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Debate resumed (Order, 17 March).
Question again proposed,
(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
(a) for zero-rating or exempting a supply, acquisition or importation;
(b) for refunding an amount of tax;
(c) for any relief, other than a relief that—
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.
Before I call the Secretary of State for Communities and Local Government, from whom we look forward to hearing—we also look forward to hearing from his shadow—I simply point out that some dozens of colleagues want to speak in the debate. There will have to be a very tight time limit on Back-Bench speeches, but I know that the Secretary of State and his shadow, who are both very considerate Members of the House, will, while wanting to treat comprehensively of the issues within their domain, wish to facilitate contributions by colleagues.
No one can pretend that this has been an easy Budget for the Government, but none of them is. Every single one of them is overshadowed by the events of the previous decade, by the deepest recession since the war and by a financial and fiscal crisis in which a large part of our national wealth disappeared in a puff of debt. GDP, productivity and revenue were all decimated. That is what happens when one spends a decade using a credit bubble to inflate the size of Government. One day, the income suddenly disappears, but the commitments remain. In 2010, those responsible in the Labour party left government and did so without looking back. In the six years that followed, they have retreated ever further from any sense of responsibility.
It fell to us on the Conservative Benches to put things right: to rebuild an economy on firm foundations, to wrestle down the deficit and to mend the many institutions left in disarray. Financial regulation, educational standards and the housing market—all were broken, and all are being painstakingly restored to working order by this Government. However, every decision we made has been a hard one, because when the gap between the need and the Government’s resources is so wide there are no easy answers. We have not always got them right first time—the least worst option is not always apparent—but this is a Government willing to listen and to respond, while also keeping on track to squeeze out debt, encourage growth, generate jobs and build new homes. On all these fronts, we are moving the country in the right direction, while the Opposition rush headlong to the left. They can go their way, but we will keep on moving forward.
This Government said that they would eradicate the deficit in four years. Will the right hon. Gentleman tell me when that policy changed? How long does a long-term economic policy last for?
I do not know whether the hon. Gentleman was in the Chamber for the Budget statement. If he was, he will have seen that the Office for Budget Responsibility confirmed that we are on track to eliminate the deficit by the end of the Parliament and to have a surplus. He should spend a bit of time talking to his right hon. Friend Liam Byrne, who might provide the answer to why it has taken some time to reduce the deficit.
My hon. Friend draws attention to a very important point. We have doubled small business rate relief, benefiting businesses right across the country—the small businesses that are the backbone of our economy and that are contributing a record number of jobs, meaning that we have more people employed than ever before.
If the hon. Lady had attended DCLG questions earlier in the day, she would have heard me confirm that every penny will be made up. I am sure she is delighted to hear that.
I asked the Secretary of State about this issue in questions earlier. He said that the cost of small business rate relief in this Parliament would be funded by section 31 grants. Will he confirm that that grant will not come from any other part of local authorities’ budgets, and if it is not will he point out precisely where in the Red Book it says how that is funded?
On page 84, line 15.
Let me turn to the subject of today’s debate, which is infrastructure and devolution. Those issues will still matter a year from now—indeed 10 years and 100 years from now. In “The Wealth of Nations”, Adam Smith spoke of three fundamental duties of Government: the defence of the realm, the maintenance of law and order, and a third duty that he described as follows:
“the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit would never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.”
We can therefore take it from the father of free market economics that there is no contradiction between faith in free markets and public investment in infrastructure. Indeed, they support one another and this Budget shows how.
The Budget announces new infrastructure investments in every part of the country—from Crossrail 2 in London to High Speed 3 for the northern powerhouse. There can be no more tangible demonstration of our belief in a one-nation economy.
I will not give way.
Not for us the discredited model of a one-city economy, because much as we value London it is wrong to rely on a single centre of wealth creation. Instead, wealth must be created and retained in communities across our nation —hence our ongoing commitment to HS2, a north-south axis linking London to the midlands engine and to the northern powerhouse. Quite literally, we must go further. We must build the vital east-west links needed to unlock the full potential of our great cities beyond London.
The Pennines might be the backbone of England, but frankly they are not the Himalayas. Some of our nation’s greatest cities stretch like a string of pearls across the north—and they can and should be drawn together. That is why this Budget strikes out in a new direction with the key announcement on HS3.
No, I am going to make some progress, given the time constraints.
This is a transformative project. In particular, it provides the prospect of a better, faster line between Leeds and Manchester.
Several hon. Members rose—
On a point of order, Mr Deputy Speaker. The Secretary of State gave me a direct answer about where in the Red Book the cost of the compensation for local authorities will come from is specified. He referred to page 84, line 15. However, that deals with the cost of the loss for small business rate relief, and does not deal with the grant that will replace it. Whereabouts is the section 31 grant covered in the Red Book?
Order. I think we had better have an answer to the point of order first. I realise that the Secretary of State has recognised that this was not a point of order, which is exactly the point I was going to make!
Our road investment will complement rail investment. This includes the M62, accelerating progress to the achievement a four-lane smart motorway fit for the 21st century. Other improvements to both road and rail are not quite as high profile, but they are just as important—improving local links to bring home the benefit of national infrastructure.
I do agree, and I note two things about what my hon. Friend says. The first is that this never happened when Labour were in government, and the second is that this could not have happened without the strong economy that this Government have built.
Many of these investments, such as the road just described by my hon. Friend John Glen, are long overdue. It has fallen to this Government to make improvements that could and should, as my hon. Friend says, have been made in earlier decades. That is why we must continue to make savings across the public sector.
Will the Secretary of State join me in welcoming not only the improvements to the road links to the south-west but the money put aside for further development work on rail resilience in the south-west to ensure that in future we have a railway that works and serves our region?
I can certainly confirm that. It is a welcome development that we are following the traditions of our Victorian predecessors with the great revival of railway building, which is so important for the south-west that my hon. Friend so ably represents.
I am going to make some progress.
In order to make these investments, we need to continue to make savings. The failure to control current expenditure means not just more borrowing, but that less is available for capital expenditure—a double dose of debt for our children and grandchildren, with financial debt compounded by infrastructure debt. The decisions that we make must be for the long-term good of the nation. This Government are therefore determined to draw upon the very best advice available, including that of Lord Heseltine, who will chair the Thames Estuary 2050 Growth Commission, and that of Lord Adonis, the chair of the National Infrastructure Commission, whose excellent work has informed many of the decisions made in this Budget.
Further to the point raised by my hon. Friend Mr Betts, on which page and in which paragraph is the compensation issue referred to?
I have already given not only the page, but the line number—and the hon. Gentleman too should have done his homework.
I am delighted to say that the remit of the National Infrastructure Commission will be expanded to include large housing developments. It is vital that the big decisions we make on transport and utilities infrastructure are co-ordinated with those we make on housing. As well as building more homes, we need to build better homes. The idea that we can sacrifice quality to achieve quantity is utterly wrong-headed. The only way to build the homes we need over the long term is through forward planning, good design and sound finance.
That is why the Budget lays the groundwork for a new generation of garden villages, towns and cities. We will provide targeted support for local authorities to develop locally led schemes. We will adjust the legislative framework to speed up and simplify the process of delivering new settlements. We will adopt a localised, deal-making approach to planning reform, working with councils to tailor the system to local needs in return for commitments on housing delivery. Instead of trying to force new housing through a fundamentally unreformed system—the approach of the last Government—this Government understand that only a different policy can deliver different results.
There are time constraints, so I am going to make some progress.
This month marks four years since the introduction of the national planning policy framework. Overnight, 1,300 pages of central Government guidance were replaced with 52 pages of plain English. I see in his place my hon. Friend John Howell, who played such an important role in that. It is a crystal-clear guide to achieving sustainable development. We have seen massive improvements in planning performance and housing delivery in that time. Before, most councils did not even have a local plan; now, most of them do; and before long, all of them will.
This is not just about plans, but about planning permissions—and not just permissions, but new homes actually being built. And not just new homes, but popular support for new homes. We are seeing a rekindling of the faith in development that was destroyed under the tenure of the Labour party. There is a sense that development can make places better, not worse—not least owing to another achievement of our planning reforms, including the NPPF, which was to establish a fully fledged system of neighbourhood planning.
I am proud that the neighbourhood planning process is under way in thousands of communities across the country. Through community consultation and neighbourhood referendums, local people have been given a real say. This is proof that when the planning system is made accessible and accountable, we can deliver both quantity and quality. However, we do not regard the progress of the last four years—important though it is—as mission accomplished. Rather, it is a spur to further action: to implement the new measures set out in the summer Budget, the autumn statement and this Budget, and to continue the work of reform until we have fully achieved our vision of a property-owning democracy.
The NPPF was a new start, not an end point. The same applies to the other great reform agenda that my Department is responsible for: devolution. It was four years ago that I stood before this House to announce the first wave of city deals. The response from the Labour party was mixed: disparaging in this Chamber but welcoming beyond the confines of Westminster. Four years on, the process of decentralisation has gone further and faster than even the enthusiasts thought possible.
I am going to make some progress, given that about 60 hon. Members want to speak in the debate.
We have seen a second wave of city deals and the launch of growth deals and devolution deals to encompass cities and shires alike. We have even seen something of a change of heart on the Labour Benches. I very much welcome that, if it is a genuine source of support—however qualified—for the principles at stake. If the party of central planning accepts that power must be exercised locally, that is progress indeed.
Perhaps the Secretary of State will come on to this point, but will he tell me whether he is at all concerned about social care? The independent Health Foundation estimates that there will be a gap of about £6 billion by 2020, and the Local Government Association wanted a roll-forward of extra funding for the Better Care fund, which has not been forthcoming. Does he not have real concerns that if the amount being spent on social care is not enough, it will simply place an extra burden on the NHS?
As the right hon. Gentleman knows, provision was made in the local government financial settlement and the spending review to allocate up to £3.5 billion for adult social care by the end of the Parliament. The directors of social services and the Local Government Association actually asked for £2.9 billion, so our provision went beyond that. We also need to bring together the treatment of our elderly members of society so that councils and the NHS can, between them, look after those people well. After all, those requiring health care and social care are often the very same people. I know that, as a former Minister in the Department of Health, the right hon. Gentleman will favour that. Part of the devolution deals that we are pursuing will do that. We are seeing it happening in Manchester, and I hope that he will follow that with interest.
I am going to make some progress, as I have said.
