers. We have to do more to help to signpost the opportunities available and tackle the perceived and real barriers that confront them in taking forward their ambitions.

We want to do more for exporters. We heard about the improving current account deficit. We are on the right track, and I am pleased that the Chancellor announced today that more resources will be available for UK Trade & Investment to support our vital work in China.

We must not forget first-time employees. We have to help more young people in particular to get across the line and get that first job. We have done lots to enable more people to take on apprenticeships and traineeships. We have looked hard at how we can help to improve academic rigour. Real wages are now improving and there have been increases in the minimum wage. A lot is being done, but there is more to do. I hope very much that the voters, not only in Macclesfield but across the country, will recognise the economic achievements of this Parliament and the aims of this Budget, and vote for a Conservative Government to get the job done.

Photo of Tom Clarke Tom Clarke Labour, Coatbridge, Chryston and Bellshill 4:19 pm, 18th March 2015

I would like to begin by exploding the austerity myth, the so-called “mess Labour left behind”, which is repeated ad nauseam on the Government Benches. The myth is Labour’s excessive public expenditure. The reality is that on the eve of the 2008 international financial crisis, public spending was almost exactly the same as it was in the later years of the Chancellorship of Mr Clarke, when public expenditure stood at 39% of GDP.

It is absurd to suggest that Labour created a worldwide economic crisis. Indeed, the current Chancellor called for less regulation of the banking sector—the very banks that caused the problems we are still dealing with—in the months preceding the crash. William Keegan, the distinguished economic commentator, wrote recently that

“for all the apparent political success the Chancellor and his colleagues have had in making people believe them, the charge simply does not stand up.”

We have seen something similar in Scotland: reality turned on its head, facts switched into fallacy, rhetoric in place of reality. Last week, the “Government Expenditure and Revenue Scotland” report showed that with the SNP’s fetish for fiscal autonomy, and even including a geographical share of declining oil revenue, the amount of revenue raised in Scotland would be significantly less than the total Scottish expenditure by both the Scottish and UK Governments—a deficit of £6.5 billion. This is more than half of what is spent on the NHS in Scotland each year, and the equivalent of every person in Scotland losing £800. “So what?”, they say. Crushing the standard of living for pensioners and further impoverishing the struggling; destroying the life chances of young people and inflicting more hardship on hard-working families; putting at risk the NHS; lowering the educational opportunities for Scots; cuts to tax credits, child benefit and pensions; a harder future with less support and even less hope—all this, we are led to believe, is a price worth paying for the imposition of an ideology. In Holyrood, the obsession is with independence and its painful precursor, fiscal autonomy. With this coalition, as we have seen again today, the ideological obsession—personified by the Chancellor, whose Budget aims to cut public expenditure, reduce taxes for the rich and deliver for the few, not the many—continues.

People are hurting. The Chancellor failed miserably to meet his own deficit target. My constituents are suffering from declining incomes and failing to find work. Hard-working families in my constituency are on average £1,600 a year worse off than they were in 2010. Stagnant wages, with low-paid and insecure work, are the reality for many of the people I represent. Of course they are hurting. Some 1.4 million people in Britain are on zero-hours contracts, with some of them reliant on text messages to tell them how many hours of work they will get that week. The truth is that unemployment has been replaced by underemployment, with the state subsidising businesses profiting from the low wages they pay their workers. As a result, tax receipts are more than £68 billion lower and receipts from national insurance contributions £27.3 billion lower than they were expected to be five years ago.

The working poor are increasing in number in our country, and many of them are forced to rely on food banks just to survive. The Trussell Trust told us that in 2009 we had one food bank in Scotland, but today we have 48. I want to live in a society where there is no need for food banks. In my constituency, unemployment is at 3.8% and youth unemployment at 5.3%—both well above the UK average. The average income in my constituency is lower than the UK average, and 3,785 children live in poverty. Government support is not a dispensable luxury; it is a necessity in order to survive, and for some it is simply not enough.

Great progress was made under the last Labour Government, and we should not underestimate it. More has to be done, and I believe more will be done. My constituents and the rest of the country simply cannot endure another five years under the Tories. I have great faith that on 7 May our country, the United Kingdom, will choose to be governed fairly—and that means a Labour Government.

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover 4:25 pm, 18th March 2015

It is a great privilege to follow Mr Clarke. My experience is sharply different from his, as I represent Dover and Deal. Before I was elected to Parliament, under the last Labour Government the number of unemployed claimants in my area went up a shameful 50%. Under this Government and their clear plan, which has been implemented and is working through, the number has fallen dramatically by nearly 40%.

The right hon. Gentleman told us about his constituency experience, but I have looked at figures indicating that the difference was even sharper there. In the previous Parliament, the number of unemployed claimants in his constituency went up by 100%. Since this Government came to power, the number has fallen by 40%. This picture does not apply only to Dover and Deal or to Coatbridge; it applies across the country. We have seen a jobs revolution, which I put down to sticking to our long-term plan.

There are now 2.3 million more people in business jobs and nearly 750,000 vacancies available at any time. It is a dramatic change from how things were. As a country, we now have a record number of people in work, a record number of job vacancies and the lowest unemployment rate since 2008. My constituents tell me that we have come a very long way, and they wonder why anyone would want to return to how things were five short years ago. That provides the key issue for the next election: do we want to return to the economic chaos of the past and the risk of a Labour Government propped up by some kind of SNP deal, or do we want to stay the course and ensure stability by continuing to work through our plan. It matters to our constituents because their jobs matter.

More than 1,000 new jobs have been created every day that this Government have been in office, and 1.9 million more people now have the self-esteem and financial security of a pay packet. I think that matters to people—having that sense of stability and personal security. This is a jobs-led recovery that has done nothing short of transform people’s lives for the better on a daily basis. We are getting people into full-time work, and we are making work pay.

Let me spend a few minutes looking at the things people say when they rubbish the achievements of this Government. Let us start with zero-hours contracts and remember that the previous Government had 13 years to act on them. In fact, they brought forward some form of White Paper back in 1998, and then spent the rest of their time in office doing nothing whatever about them. That was shameful.

It is also shameful that Labour Members talk about how many people are on zero-hours contracts when they know that it is only 2.3% of those in employment—just one job in every 50. Over 80% of part-timers choose to be on these kinds of contracts because they suit them. Indeed, this Government have reformed zero-hours contracts to get rid of the exclusivity clause, so they should now be called flexible work contracts, which better describes them. They can no longer be used to exploit people in a way that the previous Government were unwilling to do anything about. In addition, we all know that the Office for National Statistics has directly rebuked the Labour party for making misleading claims about these flexible work contracts. I am proud that the Government have reformed zero-hours contract to make them fairer and to end the exploitation that the last Government allowed to take place.

Labour says, “These are all part-time jobs, and no one can get a full-time job.” In fact, more than three quarters of all the jobs that have been created since the election are full time. The number of full-time jobs has increased by 1.42 million since 2010, and the 481,000 on- year increase has accounted for 95% of the rise in employment over the past year. I think that that is dramatic. I think that it is a jobs revolution.

Labour says, “Oh, that is a London recovery”, ignoring the fact that nearly three quarters of the rise in employment since 2010 has taken place outside London. Every region has seen a fall in unemployment in the past year. Labour says, “Young people cannot get a job, and youth unemployment has gone through the roof.” In fact, youth unemployment has fallen by 181,000 in the past year. Excluding those in full-time education, there are now fewer than half a million unemployed young people, and the number of young people claiming jobseeker’s allowance is the lowest since the 1970s.

Labour says, “Wages are terrible, and all the new jobs are rubbish. They are all manual, unskilled jobs like shelf-stacking, and no one wants them.” That is not true either. Since 2010, two thirds of the rise in employment has been in higher-skilled occupations, and there has been a real-terms rise in pay in the past year. Regular pay for employees is up by 1.6% on year, and total pay is up by 1.8%. Over the same period, the annual inflation rate was 0.3%.

Then Labour say, “Women cannot get jobs.” In fact, a record number of women—14.48 million—are in work, and the female employment rate is at a record high of more than 68%. Moreover, the pay gap between men and women has been all but eliminated among those under 40. I think that that is a tremendous record of achievement.

The final lie that I want to nail is the lie that long-term unemployment is increasing and the Government have been fiddling the figures. Actually, the Government have un-fiddled the figures. Labour used to fiddle them by sending people on courses when they had been jobless for two years, and then treating them as new claimants when they finished their courses and went back to claiming jobseeker’s allowance. This Government ended that abuse and un-fiddled the figures, but long-term unemployment has nevertheless fallen by 202,000—24%—in the last year, to 629,000, and the number of people claiming jobseeker’s allowance over the past 12 months has fallen by 11% since the last election.

Much has been done, but there is much more to be done.

Photo of Bill Esterson Bill Esterson Labour, Sefton Central 4:32 pm, 18th March 2015

It is always interesting to enter the fantasy world of Charlie Elphicke. He spoke of financial security and flexible work contracts, but, as we heard from my right hon. Friend John Healey, the problem is a weakness in both employment and pay. That is one of the reasons why the deficit has not been paid off. The so-called long-term plan has been a failed plan. The Government promised to eradicate the deficit in one term, but they have failed to do so, and one of the reasons for that failure is the nature of the employment that the hon. Gentleman has just described.

A number of Conservative Members are following the Conservative campaign headquarters script very closely. They claim that the crisis became international on 1 May 2010, when, miraculously, it suddenly changed from what they describe as Labour’s crisis under the last Government to a euro crisis under this one. That is nonsense as well. We have been given a fantasy Budget by a fantasy Chancellor.

I am afraid that what is happening in my constituency is typical of what is happening all over the country: low pay, zero-hours contracts and part-time work. A third of my constituents who are in work are paid less than a living wage, and people have lost an average of £1,600 a year. There has been a recovery for a few at the top, with tax cuts for millionaires, but no sign of recovery for the majority. Just the other day, one of my constituents told me that he was struggling to make ends meet. He has not had a pay increase for years, and he struggles to afford his mortgage, the energy bills, transport, and all the other things that he and his family need. A lack of job security, as well as low pay, leaves many people feeling squeezed, and the position is the same all over the country.

Pensioners are feeling it too, with high energy prices. Added to that, we have a crisis in the NHS—people cannot get a GP appointment and there are huge delays at A and E—all on top of, and partly caused by, cuts to social care. Yet there is nothing in this Budget about the cuts to social care or the cuts to councils, nothing about what the future might look like for local government and nothing about our NHS. All we can conclude is that the Conservatives and their Liberal friends just want as small a state as possible, and that is what they have got in store for the people of this country if they win again. We have had a failure from this Government over five years and we do not need more failure over the next five as well.

What does business need? Many of my constituents either run or work in small businesses. They need a level playing field, proper skills and decent quality apprenticeships for the under-25s, not the over-26s who have benefited from what has happened under this Government. Young people need a proper choice between vocational and academic study and preparation for the wider world. We need a return to work experience and proper careers guidance in schools, something that has been removed by this Government. We have a Chancellor who did not mention what is in store for those in education. The 10% cut to education is not a sign of a long-term plan; I am afraid it is a sign of further failure from the Government, if they get in again.

The Institute for Fiscal Studies has told us that the holes in the Tory plans, even with the revisions today, can only be covered by further deep cuts to public spending, not least in the NHS, or by the usual Tory remedy, a rise in VAT. “Colossal cuts” in services is a phrase that the IFS has used, and the effect on the economy, certainly in my part of the world, will be to remove further spending power, as well as having an impact on living standards. We will see further cuts in services, which all has an impact, along with the VAT rise, on businesses and their ability to grow and create the good-quality jobs we need.

The Chancellor really has failed the people of this country over the last five years. Our constituents can do so much better than this Tory, top-down approach—the top-down reorganisation of the NHS and the failure of trickle-down economics, which helps a few at the top while the rest see their living standards fall. That has been the reality. What we need is a change of Government, because that Government will deliver success for working people. As we know, Britain succeeds when working people succeed, so let us help the majority of people in this country to succeed. Let us end the exploitation of zero-hours contracts, encourage living wage employers and have a proper rise in the minimum wage, because 20p just does not make up for the years when there was no increase.

Where was the announcement in the Budget about the exploitation of those in the care sector, such as the two women who looked after my mum in her final weeks and months? They did 25 hours in a weekend and were paid for only 10 hours. Like so many people up and down this country, they are completely undervalued, exploited and ripped off, yet we rely on them to look after the most vulnerable in our society.

What of those out of work? Self-employment is one of the options that the Government promote. The new enterprise allowance is great for those who have a business plan and know what they are doing, but the danger, I am afraid, is that it is pushing people into debt. That is what I have seen, sadly, for too many people who have gone down that route, having seen no other option because of the way the Department for Work and Pensions’ benefits system operates.

We need a change of approach. We need to see a better plan—a plan for the many, not the few; a plan that raises living standards, looks after pensioners, makes sure that businesses of all sizes can thrive, and ensures a decent society for us all. That is why we need a Labour Government to be elected on 7 May.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West 4:39 pm, 18th March 2015

We have a national health service we can be proud of; we have a national health service that we have protected; and we have a national health service that will get proper funding.

Last evening, having done a fair day’s work, I found I had about 100 e-mails from 38 Degrees, which had saved them up from my constituents then dumped them in my inbox because of a technical problem. They all asked the same question. On behalf of hon. Members on both sides of the House, I should be grateful if 38 Degrees wrote to MPs and got us to reply. It could then circulate our answers to all on its mailing list.