This Budget announces a number of new devolution deals establishing combined authorities for the West of England, Greater Lincolnshire and East Anglia, and there are more to come soon. Far from erasing local diversity, the deals make the most of it—for example, by bringing together shire, unitary and district authorities to work together for the common interests of their area. The Budget announces further transfers of power to the Liverpool city region and to Greater Manchester. This shows that establishing a combined authority, with the accountability of a directly elected Mayor, is just the beginning: a democratic basis for the ongoing devolution of power.
Growth deals are another front for the advance of localism. Through the business-led local enterprise partnerships, we are devolving control over the £12 billion local growth fund. The Budget explains how we will allocate the latest tranches of the fund. It will be done on a truly competitive basis to encourage ambition, innovation and the productive use of taxpayers’ money. I am also delighted to see the announcement of new city deals in Wales and Scotland. Specifically, the conclusion of a deal with the Cardiff capital region and the opening of negotiations with Edinburgh and south-east Scotland are important steps forward.
From north to south and from east to west, devolution is transforming our nation. In 2010, the UK was one of the most centralised countries in the free world. There were no combined authorities, and only one big city mayor. Nearly 80% of local government expenditure was centrally controlled. By 2020, there will be combined authorities across the country, and at least eight big city mayors. Local authorities will keep 100% of the income that they collect. This Budget describes and accelerates a process of profound change involving the revival and rebalancing of our economy, the rebuilding of our national infrastructure and the redistribution of power from the few to the many. I commend it to the House.
How time flies. It was only late last year that the Secretary of State was buoyed up by the Chancellor’s announcement that he had found a few extra billion quid down the back of his settee. The Secretary of State came to the House and offered no less than a guaranteed budget for every council. Sadly, as the Financial Times put it recently, the good times lasted only about a month. By February, the Chancellor was thousands of miles away in Shanghai. From there, he announced to the British people that there would have to be more cuts. Did no one remind him of the ancient Chinese curse, “May you live in interesting times”? Yes, it is a curse. As we now know, the Budget is a mega-shambles, but in China the Chancellor was blaming foreigners for his problems. He said that the EU was flatlining, the Chinese economy was failing to grow and petrol prices were collapsing everywhere.
Today’s retreat means that there is a financial hole of a further £4 billion in the Government’s accounts. No explanation has been given as to how that hole will be filled. More importantly, we have been reminded this weekend by the resigning Secretary of State for Work and Pensions that there is an ethical hole, a moral vacuum, at the Government’s core.
The hon. Gentleman seems completely oblivious to what is going on elsewhere in the world. The fact is that trends are happening in the world economy that will be reflected here in the UK. The Chancellor has cut the deficit by two thirds. Surely the hon. Gentleman would welcome that.
The hon. Gentleman will not get away with that. The truth is that this Chancellor has been in charge of the nation’s finances for six years and he now wants to wash his hands of the mess he is making of the economy.
I was talking about an ethical hole at the Government’s core. We still remember Conservative Members cheering last Wednesday. They thought it was okay to rob the benefits of the most vulnerable for the purpose of cutting taxes for the better off. It is not only the cuts to the welfare budget that illustrate the Government’s willingness to attack the poor; it is also the cuts to local government. Furthermore, the way in which the cuts are being distributed across local government equally illustrates the ethical hole that I have described. Those councils that face the greatest social needs are now suffering the greatest grant reductions.
The Secretary of State would not give way to answer questions on social care, and that is unfair because it is a key responsibility. He keeps trotting out the usual figure of £3.5 billion, but that is a false premise because the Local Government Association wanted £700 million to cover the two years that will not be covered by the better care fund. My local authority can bring in £1.6 million from the 2% social care precept but it is going to cost £2.7 million to pay for the national living wage in the care sector. That is the sort of gap that we are faced with.
I shall make a little progress, if I may, as a lot of people want to speak in the debate.
I was talking about the unfair distribution of cuts. The three most affluent areas in the country have had the lowest amount of cuts to their Government support since 2010, yet lo and behold, the same three affluent councils then received an extra £33.5 million from the Secretary of State’s transitional grant. That £33.5 million was 10% of the entire amount of transitional grant that was given to the whole country, just focused on the three most affluent councils.
Let me draw a comparison between the three most affluent councils and the most deprived councils in the country. [Interruption.] This is an important point. I hope Government Members are not scoffing. Liverpool, Knowsley, Hackney and Manchester not only had the most severe cuts to their budgets since 2010, but they did not receive a single penny in transitional grant. There is no rational explanation for such a distribution of Government largesse. Perhaps the Secretary of State will consider publishing the criteria by which the civil service distributed that £300 million. We have had no luck so far in finding out how he managed to produce a distribution that favoured the richest councils and penalised the most deprived.
I believe the hon. Gentleman said North Yorkshire. If I remember correctly, North Yorkshire got £10 million in transitional funds. West Yorkshire and south Yorkshire got not a single penny. Not a single council in the whole of west and south Yorkshire got a single penny, yet the cuts that west Yorkshire councils faced were much more acute than those that North Yorkshire had faced.
My hon. Friend is making his case well. Is there not worse to come? We heard last week that another £3.5 billion worth of efficiency savings are to be made in the final year of the forecast, yet this Secretary of State is asking many councils to agree four-year funding deals. Has my hon. Friend heard whether those that agree four-year funding deals will be spared that £3.5 billion extra efficiency savings, or will they just have the money taken off them?
I shall make some progress now.
The same people who rely on the personal independence payments, which the Government so recently wanted to cut, rely on home helps and community services, yet nowhere is the pressure greater than the growing crisis being experienced by social care. The Tory-controlled Local Government Association estimates that despite the Government’s measures there is a big funding gap in social care—£700 million this year. Many of the frail elderly in our society are no longer being looked after properly. Lord Porter, the Tory leader of the LGA, put it starkly. He said that
“vulnerable members of the community still face an uncertain future where the dignified care and support they deserve, such as help getting dressed, fed or getting out and about, remains at risk.”
Yes, a Tory leader said that vulnerable elderly people will be denied help to be fed.
A few years ago my own family faced a crisis that so many of us have to confront at some time in our lives. Let me quickly describe what happened. I went to visit my dad in the fabulous St James’s hospital in Leeds, whose staff continue to amaze with their skills and dedication. But the nurse told me that my dad was coming to the end of his life and that he had to be discharged because there was little further the hospital could do. Clearly, he could not go home. By good fortune, I was able immediately to convert a downstairs room in our house into a bedroom and shower room and within days he came to live with me. He died in that room a few months later, but we spent a wonderful time together. The sun seemed to shine into our house every day that he was there. We were blessed to have the space available, and a loving family as well as loving neighbours who helped.
However, we could not have coped without the frequent house visits by the council’s care teams, who came every day, several times a day. Last year I held a fund- raising event at my house. One of our guests that day was a woman I recognised. She had been a carer who had helped me with my dad. She told me that she would always remember her visits to our house, but I felt a chill down my spine when she told me that because of the Government cuts, council carers could no longer provide the level of care to others that my family had received. “Honour thy father and thy mother” is an injunction that a civilised society should never forget.
Local government is facing £10 billion of additional future cost pressures. There are three main threats to council finances in this Budget. First, the Chancellor demands £3.5 billion of spending cuts, as we heard, to help to fill the black hole in the Government’s accounts. On top of that, there is the £4 billion that we heard about today.
The House knows that there are very few unprotected services left. Local government is one of them and is therefore a prime target. It is home helps, children’s centres, libraries, leisure centres, firefighters and youth clubs that are at risk.
Secondly, there is the overhaul of the business rates system. We welcome the extra help being given to small business in rate relief. That was in our manifesto; we campaigned for it, and it will cost about £7 billion. The Government have said they will compensate local government for this loss. The Secretary of State quotes page 84, item 15 in the Red Book, but he is wrong. That does not indicate where a single penny is coming from. Where is that £7 billion coming from? The Tory-chaired LGA has said that this will mean that once the 100% rate retention has been brought in, the resources to be retained will be less than previously projected as a consequence. By contrast, we would have financed these cuts to small business rates because we would have maintained, not cut, the level of corporation tax.
The third threat that the Budget outlines is the decision to ring-fence business rates in London, ahead of the rest of the country. But Westminster alone takes more business rates than Manchester, Liverpool, Sheffield, Birmingham and Bristol combined—£1.8 billion. If prosperous Westminster keeps this £1.8 billion, there will be a significantly smaller pot of money to be redistributed to less affluent areas. Tucked away in the Office for Budget Responsibility’s report are the implications of all this for the hard-pressed council tax payer—something on which the Secretary of State was silent.
The OBR estimates that 95% of councils will increase council tax by the maximum allowed, and they are being encouraged to do so by the Government. This means that for the first time ever, the average council tax bill payer will be paying £1,500 a year. Over the next five years local residents face a 14% increase above inflation in council tax. In return they will get a worse service. So much for the Tories being the party of low taxation: capital gains tax cuts for the well-off and council tax increases for ordinary families. It is an unacceptable set of priorities.
Of course. The Tories are not interested in looking after ordinary people and small businesses. They are interested in directing money at the privileged few.
Let me turn briefly to the subject of devolution, which the Secretary of State mentioned. In his Budget statement the Chancellor announced a number of devolution deals, about which concern has been expressed in all parts of the House. The Minister cannot say we did not warn him that there would be trouble on that from the Labour Benches. The whole process is far too top-down. The insistence on a single mayoral model has caused much resentment, especially in cities where the idea was recently voted down by local people in referendums.
It is not councils’ fault that there are these tensions—our councillors are under enormous pressure to get whatever they can for local residents. The fault lies entirely with the process imposed, not by the Secretary of State, but by the Chancellor, who is stubbornly refusing to allow ordinary citizens to have a say in how their areas should be governed.
I agree entirely with my hon. Friend’s point.
Let me make some progress on devolution. The average pot of money available to the metro mayors appears to be about £30 million a year, but that is dwarfed by the severity of the cuts that each of their councils has suffered. Top-down devolution, compounded by financial injustice, simply will not work as an enduring solution. Labour wants properly funded, real devolution, which would include, for example, the power for every council to open schools, build homes and regulate buses—mayor or no mayor.
That brings me to the Budget’s implications for the north of England. The Chancellor boasts about his northern powerhouse, but his Budget cuts to northern councils alone since 2010 add up to £3.9 billion being taken out of the northern economy. What do we get instead? A few million pounds for a scaled-down flood defence scheme in Leeds, and a few million more to fund, not an electrified rail link, but a study that might report eventually on whether there should be electrification. None of that cuts the mustard—it is more of a power scam than a powerhouse.
Let me express my great admiration for councillors of all parties who do their very best across the nation, despite years of cuts, to protect services. Libraries, for example, are one of the most prized assets in any community, but they are frequently the first to go. On Friday, I visited Wyke library in Bradford. The council has managed to keep it open, despite the prospect of losing half its budget in a decade. The library is a beacon of hope and self-improvement, buzzing with learning. I met people there who were studying to better their lot in life. They told me there was no way on earth they could afford to buy the books they could borrow from a public library or to use the internet, which was also available. The priority had to be putting food on the table for their kids, but they were able to come to the library and have access to knowledge. I met one man who was using the internet—publicly provided in a public library—to complete his PhD. Cutting libraries, cutting museums, cutting theatres—all of this is nothing short of cultural vandalism.
The Secretary of State did a round of media interviews this morning. On ITN, he told Conservative Members to come together again; he said they should stop scrapping with each other. Well, good luck with that. Then he went on the “Today” programme and talked about the rough and tumble of Budget negotiations, as if that explained the resignation of Mr Duncan Smith.
I think the Secretary of State is a decent man, and I suspect that, in his heart of hearts, he appreciates the value of local government services. He knows the role—how could he not?—that many of them play in supporting the vulnerable, but what does he really know about the rough and tumble of Budget negotiations? He was the first Secretary of State to sign up on the Chancellor’s terms.
On the radio this morning, the Secretary of State referred to the right hon. Member for Chingford and Woodford Green as his very good friend. My guess is that he may not want to follow the path of his very good friend and resign from the Government to defend local councils. I hope, however, that he will decide to fight his corner rather more strongly than he has this year against a Chancellor who has proved his judgment is nil.
I am grateful for this little riff on resignations, but coming from a party that resigned from reality last August, it is pretty rich.
It is time for the Secretary of State to stand up to the demands of an unreasonable Chancellor, rather than standing by while communities are decimated. If he will not, we will.
Several hon. Members rose—
Order. May I point out to the House that, from now on, there will be a five-minute limit, apart from for Front Benchers?
It is a pleasure to be called early in the debate and to follow the two Front-Bench speeches—particularly the quite superb opening speech by the Secretary of State, and I pay tribute to him and his team of Ministers, who serve us really well.
This was a Budget for small businesses and enterprise as much as anything else. I welcome the doubling of small business rate relief and the increase in the maximum threshold for relief from £12,000 to £15,000. I really welcome the reduction in corporation tax, the capital gains tax changes, and particularly the 10% rate on long-term investments in unlisted companies, which will do a great deal for start-ups and business angels.
I also welcome the stamp duty changes on commercial properties and the abolition of national insurance for the self-employed.
The other day, I worked out that this is the 40th Budget, including emergency Budgets, that I have been privileged to listen to, but this is without doubt one of the best Budgets, if not the best Budget, for small businesses, enterprise and wealth creation in our communities.
The Opposition have accused the Chancellor of favouring the rich, but let us hang on a moment. In the last financial year, the richest 1% paid 28% of all income tax. That is really quite staggering, and it completely undermines the Opposition’s argument.
Like other Conservative Members, the hon. Gentleman seems to be celebrating the fact that, under a Government that have seen the rich get much, much richer and the poor get much, much poorer, the rich are actually starting to pay more tax. Would it not be better not only if the top 20% paid more tax, but if the bottom 20% actually got wealthier rather than poorer?
I am grateful to the hon. Gentleman for that intervention; he and I get on very well together, and I respect his views. However, I would refer him to the comments by Paul Johnson, the head of the Institute for Fiscal Studies, who pointed out that, over the past few Budgets, higher earners have
“seen huge reductions in pensions tax relief”,
as well as a host of other measures, such as a “clampdown on buy-to-let”, and that they have been “squeezed in other ways”. He points out that this Budget’s impact on income distribution has been “incredibly modest”. That underscores the point that this is a fair Budget and, indeed, one for all our constituents and communities.
In the few minutes I have left, I want to touch on the devolution proposals. I support devolution. The flexibility that comes with making Government money available at the local level and responsive to local aspirations makes sense. I will certainly look carefully at the Secretary of State’s proposals for the combined authority in East Anglia. However, I would ask the Minister who winds up to confirm whether the £30 million a year is new money and whether the £170 million for housing will be spread over 30 years or treated on an annual basis. Could we have a look at that?
I certainly support the idea of devolution, but I am sceptical about the idea of elected mayors, for the following reasons. Back in 2000 and 2001, I was one of those politicians who were vehemently opposed to the now Lord Prescott’s proposals for regional assemblies, on the grounds of extreme cost and empire building. I also took the view that they would probably lead to the demise of the shire counties. I therefore regard the plan to bring in elected mayors with extreme suspicion. We are going to have to look at the cost very carefully. I remember when we discussed the plans for police and crime commissioners four years ago, and the view was that they would cost very little. It was said that the chairman of the authority—who is now called the police and crime commissioner—would sit in the police headquarters at no extra cost, but our PCC now costs £1.37 million and has a large number of staff in a separate building. He has built a mini-empire. The cost of the 41 PCCs across the country comes to £52 million.
This discussion is going to have to continue, because the most important thing is to have the support of the local authority.
I am worried about empire building. The new mayor is not going to operate out of a garden shed, although if one of us is elected in East Anglia perhaps we will do so. He or she is going to want to build a large empire and have a large number of staff, including directors of this and that division and department. Before too long, there will be a lot of pressure to have an elected assembly, and the heads of highways, infrastructure and housing will then become elected. Before we know where we are, we could well have an elected assembly.
I am glad that the Secretary of State has shown the courtesy to stay for my speech, because he has obviously been here a long time. People in Birmingham, Manchester, Newcastle and London feel an affinity with and an attachment to their city, so they are more likely to support the idea of having a mayor. I feel absolutely no affinity whatsoever with East Anglia, but I do feel an affinity with Norfolk. Does East Anglia include the three counties of Norfolk, Suffolk and Cambridgeshire that will be in the combined authority? Does it include Essex as well? No, it does not. What about Bedfordshire and Lincolnshire, just north of my county boundary?
I think that a mayoral election would face the problem of a pitiful turnout of perhaps 12% or 15%, so there would be no mandate. I am also worried that the institutions of Norfolk county could be undermined: this could be the death knell of Norfolk County Council, Suffolk County Council and Cambridgeshire County Council.
I also think this could lead to conflict with MPs. If I open a factory or campaign on a big issue and the elected mayor comes along and says, “Hang on, I also have a mandate of all of 12%”, and starts ordering us around, that is not good for the constitutional relationship between MPs and their voters. I am bruised by my experience of campaigning against the incinerator proposed by Norfolk County Council, when the local enterprise partnership suddenly waded in behind the county council.
I ask my right hon. Friend: can we have devolution, but can we also look very carefully at the idea of an elected mayor? Let us have devolution first, perhaps with a Minister for East Anglia. Perhaps that could be his colleague, the Minister for Housing and Planning, my hon. Friend Brandon Lewis. Let us then move very cautiously before we turn to the election of a mayor. If I do not have an assurance from my right hon. Friend, it will wreck what is an absolutely outstanding Budget.
The Scottish National party approach the Budget with some degree of success compared with last year, having secured measures relating to the tampon tax. We have not yet secured those on VAT relating to police and fire, but perhaps we can pursue them as the Budget winds its way through the House.
I am glad that this Government are picking up on the success of the Scottish Government, whose small business bonus scheme has for some years helped many small businesses across Scotland survive in these very difficult times. We are now moving towards a considered review of business rates, but we are including the business community in the process and will take until 2017 to establish what the new system might look like. We are taking our time to get it right. Our Government like to consider these things more carefully and we do not like to jump, as this Government seem to do, from one crisis to the next.
Similarly, a cross-party commission on local tax reform has looked at council tax in Scotland. The cross-party review carefully considered all the different options relating to council tax and how we could make it a fairer system. The review took evidence, had public meetings and came up with a set of recommendations to which all parties could sign up. That had real credibility and an evidence base behind it. The right thing to do is to give clarity and certainty in order to try to make tax fair.
It would be good if this Government took on board that lesson, because they are so different from ours in Scotland. They are in chaos over welfare reform. There is a black hole in the Chancellor’s Budget, and that is on top of the targets he has failed to meet. He is responsible for local government tax hikes—the social care precept is a tax hike by any other name. He also claims to be helping tenants by cutting 1% of social rent for those in housing association accommodation, but he is ignoring altogether the rise in private rents, which is contributing to the housing crisis in England.
Members may have heard me say during DCLG questions earlier that the Communities and Local Government Committee took evidence from Crisis and Shelter that suggested that soaring rents in the private rented sector are now the leading driver of homelessness in England. There are already 3,600 people sleeping rough every night in England, and that figure has gone up 30% in the past year. There has been a 250% increase in the past five years in the number of people who end up homeless because they cannot afford to pay their rent. We are taking a different approach to the issue in Scotland. Our recent housing legislation has provided greater protections for people in the private rented sector, as well as for those in the social rented sector who have long enjoyed protections.
Tenants are being forced into poverty. There is, of course, a place for the private rented sector in the housing mix, but in England families are increasingly being forced to rely on that sector. They have no certainty in their tenancies and they cannot afford to get by, while social rented properties are being sold off, left, right and centre, with nothing similar to replace them.
The Scottish Government have the power to control the housing market, so they could introduce a rent cap if they wanted to do so. Should not the regions of England have the same powers as Scotland to control our housing market, so that if our London Mayor and Assembly, for example, wanted to introduce more rent controls, they could do so?
Yes, I think that would be a very useful idea. Rents in the private sector are soaring compared with those in the social rented sector, so it is perverse that this Government view the social rented sector as the source of the problem, not the acceleration of rents. That would be a useful power for local government in England.
It is evident to just about everybody outwith those on the Government Benches that the solution to the housing crisis is not starter homes starting at of £450,000. A salary of £77,000 with a deposit of £90,000 is the going rate for these starter homes, but that will not exist in perpetuity for the next generation, who will go back into the very expensive retail housing market.
The Budget includes a welcome commitment to combat homelessness, but the funds involved are a drop in the ocean, given the size and scale of the housing crisis facing England. Virtually nothing is happening to encourage growth in the social rented sector in local government and housing associations. This Government are providing a sticking plaster when the patient needs urgent CPR. In Scotland, homelessness is falling and we are continuing to invest in the social rented sector, despite the cuts we face from the Government down here.