I invite 38 Degrees to ask its members whether they would like to provide their e-mail addresses to MPs so we can do that. It would make life much easier for our staff, who, from within that blizzard of e-mails, have to find the individual requests from constituents who have heart-rending problems and who need instant attention. Too often they will be overlooked because we are dealing with the blizzard of e-mails that 38 Degrees and others send.

Incidentally, I challenge 38 Degrees to put back on its Wikipedia entry the Labour activism of some of its founders. Accurate information was wiped off pretty quickly.

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

Oh! Falsifying Wikipedia. Shameful.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

It was not falsifying. It was just taking things out that ought to remain. There is a record in the trail.

There are many things in the Budget on which hon. Members on both sides of the House can agree. Some measures could go further in future Budgets. I welcome the suggestion that farmers should be able to average their income over a number of years, but the same problem applies to a number of people in small businesses. A lot of people in small businesses work very hard for very long hours for very many years. They often do not make many profits. Sometimes they have good years and sometimes their business becomes worth a bit and they can sell it. The taxation arrangements are not easy for all of them—they are better for those receiving entrepreneurial relief. For other businesses, if people get a lump sum in one year, they should be able to spread it across a number of years, as under the provision for farmers.

I spend much time serving with hon. Members from both sides of the House on the High Speed Rail (London - West Midlands) Bill Select Committee. A number of farmers, business people and local residents come to see us. My admiration for people in business, whether on the land or in offices or factories, has gone up a great deal. I am very impressed by the quiet way in which people get on with their lives and come to Parliament to petition when their interests are affected.

Some cannot easily come to Parliament. I say this to those on the Treasury Bench: whatever the reasons of money, I do not intend to tolerate for much longer the fact that half the pensioners in this country who retire overseas get inflation increases and the other half do not. The Government say that there is no money, but we are getting out of austerity and into prosperity. The background is chance. We did not have agreements with some of the Commonwealth countries—the old dominions —but we did with other foreign countries, and the EU requires us to treat EU citizens the same.

It is frankly wrong that someone who has worked in this country and retires overseas should be treated differently on different islands in the Caribbean, in Canada, in the United States of America, in South Africa and other African countries and so on around the world. It is one of those things that is just wrong.

The Chancellor made a number of good jokes, some of which had tax prices attached to them. He said he wanted a review of the variation of wills. If that provision is taken away, a lot of ordinary people will find that they have to revise their wills several times over a decade. Most of us do not know when we are going to die. Being able to vary the beneficiaries of a will is important. People do it not just for tax reduction, but because it allows them to take account of changing circumstances. We have all heard examples of people who have made wills that were right 10 years ago, but that are not right 10 years later. If a variation can be agreed, it is a sensible way to do sensible things. It is not just about reducing tax.

Arguing that the lifetime pensions allowance should be reduced to £1 million is one thing. Someone who has a pension entitlement with a capital sum behind it of £1 million is lucky compared with many, but it begins to look a bit tight for those savers who are reasonably successful in their earnings. I remember once prison visiting with a retired newspaper editor. He said to me, “Tell me about MPs’ pensions.” I did, and said, “What about you?” He said: “When I retired as a newspaper editor, I had a pension pot of £10 million with a pension of £1 million a year.” I said: “Some people have all the luck. And you accuse us of having our noses in the trough.”

I say to the Government that there are some areas where money should not be restricted too much. On housing, we clearly have to improve leasehold, which requires civil servants in the Department for Communities and Local Government to watch what happens. We also need to bring in commonhold properly and make sure that resources are such that managing agents and freeholders do not get away with abusing leaseholders. I am not saying that they all do that, but it happens too often.

Finally, a number of people aged 19 are still doing A-level-type courses in further education and sixth-form colleges. The funding arrangements are becoming too tight for them, so I ask the relevant Departments—the Department for Business, Innovation and Skills and the Treasury—to ask themselves whether that is really their intention. They need to remember that they should not treat young people like racehorses by using their birthday as a rigid time to calculate how much money to spend on them. They all matter to us and I know that Members on both sides of the House care about that.

J

Mr Bottomley is quite correct when he says that "Some cannot easily come to Parliament." He's talking about the 4% of OAPs whose state pensions are unjustifiably and cruelly frozen for the rest of their days. This is despite them contributing to National Insurance on the same terms and conditions as the 96% of OAPs whose state pensions are NOT frozen, and who receive increases every year.
Of course they can't easily come to Parliament to petition or lobby, they're abroad, out of sight & out of mind. But that's wrong, the frozen pensioner with today's technology is never out of mind. For proof - you're reading this aren't you, and I'm thousands of miles away from the UK Parliament.
Just how this policy is so wrong as Peter Bottomley said, is also how illogical it is.
Picture your pension frozen for life in one county in UK but not frozen in another. Bags of cash in Bedfordshire but broke in Berkshire. Coining it in Cornwall but crumbs in Cleveland. Laughing in Lancashire but lost everything in London.
Not only would this be wrong, it'd be against any law written in the land, and against everything we stand for. But the government is doing precisely this, by paying OAPs in one country yearly increases to their pensions, and not giving any increases at all (for life) in another country. If it was a private company doing this, would they be allowed to get away with it, not a snowball's chance in hell, so why should the government get away with the theft of pensions paid for in good faith?

Submitted by Jeff Chipps Read 12 more annotations

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Environment, Food and Rural Affairs) 4:45 pm, 18th March 2015

A Budget is not an exercise in economic theory; it is a practical attempt to manipulate the levers of the financial system, both fiscal and monetary, to maximise public goods and public benefit. It used to be assumed in British politics that uncertain inviolable public goods would always be defended by Government, but that assumption has fallen apart over the past five years. From the quality of our air and water to the threat of catastrophic flooding and climate change, many now see that the role of Government has been hopelessly diminished. Over the past five years, the Government have stepped back from so many of the key risks facing our country that in the eyes of many people they are no longer fit to govern.

I want to focus on climate change and resource insecurity—two issues on which the Government promised significant progress and on which the Chancellor himself once made significant promises, but which show the true face of this Government and their significant failure.

In 2013 the chief economists of the Department for Environment, Food and Rural Affairs, the Department of Energy and Climate Change, the Department for International Development and the Foreign and Commonwealth Office proposed a cross-departmental review of resource security, climate change and growth. They had been planning it for more than a year. The Chancellor, however, cancelled the review on the grounds that neither resource security nor climate change posed a threat to growth. One has to wonder whether he ever read those letters that the Governor of the Bank of England is obliged to send to him every time inflation misses its target, because all 14 of them specifically cited resource price spikes and resource insecurity as key factors in missing those economic targets.

One has to wonder whether the Chancellor ever listens to the speeches of the Governor of the Bank of England, because Mark Carney has spoken powerfully about a “tragedy of horizons”, whereby new challenges to our long-term prosperity and economic resilience, such as climate change, manifest themselves beyond the standard regulatory and market outlook, which is two to three years. Speaking only last year at the World Bank-International Monetary Fund meeting, Mr Carney highlighted the fact that the vast majority of fossil fuel reserves could become unburnable in the transition to a low-carbon economy, resulting in a problem of “stranded assets”.

Investment horizons, whether in terms of the maturity of debt, the scope of risk analysis or the focus of equity markets, are often much shorter than the lifetime of the underlying assets and the impacts they create. An extended time horizon, such as that advocated by the Governor of the Bank of England, is a critical yet poorly understood dimension of a sustainable financial system. What Carney is pointing out, and, sadly, what this Government and this Chancellor have ignored, is that standard investment practice underestimates the value of future threats, particularly for those that are poorly priced and build slowly over time.

Out of 2,868 companies surveyed about their approach to risk management, 72% identified a current or future risk related to climate. It is clear that businesses and investors agree with the Governor of the Bank of England and disagree with the Chancellor, but the situation is worse than that: businesses and investors are delaying investment because of the regulatory risks this Chancellor has created. Of those 72% of companies identifying climate-related risks, 90% cite regulatory risk as a key factor affecting their business. It is no wonder that Bloomberg screens now include a carbon risk valuation tool. The Chancellor should take a look at it.

One of the desperately short-sighted measures the Government took was to scrap the adaptation reporting power. That means that the companies that own and run our critical infrastructure no longer have an obligation to monitor and report but are free to ignore the risks of climate change, leaving us more exposed to the impacts of extreme weather events and flooding. Ironically, the Chancellor claims that that was done as part of reducing the burden on business of unnecessary regulation.

Another short-sighted but devastating decision that undermined the investment capacity and future productivity of UK business was the Government's decision to downgrade the UK climate change risk assessment. I say downgrade, but that is really a euphemism: the Government slashed the number of staff working on climate change impacts from 38 to six in 2012. I do not know how much those 32 officials were being paid, but I am absolutely confident that the cost to British business from the lack of capacity to make a proper future assessment of climate risks and how to adapt to them will be infinitely more.

The impact of climate risk on our economy has been made only too apparent by the devastation left by the floods in 2007 and in 2013-14. This is not an imagined threat of future danger but a proven disaster, so one might expect the Chancellor to abandon cynicism and make the necessary investment to protect the public good. In his autumn statement, the Chancellor announced funding for 1,400 flood defences. It has now been revealed that the lack of partnership funding means that only 93 are fully funded.

A proper Chancellor would understand that the value of the financial system lies in the power it has to catalyse and facilitate a dynamic and efficient real economy. The real economy is that part of the economy that is concerned with producing goods and services as opposed to the part that is concerned with buying and selling on the financial markets. The goal of the financial system should be only to deliver inclusive and sustainable development by facilitating transactions, intermediating capital, transferring risk, transforming maturity, providing liquidity and governing assets. In short, it should serve and support the real economy by enabling capital to be allocated efficiently where it can best be used.

This Chancellor has failed to understand that distinction. Under him, we have seen increasing financialisation of the economy and the increasing importance of financial markets. My point is that the local economy has abundant stocks of financial assets but insufficient flows of investment into the areas where they are required for long-term sustainable development. The World Economic Forum estimates that there is a $1 trillion gap in investment infrastructure each year, but why is that gap important and why is it so important this year? In September, Ban Ki-moon will convene the leaders of the world to agree the sustainable development goals and in December the world will look to Paris and the UN framework convention on climate change to deal definitively with the risks to all our economies posed by climate change.

We must ensure that the misalignment between the financial system and the real economy is addressed and ensure that the financial economy is properly aligned to deliver the investment flows into the productive economy that will supply the need for new energy infrastructure and new adaptive capacity; that will deliver the transforming power of education and public health objectives set out in the sustainable development goals; and that will make for a more, rather than less, inclusive society and end poverty.

We know that a Budget is not an exercise in economic theory but a practical attempt to manipulate the levers of the financial system, both fiscal and monetary, to maximise public goods and the public benefit. If we want peace in the world, we must create economic justice, and if we want justice we must live sustainably.

Photo of Jackie Doyle-Price Jackie Doyle-Price Conservative, Thurrock 4:52 pm, 18th March 2015

Mr Browne is no longer in his place, but I cannot speak without referring to his parting comments, which were characteristically wise. We would all do well to remember his observation that it is our job in this place to inspire, to bring out ideas, to bring beliefs and to bring ambition. It is not the job of people in this place just to do what is politically expedient. We should always strive to do what is right and everyone in this House would do well to reflect on that observation.

I want to share with the House the experience of my constituents in Thurrock over the past five years. It is true that the future for Thurrock is looking much brighter than it did five years ago when I was first elected. Unemployment is falling and has fallen by two thirds in that period. We have more people in work than ever before, and new jobs are being created. The port of Tilbury, which is the primary business in the constituency, is expanding with a new distribution park, and at Purfleet, at my ferry port, three ships a day are exporting cars to Europe—an indication of the renaissance in car manufacturing over the past five years. Our young people also have access to many more opportunities through apprenticeships.

The Government can be very proud of the conditions they have created in Thurrock to enable growth against the odds. We need to make it easy for businesses to expand and grow and create jobs and we can do that by getting out of their way and by having a competitive tax system.

Infrastructure is important in facilitating growth, and I thank the Government for the introduction of free-flow tolling at the Dartford crossing and for the improvements to the A13 and to junction 30 of the M25, despite the fiscal challenges that we face. All those improvements are getting the traffic moving and enabling the creation of more jobs and growth—so a big thank you to the coalition Government for everything they have done for Thurrock.

I thank the Chancellor for what he has done in the Budget today to reduce the tax burden on working people. Lower taxes are in my DNA as a Conservative. I believe that we should all strive to ensure that people keep as much of their earnings as possible. By doing so, we reward them for their hard work and efforts and give them every incentive to succeed. For low-paid workers, the impact of benefit reduction combined with taxation kicking in can mean that they are effectively working for nothing. There can be no greater disincentive to join the world of work than that, and we cannot blame people for making a rational economic choice in those circumstances. The morally bankrupt thing for the Government to do would be to leave that be, but by putting an emphasis on increasing the personal allowance we have taken millions of people—the very people who can least afford to pay it—out of income tax altogether. We can be proud of that.

I encourage the Chancellor to continue with that policy and I hope that, when the Conservatives are returned with a majority, he will strive to make the living wage the point at which income tax kicks in. I also commend the Chancellor for increasing the allowance for those on higher rate taxes, because the previous rate has not been hitting the most well off. It is important that people who work hard and do the right thing are reassured that the Government are on their side and want them to keep as much of what they earn as possible.