I will now turn to issues relating to devolution deals and draw Members’ attention to the “Pitch Book” on the Scottish Cities Alliance website, which outlines the scale of the ambition for some of Scotland’s cities. This Government could be doing a lot more to support growth deals in Scotland. Work is already going on in my own city of Glasgow and the partnership authorities in that city deal. That is making a significant contribution to the growth of local economies, and doing so in a sustainable manner that brings people on board and gets them back into work in communities that have been neglected over generations and that are still recovering from the cuts of the Thatcher years.
I reiterate my and my colleagues’ disappointment about the Aberdeen city and shire deal. The plans were for an ambitious deal comprising a £2.9 billion infrastructure delivery programme and an associated investment fund. Members will appreciate our disappointment when the Chancellor could find only a measly £125 million down the back of the Treasury sofa. Aberdonians often get unfairly maligned for being thrawn, but this Chancellor is in a different league entirely when it comes to being stingy towards a city whose oil has kept the UK economy afloat for years. There is news that the Inverness and highlands city deal may be announced tomorrow in Inverness, and I welcome that development. The people of Inverness and the highland region have been waiting for some time—since before the elections last year, in fact—to hear whether they will receive anything from the UK Government.
Significant investment is required to grow the economy of Inverness and the highlands, and to provide opportunities that enable young people to stay in the area. For too long, the brightest and best have had to leave the highlands to seek their fortunes elsewhere—[Interruption.] Especially my hon. Friend Patrick Grady. The technological advances that we have in 2016 give us real opportunities to reverse that trend, which has damaged the highlands for so long. Doing so would not only allow local young people to stay in the area, but attract new families to enjoy the excellent quality of life afforded by that part of the world. Inverness deserves its share of UK Government support to innovate and make changes. I urge the Chancellor and Ministers to be generous and to find the sums of money that the area needs to stimulate growth.
Young people are making life choices as we speak. They are filling in UCAS forms and deciding where they will go to take their next steps in life. They need to know that in this Budget, the UK Government, as well as the Scottish Government, are thinking of their futures.
I want to follow up on city deals. Is my hon. Friend aware that at the back of the queue is the city deal for Edinburgh and south-east Scotland, which includes my constituency? The Chancellor and the Minister have made a great to-do about the fact that negotiations have been opened, but waiting six months before opening negotiations does not constitute an announcement. That is not an announcement; it is delay, delay, delay.
I absolutely agree with my hon. Friend and with other colleagues from that part of the world, who are also here. I understand that the Edinburgh and south-east Scotland city deal team put in their bid in September last year. To open negotiations only now is an unacceptable delay in a region that needs that stimulus.
Select Committee reports on city deals have mentioned that they are often dictated by political imperatives. It seems as though Edinburgh’s deal sits nowhere in those political imperatives. We have waited and waited with bated breath for an announcement on the Edinburgh and south-east Scotland deal, but we have had no certainty about how well the plans have been received. It would be good to have an announcement soon, because the purdah period for the Scottish Parliament elections is imminent. There will then be a further purdah period for the EU referendum.
The people of Edinburgh deserve to know how their deal is being received and when work can get under way. It would be a shame if the ambitious proposal in the bid for £1 billion to improve infrastructure, skills and innovation were put on hold by an EU referendum. That £1 billion of investment could unlock an additional £3.2 billion of private sector investment in Edinburgh and south-east Scotland. Because the bid team is working collaboratively with Edinburgh University, surely the potential impact of the city region deal to the UK’s productivity and growth is deserving of an announcement of significant funds very soon.
There are fledgling deals in other parts of Scotland as well, and I would welcome early engagement by the UK Government in those deals. This morning, I met people involved with the Ayrshire growth deal, which involves ambitious proposals for the area to bring in greater science, technology and innovation and to make the most of the Prestwick hub—
There is lots of potential in the area, and indeed in Kilmarnock. The growth deal should help to encourage young people to stay in the area and to make their lives there, and it should attract back families who have moved away.
There are many ways in which Scotland looks at issues differently. Our population of 5 million allows us fleetness of foot and innovative thinking. In local government, housing, homelessness, city deals and a host of other areas we can lead the UK. I hope that the SNP’s involvement in this Parliament, however long or short that involvement may be, will allow Members to look to Scotland for ideas of civilisation.
It is a pleasure to follow Alison Thewliss to speak in this important Budget debate. The Budget carries on the Government’s good work of the last five and a half years and helps to secure our country’s future—a future that is rosier than it would otherwise have been, thanks to the action that the Government have taken.
Let us look back to 2010 and the very serious financial position that the country faced before the election. Had the people not voted as they did, we would now face more borrowing, much more debt and higher borrowing costs. The welfare budget would have been out of control, public spending would have continued to spiral and the economy would have been wrecked.
It is a fact of life that Labour Governments always wreck the economy and that Conservatives have to come back in, clean up the mess and get our country back on track. The Budget carries on that work. The people understood that difficult decisions had to be made in 2010. They understood that at the election in 2015, and they understand it now. There have been significant achievements. In my constituency, unemployment is down by 90% over the past year and by 62% since the Government took office in 2010. The economy is moving in the right direction.
I will focus my remarks on the way in which the Budget affects local authorities through the devolution of business rates. Before first arriving in this place, I was a small businessman, and I used to receive a bill from my local authority for what I thought was quite a substantial chunk of money. That was not for services directly received—commercial waste collection, for example, is a commercial service, and we paid extra for it—but my bill arrived with the Rugby Borough Council logo on, so I consoled myself with the thought that the money was being spent in my community. That, of course, was not the case, because for a long time local government simply acted as a collection agent on behalf of central Government, and the money went back to central Government. I think it is ideal for local authorities to retain the business rate, and that is the right thing to do. I used to ask myself, “If the local authority do not retain the business rate, what incentive is there for the local authority to grant consent for new development and new businesses and to encourage the growth of the local economy?” Of course, there was none, but there is now.
I am very pleased that the Government will carry out a business rate revaluation. I support that, because I believe that any tax that is based on the value of property should be based on the current value, and that there should be regular revaluations. I note that the Government will publish a discussion paper with options for achieving that. I am pleased that the maximum threshold for relief will go up from £12,000 to £15,000. Some 600,000 small businesses will therefore never pay business rates again, which will save them almost £6,000 a year.
There are some issues in respect of the effect on local authorities. For Rugby Borough Council, the cost of doubling the relief for businesses with rateable values of up to £12,000 will be around £570,000. I hope that the Secretary of State or the Minister who responds to the debate will set out how the effect on local government will be dealt with. Analysis by Rugby Borough Council shows that there are 134 businesses in the borough with a rateable value of up to £15,000, from which it collects almost £900,000 in business rates. It is uncertain at this stage how many of those 134 businesses will qualify for relief, or what level of relief they will be entitled to. There is some uncertainty among local authorities.
I am further concerned that business rate relief will act as an incentive for local authorities to consent to larger, rather than smaller, business units. In my constituency, a big unit is relatively easy to provide, but there are fewer units available for smaller businesses that wish to grow and develop. If a local authority is faced with an application for a smaller unit from which it will generate no income and an application for a larger unit from which it will retain the business rate, it is not hard to see which route the local authority will take. I also fear that by creating a cliff-edge as the rateable value increases, the relief might disincentivise small businesses from growing and developing.
This sorry excuse for a Budget is falling apart in front of our very eyes, just like the Chancellor’s reputation. Harold Wilson said that a week is a long time in politics, and by heaven doesn’t the Chancellor realise that today? Just one week ago, the Chancellor was standing at the Dispatch Box flaunting himself as a future Prime Minister, but now what do we see? His credibility is devaluing faster than a banknote in a banana republic.
I do not see the former Work and Pensions Secretary, who threw the towel in, as any comrade in arms in the fight for fairness and decency. I welcome his conversion to our cause after six years of the most brutal attacks on the welfare state since its creation: attacks on the lower paid, the unemployed, the disabled, the young, the vulnerable and the weakest members of our communities; and the bringing in of policies such as the bedroom tax, which has seen three-quarters of the people affected having to cut down on food to be able to afford to pay it.
Parkinson’s UK and Arthritis Research UK say that 682,100 people currently claim PIP. Of those, 200,000 have a musculoskeletal condition, which means they cannot dress or go to the toilet unless they receive help. That is just one example of disabled people who need help. Have the Government forgotten about these people?
Yes, they have forgotten about them and such cases are replicated right across the UK.
The introduction of a benefit cap will cast an extra 40,000 children into poverty. There have been cuts to employment support allowance, tax credits and housing benefit, and with the botched universal credit, more than 2 million families will see their benefits cut by
£1,600 a year. The infamous work capability test targeted terminally ill cancer patients and those with severe learning difficulties to reach targets. I welcome the change of heart from the ex-Work and Pensions Secretary, who finally realises that it is morally reprehensible to persecute people who need help to just wash, dress or go to the toilet.
What is more, we are sick of the spin from the Chancellor, whether the northern powerhouse guff he keeps coming out with or him pretending to be the builder of the infrastructure in this country. Bob the Builder was funny, but George the builder is not, Lurking in factories or loitering on building sites wearing shiny hard hats and high-vis jackets, his trips around the country are nothing but public relations trips funded by the taxpayer.
All this is happening at a time when we are facing a housing crisis in this country. I remember first coming down to London and seeing people out on the streets as rough sleepers. We all thought that was disgraceful. Labour cleared that up, but what do we see now as we walk into Parliament these days? The very same thing we saw when the Tories were in power in the ’90s—rough sleepers. It is a scandal that the fifth-wealthiest country in the world sees its priorities as cutting welfare for the weakest and increasing the number of rough sleepers by 50%, while lavishing tax cuts on the very rich.
I am proud to be a member of the Union of Construction, Allied Trades and Technicians. I joined when I was a building labourer, long before I became a Member of this House. I want to see the building of houses to sort out homelessness and the housing crisis, and I want to see infrastructure built for the benefit of everyone. But what do I see under this Government? I see rent rises in the private sector, council sector and housing associations brought about by a Government who persecute tenants. I see disgraceful threats to end the security of tenure to families who can be kicked out of their council houses, with kids ripped out of school and communities destroyed forever. I see the privatisation of housing association properties when the Government force them to be sold on the cheap. I see councils being forced to sell their best properties to spivs and speculators, depriving parents and children the chance to live in a nice area. I see the ludicrous first-time buyer scheme and the ridiculous belief that ordinary people can get on the property ladder by purchasing a house costing up to £450,000, which must be something like 18 times the average wage in my constituency.
I pay tribute to South Tyneside Council and Gateshead Council, who cover my constituency, for the work they have done to protect people from the cuts that have happened in the past and for what they will do in the future. Instead of building up the country and building a future for everyone in society, we have a Chancellor who is just digging his own political grave.
I am really pleased to be able to welcome the Budget. This Budget delivers on the promises made to the people in my constituency in May. Let us take away some of the noise we have heard today and focus on the big picture of what is actually in the Budget.
This is a Budget for ordinary working people. This is a Budget for small business and enterprise. This is a Budget for Telford. Telford has a proud history of innovation, creativity and finding solutions to problems. We have a rapidly growing, dynamic small and micro-business sector with increasing numbers of people who are self-employed; people who are doing it for themselves and building their businesses from nothing. They are the job creators of today and of tomorrow.
More than 3,000 small businesses in Telford will benefit from the measures in the Budget to cut business rates. Sadly, for some, this help has come too late. I want to put on record the sad closure of Queenies Cupcakery in Ironbridge, which closes its doors in April after a long struggle to meet its business rates. However, the cut is just in time for many of the small kiosks in the town centre, which will welcome the news, as will Fabulous Hair in Dawley, Ketley Cod in Station Road and Zen Communications in Stafford Park. This is a Budget for them.
Telford is an area of low pay, where many people have little disposable income. People in Telford work hard. They take on extra hours; they take on two jobs to make ends meet; and they save for their family and their future. This Budget incentivises and rewards that ethos. By raising tax thresholds, 2,000 people on low pay in Telford will be taken out of tax altogether and many others will keep more of their hard-earned cash.
Working people in Telford support the Budget. In particular, they like the freeze on fuel duty. Be under no illusion: a freeze in fuel duty makes a massive difference to everyday life and ordinary household spending power for those on a small income in Telford. I remember three years ago going to Asda in Telford and spending 135p on a litre of petrol. Today, a litre of petrol costs less than £1. More people in Telford have money to spend. One has only to go to the retail park on a Saturday, as I did on Saturday, to see what I am saying. It is hard to get a place to park and there is a queue around the block to go to the Costa in Next. People in Telford are keeping more of the money they earn, and hard work is being rewarded. I welcome that and the people in Telford welcome that—and this is before the introduction in April of the national living wage.
This Budget supports business, rewards hard work and boosts household income. These are the big picture measures for tens of thousands of working people in Telford. This is a Budget for them. What else will the Budget do? It will incentivise people to save for their future. For those under 40, the Government will give them £1 for every £4 they put away. This will help young people in Telford to save for a home or to start a family. The lifetime savings account is flexible, simple and gives people the opportunity for self-reliance. This is a measure for Steve, a teacher at Madeley Academy and a measure for Stefan, a care worker from Dawley. This is what we do in Telford: we try hard, we work hard and we want to get on. That is why this Budget is for Telford.
There are pockets of significant deprivation in Telford, which is why I am delighted to see in the Budget support to tackle homelessness. I want to pay tribute to a homeless charity that I support called Stay, which is celebrating its 25th anniversary next month.
This Budget enables people to make ends meet and to save for the future. It is a Budget for hard-working people, a Budget for business and enterprise, and a Budget for Telford. It is for those reasons that I wholeheartedly support it.
I want to get beyond the Budget headlines, which often lead to cheers from the Government Benches, and instead consider some of the details and try to get some answers.
I want to return to the point I raised in Communities and Local Government questions earlier, in an intervention on the Secretary of State and then in a point of order, because I still have not had an answer. The Government have said that local authorities will be compensated for the change to small business rates relief, which amounts to £1.7 billion in the next financial year—2017-18—and to similar amounts in years after. He said it was mentioned on page 84, line 15, of the Red Book, but that refers to the cost to the Government of the small business rates relief changes; it does not show how local authorities will be compensated for that loss by a section 31 grant. Will someone please show me where in the Red Book the section 31 grant is described as compensating local authorities?
Does my hon. Friend agree that this is a very pressing issue? In Greater Manchester, the business rates retention scheme could be put in place as early as 2017. Will the Government even have finished the consultation by then? Where are we? We need to know where we are.
Local authorities are entitled to absolute certainty. We can welcome the help for small businesses but not at the cost of local authorities and their services. If the Minister cannot explain this today, I hope that the Secretary of State, to whom I have written, can at least give us a written answer that can be made available to everyone else through the Library.
The Secretary of State went on to say that after 2020, because no grant will be available, compensation will be provided by a reduction in devolved powers to local councils, so that they will not have as many things to spend their money on—money they now will not get through business rates relief. It is a bit disappointing that the Government’s way out is to reduce devolution. That does not seem to be consistent with their claim to be devolving more powers all the time.
More worryingly, on the change between the retail prices index and the consumer prices index, which comes into force in 2020, how on earth will the Government find a mechanism by which to compensate authorities for that change, given that it will vary year on year? How will they do it, when the only way to provide compensation will be by changing the devolved powers available to local authorities, which cannot be done on a yearly basis? Will the Minister please provide the mechanism and explain it to us?
There will be a fundamental problem here after 2020. If any future Government were to introduce the sorts of changes this Government have made to business rates, where would it leave local authorities? Their income would simply be cut, and there would be no means by which to compensate them because there would be no revenue support grant in existence. Local authorities’ devolved powers cannot be changed on a year-to-year basis. This does not just throw up the need in future to devolve receipt of business rates to local authorities; we also need seriously to consider devolving the right to set business rates and business rates assistance. If that is not done, this will be sham devolution, and it will raise the great risk of future Governments on a whim being able to change the system on which local authorities will rely for a good percentage of their income. This problem has to be thought through.
I turn now to the four-year settlement that the Secretary of State rightly offered to local councils for the rest of the Parliament. Where is that left by the £3.5 billion of efficiency savings the Chancellor announced in his Budget and the £4.4 billion of extra savings that presumably have to be found now that the PIP cuts are not being carried through? In total, it would seem to amount to an extra £7.9 billion that he will have to find. Can we have a categorical assurance from Ministers that this will not affect the four-year settlement offered to local councils? I hope that it will not once again be a case of giving local authorities certainty for the Parliament, only to come back within a few months and ask for more cuts, which would put them in an impossible position.
Moreover, are we going to see further cuts to the public health grant, which the Government have not preserved? In the last Parliament, the public health grant was initially—up to 2013—part of the health budget and ring-fenced accordingly, but it is now part of the local government budget, and already this financial year it has seen a one-off cut of £200 million. It is estimated that there will be £600 million more in real-terms cuts by 2020. Will the grant face any further cuts as a result of the Chancellor’s need to fill the £7.9 billion black hole?
Finally, the Government have announced £115 million of help to tackle rough sleeping. It is a blot on our society and it is right that extra help is being given to deal with it, but to tackle homelessness properly—apart from the prevention at one end—we need more social housing to offer to homeless people. What do the Government have to say about the Chartered Institute of Housing’s report stating that there will be 300,000 fewer social rented homes by the end of the Parliament than there were at the beginning? What about the evidence that St Mungo’s gave to the inquiry by the Communities and Local Government Committee the other day stating that, unless the Government changed the link to the local housing allowance, all its help and provision for homeless people will have been closed by the end of the Parliament? That is a situation that no one can tolerate.
It is a pleasure to be called to speak in this Budget debate.
In these debates, we normally have a chance to pick over the elements of a Budget of which we particularly approve, to consider and discuss them and to draw conclusions, and normally by the Monday the devil in the detail has been uncovered. I think we can safely say that this year that has largely been the case: we have found the devil, and the devil has been chased out of the room.
I would love to speak for the remaining five minutes about the importance of the northern powerhouse, about why it is about more than just transport infrastructure projects—important as they are—and about why devolution has the opportunity to be a visionary policy and how the Chancellor deserves immense credit for persisting with it. Owing to the pressures of time, I will focus on the elements that I think form a golden thread running through the Budget and the Government’s approach.
We can call it compassionate Conservatism, one nation, social justice, a preferential option for the poor—the title does not really matter—but running through everything we do as a Government and a party should be a concern for the people the state has failed; those who face challenges we might not face ourselves; those at the bottom of the pile, the low-earners; and those who might not always be at the forefront of our minds as we go about our regular business. If we want to be a party that can look itself in the mirror and believe it is doing its best for everyone in our country, we must meet that challenge.
We have to make sure that our values and principles apply equally across the generations, which is why it was so important that this was a Budget for young people as much as for old people. Focusing on every generation, and on the balance and links between them, and ensuring that the next generation has the chance to exceed the achievements of its parents’ generation have to be the fundamental tests of every Conservative policy in every manifesto we put out. They should be at the centre of what we seek to do.
I heartily welcome the Government’s decision to rethink PIP. I had real difficulty understanding how the limited technocratic changes to the points-scoring system in the PIP assessment could be squared with the large saving the Treasury was seeking to derive from the PIP changes. I am glad we are not going down that path now.
I welcome our remaining a party committed to halving the disability employment gap, but I am realistic enough to recognise that it will require some radical policy reform to ensure that the complex needs of people trying to find work are adequately assessed and met in order that we help them back into work. Moreover, we have to recognise that a significant number of people on a benefit such as PIP will never be able to return to work, and we must be ultra-careful in this place not to fall into some inadvertent utilitarian trap that sees those who cannot return to work as somehow being less deserving of our sympathy and financial support. Many who are in work rely on PIP to stay in work—it is a working-age benefit; it is not means-tested. Equally, however, many are not in work and never will be. They will face a life reliant on the state, but that is not necessarily a bad thing or something to be ashamed of.
We need to do more to ensure that money is spent in a way that is aligned with incentives and that the most vulnerable within a vulnerable group are looked after. Those with every chance of returning to work are no more worth while than those who are not. There is no hierarchy of human value in our welfare state. The benefits system should not be seen as a greater opportunity for savings among the economically inactive.
It genuinely staggers me, though, that the Labour party is a bystander in this debate. Labour Members talk the language of welfare reform, but they have no ideas at all, other than to get out the national credit card, time and again, to pay for every U-turn. I have said in the past that to make real progress on disability policy, there needs to be cross-party agreement. I look to the Labour Benches to try to decide who might be brave enough to make that step—to dispense with the ill will and malevolence and to come forward with some real proposals to find that cross-party support. I do not see it yet.