I welcome the fact that the Chancellor has frozen the duty on wine and reduced the duty on spirits, but it I want to make an observation about tobacco taxation. The duty on cigarettes is due to go up by 2% plus RPI later this afternoon. A week after the House voted to introduce standardised packaging for cigarettes, I would like to put the Exchequer on notice that it will take a big hit as a result of that measure. I represent a number of ports in my constituency, and I have seen at first hand the challenge that Border Force, HMRC and the port security authorities face in tackling the growing menace of tobacco smuggling. It is estimated that about a third of the cigarettes sold in the London area are contraband, in one way or another. Anyone who visits a car boot sale or market will be able to buy contraband cigarettes for a couple of pounds a packet.

As we move towards a standardised packaging regime in which much of the price of the product will be accounted for by taxation, I am afraid that we will have created a massive opportunity for organised criminal activity. I ask the Treasury to bear that in mind, and I hope that the proposed legal action in relation to standardised packaging does not cost the Exchequer even more billions of pounds. Whatever the good intentions behind the measure, I fear the consequences for the Exchequer. That lost revenue will of course have to be recovered from elsewhere. Apart from that, I wholeheartedly welcome the Budget. Let us continue the good progress that we have made into the next Parliament.

Photo of Ian Lucas Ian Lucas Shadow Minister (Defence) 4:59 pm, 18th March 2015

I want to start by quoting a Conservative, which is not something that I generally do. The commentator Tim Montgomerie has said of the Chancellor of the Exchequer:

“He promised austerity but repeatedly missed deficit targets and has presided over a massive increase in government indebtedness. He defended Plan A against all comers but pursued a semi-Keynesian Plan B.”

I have been here throughout the debate, and it never ceases to amaze me that Conservative Back Benchers repeat their mantra of the “long-term economic plan”, which of course has failed completely. As we have heard from a number of Opposition Members, in the emergency Budget the Chancellor stood at the Dispatch Box and said that there would be no deficit by now. He has failed in the target he set himself and he has done so because of his own poor policy choices. He inherited economic growth and falling unemployment, but in 2010, following his Budget, he introduced a number of specific policies that strangled growth. First, he increased VAT, the tax the Conservatives never mention. They talk about being a tax-cutting party, but they always increase VAT. It is a tax that takes money out of the pockets of consumers and channels it directly into the Treasury in Whitehall.

It takes money away from high streets and presents it to central Government. If we look at high streets in the UK today, we see how much pressure is on them, and one reason for that is the choices this Government made on VAT.

In my constituency, the median wage has fallen by 7.4% in the past year alone. That is the reality of what life is like for my constituents today. To hear some of these speeches by Government Members is to hear about a complete fantasy world; that view is reinforced whenever my constituents see this Chamber and hear what Government Members are saying. The lack of demand is having an enormous impact on local businesses and our local economy, and it has all been presided over by this Chancellor, who decided to raise £14 billion from increasing VAT. His decision was so bad that he had to change policy. As Tim Montgomerie said, the Chancellor had to move to plan B. Plan B was a policy he pursued from 2012-13, because he had strangled growth in the two years from 2010 to 2012.

The Chancellor has introduced some public sector projects. It is extraordinary that the Minister responsible for prisons, Andrew Selous, has just arrived, because I am about to refer to the proposal to build a prison in north Wales, which I welcome. It is a public sector project, investing public sector finance in the local economy. It is the first prison for a quarter of a century that is going to be run by the public sector and a Conservative Government introduced it. It will bring jobs and money to the local area, so I am puzzled about why a similar project was cancelled by the incoming Government in 2010.

Unfortunately, according to press reports, the Her Majesty’s Revenue and Customs office in Wrexham is now to be closed. It is the last such office in north Wales, where a number of specialist tax public employees work. There has been no discussion with me about this and it has become known only because of newspaper articles in the past week. That move will take away 383 jobs, which is more than will be brought in by the new prison, so the picture is mixed.

We are approaching an election again and we have a budget deficit of £75 billion, which the Chancellor has failed to eliminate in the way he promised he would. The IFS tells us:

“Debt is set to peak at over 80% of national income. The deficit is still more than 5% of national income….Difficult choices lie ahead.”

What will this Chancellor do after the election? We recall that both the Conservatives and the Liberal Democrats said before the 2010 election that they had “no plans” to increase VAT. When I pressed the Chancellor on his plans for VAT when he delivered his autumn statement, he said:

“The plans that I have set out involve spending reductions and welfare reductions…We will go on reducing spending and reducing welfare, and we do not need tax increases.”—[Hansard, 3 December 2014; Vol. 589, c. 331.]

The Office for Budget Responsibility tells us today in its report that, if the next Government are to stick to the Conservative and Liberal Democrat spending plans, the budget cuts that will have to be made will be bigger than those implemented by the current Government, and we all know what those have meant.

What do the Conservatives do after elections when they want to raise money? They increase VAT. They did it in 1979, 1991 and 2010. They never say before an election that that is what they will do, but when they come in and raise VAT it has a devastating effect on economies and on people on low incomes. I have absolutely no doubt that the spending that the OBR is talking about cannot be done without tax rises. This Government are a tax-raising Government. They put up taxes and VAT in 2010, and raised £14 billion. As night follows day, if a Conservative Government are re-elected, they will increase VAT, and they will use the money raised to fund the positions set out in the OBR report.

Photo of Mark Garnier Mark Garnier Conservative, Wyre Forest 5:06 pm, 18th March 2015

It is a great pleasure to follow Ian Lucas. He made a passionate speech—the one thing I have learned is that Opposition Members feel very passionately about everything they talk about—but it does not mean that he was right. I wish to pick up on two issues, one of which is his reference to Conservatives being a high-tax party and the second is his reference to the fact that the promise to reduce the budget deficit by now has not been met. I look back to 2010 when I and many other Members were first elected to this place. We were listening to the Chancellor, who said that the budget deficit would be reduced to nothing by 2015 and that we would start to see the net debt reducing as a percentage of GDP. We cannot turn away from the fact that, although we were expecting a zero budget deficit by next year, that will not happen. But every single prediction that was made in 2010 was based on what was known at the time, on what was going on in the global economy and in our own economy and on a whole number of other different factors, all of which contribute to the great melting pot that is fiscal and economic forecasting.

What nobody could have understood at the time was the absolutely colossal problems that we would have in the eurozone and in Europe. When a country’s biggest trading partner has massive economic problems—we are seeing economic decline in Europe at the moment—it is inevitable that it will not reach its economic and fiscal targets. What is an extraordinary achievement is that, despite the fact that we are still seeing Government net borrowing going up, we have got to the stage where the economy is growing at such a rate, according to the OBR, that net borrowing as a percentage of GDP will peak this year at 80.4% and decline by 2020 to 71.4%. Finally, we are in a position in which we are reducing public sector net debt as a percentage of GDP. That is incredibly important because at the moment this Government—and the next Government and many Governments after that—are spending revenues not raised in this Parliament but that will have to be raised in 20, 30, 40 and 50 years’ time. It is our children, grandchildren and our great grandchildren who will have to pay down that debt.

I did not get elected to spend the money of future generations. I want to spend this generation’s money—this set of taxpayers’ money. However, when this Government came to power, there were a huge number of problems. There was a fragmented banking system. I am not somebody who will necessarily say that Mr Brown was wrong to bail out the banks. I know that many people say that it was a rash thing to do—I said that at the time. But in retrospect, I can see that it was the right thing to do. We could not allow our banking system to collapse, so the decision was right. But it was also necessary to reform the banking system completely, and this Government have done an enormous amount of work to do that. Credit conditions are improving and we have seen a big change in the financial regulatory system. That is all about ensuring that we remain one of the world’s pre-eminent banking centres and, much more importantly, that we get finance to the small and medium-sized enterprises, businesses and households that need it.

Ultimately, the Chancellor has achieved an extraordinary level of economic success over the past five years, and that is the result of a number of different factors. One of those factors, of course, is the reduction in corporation tax, which will fall to 20% next year. As a result, many companies around the world now view the UK as a tax haven, as evidenced by Pfizer’s AstraZeneca bid, and that is attracting a huge amount of inward investment. The net result has been over 750,000 new businesses created in the UK and 2.2 million new private sector jobs.

However, there are a number of issues that we have to be incredibly careful about. One of the most pernicious problems built up in the bubble years before the financial crisis—I bang on about this—was the colossal increase in household debt, which went from about £400 billion in 1997 to about £1.45 trillion in 2008. That was a huge increase of household gearing from around 100% to 170%. It has since come down to about 140%, and I am pleased that the OBR has predicted that the increase, which will happen, will not take it to the same level.

What does that mean for our constituents? Over the next few weeks we will all be knocking on our constituents’ doors ahead of the general election. They will open their doors and show us a glimmer of their lives. We will see the television flickering in the background, and there will probably be a couple of kids not doing their homework when they should be. What we know is that as a result of those bubble years the average household can rely on only six days of savings should one or both of those people lose their jobs.

The economy is still incredibly fragile. It is in a really dangerous place. If we do not stick to our plans and try to continue to grow jobs, we will end up jeopardising the jobs that we have grown. It is so important to get this absolutely right. When we look at our constituencies, as we will all be doing, particularly after this Budget, we will see that in the vast majority of cases unemployment has dropped. Unemployment in my patch has dropped from 2,300 to 999 today, which is a good thing, but we still have below-average wages and a higher than average number of part-time jobs.

That is why now is not the time to get the bunting out, although an enormous amount had been achieved. Now is absolutely the time to make sure that we do not deviate from the plan that has been proved right in the vast majority of cases over the past five years and that can finally finish the process of restoring this country to economic soundness and fiscal probity.

Photo of David Lammy David Lammy Labour, Tottenham 5:13 pm, 18th March 2015

As a former Universities Minister, may I begin by welcoming the decision on support for PhD students, which obviously builds on the progress previously made for masters students? That is hugely important to our economy. I also think that it is fantastic that the Mayor of London has been given greater powers in relation to skills and planning. The move on the London Land Commission is vital if we are to bring forward land for housing here in London.

I would like to have seen something in the Budget on Crossrail 2. It is hugely important that we build on the developments of Crossrail 1 and do not lose the expertise, so we must move on to Crossrail 2. The Chancellor was previously able to find £2 million to see the concept of that scheme move forward, and it would have been nice to see some determination at the Dispatch Box today, but it was not mentioned. There are also vital infrastructure developments here in London, including a bridge in the south-east and the Bakerloo line extension, but those, too, did not feature in the Budget statement.

The major issue facing London and the south-east is housing. Although the Chancellor set out his plans for a new ISA for first-time buyers, when one looks closely at the figures, it does not look as though that will go very far. The average London house is now being bought for £470,000. The average London earner is making £36,000. On any analysis, despite the ISA, which can be topped up to £15,000, a buyer would need a deposit of £75,000. It is going to take a lot of ISAs and a long time to get to that deposit. The Chancellor gives the impression that the Government support home ownership. My guess is that someone on average earnings might be able to find £1,500 to stick into an ISA, but it is unlikely that they will find £15,000, and if prices continue to rise, getting to that deposit might well take a decade or more.

But most people moving into housing in London this year are moving into private rented accommodation. We have heard nada—zero—from the Government about that lion’s share of our population who are in private rented accommodation. Here it is important to say that I am not talking about students or young professionals, often living in overcrowded circumstances. I am thinking of London’s working families, moving every six months because of shorthold tenancies because of dodgy landlords. We heard nothing from the Government in relation to rent caps, the lettings crisis and that important group of Londoners—nothing on rents, nothing meaningful on house building and nothing for those who want to get on the housing ladder.

The real sadness is the travesty of social housing in this country. How many council homes did we build in London last year? Forty. Forty council homes were built in London last year. Because of the lack of grant to housing associations, the number of properties that they brought on to the market is also very low, relative to the need out there. At the same time, with right to buy and the huge discounts that exist, thousands of council houses are coming off the market. Of course, there is a discount. The discount available on council houses is £100,000. What happens? Someone buys their council house, gets the £100,000, and then sells it. In what other area of public policy can anyone get £100,000, handed across from the taxpayer? This Government took the bonds that we introduced for young children so that they would have assets, and they are prepared to give £100,000 to those who want to buy their own home and then sell it off.

So on housing, the biggest crisis facing our country, we have heard nothing. I said that I welcomed the handing over of greater powers in relation to skills to the Mayor, but that is handed over with one hand and taken with the other. It has not gone unnoticed that this Government have plans for a 24% cut in our further education budgets across the country—24%. How does someone get up the ladder if they are stuck in one of those poorly paid jobs in retail in this city and beyond? They often do it by going to night school. I say to the Minister, “Find me a college that’s open past 8 pm for an adult—not a young person—who is available to skill up, and I’ll give you a beer.” There are hardly any such colleges left in the country. The opportunity does not exist. If the Government were serious about vocational skills, they would attend to adults in adult learning who want to move up. Despite all the plaudits on apprenticeships, let us remember that the growth in apprenticeships in London is in customer services and hairdressing. I rest my case.

Photo of Julie Hilling Julie Hilling Opposition Whip (Commons) 5:19 pm, 18th March 2015

In his autumn statement, the Chancellor said:

“We have shown in this Parliament that we can deliver spending reductions without damaging front-line public services if we are prepared to undertake reform.”—[Hansard, 3 December 2014; Vol. 589, c. 309.]