I want to focus my contribution on the devolution deal for Greater Manchester. I welcome the principle of local politicians and communities having far greater control over the policies and funding that affect their localities. It is right that we have a much greater opportunity to shape our own destiny and build a world-class, fair and prosperous Greater Manchester. However, as we take greater responsibility, the Government, and especially the Chancellor, must understand that we are not prepared to be set up to fail or to collude with policies that are plainly wrong. Greater Manchester’s political leaders are right to do business with the Government, notwithstanding, in most cases, serious political differences. However, I have come to the conclusion that, in some key areas, the combined effect of the devolution deals so far is flawed. We must negotiate a new, fairer deal that enables us to tackle the inequality that has left too many people and communities behind.
On skills, it is essential that we raise our game in Greater Manchester, so that we can tackle the scourge of worklessness, improve poor levels of productivity and ensure that people living in our communities benefit from the future jobs that businesses will create at the cutting edge of the technological and green revolutions. The current devolution deal only gives Greater Manchester control over 19-plus education. This is nonsense and is setting us up to fail. I want local authorities and the mayor to have the power to support school improvement through a properly funded schools challenge, on a par with London, to build a 14-to-19 phase of education with a high quality vocational offer and to have greater flexibility to work with employers on apprenticeships. If the Government are serious about supporting Greater Manchester to tackle the scandal that is 25% of children living in poverty, they will provide additional funding so that we can expand early childhood development programmes, not cut them, as is happening now.
On health and social care, we have agreed to create an integrated care and support system. However, we have a £2 billion NHS funding gap in Greater Manchester. Cuts to council budgets are severely restricting access to social care, and community mental health services are in crisis. In many areas, preventive services, often provided by voluntary organisations, are being cut to the bone. On top of that, we have no guarantee that the Treasury will not cut our funding further in the future. A fair deal would mean NHS England more than doubling the transformation fund established to support those changes in Greater Manchester, from the current £450 million to £1 billion. Any deal must also make it clear that in Greater Manchester we vehemently oppose the privatisation of the NHS.
Let me turn to business rates. I strongly support the principle of money raised in Greater Manchester staying in Greater Manchester. Indeed, in the longer term, devolution must mean greater fiscal autonomy on a much broader level. However, at the same time, Government cuts to councils’ grant aid and the disparity in revenue generated in the different cities and towns of Greater Manchester increase the risk that the deal will increase inequality, not reduce it. A deal that is fair must put in place transitional arrangements to ensure that the cumulative impact of 100% rate retention, combined with cuts to government grants, does not disadvantage any of our 10 Greater Manchester authorities.
In some parts of our conurbation, the decline of town centres has damaged both economic opportunity and civic pride. Despite being identified as a priority in negotiations between Greater Manchester and the Government, bids for town centre renewal funding have so far been rejected by the Treasury—another flaw. A fair deal would recognise the importance of towns and district centres across Greater Manchester. Finally, the devolution deal is silent on accountability and public participation. While some of these issues require resolution at Greater Manchester level, a fair devolution deal would include funding to enhance public involvement and the accountability of the mayor and the cabinet.
A new, fair devolution deal is essential if Greater Manchester is to reduce inequality and become a world-class conurbation for all its people. This Budget reaffirms the Government’s commitment to a northern powerhouse, but I must warn Ministers that it has all the hallmarks of the big society—a tarnished brand, fatally undermined by reality. Disproportionate cuts and policies such as the forced academisation of our schools make a mockery of the northern powerhouse; indeed, we would be a northern poorhouse if it was not for the innovation and commitment of our local councils and communities. It is for that reason that our leaders in Greater Manchester have been right to be pioneers for devolution, but the time has now come to demand a fair, not a flawed, devolution deal.
I have sat in this House for a period of time, and Budgets come and go, but what is important is the direction of the country over a period of years. When we came into office in 2010 in coalition, we inherited the largest peacetime deficit—nearly 11%. That required some tough measures and also some persistence, but fortunately the Government have been quite sensible. They have not pushed the deficit down in four years, as we heard earlier in the debate; they have done so with regard to the real economy. We now find that the budget deficit over the next year or two will be down to the levels it was at pre-crash, before 2007. It is not caring or even very sensible to run large deficits or build up large debts for future generations.
The Government have met many spending commitments. In the course of the last six years, they have managed to reduce the tax rate, particularly on many of the lower paid, but the backdrop is that they have done something that many were sceptical about: they have created a jobs miracle. The British economy has performed tremendously well over the past six years at creating jobs. Compared with the rest of Europe or the rest of the world, we have done a fantastic job. That is because employers have been sensible and employees have been sensible, sometimes accepting the fact that they have to be more productive or accept lower pay rises, but it is also because the Government’s policies of ensuring a combination of welfare reform and pushing up the allowances—the rate at which people pay tax—have provided a big incentive for people to take employment.
There were two events on Wednesday: one was the Budget, but the other was the employment figures, which I want to focus on briefly. We have employment in Britain of 31.42 million—a record. That is a massive number of people, and it is up nearly half a million over the last year. We have real wages growing at 2.1%—above inflation—which means that living standards are slowly starting to recover, albeit perhaps not fast enough. In this Budget, the Government have again pushed up the allowances before people pay tax, but they also have proposals for a living wage, which should help to repair living standards, which we all want.
The number of people in private sector employment is 26.1 million—a record level. The claimant count has fallen in the last year—102,500. Even youth unemployment is down, while the number of those on unemployment benefit is down to its lowest since the 1970s, so there is a pretty good record on what is happening in the British economy. The Government have created a framework and they have the stability and a plan—a long-term economic plan. Employers have been able to invest, employees have taken sensible decisions, and we have got a lot of our citizens into work. We all know that one of the best ways out of poverty—one of the best ways for people to skill themselves; one of the best ways to get the most out of life—is, for those who can, as my hon. Friend Paul Maynard said, to be given a job. That gives people hope and an opportunity for the future.
I do not think we say enough in this House about how the British have done well. If we look in the back of The Economist, as I occasionally do, at the relatives rates of unemployment and employment across Europe, we see that Britain’s unemployment rate is lower than Germany’s, which one would not have thought or considered. Our unemployment rate is only a little above that of the United States, which has been recovering pretty well. Indeed, the chances of getting a job in this country are far better than in most countries across Europe. If there is a problem of people migrating to try to get into Britain, it is for reasons: we speak English and it is easy to get employment. Our employment market is far more flexible and robust than most of those in the continent of Europe.
When I looked at the Red Book and the other financial documents that were provided, I was glad to note that the Government were assuming that, although the rate of growth would slow as productivity picked up, we would still end up with unemployment below 5% over the next two to three years. That constitutes a real success of economic policy, changing people’s life chances and giving them far more opportunities to make the best of their lives.
This is a Government for hard-working people, and long may it remain so.
As is now abundantly clear, the Budget was developed with short-term politics in mind rather than compassionate, long-term economics. On one level, we have to admire the sheer audacity of the Chancellor: the audacity of someone who genuinely thought that he could get away with rewarding Tory donors in the City with a cut in corporation tax while attempting to cut benefits for disabled people, get away with cuts affecting those who were least likely to vote Conservative while sticking to his mantra that “we are all in this together”, or get away with preaching about the northern powerhouse just as the Department for Business, Innovation and Skills closes its Sheffield office and moves all 200 jobs to London. Today, all that he has got away with is shirking his duty to come to the House and account for his failure and the black hole in his Budget, and his reputation is now in tatters.
There was never any compassion in trying to cut the benefits of 370,000 of the most vulnerable disabled people in our society by £3,500 a year. As we know, this Government have always hit disabled people hard, through the bedroom tax and cuts in employment and support allowance, but I would have had much more sympathy with today’s U-turn had it been based on the warnings from charities such as Sense, which called last Wednesday’s Budget a
“bleak day for disabled people”.
A constituent of mine is disabled, and determined to carry on working. The personal independence payment helps him to do that. When he gets home, his joints are so stiff that his wife has to help him go to the toilet and have a bath, yet he is determined to go on working. He wants to keep working because he wants to keep his dignity; the Chancellor wanted to take it away. The Chancellor has performed a U-turn, not to help my constituent and help him to keep his dignity, but in an attempt to keep his own dignity. All that we need to know now is who he will pick on next in order to fill the £4.4 billion hole in his budget. We can be sure of one thing: even after today, the most vulnerable in our society will continue to pay for the Government’s failures.
Let us take the announcement of business rates relief. On the face of it, the announcement was good news for small businesses in my constituency, but our local councils could find themselves cutting more services for those in need in order to make up the shortfall in their budgets. In my local area, we are proud to have more small and medium-sized businesses in the economy. In Kirklees, small business relief accounts for 11% of net rates income, as opposed to 4% in England as a whole. When 100% retention is introduced and the promised compensation for the loss of income ends, the council will be stuck once again, trying the balance the books to pay for a short-term victory for the Chancellor. As my hon. Friend Mr Betts explained so clearly, despite the vague assurance that we heard today that councils would be compensated, the Red Book includes no explanation of where the money will come from and how long it will last.
The Chancellor was no less audacious in telling us great things about the northern powerhouse. If only we could believe him. Electrification of the trans-Pennine rail route would be a crucial development, but the project has been announced, cancelled, re-announced, delayed, and then re-announced once more, and we still have no clear commitment from the Chancellor as to when it will happen. There is nothing clever about announcing big investments and then running for cover when it comes to their implementation.
Indeed, work has only just started on 9% of the projects in the Chancellor’s infrastructure pipeline. A lack of infrastructure investment fuels poor productivity. Like so many of the Chancellor’s audacious predictions, productivity forecasts—as we now know—have been revised down for the next five years, and, once again, it is the north that suffers as low productivity strangles economic growth, holds back wages, and delays the much-promised recovery. The output of the Leeds city region is now 12% behind the national average.
I am afraid that I can feel no compassion for this Chancellor. He wanted the poorest fifth in our country to lose an average of £550 a year, while the richest fifth gained £250.
My hon. Friend is making a great speech, but could she touch on the subject of the women against state pension inequality campaign? Women up and down the country must have been very disappointed that the Budget contained no move towards them. Those women, born in the 1950s, are really suffering.
I could not agree more. There was also nothing for long-term social care, nothing for the NHS and nothing for the next generation, despite the Chancellor’s rhetoric.