Today, in two short phrases, he said that to achieve his £30 billion savings he would cut £13 billion from Government Departments and £12 billion in welfare savings: no more details and no discussion of the misery that this means for many of my most vulnerable constituents. His cuts to front-line services have damaged residents in Bolton West and will continue to do so. People used to say that when the tide rose it lifted all the boats, but this Government have proved that now it only lifts the yachts. Constituents in Bolton West will be £1,600 worse off at the end of this Parliament than they were at the start. On top of the £100 million cut in its budget, Bolton council now has to find a further £43 million in the next two years. Social care is harder to get, youth provision is down, roads are full of holes, and the voluntary sector is cut.

The Chancellor talks about £12 billion savings in welfare. A consortium of northern housing providers, including Wigan and Leigh Housing and Bolton At Home, has undertaken a survey of the impact of welfare reform on their tenants since 2012. Its latest report makes frightening reading. Average debt has tripled in two years and now stands at £3,500. One in two households is regularly unable to meet its weekly debt repayments, which are averaging just under £35 a week—88% higher than at the start of the study just two years ago. People in 23.5% of households are unemployed—the highest level of unemployment since the start of the study—and fewer than one in five is in full-time work, while 69% of those in part-time work want more hours. After their bills are paid, they have just £2.53 left per day. After bills, more than six in 10 households have less than £10 for the week’s spending money. One in five households has used a food bank. Although £3.63 per person is the average spend on food, three out of 10 families have less than £2.86 per day to spend on their food. A total of 53.8% of people say that they cannot heat their homes to the level they need, and 44% have said that their health has deteriorated since the start of the study just two short years ago. Tell those people that we are all in it together; tell them that Britain is walking tall again; tell them that the plan is working. Britain needs a better plan. The Tories will never understand that Britain only succeeds when working families succeed.

Young people have borne the brunt of many of this Government’s decisions, with tuition fees trebled, the education maintenance allowance abolished, Connexions got rid of—so they cannot now get the careers advice they need—and youth services about to become the first statutory public service to disappear altogether. The most vulnerable young people are being hit hardest, with 1,000 sanctioned every day. The YMCA has reported on many of the young people that it works with. Those who have been sanctioned say, for example:

“I was unable to eat and it was lucky that the YMCA could help.”

A young woman said:

“It’s how long they left me with no money for food knowing I was pregnant and had to buy my own food.”

Another young person said:

“I went 3 months living on food parcels which is really degrading because you lose all your dignity. It’s not just physically hard, it’s mentally hard.”

Sanctions are supposed to help young people into work, but one young person said:

“My focus turned to survival rather than gaining employment.”

Yesterday evening, Liam Preston from the YMCA told me of its serious concerns about the rise in poor mental health among young people, compounded by the cuts to child and adolescent mental health services and to youth services and other support services. Unless we look after the most vulnerable and make sure that ordinary families succeed, we will never succeed as a country.

A couple of weeks ago, at an event to encourage people to vote, one young woman spoke very eloquently about her life. She said that when someone has to worry every day about putting food on the table, paying their bills and clothing their children, they cannot worry about voting. Another young woman from Foxes of the Fold women’s group in Johnson Fold told me that she now has permanent asthma, because paying the bedroom tax meant that she could not afford to put her heating on all winter. Those are real lives.

This Government have targeted the weak and given tax breaks to the rich, and there have been tragic consequences, such as a rise in suicides. Let me tell hon. Members about one young woman whom I have known for many years; I used to be her youth worker. She has suffered from poor mental health ever since her terrible childhood, and she now lives in supported housing. She is waiting for an appointment at a pain clinic, which has been cancelled four times, and for a procedure to stop her pain, which has been cancelled twice. She was told that, owing to the cuts, her housing project would close. Unsurprisingly, she is now in hospital—she is very poorly—having tried to die. She is a victim of the cuts and of this Government’s policies. It need not be this way.

I presented apprenticeship awards at Forrest construction company in my constituency last week. The chief executive officer told me his story: from apprentice to CEO and from poverty to millionaire in 25 years. He recognises the need to put something back into the community, having benefited from careers advice and from people taking a chance on him. His company puts £1 million a year into the communities where it works. He believes that resources, play spaces, facilities and voluntary organisations make a difference to people. He says that if people’s horizons are raised, their lives will improve.

This Government offer not support but simply more cuts. Zero-hours contracts and food banks are not a legacy to be proud of. They do not understand the lives of working families, and they do not have the answers. Britain truly can do better than this, and under Labour it will.

Photo of Iain McKenzie Iain McKenzie Labour, Inverclyde 5:26 pm, 18th March 2015

Members from across the Chamber would probably describe the Chancellor’s statement as quite unbelievable, but for very different reasons. My constituents would certainly describe it as unbelievable because they have again listened to a Budget that is unable to hide the fact that, after five years of this Government, working families are worse off. The Chancellor claimed otherwise, but we know that the real truth is that people in this country are still struggling.

As we know, we have a Chancellor who gives with one hand and takes much away with the other. His tax and benefit changes since 2010, including that big VAT rise, have cost families dearly year after year, and no pre-election tax cut can make up for that. Worse still, we know the Tories are planning more extreme cuts after the election, which will go way beyond balancing the books.

We need a better plan—a Labour Budget that puts working families first. That is why this Budget will not be welcomed by the majority of people in my constituency of Inverclyde, or indeed in Scotland. Labour’s plan for creating wealth does not just target a few at the very top, but, unlike this Government’s plan, aims to help hard-working families across the country. We need something better, recognising that Britain only does well when we all do well and prosper. The gap between rich and poor is still too wide, and history tells us that our society does not fare well when that gap is so wide. We need support for and investment in business; and, as has been said, we need investment in our young people too, to create not just jobs for them, but careers.

The Chancellor claims that the economy is a success, but the reality is failure on every measure which the Government have set themselves to achieve. They have borrowed more, debt is up, low-paying jobs are up and tax receipts are down. All those are connected, for people cannot expect to deliver an economic recovery solely through the millionaires at the top. The squeeze on living standards during the past five years means that the Chancellor has failed to bring in the tax revenues necessary to balance the books. Indeed, the Government have broken their promise to balance the books by 2015. Low and stagnant pay means that tax receipts have been £68 billion lower than expected and national insurance contributions £28 billion lower than expected.

The Government have failed to tackle the cost of living crisis. Wages continue to stagnate, and too many jobs have been created in low-paid, insecure work, rather than in high-paid, high-skill sectors. So what is the Government’s solution to fix their mess? As we have heard, it is to take Britain back to spending levels last seen in the 1930s, with further planned cuts of £50 billion. We have already had five years of that and it has not worked. The Government want to run the state, but they do not believe it should exist. The Government’s plan has clearly failed, and we need a different approach. We need a Government with new ideas on how to support business, to create jobs, especially for our young people, and to improve living conditions for hard-working families.

Labour’s Budget would have seen support for working families not simply through tax-and-spend redistribution but by building a more inclusive recovery. Wealth does not flow from the top down: it is created from the bottom up, by working people and families. Every person in every sector of the economy is a wealth creator.

My constituents in Inverclyde will not be fooled by the small rise in the minimum wage announced by the Chancellor to take effect in October. It falls far short of the £7 minimum wage that he promised over a year ago. Under this Chancellor, we have seen the value of the minimum wage eroded and working people’s living standards fall. The hard-working families I represent in Inverclyde are on average at least £1,600 a year worse off under the Chancellor. Without doubt, Labour has set a more ambitious target for the minimum wage, which would see it rise to £8 an hour. We will also act to make sure the national minimum wage is properly enforced, unlike this Government who have failed to get to grips with non-payment, and named and shamed but a handful of companies.

Labour will take action to help to make work pay with an economic plan that works for all, not just a few at the top. We will tackle low pay and address insecurity in the workplace. My constituents tell me on the doorstep that they are struggling to make ends meet as the cost of living crisis bites deep; they need a pay rise and fairness in their contracts at work. Increasing the minimum wage to £8 an hour would instantly benefit more than 6,000 people in my constituency, but we need to go further and encourage more employers to pay a living wage by establishing “make work pay” contracts.

My constituents would also benefit from our compulsory jobs guarantee to provide a job for every young person unemployed for more than a year. The Government sorely lack any plan to give those young people an opportunity in life. The jobs of tomorrow will come from a large number of small businesses, not simply a number of large ones. That is why we also need to look at how overheads can be cut for businesses, but the Chancellor has given us nothing like Labour’s promise to lower energy bills through a price cap or to reform the energy market. Cutting costs for businesses means they have more scope to hire, contributing to the recovery and creating more jobs.

Scotland needs more than low-paid, low-skilled jobs. In Scotland, 82% of the jobs created since 2010 fall into that category. Those jobs fall way short of allowing families to make ends meet from week to week, and we have seen in-work poverty increasing and zero-hours contracts flourish. If we do not get to grips with low pay, low skills and poor contracts, we simply cannot expect Britain to lead the way in existing markets or in developing new markets.

Labour’s agenda is about fairness and opportunity for all. I hope that this will be the last Budget from a Government focused on millionaires rather than the millions who need help.

Photo of Michael Connarty Michael Connarty Labour, Linlithgow and East Falkirk 5:33 pm, 18th March 2015

The Budget statement was very interesting, because it was an attempt to rewrite the Chancellor’s last five years. It is strange that the Chancellor forgets where he started, what he promised, and what he tried to do. He came into office five years ago with austerity max. That was his solution. He was going to drive out the deficit by slashing public sector expenditure—and he was applauded to the rooftops by Conservative Back Benchers. Within a year, the economy had stalled, we lost our triple A credit rating and the Chancellor panicked. What did he do? Strangely, he stole Labour’s plan B. He realised that he had to bring something other than austerity and cuts into the economy, because of the damage that they were doing. That is a lesson that the eurozone could learn, because it is doing the same thing across Europe now, with its obsession with austerity and cuts.

The Chancellor brought in some other measures. For example, he started to tax. If we look at the figures for the past five-year period, 18% of his deficit cutting has been done by raising taxation and 82% by cuts. That is still the wrong balance, but at least it gave him some income with which to start to give incentives to the business community and to consumers to try to raise the economy.

The Chancellor got to a position where he had halfway run his race. If someone said to me, “I’m going to run a mile,” but then wanted a medal because they had run half a mile, I do not think they would get a medal. Yet he stood up today wanting applause from everyone on the Back Benches—he got it from his own side—for having failed to reach his own target! It is an amazing situation in politics, where someone sets out to do something, fails to do it and then tells us what a wonderful job he has done. The reason, of course, is that he is trying to put a gloss on his failure. A lot of the things that have happened in the economy have not been because of the Government; they have been despite the Government.

It is very important to look at where the Chancellor got his money from. He got it by taxing the low and middle-income people in this country. How can anyone expect the people of the UK to applaud the Government when it is the people who have felt the pain? The Government will never be able to justify to the vast majority of my constituents—and, I think, the people of the UK—cutting tax by 5% for those earning more than £150,000 a year. We get people saying that that is worth £40,000 to a millionaire, but the main thing is that it was unfair, it was unnecessary and it was playing to an ideology, not to practical economics. Why the Chancellor should think for a minute that he should get any applause for that, I do not know. He will get none in my constituency, even from the very hard-working people earning decent wages, for example in the oil and gas industry.

The Government have been telling us a mythology today. They expect people to believe it, but I have been listening to the commentators outside the Chamber and they are not buying it. This has been a feeble Budget, with little bits here and little bits there. How does one spend £6 billion, yet do very little to incentivise the people of this country? Just follow the Chancellor’s words. There is nothing there, as far as I can see, to help people.

The Budget, as far as I am concerned, is based on another mythology: the mythology of the unemployment level. They keep saying, “The unemployment level in your constituency, or in this constituency, has fallen.” If that was true, it would be fine. But it is not true. The unemployment claimant level has fallen. What has happened is that large numbers of people in the support system have been put on employment and support allowance and are not counted towards the claimant count. Massive numbers of my constituents tell me about the sanctioned people in my constituency. My hon. Friend Julie Hilling elucidated that so well, with the number of examples she gave.

The example that struck me most was the person who, in the past couple of months, died of starvation. He was a person with a mental health problem, who had been sanctioned because he had not turned up for various signing on regimes. He had £3.66 in his pocket. The care worker who found him said that even murderers do not starve to death in this country, but people who cannot help themselves are sanctioned for three months. That is three months without any form of income. There are no other places to go. The supply of loans that used to exist have dried up. People live in absolute dire poverty.

I found a woman with three children who, because of a break-up in her relationship, went from summer to Christmas without any money from the local Department for Work and Pensions. She lived on her family allowance and by borrowing from everyone she could find to keep her alive. Eventually, she came to my surgery in tears, absolutely howling, looking at a Christmas with no money in her pocket and no one else to borrow from. That is the reality of this so-called unemployment fall. A massive number of people—the figure I have heard is as many as 1 million—have been sanctioned off benefits and are living below the breadline. That is not because they are not seeking employment, but because they despair. They give up. They try again, they try again. They are told, “That is not enough, fill your book in.” They keep trying, but are always told, “That is not enough.” That is not the economy that I particularly want to see.

The Chancellor said that he is going to do something for people on low wages. That is another joke. Government Members sneer and laugh when people talk and shout about zero-hours contracts or part-time employment, but that is the reality. I watch and wonder sometimes if they have any moral fibre in them. The reality for my constituents—I have taken up these cases—is exemplified by Burton’s Biscuits, which said, “We don’t have zero-hours contracts. We guarantee 150 hours a year.” No one can live on that.

The problem with what the Chancellor is trying to sell is that we are not buying it. It is a hard life out there for ordinary families, and what we need is a Budget from a Labour Government that says, “You build the economy up from below. You do not trickle down from above.” Every statistic shows that we have failed to grow because we still rely on trickle-down economics. We need a Labour Government with a better plan for our people—one that puts the people and my constituents at the bottom level first, so that they can work their way up, not a plan that gives to millionaires in the hope that they will trickle it down.

Photo of Geraint Davies Geraint Davies Parliamentary Assembly of the Council of Europe (Substitute Member) 5:40 pm, 18th March 2015

It is a pleasure to follow my hon. Friend Michael Connarty, who sits on the European Scrutiny Committee with me.

First of all, I should welcome a couple of things in the Budget. One, of course, is the Swansea Bay lagoon. If that is going ahead—I assume that the Planning Inspectorate has suggested it supports it—it will be more than a small step for green energy and a giant leap for the Swansea economy. Secondly, I welcome the VAT withdrawal from tolls on the Severn bridge, which will loosen the noose around the neck of the south Wales economy, although I think the toll should be reduced down to the maintenance and operations level—about £1.50 a car—to encourage inward investment, tourism and trade, particularly with the south-west.

In general, however, I think this is a candy-floss Budget—it looks bigger than it is and seems to taste nice, but afterwards we are left feeling hungry, and it is not particularly good for us. Prior to the Budget, we heard from the OBR that the previous plan was to reduce spending to 1930s levels. It is as if the Chancellor is operating a time machine. He has moved the switches, and he can move around the numbers, because the oil prices are down, so now apparently we are only going back to the year 2000. However, the executive summary from the OBR mentions that the cuts, increased for 2016-17 and 2017-18, are much harsher and sharper than in the previous five years, but then he plans the biggest increase in real spending for a decade in 2019-20, which of course is election year. In other words, this is cynical electioneering, rather than a long-term economic plan.

On the long-term plan, the two variables people talk about are the deficit and jobs. It is hardly a success to see debt as a share of GDP move from 55%, where Labour left it, to where it is now, hovering around 80%. It is hardly a success that the Conservatives and the coalition Government have borrowed more in five years than Labour did in 13 years, during which time we bailed out the banks. The reason for that is the failure to generate growth. It is claimed that there is lots of growth, because there is 2.6% growth at last, but annualised growth over the past five years has been about 1.7%. Under Labour, growth was 40% over the 10 years prior to the banking crisis in 2008. Again, this is not a great success. We have lost our triple A rating.

There is talk about jobs. There are more jobs, but productivity is down and overall production is being spread among more people. There are 800,000 fewer people in jobs earning more than £20,000, and more people than that are earning less than £20,000. Through the economics of austerity and low wages, we are generating less tax revenue, we cannot balance the books and debt is going up. That is hardly great news. Meanwhile, there is talk of people literally dying on sanctions. In Swansea, 65% of people on jobseeker’s allowance, surviving on

£72 a week, have been put on sanctions. Why are the Government not focusing on the 10% of wealth held in offshore accounts where it is evading or avoiding tax? We have heard something about that, but it is more talk than action and recovery.

The big choice is not about how much we spend versus tax and comparing the different numbers; it is about how growth can help to generate revenue and get the deficit and debt down. Anyone who, like me, has run a business knows that if they make a loss there are two ways forward: one is to make savings and the other is to grow the business. How are we going to do that? In fact, we are doing the opposite. We have the austerity of cuts. With the police, we have seen 26% cuts and another 20% of cuts are still to come through. The president of the Association of Chief Police Officers, Sir Hugh Orde, has said that we are at a tipping point and there might be greater risks from disorganised terrorism. It is the same with defence, with massive cuts to the budget, while Russia is spending £50 billion or 3.3 trillion roubles on defence. There are threats out there in the world; are we rising to them? No, we are not. Why not? Because we are not generating growth.

Growth incorporates the three elements of consumption, investment and net exports. Consumption confidence was dashed in 2010 when the Chancellor said he would sack half a million people and people stopped spending money. Investment was undermined when the funding for lending scheme of the Bank of England was focused on mortgages, not businesses, so that lending to business went down by 40%. There was no growth in net exports in 2013 in terms of the balance of trade, with no net contribution. Last year was even worse, as we lost £8 billion. Firing up exports has been a complete failure.

So we need a plan for growth, which includes things such as tuition fee reductions. What that does is increase productivity and the size of the cake. Whatever the Business Secretary says, the reality is that people are being deterred because of the prospect of having these massive debts. People’s credit ratings are being reduced; people cannot buy a house. At some point, if their incomes go up, they hit higher payback thresholds, and they want to avoid paying it all. It does not make sense; we need to invest in productivity. Tuition fees are relevant.

We need to say clearly that we want to be part of the EU because we need inward investment from China or India, platforming into the biggest economy in the world—it is the EU economy—from an English-speaking place, namely Britain. Those thinking of making such investment do not want to worry about a referendum and the possibility of our coming out of the EU. We want city regions and we want them supported by money from regional banks. We want a house building programme and we want a procurement strategy through which small businesses, which pay British tax, are encouraged and not discouraged by the bigger players.

We also want fairer taxes, whether it be a 50p top rate or getting rid of the bedroom tax. The reality is that poor people spend all their money, and rich people hide it away. If we want growth through consumption, we need a better way forward with a fairer balance of incomes. The truth is that we have a Chancellor who is looking to the future walking backwards. He is taking us back to an age in which the poor get poorer and the rich get richer. We all want a fair share, and we all want to be productive to help make Britain succeed together. That will only occur with a Labour Government.

Photo of Jack Dromey Jack Dromey Shadow Minister (Home Affairs) 5:47 pm, 18th March 2015

“No more top-down reorganisations”; “no plans to raise VAT”; “We back Sure Start”—these are all broken pledges from a Government and a Chancellor who cannot be trusted. Had I shaken the Chancellor’s hand last Sunday, I would have counted my fingers afterwards.

The pledge on no cuts to front-line services rings particularly hollow in the Home Office. Some 17,000 police officers have gone, 8,500 of them from the front line; 4,000 police and community support officers and 15,000 members of police staff have gone, too. These are the biggest cuts in Europe, and there is worse to come, with the Association of Chief Police Officers predicting 30,000 more losses in the next Parliament.

All of this is happening at the worst possible time. The threat from terrorism has been elevated to “severe”, yet we are seeing the systematic undermining of a vital tool in combating terrorism—neighbourhood policing, described by Peter Clarke, the former head of the counter-terrorism command, as the “golden thread” that runs through the police effort in combating it. The number of rapes is up by 31% and violent crime by 16%. As more cases of child sex exploitation and abuse come to light, so, too, are the pressures growing on police time and resources. We have heard of revelations in the midlands today of 500 vulnerable individuals, 70 separate investigations and a police service now devoting 10% and rising of its resources to combating child abuse.

As for the claim that crime is falling, crime is changing. It is true that traditional forms of volume crimes such as burglary and car theft are down, but other forms of crime—fraud, cybercrime, online crime—are increasing at a massive rate. The Office for National Statistics has said that if these were fully reflected in the annual crime survey for England and Wales, we would see an increase in crime of 50%. Many police forces are on the brink. In the words of Neil Rhodes, the chief constable of Lincolnshire, forces are

“on the edge of viability.”

On top of all that, our police forces are stretched to breaking point, and are taking up to 30% longer to respond to 999 calls. Nearly 14,000 more crimes have been unsolved since the Government came to power. The victims of crime are being let down as too many criminals get away scot free. Under this Government, 7,000 fewer crimes of violence have been solved, and, although domestic violence is on the rise, the number of cases passed for prosecution has fallen by 13%. The first duty of any Government is to provide for the safety and security of their citizens, and it will fall to us, as the party of neighbourhood policing, to rebuild it when we are in government. Neighbourhood policing is the bedrock of policing: it means local policing, local roots and a local say.

A more general choice now confronts the people of our country. Labour is, and always has been, the party of working people. The contrast with the Tories could not be more stark. They are the party of low wages and insecurity. One in five people in my constituency earns less than the living wage, and hundreds are on zero-hours contracts. The Tories are the party of high rents and high house prices, of high energy bills and high child care costs. They are pushing up the benefits bill with one hand, and borrowing £200 billion more than planned with the other.

The Tories are failing their own test, but they are also failing the big tests that my constituents apply to their own lives: “Am I better off? No, I am not”, I am told time and again on the doorstep. “What planet does the Chancellor live on?” asked someone in Kingstanding last week. The average family is £1,600 a year worse off. The other test is “Do my kids have real prospects for the future?” The answer to that question is that this is the first generation since the war who are growing up with less good prospects than their mums and dads and grandmums and granddads.

Labour, in contrast, is the party that believes in making work pay. Labour believes that it is wrong for people to go to work and live in poverty. It is the party of the much higher minimum wage—the £8 minimum wage. It is the party of the living wage. It is the party of security at work, which will tackle the exploitation of workers through zero-hours contracts. It is the party that will build the homes that Birmingham, and Britain, need, and will act to ensure security at home for those who live in the private rented sector. It is the party that will tackle the energy giants and bring down energy bills. It is the party that will provide affordable child care—25 hours free of charge—for all families. It is the party of equal pay and opportunity. It is the party that will tackle the abuse of power, and the abuse of workers by the rich or those who seek to take advantage.

There is but one alternative to this Government, and that is a Labour Government. UKIP? UKIP is not so much the party of the flat cap as the party of the flat-rate tax. It would privatise the national health service, drive women back into the home and gays back into the closet, and divide our country once again. My dad described to me the humiliation that he experienced when he came from County Cork to dig roads in London and saw signs reading “No dogs, no Irish.” As for Nigel Farage, boasting, vainglorious, saloon bar Nigel—a man of the people? In the immortal words of Ricky Tomlinson, my arse, or if that is not parliamentary language, Mr Speaker, my posterior.

What kind of society do we live in? This is a Government who are strong with the weak and weak with the strong. In the words of one former Tory voter in my constituency, an ex-policeman, they are a Government of the rich, for the rich, making the rich richer. What says it all is that they introduced the bedroom tax on the very day that they gave 13,000 millionaires a £100,000 tax cut—a grotesque combination. There are heartbreaking cases in my constituency of people who have been hit hard by the bedroom tax.

This is a Government whose days are numbered. Their end cannot come soon enough.

Photo of Helen Goodman Helen Goodman Shadow Minister (Work and Pensions) 5:54 pm, 18th March 2015

We heard a characteristically self-congratulatory speech from the Chancellor earlier today. According to him, his strategy is working and his early austerity is paying off, with a growing economy, rising employment, a falling deficit and even enough room for manoeuvre for a few more tax cuts. Let us take each claim in turn.

This has been the slowest recovery from a recession ever recorded. The economy was growing when Labour left office in 2010. The Chancellor slammed on the brakes. The OBR estimates that the economic loss was 2% of GDP in the first two years; a professor of economics at Oxford university estimates it at 5%. That is £1,500 for every man, woman and child.

It is true, of course, that employment is now rising, but not as much as Government Members claim. The JSA claimant count is down to 800,000 but the figure on the International Labour Organisation’s unemployment measure is 1.8 million and the rate varies among particular groups. In the north-east it is 8%, while for young people it is 16%, and, as other colleagues have said, many jobs are zero hours and low paid. Average earnings have fallen. They are not forecast to reach pre-recession levels until 2020, fully 12 years later.

Poverty is up and earnings are down, the consequence of which is that tax revenues have been weak, so the Chancellor of the Exchequer’s deficit and debt reduction targets have both been missed. The deficit is down by a third, not eradicated as planned. Debt is up by a third and £200 billion more has been borrowed than was planned. Living standards have fallen and inflation is below target, verging on the negative, while interest rates have never been lower and are negative in real terms.

None of that suggests that the economy needs to be reined in or that there is spare capacity, yet the Chancellor is planning to go into the next general election with a plan to cut both tax and spending. The Red Book shows a 5% reduction in GDP—between £60 billion and £70 billion of cuts. The OBR analysis also shows huge reductions in the first two years—indeed, bigger than those we have seen in the last five. Obviously that will further deflate the economy. Even the Financial Times this week was describing it as “unnecessarily extreme”.

What the economy needs is continued growth and measures to boost productivity, which fell last year and has stalled in the last six. Productivity in Britain is now lower than it is in the United States, Germany, France and Italy. Higher productivity would mean higher wages and make our exports more competitive, which would be especially useful at the moment, when the pound is rising against the euro. According to the OBR, higher productivity would also mean higher growth and lower debt. Indeed, the OBR’s scenarios show a massive difference in the debt-to-GDP ratio, of 50% to 57%, compared with 87%. The OBR describes the productivity performance in this country over the last five years as disappointing.