In fact, the Chancellor was playing politics with some of the neediest people in our society. Those who put politics before economics take a risk. The Chancellor had obviously started to believe some of his own press; I wonder whether he still believes it tonight. He got the economics very wrong, but he also got the politics wrong. He should now come back to the House with a package that addresses the real long-term needs of the country, not his own short-term aspirations. He should stop playing politics, and start planning for an economy that works for the benefit of all, not just his wealthy mates. If he cannot do that, he should have the courage to say so and take the consequences, rather than asking others to pay for his failures.
Before addressing the main Budget issue that I want to discuss, I want to mention two announcements in the Budget which, although small, are of great significance to two institutions in my constituency: Bletchley Park and the Open University.
The award of £1 million will allow Bletchley Park to establish a major new exhibition of the Turing-Welchman bombe, which helped to break the Enigma cipher during the second world war. Let me take this opportunity to congratulate Iain Standen and his team at Bletchley on all that they have done to transform it into a world-class heritage site, and to secure its legacy for generations to come. I warmly invite any Members on either side of the House who are seeking a distraction from political storms during the Easter recess to visit Bletchley Park, and to see for themselves how this vital part of our nation’s heritage has been transformed.
I also thank the Chancellor for announcing a measure that will help another world-class institution in Milton Keynes, the Open University. The extension of the eligibility for Masters loans to include three-year part-time courses with no full-time equivalent is very welcome. The Open University had been worried that the absence of such a provision would have a detrimental effect on numbers for the 2016-17 academic year, but the Chancellor’s announcement will help to secure its future.
The main issue on which I want to focus today is not only the long-term future of Milton Keynes and the surrounding area, but the wider national benefit. Announcements are sometimes hidden in a Budget’s small print and can make unwelcome surprises, but I was delighted to discover on page 82 of the Red Book the decision to ask the National Infrastructure Commission to
“develop proposals for unlocking growth, housing and jobs in the Cambridge – Milton Keynes – Oxford corridor.”
I have long argued that we should be looking at the huge economic potential of that arc and I am delighted that the commission will now be focusing on it. I welcome the acknowledgement in the terms of reference issued by the Chancellor that the commission should work not on its own, but in collaboration with local stakeholders, including Network Rail, the local enterprise partnership, and further and higher education. A number of exciting projects to develop the arc are already under way. I am chair of the east-west rail all-party parliamentary group and the new rail line will unlock huge economic growth, tax revenues, new jobs, and connectivity within the region. The Department for Transport is also exploring options for the Oxford to Cambridge expressway.
In addition to traditional transport infrastructure, we are innovating the intelligent mobility solutions of tomorrow. We have the Transport Systems Catapult in Milton Keynes, and the Open University and others are developing the MK Smart project. Such schemes will unlock the digital and hard-infrastructure improvements of the future, and it is important that the National Infrastructure Commission takes that work into consideration.
This is about more than just transport. The MK Futures 2050 Commission, ably chaired by Sir Peter Gregson of Cranfield University, is looking at housing, education and training, energy, water supplies and the many other areas that are needed to support economic growth and to preserve the local environment and designs that have made Milton Keynes a success. We celebrate our 50th anniversary as a new town next year, and the MK Futures 2050 Commission is looking at the 50 years beyond that. I also draw the National Infrastructure Commission’s attention to the Centre for Cities report on fast-growing cities, which was published just a couple of weeks ago and contains important findings that the commission should consider.
I echo the vision set out in the terms of reference. It notes that we already have
“global centres of research expertise in Oxford and Cambridge and advanced manufacturing and logistics in Milton Keynes” and that we should
“maximise the potential of the area as a single, knowledge-intensive cluster that competes on a global stage”.
The terms of reference also acknowledge that
“Institutions to strengthen governance across the corridor” are necessary. I strongly echo that point and my one ask today is for a meeting with the Secretary of State for Communities and Local Government to discuss the matter. We need local devolution across the corridor. We must be able to compete with the northern powerhouse and the west midlands engine, and there are important debates to be had about that.
It is not often that those of us privileged enough to gain membership of this House witness a political statement that destroys a political philosophy. Last week, however, the Chancellor’s Budget statement did precisely that when it destroyed the philosophy of compassionate conservatism. Compassionate conservatism has been killed stone-dead and, at a stroke, the Chancellor has re-toxified the Conservative party. The nasty party is back.
We have a Chancellor who introduced a Budget last week that was morally wrong, politically stupid and economically incompetent. The Chancellor has missed every target that he has set for himself. He sets his own tests, he marks his own tests, and he then proceeds to fail every single test. This vainglorious Budget contains a clear national vision, a vision that the Government have been rolling out at speed in every policy area. It is a national vision that balances the books on the backs of the poorest and most in need. It is a vision built upon mortgage debt, hollowed-out public services, collapsing councils, decrepit adult social care, rising child poverty and defunded children’s services. It seeks as a matter of principle to strip the national health service of the funding it needs while actively misleading the public at every turn.
It is remarkable that it has taken the resignation of the former Secretary of State for Work and Pensions, Mr Duncan Smith to illustrate this flawed, nasty national vision, because we have been told for years that the right hon. Gentleman is on the right of his party, but he has outflanked his Chancellor on his left in recent days. The Chancellor has disappeared. He was unable to make his sums add up or to defend himself or explain his own incompetence. The Chancellor is in the bunker, sat in the ashes of his incinerated ambitions. He is a man who has placed his personal ambitions and the electoral calculations of the Conservative party above every single consideration for the national good.
I was a boy when the former Secretary of State for Work and Pensions was described by Prime Minister John Major as one of the “bastards” outside his Cabinet. Thatcherism was entering its final days back then, but it is back, making sure that austerity works for the rich while punishing the poor. Millions of people all over the country now see this Prime Minister and this Chancellor in precisely the same way as John Major saw his Maastricht rebels. The Budget fails our country, it fails my constituents and it fails every community in west Cumbria.
Before the Budget I wrote to the Chancellor setting out again what my community required from him on infrastructure, on our local NHS, on the second phase of the West Cumberland Hospital and on NHS recruitment, yet only a deafening silence followed. Thanks to our locally produced, real, long-term economic plan, established by me over 10 years ago, west Cumbria now stands on the verge of a truly transformative era. We have the opportunity to become one of the fastest growing sub-regional economies in the whole country. The single biggest private sector investment Cumbria has ever seen, in the shape of new nuclear reactors at Moorside, presents west Cumbria with remarkable opportunities. The project has taken over 10 years to reach this point and meaningful Government assistance could expedite progress.
The A595 is the main road artery in my constituency and the industrial Cumbrian coast. The road cannot cope as it is, but the increased population and works traffic resulting from Moorside will put even more pressure on it. The case for improving the road is overwhelming.
I am grateful to my hon. Friend for that intervention. The fact is that the north will succeed despite this Government, not because of them, but we could have a whip-round to buy the Chancellor a map to explain to him where the north actually begins and ends.
My local health economy is currently engaged in the success regime process, which is already being undermined by Ministers in the Department of Health. A necessary body of work—working out how we adapt the Cumbrian health economy to best meet the needs of such a challenging geography and a dispersed population with specific needs—is becoming fatally compromised by the refusal of Ministers to listen to those who have been tasked with undertaking the success regime. To secure the outcomes and achieve the improvements that the clinicians and other experts within this process want, the system requires more resource. This is simple and obvious, and the request is being made, but the response from the Government so far has been a resounding no. Without additional resources, the success regime will fail, yet this Budget offers no help for our effort to recruit more health professionals; to finish the redevelopment of West Cumberland hospital; and to finally achieve the ambitions of everyone in Millom for our local hospital services or of the public and patients concerned about future services at Keswick, Maryport, Cockermouth and Workington hospitals.
Is my hon. Friend as concerned as I am that two more cuts to the NHS will hit and cause extra pressures? There will be £650 million of pressure from the pension contributions that have to be paid for NHS staff and a £1.1 billion cut in the maintenance and repairs bill for the NHS. All of that will have to be found.
Order. A great many people wish to speak in this debate. Every time there is an intervention—and these have been too long—another minute goes by and somebody else drops off the end of the list. Just so long as hon. Members know that when they make interventions, the time available for the debate does not increase but merely prevents their colleagues from speaking. I am not saying for a moment that Barbara Keeley has done anything wrong. She is perfectly entitled to intervene, but I merely point out the consequences.
Thank you, Madam Deputy Speaker. I appreciate my hon. Friend’s intervention and I share her misgivings. Let us make no mistake about the message being sent to the NHS in Cumbria—this Government are saying that people in Cumbria have to make do with a defunded NHS that cannot provide the same level or standard of care that the rest of the NHS does in terms of quality or accessibility. If that is true, the notion of a truly national health service is yet another casualty of this Prime Minister’s twisted national vision.
The future of Copeland—the most remotely accessible constituency from Westminster in England—and west Cumbria is brighter than it has ever been. As I said earlier, that is despite, not because of, this Government. With investment and support from Government, we can remove the barriers that are preventing us from achieving our vast economic potential. The achievement of this potential is in the national interest as much as the local interest. West Cumbria can help, perhaps better than many other areas, to rebalance the national economy, secure our national energy supplies, help us fulfil our environmental objectives and attract massive, truly significant overseas investment.
Finally, let me say that this rotten Tory Budget has been made possible only because my party failed to convince the British people to trust us at the last general election. The consequence of that failure is this Budget and more like it between now and 2020. These Budgets damage our communities, they damage those most in need and they damage the life chances of the very people that my party was founded to represent. On the Opposition Benches we must listen to the people of this country, regain their trust and, by any means necessary, ensure that we are in a position to earn their confidence and support at the next general election. Because wherever you are in our country, whoever you are, and whatever your background, race, ability or circumstance, you deserve better than this Government, and it is the job of my party to provide precisely that.
Last week, the Chancellor delivered a Budget that will ensure our continued economic recovery following the great recession—the worst since the great depression. Figures show that our economy is expected to grow faster than any other advanced economy, and that is very welcome news, but we must ensure that all parts of the country share in that growth.
Unemployment has fallen again under this Government, and the claimant count for out-of-work benefits is at its lowest level since November 1974. Employment is growing fastest in the north-west, and my constituency of Bolton West has seen the unemployment rate fall to 2.6%. Although I appreciate that more needs to be done, we have an economic stability that is reassuring for our businesses and manufacturers, creating the confidence that they need to continue to invest and thrive in Britain. Businesses have created more than 2.7 million new jobs, and the private sector has created six jobs for every one lost in the public sector. Stability is especially important for industrial recovery as investment in training, plant and machinery requires long-term confidence because the costs involved are high, especially by comparison with other sectors.