In other words, what this Budget should have contained was measures to boost productivity, which would have improved the public finances—measures such as better access to finance for SMEs, through a British investment bank; maintaining and improving the skills of the labour force, through a young person’s job guarantee, better vocational education and cuts to tuition fees; substantial improvements to the nation’s infrastructure; and devolving economic power and funding to city and county regions.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

I will buy the hon. Lady an extra minute, because I can see that she has got a thick wodge. She is one of the more economically literate Members on the Opposition Benches and she has made a number of proposals, so I wonder how she proposes to pay for all those things. Is it more tax, more borrowing or a higher deficit?

Photo of Helen Goodman Helen Goodman Shadow Minister (Work and Pensions)

The whole point about the plans that we are putting to the British people is that we think it is reasonable to borrow for investment, in the same way that people borrow to buy a house. We think that is a sensible proposal for the nation as a whole. It would build capacity and mean that everybody had a higher standard of living, that we had faster growth and that revenues were higher, and in the end the deficit would come down.

Today, there is no new money for infrastructure. The Chancellor spoke about it a lot, but he was simply elaborating on the plans he put before the House in the autumn statement. There is no new money for science, for SMEs, for transport or for broadband.

The Chancellor proposed changes to personal tax allowances that will benefit people on higher incomes far more substantially than they will benefit those on lower incomes. A person earning under £10,000 a year will get no benefit. A person earning between £11,000 and £43,000 will benefit to the tune of £80, or by as little as £20 if they are on housing benefit or tax credits, because those benefits will be withdrawn. The biggest benefit of the increased tax allowance will go to people earning between £43,000 and £100,000. They will get £160 in their back pockets.

The Government propose significant changes to the savings and pensions tax regimes that will cost £1.7 billion. I put it to hon. Members that it might be nice for people to save and nice to have a better tax regime for a small number of people, but when our economy is in such a weak state, they can hardly be a priority on which it is appropriate to spend £1.7 billion. That will obviously benefit the better-off people in this country as opposed to the vast majority of people.

My right hon. Friend Mr Lammy comprehensively demolished the Government’s help-to-buy proposals. It is absolutely absurd to keep pumping money into the housing bubble in the south-east and not to do something about the underlying problem. Building homes would tackle the housing crisis, create jobs and boost the economy. In my constituency last year, not a single property was exchanged for £600,000, which is the Government’s limit in their Help to Buy scheme. That epitomises all that is wrong with the Government and how totally out of touch they are.

Furthermore, I believe that the Budget is dishonest. It tells only half the story. It does not set out where a further £9 billion cuts in welfare would be found; it does not say what the rate of VAT will be after the election; it does not say how big cuts would be to defence, police and local government; and it does not say whether charges will be needed in the NHS.

I do not believe that the British people want a fundamental re-imagining of the state. They want something simple: a better future with a Labour Government.

Photo of Nia Griffith Nia Griffith Shadow Minister (Wales) 6:02 pm, 18th March 2015

I should like to set the record straight. People will see through the Budget very quickly. They know that a few gestures from the Chancellor and the recent lull in inflation will not make up for the loss of purchasing power that households up and down the country have suffered over the past five years.

Let us set the record straight on the Labour Government. There was a financial crisis in 2007-08. It was a worldwide banking crisis. At that time, Conservative Members agreed that we had to back the banks and bail them out to protect people’s savings and homes. The Labour Government understood that the only way to get the deficit down was to ensure that we got the economy growing first. By the time we left office in 2010, there was an annual growth rate of 4%. The first thing the Conservative-Lib Dem Government did was to choke off that growth. By the end of 2010, growth was down to 0%. As a result, the recovery has been much slower and demand has remained low, which has hit our manufacturing industry, and therefore tax receipts have been low, which has made it difficult to reduce the deficit.

The Government’s priorities have exacerbated the problem, because capital expenditure has the greatest impact on growth in an economic crisis. Money that is spent to improve our infrastructure and attract investment—capital expenditure—provides jobs in the UK and puts money in the pockets of local people, who spend it in our local economy. Capital expenditure also helps us to keep the skills base. For example, in construction, public capital expenditure has provided work and kept the skills base when there has been no work in the private sector. The Labour Welsh Government have tried to keep capital expenditure going in Wales. The Government parties have done nothing except cut back on that type of expenditure and then try to rewrite history.

For example, we had already agreed that the main line from London to Swansea would be electrified, but then the Government parties cut the funding before pretending to give it back, first to Cardiff and then, after a long struggle, to Swansea. They tried to take credit for that, but, to be frank, they should not have cut it in the first place.

The choices the Government parties have made on taxation are not only morally wrong, but economically unwise. Those on low and middle incomes, of necessity, spend their income back into the local economy much more quickly than those on the highest incomes. There is not a trickle-down effect, as the Tories seem to believe, and much of the tax cut for millionaires has probably gone on expenditure overseas. Those on low and middle incomes—the working poor—have been particularly badly hit. VAT is a very regressive tax that is levied on all sorts of things that are not luxuries, such as bathroom items, including toilet paper. Such items add up in household shopping baskets. In fact, families find themselves £1,000 a year worse off under this Government. That has been fuelling household debt and driving people to food banks. In Wales alone, which has 5% of the UK population, 79,000 people have visited a food bank in the past year.

I want to address some specific issues mentioned by the Chancellor. The first is his announcement about the Severn bridge toll rates for 2018. I remind the House that it was a Tory Government who set up the private finance initiative scheme for the Severn bridge in the first place and landed us with all the payments we have to make. It is also reasonable to say that prices will come down in 2018 anyway, because that is when the concession will end and we will finish paying for the building of the bridge, and VAT will be removed because it will return to being a publicly owned asset rather than a privately owned company. That will happen anyway, so it is not good enough simply to say that prices for white vans will be reduced. Haulier companies such as Owens in my constituency, which employs 500 people, pay a massive amount in Severn bridge tolls every year. Obviously, they find it difficult to compete against companies based in England, so we expect much more than the little reduction in 2018.

The rise in the tax threshold is welcome, but, as my hon. Friend Helen Goodman has said, too many people do not earn enough and will not benefit very much because of cuts to housing benefit and tax credits. Those who will benefit are much further up the tax scale, so the policy is not going to help half as much as it ought to and the people affected are still being hit by the increase in VAT.

On the issue of greater freedom for pensioners to use their money in different ways rather than purchase annuities, it is absolutely vital that stringent regulation is established straight away to ensure pensioners are not ripped off by the unscrupulous, who are, doubtless, rubbing their hands with glee and hoping to cash in on the unsuspecting.

I certainly welcome any measures that ensure that tax owed is tax paid, but tax avoidance measures taken by the Labour Government are now bringing in 10 times as much revenue as any measures taken by this Government. I draw the House’s attention to one problem in particular. January saw the introduction of new EU rules on the collection of VAT from companies that operate in more than one country. Clearly, the rules are necessary and were designed to stop big companies wriggling out of their moral tax responsibilities, but the practical procedures required by Her Majesty’s Revenue and Customs are threatening to put small digital businesses out of business. Such businesses sell knowledge-based products online; they may be very small domestic businesses selling recipes or knitting patterns that involve a small transaction. If sales are carried out in many different countries over the internet, those tiny transactions have to be logged in great detail, so I ask that HMRC takes another look at what it can do to ease the burden on those small businesses.

Let us be absolutely clear: the Chancellor is proposing massive cuts over the next few years to public services and welfare, and he has not even hinted at how they will affect people. The key issue is that, by doing so, he will repeat the problem of choking off growth and we will be back to a state similar to that in which we found ourselves at the end of 2010. This Budget is going nowhere. If we want to get a better system, we need a Labour Government to make sure that we tackle the energy crisis, prices and the problems that people face so that they are then able to spend more and get the economy going again.

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East 6:09 pm, 18th March 2015

In June 2010, we were told that we had to have an emergency Budget. Even at that stage, one of the strange things about that was that many of the measures were so un-emergency that they did not have to come in until the following January. To a large extent, the emergency Budget was a political statement about where the incoming Government wanted to go. Today’s Budget is a political statement as well, from a Government who are trying to convey the impression that they have solved the country’s economic problems and that there will be no need for many more harsh decisions or much more austerity as they want people to think it is safe to vote for them. It is therefore a highly political Budget.

Not only is this a political Budget but the Chancellor, optimistically I would suggest, seems to be planning not just for the election that is about to happen but for 2020. His predictions for spending show severe cuts in the first part of the next Parliament then a sudden uplift towards the end, just before another general election. Even the OBR says that that is very strange and that this is a “rollercoaster” of spending. It is not justified, I would suggest, by anything other than its politics.

The people of this country deserve something better than a Budget that will, as the Chancellor hopes, make people feel good when a lot of the underlying issues have not been resolved. Some of those people were badly affected by some of the things we were told were absolutely essential back in 2010 and will find it pretty galling to be told now that things are perhaps better when they are still suffering. At that time, we were told that we would have to cut disability benefits by 20%—people wonder why the disabled in this country are so angry, so upset and so worried. That was the prospectus put before them then.

One of the main things the Chancellor wanted to talk about today was the tax threshold, but we have to ask over and over again what that means for the low-paid. Between 17% and 20% of people in employment are already earning below the tax threshold and further rises in it do absolutely nothing for them. What is the Government’s proposal to help those low-paid people? There does not appear to be anything and there is a considerable fear that those low-paid earners will end up paying for this constant increase in the tax threshold, perhaps through a VAT increase, which they will have to pay for even though they gain no benefit from it. Even if people fully endorse the argument about the tax threshold, there should be provision for the low-paid as well so that at the very least they are provided for.

That point and some of the speeches we have heard show the fundamental differences between the Government and the Labour Opposition. Members have said how important it is that people can keep hold of their own money. Tax is basically a bad word for them and they want as little of it as possible. The problem is that that has consequences that are felt in the real world. If taxation is reduced, spending must be reduced unless taxation is being increased somewhere else, which brings us back to the question of VAT. If we want a society in which we provide good quality services and in which people are not anxious about things such as how their parents will be cared for or how they will encounter the care system in their old age, it has to be paid for. If anyone believes that the answer is to cut taxes they should be open and honest and say what impact that will have on services.

Photo of Adam Afriyie Adam Afriyie Chair, Members' Expenses Committee, Chair, Parliamentary Office of Science and Technology

Does the hon. Lady not recognise that when certain taxes are cut, the overall take by the Exchequer increases, as has been demonstrated over the past five years?

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East

We have heard the argument that if we reduce taxes, we get more revenue in. Of course, it is usually heard in relation to the 50p rate of tax, but that was a very poor example. It hardly had any effect, and so many people made their own arrangements before and after the announcement was made on reducing the rate again that we cannot tell what really happened.

It is important that we should have a discussion about the kind of values we want and the kind of society we want to live in. There has been a similar debate north of the border, where we have a Government who are trying to suggest that, although they do not necessarily want to cut taxes, it is possible to have fantastic services without ever putting up taxes. That will also leave the public confused about what can really be achieved.

Photo of Geraint Davies Geraint Davies Parliamentary Assembly of the Council of Europe (Substitute Member)

Does my hon. Friend accept that if the Government consistently put up tax allowances while putting wages down, tax revenues are going to fall? Does she agree that that is why we are nearly bankrupt?

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East

Tax revenues have been falling, and the whole issue about low wages is extremely important.

We have had discussions in the House about zero-hours contracts. I think it was Charlie Elphicke who said today that Labour had done nothing about them for 13 years. I was not a Member of this House at that time, but I was a local councillor for much of that period and I met people constantly in that role. In all honesty, I do not recall people raising the issue in the way that they have been doing more recently.

Zero-hours contracts are a growing phenomenon, and they are still under-reported. I mention them on some of the literature that I give out when I am door-knocking, and a couple of the people I have spoken to in the past few days have looked at that literature and said, “What are zero-hours contracts?” When I explained, they said, “Oh yes, that’s what my son had when he was working for a pizza house.” Another man said, “Oh yes, that’s what happened to my son. The other day, he called and asked me to pick him up from work because he had gone in, only to be told to go home again because there was not enough work for him. They could do that under the terms of his contract.” Those people might not have known the term “zero-hours contract”, but they certainly recognised the conditions involved.

These issues are a matter of concern for young people. Unemployment is not falling as it should be. It is still, in the words of most commentators, “stubbornly high”, and we need to do something to address the problem. Also, earnings for younger people have not risen. The Government are proud of saying that average household incomes are beginning to rise again. Those in the oldest age group have done the best, and people in the middle are beginning to do a bit better, but young people are still doing significantly less well. That is a serious matter and we should be giving it greater consideration.

Many young people have a string of temporary jobs. They are in and out of jobs even when there is work available, which is very frustrating. One constituent told me that her son had worked for Royal Mail for three months at Christmas. He knew that it was a temporary job and he was told that there was no further work afterwards. He signed up with an agency that handled temping work, and he was phoned up a few weeks after Christmas and asked whether he was interested in a “call-on job”—a zero-hours contract, effectively—with Royal Mail, no less. So apparently there was no proper job on offer, but Royal Mail had none the less asked the agency to take on someone on those terms. How much better would it be for that young man if he could get a proper job that paid him a proper wage and in which he could learn a skill? We must do something for our young people. We must not sit back in apparent complacency and say that there is not a problem.

Photo of William Bain William Bain Labour, Glasgow North East 6:19 pm, 18th March 2015

This was the Chancellor’s sixth Budget, and after a Parliament of unparalleled failure on living standards not seen in decades, today was his final chance to chart a fairer course for the British people. He failed that test. He failed it because the values by which he has conducted economic and fiscal policy for the past five years are not the values that build an economy where we have a dynamic industrial policy and public spending plans that generate more growth, decent jobs and rising living standards with higher productivity. He failed because, by his actions, he has shown that he does not believe in a society where opportunity and assets are more equally distributed to the benefit of all, and inequality is lower. He failed because time after time he has put short-term tactics before a long-term strategy for growth in our green industries. This is the Chancellor who told us he could balance the books without hurting the poor, yet young people have seen the biggest drop in incomes during this Parliament and all he has to offer now is a vision of a low-wage, lower-skill economy drifting out of the EU, thereby damaging our future prosperity even further.

Britain is a better country than this Chancellor gives it credit for. He said that his policies today will tackle waste and inefficiency, but what can be more inefficient than the waste of young talent or over-25s being idle? A Government with real ambitions for our country would be creating opportunities to give them hope with a decent job. He says his chancellorship has been about fairness, but what could be more inequitable than bonuses rocketing at the very top of society, while he has broken his promise on the minimum wage by raising it by a measly 70p, instead of to the £7 per hour by this autumn which he promised last year? He boasts of his record on growth, but the UK has had the slowest recovery from recession of any other developed country apart from Italy and Greece, with the IMF and other forecasters predicting that growth will be lower next year and the year after than this year.

According to the Fraser of Allander Institute’s most recent commentary on the Scottish economy, full-time employment is more than 4% below its pre-recession peak and the total numbers of hours worked in Scotland is still lower than it was before the recession. On this day, when unemployment has gone up in my constituency and risen across Scotland by 6,000, this Government should have had more measures in their Budget to deal with that.

We know that bank lending to small and medium-sized businesses has been falling and that exports are weak, with the OBR pointing out that net trade will make a negative contribution to growth all the way until 2019. Productivity is poor. People are having to take out credit and take on more personal debt to make ends meet. This was supposed to be a recovery based on the march of the makers, yet it has stretched households, who are taking on more debt and shouldering the burden of fuelling growth. This should have been the Budget that addressed structural problems in the British economy, because a Chancellor who wants a credible deficit reduction plan for the next Parliament has to have a plan for more balanced growth and prosperity. The rewards of that growth have to be more fairly shared among ordinary working people than this Chancellor has achieved. But he failed. He failed because not only does he have the wrong plan for Britain’s future, but he has the wrong values for our economy and our society, too.

Photo of Adam Afriyie Adam Afriyie Chair, Members' Expenses Committee, Chair, Parliamentary Office of Science and Technology

This is the 10th Budget that I have listened to in the House of Commons. The first five led to massive unemployment and a huge deficit, and really damaged the lives of the least well-off in this country. The five under the current Government seem to have led to greater levels of growth, lower youth unemployment, low unemployment overall and a lower deficit. Does the hon. Gentleman recognise that in any way, shape or form?

Photo of William Bain William Bain Labour, Glasgow North East

I gently point out to the hon. Gentleman that the emergency Budget and the spending review adopted in autumn 2010 led to three years of hardly any growth at all in the economy, a dramatic fall in tax revenues, the deficit having not fallen or been wiped out as the Chancellor had promised, and debts doubling over the course of this Parliament. That was the reason the economy has underperformed and why this Government are going to leave to their successor the highest deficit in the developed western world. The fiscal policies that this Government have adopted could not have been more wrong.

We need a different plan for public spending and for more balanced economic growth, not the one the Chancellor has offered today. We need a plan for a fairer tax system, with tougher action against those who do not pay their fair share of tax or indeed do not pay any tax at all. It was very troubling to read in the OBR’s fiscal outlook this afternoon that it has doubts about the £5 billion that the Government have suggested they will pull in from the tax evasion measures set out today. For example, the OBR said that some of the specific measures were “unlikely” to generate the extra revenues that were scored in the Red Book.

The test for this Government in their Finance Bill next week is whether they will be prepared to bring in legal penalties for those who evade or avoid taxes so that we can fill the gap of £34 billion of tax that should be collected by the Exchequer and has been foregone under this Government. That is what hard-working taxpayers will want to see in the Finance Bill next week.

Despite the Chancellor’s modest U-turn today, he still intends by 2018 to force through the biggest fall in core public service expenditure since 1938. The cynicism of this Budget is that, by bringing in deeper cuts between 2016 and 2018 and then partially reversing them in 2019 and 2020, we can see that it is the electoral cycle that has motivated the Chancellor more than the cycle of what is good for jobs and stable growth in this country.

Labour has a different and a better plan. It is one that does not jeopardise investment in infrastructure. If we balance the current budget in the next Parliament, then, as the National Institute of Economic and Social Research has said, we would have more growth, more jobs and faster rises in wages—a better plan for Britain.

I welcome what the Chancellor did for the oil industry. With receipts forecast to fall to £700 million in the next fiscal year, there is an even stronger case for an oil resilience fund, which would do a great deal to secure investment and jobs in the offshore sector in Scotland.

We should have had a Budget that raised the minimum wage to beyond £8 an hour. We should have taken steps to encourage the living wage to be paid to as many people as possible in this country. We should have had a higher rate of income tax for those earning more than £150,000 a year. We should have had the opportunity to begin the job of change, but change is coming. A Labour Government are coming, and I believe that the British people will begin that job of change by voting, in just seven weeks’ time, for a Labour Government and for a more equal and prosperous society.

Photo of Diana R. Johnson Diana R. Johnson Shadow Minister (Home Affairs) 6:27 pm, 18th March 2015

When the Chancellor stood up this afternoon, one of his opening remarks was that his Government chose the whole nation. He talked about us all being in this together, which he has said on many occasions. But he did not talk about the 1 million people who use food banks, the 1 million people on zero-hours contracts, or the tax breaks that he gave to millionaires. He did not really talk about the widening regional inequalities in this country, which we are seeing more starkly than for many, many decades.

For my constituents in Hull, there was no mention of the disproportionate cuts to local authority funding—25% of Hull city council’s budget has gone, although it is in the top 10 most disadvantaged communities in this country. The Chancellor did not talk about the Centre for Cities report, which said that 13,300 private sector jobs had been lost in my city over the past decade. I want to talk a little about the regional nature of the inequalities in this country; and how the Budget that has been set out today will not tackle those growing divides.

The Chancellor talks a lot about the northern powerhouse. I had a look at page 43 of the Red Book to see what he was saying. I was very disappointed to find very little mention of great cities such as Hull. The little that there is is about the electrification of the rail line between Hull and Selby. Unfortunately, the Government and the civil servants forgot that the rail line across the Pennines stretches from Liverpool all the way to Hull. They decided, for reasons unknown to me or to many of my colleagues, that they were going to stop the electrification in this round at Selby.

To put matters right, Hull Trains has put together an excellent package of private finance to complete the electrification all the way to Hull. In fact, a strong cross-party delegation went to meet the Secretary of State for Transport to press for that to be done as soon as possible, particularly given that Hull will be the city of culture in 2017 and is expecting many more visitors. However, the Red Book states that electrification of the line to Hull will go ahead in the period from 2019 to 2024. The impetus for doing something very positive, using private sector money and doing it quickly, seems to have been completely lost.

I stress that if electrification to Hull does not happen, that will put in doubt the direct train services that currently operate between Manchester and Hull, because of the new franchise going through at the moment and the new rolling stock that will be required for the electrified line. Again, it is pie in the sky when it comes to investing in local rail services. There is talk here of High Speed 3, but I would like to get High Speed 1 to Hull in the first instance. I am still very conscious that £22 billion was spent on transport infrastructure in London in 2013, but in Yorkshire the figure was £1.1 billion. There is real discrepancy.

I mentioned Hull being the city of culture in 2017 because I was looking out for additional support for the city, given that special status. I note that paragraph 1.148 of the Red Book, which relates to the northern powerhouse, states that

“the government is already… investing in the vibrant cultural life of the north, including £78 million for the Factory Manchester.”

Well, good luck to the Factory Manchester, but what about the 2017 city of culture? I also note—this is on page 73 of the Red Book—that money is being provided to the Muni theatre in Pendle, but again there is no mention of Hull.

I want to move on to businesses. Hull had one of the lowest rates of business start-ups in 2013, according to the Centre for Cities report, so I welcome the extension of the Humber enterprise zone. It is just a shame that the Humber local enterprise partnership has had much less to spend than Yorkshire Forward did.

On digital matters, unfortunately only 22% of postcodes in Hull currently have access to high-speed broadband, which is one of the lowest rates in the country, al though KC Communications tells me that we are future-proofed because our high-speed broadband goes to the property and not the cabinet, which is what happens across the rest of the country. For reasons I do not understand, Hull was excluded from the first tranche of the SuperConnected Cities voucher scheme, which local businesses have been complaining about. We are told that there are 50 cities in the next tranche, but we do not know whether Hull will be included—I hope that it is.

The Red Book also refers to a northern hub within the northern powerhouse, with £11 million to develop the digital industries in Leeds, Sheffield and Manchester—the Deputy Prime Minister’s golden triangle—but again Hull seems to have been excluded from that. May we have some clarification on that?

On jobs and growth, of course it is good to see more people in work, but in Hull 1,000 people applied for the 14 Siemens jobs that were advertised, which shows the lack of good-quality, full-time, permanent, skilled jobs in the area and how there is much more to do.

We know from today’s Budget that there are cuts ahead if the Conservatives win the general election. We already know that there have been massive cuts to policing, to council services and to the local NHS. In Hull we know that Humberside already has the lowest police numbers since 1979, that a quarter of our council budget has gone—£278 per person—and that our local NHS is really suffering, with our A and E department in crisis. I shall wait to see whether the money that has been announced for mental health services for children and young people comes Hull’s way, because many of our young people are having to travel hundreds of miles to get treatment.

Hull people know from our experiences since 2010 that a Tory-led Government would certainly direct the deepest cuts identified in this Budget at our city. Hull needs a Government who really have chosen to stand up for the whole nation, are on our side in Hull and not on our back. We need the economics of hope and investment in all parts of all regions. We need a Government looking to the 2030s, not the 1930s. Hull desperately needs a Labour Government.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs) 6:34 pm, 18th March 2015

Five years ago when the so-called emergency Budget was announced, I remember twice intervening on the Chancellor and challenging his assertion that there would be an economic recovery and that his was a good long-term plan that would benefit everybody. Ultimately, he had to acknowledge that it would come down to his judgment. Five years on, I have to say that his judgment has failed. It has failed miserably for the people whom I represent. This has not been the so-called long-term economic plan that benefits everyone. It has not been an economic recovery that benefits everyone. It has not been an austerity programme that hits everyone. It has been balanced on the backs of those least able to afford it socially and economically all the way through.

I do not believe it was ever intended to be a fair plan under which everybody would shoulder their fair burden. The language of the so-called emergency Budget of 2010 made that clear. The recovery has been unbalanced, both sectorally and geographically; it has been delayed, because there was a period of two or three years when we flatlined as a result of the decisions of the coalition Government to cut off infrastructure spending; and it has left people behind. It has left behind a generation of young people and a generation of working poor. When did we see this last? We saw the same approach in the 1980s—“Don’t worry. We’ll do our very best. It will trickle down and the effects will be seen.” The recovery does not trickle down into my constituency.

Some people, I accept, have hardly seen the impact of this recession. They have done well. They have been in a secure job. Life has gone on almost as normal. We have a great manufacturing belt in my constituency. Many people there will not have seen the recession. They will have got through okay, but underneath that there is now a huge group of people—those who work part-time, those who wait for that call in the morning to see whether they are to be brought into work, those who have seen a drop in earnings of probably 6% to 10% if they are working, and those who balance two or three jobs to try to make ends meet.

What would it be like—this is the reality check that we need five years down the line—if the Chancellor had to wait for a text in the morning to say, “Take a rest day today. You’re entitled to it. We haven’t got any hours for you”? Could he work on that basis? What if the Chancellor did not have to put on his suit and head up to the Banqueting House for a nice gala dinner or a fundraiser, but had to walk 4 or 5 miles between food banks on different days of the week to collect sufficient food for a working family to get through that week? Five years ago, after the emergency Budget, there was one food bank in my constituency. There is now not one town, one village or one street that does not rely on food banks. The generosity of those who supply them is amazing, as we always say, but we should not be in this situation when we are still the sixth most prosperous country in the world.

What would the Chancellor do if he had not simply to be the Chancellor, but to do another job to make ends meet, or perhaps three jobs—and I am not talking about directorships, by the way. That is the reality for many people. I have spoken to those people, and when I hear the Chancellor speak I wonder if he ever has the same conversations. Does he have constituents who come in and say, “Even after running two or three jobs, some of them on night shifts, I still can’t make ends meet”? Does he ever have that conversation? I have never heard it from him. My constituency must be very different from his, yet mine is not a poor, poor constituency. There are some people who are doing quite well, yet from other constituents I hear about the problems all the time.

That is backed up by the statistics, which show that in the Bridgend county borough area, a prosperous manufacturing belt on the M4 corridor in commuting distance of Cardiff, there has been a tenfold increase in people who rely on payday loans. Some of them are piggybacking payday loans—not just one, but another one to get over the original payday loan. I have referred to the extent of the food banks and to the fact that, under this coalition Government, people at those food banks are in work as opposed to not working, and that for the first time in history, we now have more working households in poverty than non-working households in poverty. All this stacks up to a compelling argument.

Since the emergency Budget five years ago, when the Chancellor said to me in response to two interventions, “You’ll have to trust in my judgment. This will not fall on the working poor or on the young”, we have seen what has happened to youth unemployment levels. It is great to see claimant counts coming down. They have come down in my constituency, and that is fantastic. However, the last time I heard such praise for claimant figures was during the 1980s when everybody was moving out of the jobcentres and on to sickness benefit. We can cut these figures in any number of ways, but if the people who are coming off claimant counts are in self-employment, they are typically earning 40% below the average median earnings of somebody in a full-time-wage job. If those people are working two or three jobs in order to make the money up, and if there is, as there has been under this Government, a massive increase in housing benefit and in poverty pay subsidised by the taxpayer, I say to Government Members that something has gone seriously wrong, and it stems back to the point in time when a decision was made to say, “We have to go for this austerity; we must have this fetish about deficit reduction above and beyond everything else.” At that point—

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

I have no time—I apologise. [Interruption.] Oh, I do have time, so I will give way. Perhaps the hon. Gentleman will explain why the Government chose at that time to do the complete polar opposite of what I did as Minister in the Department for Environment, Food and Rural Affairs, when we had capital spending on flooding and chose to keep people employed in their jobs.

Photo of Adam Afriyie Adam Afriyie Chair, Members' Expenses Committee, Chair, Parliamentary Office of Science and Technology

Of course we all agree that we want the least well-off in society to do well, and the measures that the Chancellor has taken over the years are beginning to show effect. Does the hon. Gentleman not remember that under Labour’s Budget proposals, the cutting of the deficit was at a steeper rate?

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

Nearly every party is agreed on this, apart from some who have said that there is no need to cut the deficit. We agreed that we had to cut the deficit, but we also made it clear that we had to keep people in jobs while doing so. That is why, when I was a DEFRA Minister, we brought the funding forward and made sure that people in the Environment Agency were employed building flood defences.

My argument to Government Members and to the Chancellor is that there seems to be a complete disconnect. Throwing around claimant counts stats and saying that everybody has had to shoulder the burden simply does not ring not true for my constituents. Over the years, there has been an honourable tradition among those on the Government Benches of arguing for the working poor as well as others, but that seems to have disappeared over this five-year cycle. I hope that next time we will have a Government who deal with zero-hours contracts and the exploitation of agency workers, give a jobs guarantee to young people, have the sorts of initiatives that are being carried out by Labour in Wales, and build an economic recovery that benefits everybody, not just those at the top.

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions) 6:43 pm, 18th March 2015

I am sure that by now Government Members will recognise that the Chancellor’s Budget has not convinced my colleagues and has not convinced the country, and it will not convince my constituents. There is very little in it to return them to the confidence in the future that everyone I speak to on the doorstep tells me they desperately want. Whatever the Chancellor likes to say, low productivity, low pay, low tax receipts and high spending cuts have characterised his management of the economy until now. We heard this afternoon that such an approach is set to continue if his party returns to government in the next Parliament. Happily, we do not expect that to happen.

The Chancellor has taken a series of quite deliberate fiscal choices that have favoured the better-off, whether it is reducing the top rate of income tax or introducing the marriage tax allowance. The latter benefits only couples who are well off enough to be paying tax at all, and, what is more, only one in five of the couples who will benefit are raising children. Middle-income families have been squeezed repeatedly under this Government. My constituents report a pervasive feeling of insecurity and a deep concern for the future of young people.

Most distressingly of all, the very poorest have been pushed to the very margins of our society. There was a shocking rise in food banks from 60,000 visits in 2010 to nearly 1 million in 2013-14, and there was a 55% rise in homelessness and people sleeping on the streets between 2010 and 2014. I am sure that hon. Members cannot have escaped noticing that, as I have, including on their way home from this place in the evening.

The Chancellor repeated this afternoon the claim, which Government Members often make, that child poverty has fallen under this Government. Let us put the record straight: it has fallen in only one year under this Government—2010-11—which was before a single coalition fiscal policy had taken effect. Since then, it has flatlined at 2.3 million children, and the IFS has predicted that, under the measures the Government have already announced, it will rise by 700,000 children during the next Parliament. The fall in the first year of this Parliament was wholly and solely the result of the 2010 Labour Budget, since when median incomes have stagnated. Government Members used not to like the relative poverty measure for exactly the reason that it was bound up with what happened to middle incomes. I notice that they are not so vocal against the relative poverty measure now. They may now want to look at other measures of poverty, but it is an absolute disgrace that absolute poverty has risen under this Government for the first time since measurement of that element of poverty began, while material deprivation has also risen.

Photo of William Bain William Bain Labour, Glasgow North East

Does my hon. Friend share my astonishment, and that of other Labour colleagues and indeed the whole country, that to try to persuade us people were better off the Chancellor used a metric that deals only with mean incomes—skewed to people at the very top of the income scale—and includes universities, which are not of course households?

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

The use of statistics this afternoon bore absolutely no relationship to the lived experience of my constituents and those of many of my hon. Friends.

As colleagues have said, most recently my hon. Friend Huw Irranca-Davies, this Government’s total lack of attention to working poverty is crucial: it is right and welcome that more people have moved into work since 2010, but that is not sufficient if they do not earn enough to live on. The increase in the national minimum wage will help a little bit, but the increase is more modest than we were promised last year. Increases in the tax threshold will increasingly give diminishing returns—they omit the poorest, who pay no taxes or whose incomes are already below the tax threshold—and what is more, they help the better-off. I remind Government Members that the better-off include us. The fundamental problem is that people cannot find the hours they need at the pay they need, which not only puts families under pressure, but is a major contributor to the failure to bring down the deficit as planned. The TUC says that we are set to borrow £54 billion more than planned this year, of which two thirds is a direct result of poor wage growth.

As colleagues have said, young people have been especially hard hit, again as a result of conscious policy choices by this Government. Of course older people should never face retirement in poverty—I am proud that Labour Governments halved pensioner poverty—and an ageing population means increasing the spending on this group, but we are significantly under-investing in the next generation. My constituents repeatedly say that to me. Hourly wages and weekly earnings have fallen fastest among young workers. Research by the London School of Economics has shown that typical incomes for those in their 20s were nearly a fifth lower in 2013 than they were five years earlier, and even those in their 30s with good degrees have lost out on their incomes. That not only blights young people’s lives today, but damages their ability to plan, save and look forward to the future. A Government who have made much of rewarding saving and forward planning should be mindful that they are putting a whole generation in a position in which they are simply unable to do so.

Although there were announcements today about helping people who wish to buy a home, an aspiration shared by many of my constituents, it is noticeable that there was absolutely no help whatsoever for the many young families who rent a property and will continue to do so for many years to come. If it is right to provide financial support to young people to buy their first home, will Ministers explain why it is not right to offer the same kind of financial support to those of them who rent?

Nor was there anything to comfort families with children. As the Child Poverty Action Group has pointed out, the cost of raising a child has grown significantly faster than its parents’ incomes under this Government. We heard nothing to help people with the additional costs of raising children, simply a tax break for married couples, many of whom will not be raising kids at the moment.

Finally, we heard today of the truly shocking plans for further cuts if the Conservative party were to form the next Government. Those shocking cuts to public service spending have been accelerated into the early part of the Parliament, no doubt so that a future Conservative Chancellor would be able to say that he was increasing spending as an election approached. We have heard in the past about shocking cuts to social security spending, and those cuts will be even harder on working-age people and families with children because pensioner benefits will be protected.

The Budget has told half the story today, hidden the pain for tomorrow and done nothing to put the country and families in my constituency back on their feet. It is not a Budget about the future: it is the Budget of a failing Government.

Photo of Luciana Berger Luciana Berger Shadow Minister (Public Health) 6:51 pm, 18th March 2015

I rise on behalf of my constituents to share my bitter disappointment about the Budget. It was out of touch and arrogant, and the Chancellor even had the gall to use the phrase—from which my constituents recoil when they hear it—“We’re all in this together”. He told people that they are better off now, when my constituents—I meet and engage with them every week—tell me that they are not. In fact, if we look at the evidence and what is actually happening, we see that there has never been a bigger gap between the rhetoric we heard today and the reality of people’s everyday lives. The Chancellor has presided over the slowest economic recovery in the

UK’s history and has borrowed more in this Parliament than Labour did in 13 years. He has also broken his promise to eradicate the deficit by the end of this Parliament.

I have said it before and I will say it again: giving with one hand but taking more away with the other is nothing to celebrate. This has not been a recovery felt by millions of people across the country. Looking at the Tories’ tax and benefit changes, we know that families are on average £1,127 a year worse off; working people are £1,600 a year worse off; wages are down for the first time since the 1920s; and people are earning less at the end of a Government than they were at the beginning.

Despite what the Chancellor said in his speech, I found buried—on page 67 of the OBR document—the fact that the real consumption wage will not rise above its pre-crisis peak until the end of 2018. The Chancellor’s own documents, and the OBR’s documents, do not correlate with what we were told earlier.

We also know that the Government have raised taxes 24 times since 2010. I contrast that with the fact that people on the highest incomes have seen a tax cut, and hedge funds in particular have seen a tax giveaway of £145 million. This is not a recovery felt by the majority: it is a recovery felt by a very few people.

I am concerned that our NHS is in crisis. We know that one in four people cannot access a GP appointment, and we know that the Government did not met A and E targets for the whole of last year. Too many people have not received cancer treatment in good time. I hoped that the Chancellor might talk about what the Government would do about the NHS, and I was struck by his comments about child and adolescent mental health services and maternal mental illness. He said that the people affected had been forgotten for too long. I was surprised to hear him say that because it is on his watch that we have seen some clinical commissioning groups spend as little as 6% of their budget on mental health. Despite the campaign for parity of esteem for mental health services by Labour peers—they were successful, and it is one of the few things that the Opposition can be proud of in the Health and Social Care Act 2012—in practice we have seen the complete opposite.

It is on this Government’s watch that we have seen cuts to mental health trusts that are 20% higher than for other elements of our national health service. A response to a parliamentary question reveals that there have been real cuts of £50 million a year to child and adolescent mental health services. Just yesterday, the CAMHS taskforce released its report. It was interesting to see the sanitised version of the report, because we saw a leaked copy in The Times a couple of weeks ago. Across the country, we have seen a reduction in the number of specialist mental health nurses by 3,300, and a reduction in the number of beds by 1,500. Too many young people are having to travel hundreds of miles to access mental health services, if they are able to access any sort of treatment or support at all. I thought it showed some cheek for the Chancellor to say that these people had been forgotten, because it is on his watch, over the past five years, that we have seen this reduction in attention and support for mental health.

There was nothing in the Budget to counter one of the biggest problems in our country: job insecurity. Many of my hon. Friends have raised the challenges of zero-hours contracts. I was very interested to hear Charlie Elphicke, who is no longer in his place, call them flexible work contracts. According to the ONS, 1.8 million zero-hours contracts were used by firms in the UK last summer. I know, from a report I conducted with two of my hon. Friends on Merseyside, the impact faced by too many of our constituents every time they wait for that text message or that phone call to find out if they have work. I was struck by the experience of my constituents who said that they could not buy a belt because they were not able to plan their finances from week to week. This is not just about zero-hours contracts, however; there are low-hour contracts too, and the millions of people who are in part-time work who wish to be in full-time work. If I had been the Chancellor, I certainly would not have talked about the national minimum wage, given that he previously backed a minimum wage of £7 an hour but has failed to introduce that in this Parliament.

Other hon. Friends have pointed to the challenges relating to food banks. It is a disgrace that just under 1 million people have had to access emergency food aid.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

My hon. Friend is making an eloquent speech. What does she make of the study by the Children’s Society and the StepChange charity, which points to 86,000 families in Wales—23% of the total number of families—who are failing to keep up with household bills and loan repayments, and the response of a Wales Office spokesman who said, “The UK Government’s long-term economic plan is working”? Where have we heard that before?

Photo of Luciana Berger Luciana Berger Shadow Minister (Public Health)

I thank my hon. Friend for that intervention. He and I have been campaigning on this issue for many years, because we do not believe that in the sixth-richest nation in the world we should have any food banks, let alone the number that we have across all four nations. The fact is that just under 1 million people have had to access emergency food aid for themselves and for their children—all too often it is children who are affected. It is not just people who are out of work, but people in work, often on zero-hours contracts, who are struggling from week to week. People deserve better. I reflect on the comments made by my hon. Friend Kate Green on the increase in absolute poverty. I am ashamed to live in the sixth-richest nation in the world, when we have seen an increase in absolute poverty in 2015.

I represent Liverpool Wavertree in north-west England. We heard in the Budget that cuts to local authorities are coming down the line. I have very serious concerns about what will happen to local authorities, particularly in the north-west where already we have experienced cuts 75% higher than in other parts of the country. Yet another report came out last week, showing that Liverpool has seen a reduction of £390 a head in funding since 2011, while in the south Wokingham has seen a cut of just £2.29. Our budget in Liverpool has been cut by 58% in real terms since 2011. That is £329 million. Page 130 of the OBR report states that we should expect a much sharper squeeze on local authorities’ real spending in the next Parliament. I shudder at what that will mean for my constituents and residents across Liverpool and the north-west. I am concerned about what will happen to our libraries, our social care and our children’s centres.

Ordered, That the debate be now adjourned.—(Mark Lancaster.)

Debate to be resumed tomorrow.