With employment in the north-west growing faster than in the rest of the UK, we can clearly see that the northern powerhouse is delivering the skilled jobs that provide the foundations for a better economy. The Budget seeks to increase the connectivity of the northern powerhouse through a strong transport infrastructure network. The green light has been given to the High Speed 3 link between Manchester and Leeds, and an extra £161 million was announced to upgrade the M62 to a four-lane smart motorway and to upgrade the A66 and A69. Work is under way on the Mersey Gateway project, which is set to conclude in the autumn of 2017, with a six-lane bridge over the Mersey between Runcorn and Widnes. We have had funding to upgrade the A5036 Princess Way—through Seaforth and Litherland—which links Liverpool’s ports to the motorway network, and is key for an increased manufacturing and export-led economy.
Our rail services in the region are also set to improve, with the electrification of the Manchester to Liverpool line and the ongoing work between Manchester and Preston to help to provide a reliable and sustainable railway and tackle overcrowding. My constituents have experienced delays as a result of the electrification process, but appreciate the reasons for it. None the less, I urge the Government to consider providing more carriages until that work is finished. The Budget also announced plans to develop the case for a tunnel to link Sheffield and Manchester, which will be appreciated by anyone who finds that their route takes them over Snake Pass—especially in winter. All that investment in connectivity and infrastructure in the north is enabling the rebalancing of the British economy and providing the foundations that we need for the northern powerhouse to prosper.
The plans for further devolution to our cities is continuing with the transfer of criminal justice powers to Greater Manchester. The original police and crime commissioner role merely replaced the police authorities, but this reform gives the potential for changes to better reflect local needs and allow increased innovation. We need a system that prevents people from getting involved in crime in the first place, and that reduces stubbornly high reoffending rates. Devolution provides opportunity for the north, as it moves power away from Westminster and brings it closer to the people. The mayor of Greater Manchester will have more powers than the London Mayor, and we need to make sure that those powers will be exercised in all our interests and improve services across Greater Manchester. The Government has delivered for this generation, and the Budget now ensures that it will also deliver for the next.
I do not want to speak at length this evening, but I do wish to add my voice to the chorus of congratulations that has greeted this Budget from all parts of the House. Certainly, in the 12 years that I have been in this House, I cannot remember a Budget in which so big a hole has opened so fast, which is why it is perfectly natural for it to have provoked such a hymn of praise.
According to Mr Davis, when one starts picking the details apart, the whole thing falls apart. Heidi Allen said that the Government had made some poor decisions. Over the weekend, Andrew Percy said that this was a Budget that hit exactly the wrong people. According to The Times, Members of Parliament, who were presumably once supportive of the Chancellor, now say that he is a “busted flush” and “damaged goods”. Let me associate myself with this new consensus breaking out right across the House.
I also congratulate the Chancellor on going to such lengths to, in his words,
“put the next generation first.”—[Hansard, 16 March 2016; Vol. 607, c. 951.]
That was a pithy message, and he has presided over an economy where that is exactly what has happened. This is now the first generation to be worse off than the generation that came before them. This is now the first generation to be more likely to live in poverty than pensioners. Today’s young generation are the first generation to have to work years longer in order to earn their pension. Young people today are the first generation to graduate from university with over £50,000 of debt. This was indeed a Budget for the next generation, but not quite in the way the Chancellor presented it. In fact, it was just the latest from a failed generation of Conservative politicians.
For me, the final proof was this: if the Chancellor wanted to do something for the next generation—if he truly wanted to put the next generation first—he would surely have done something significant, perhaps even magnificent, for Britain’s youngest city, which is of course my home city of Birmingham. Instead, we have a Conservative Birmingham bombshell of over £100 million of tax rises and spending cuts. That is the how the Chancellor has put Britain’s youngest city first. The Government now admit—this is the irony—that the great city of Birmingham needs a fair funding formula. In fact, they are so convinced of the need for this new funding formula that they are determined not to introduce it now but in a couple of years’ time. This short-changing is costing our city some £98 million in lost grants. Indeed, there would be almost no need to introduce cuts in this year’s council budget were it not for that short-changing.
I am grateful to my fellow Birmingham MP for giving way. The great city of Birmingham has been hit by the biggest cuts in local government history—three quarters of a billion pounds. Had it been treated fairly this year, it would have been £98 million better off. Does my right hon. Friend share my concern, and that of the people of Birmingham, that although we put a powerful case to the Government for support out of the transitional fund, 95p in every 100p goes to Conservative councils, but not one single penny to hard-hit Birmingham?
My hon. Friend is absolutely right. It takes some doing to sit in Whitehall and write a formula that means that pretty much only Conservative councils get the money, but I take my hat off to the Secretary of State and the Chancellor for somehow finding a way of doing it.
The problem is not just that £98 million was short-changed from the budget for Birmingham this year, but that because we have a weaker tax base in our city, we have to raise significant extra resources from the social care levy, costing us another £5.5 million, and that despite the fact that our police service is on one of the most dangerous frontlines, we have had £10 million of cuts to its budget this year. Altogether, the total is £113 million. This is a bombshell that the people of Birmingham will not forget.
Whoever is winding up this debate should recognise that there are some significant questions that we from our home city need answers to. We would like to know why we have not got any of the transitional funding that went to others. We want to know whether, if we agree a four-year funding settlement, our budget will be put into play in 2019-20 as part of the £3.5 billion-worth of efficiency savings earmarked by the Chancellor last week. This is a significant issue for councils up and down the country. If they agree four-year funding settlements with this Government, will they be protected from the new £3.5 billion efficiency drive that the Government announced last week? Yes or no is the simple answer. Birmingham is up for the challenge of business rate retention, but we need much clearer answers than we got earlier about whether the gaps will be made good. Will Ministers confirm whether the OBR’s assumptions that there will be a 14% increase in council tax over the next four years are true? Do they share those assumptions?
The Labour party in Birmingham is rebuilding our city and getting it back to work, delivering record numbers of new businesses, record amounts of new investment, and record new infrastructure. We have built more council homes than any other council in the country, we have got over 3,000 young people into work, and we promised and delivered the living wage on day one of the new Labour council. Give us the tools and we will do the job!
It is a pleasure to follow Liam Byrne. He claims everything for the Labour Administration in Birmingham, but he cannot claim that they had anything to do with High Speed 2 finishing in the city. Sadly, HS2 goes through my constituency and causes a great deal of grief.
It is a pleasure to welcome the Budget, and I do so in the knowledge that the British economy is far stronger because when we came into government in 2010—albeit as a coalition Government—we took difficult decisions, and the British people reacted positively to a Conservative vision for the country. They reacted by starting businesses, creating jobs, and embracing a long-term economic plan. The phrase “long-term economic plan” is oft mocked for its repetition, but it is responsible for the emergence of sound public finances that provide the security that people want—a welfare state that works, an NHS free at the point of need, a good education system, and security in old age, all of which we have on offer in the UK.
I wish to mention a couple of points that perhaps have not featured in other people’s contributions, and to thank the Chancellor for two announcements in the Budget that are personal to my constituency. First, for several years I have worked with my constituent Peter Dodd and with Zero-m to gain a lower clean fuel duty rate for aqua methanol. This fuel, which produces virtually no particles, or NOx, and much reduced carbon dioxide, should now be able to play a great part in reducing street-level pollution in our cities. The tax changes had been postponed for bureaucratic reasons, together with a new Treasury review of a 2013 European Court of Justice ruling—another example of how the EU holds back innovations in the UK, because the measure could have been introduced much earlier.
I was therefore delighted when the Chancellor announced the new reduced rate at the originally planned 7.90p per litre, which is a significant reduction from the standard rate of 57.95p and will be introduced from
Secondly, I currently chair a cross-party limb loss forum that is working to improve access, quality and research in prosthetics and wheelchair services, as well as rehabilitation. We are pleased to welcome the announcement of £1.5 million of investment in sports prosthetics for children, as well as a fund to develop innovative prosthetics for the NHS. Pace Rehabilitation is a company with a base in Chesham in my constituency, and it works across the board with people with limb loss. Its attention to detail and ability to tailor its work to meet individual needs is exceptional, and I have been privileged to meet amputees who, thanks to its work and that of many others, can live their lives to the full and even ski, cycle and snowboard again. Indeed, I understand that Pace prostheses have been walked to both ends of the world.
Today is a day for the Department for Communities and Local Government. Like other councils, Buckinghamshire County Council remains concerned about the impact of the Budget. A large worry is the prospect of further cuts downstream to meet the Chancellor’s Budget surplus targets, particularly in the light of recent developments. The council has applied for a four-year settlement that would help to alleviate the uncertainties, but there is no guarantee that it will be forthcoming. There are concerns about the impact of the small business rates relief announcements, so I hope that during the consultation the compensation that DCLG officials have indicated will be forthcoming will be confirmed.
The announcement that all schools will become academies is also causing concern, particularly among those in the area of special educational needs. What does it mean for the role of local authorities in providing additional support for those with special educational needs if they have no power over any of their local schools? Could we have clarity from the Minister about how support for SEN will work?
Finally, I am concerned about the implications of these measures on social care, and the National Autistic Society—with which I work—is facing concerns about the future of care homes and companies. Will the Chancellor provide an assessment of the gap in care funding between now and 2020?
All in all I welcome the Budget, but I could save the Chancellor a great deal of money and fuss. There is one project that could be axed that would put a lot of money into Treasury—and that, of course, is HS2.
Several hon. Members rose—
If we go back to 2010, when Labour left office, the economy was growing and unemployment was falling. Unfortunately, the Chancellor’s inept handling of the economy meant that we had a longer recession and lower growth for quite some period after that. In terms of his record in the last Parliament, he failed on his borrowing target and he failed on his deficit target. In this Parliament, he has missed his debt-to-GDP target and his welfare cap target. His surplus forecast for 2019-20 will be achieved only with some very creative accounting and sketchy assumptions. In fact, Paul Johnson of the Institute for Fiscal Studies has said that the chance of the Chancellor hitting his target was
“only about a 50-50 shot”,
and that he would need to impose “proper” tax rises or spending cuts if there was any further downgrade in public finances.
In relation to today’s discussion about cuts for the disabled, we have already heard that there have been £24 billion of cuts for disabled people since 2010. Under cuts to the ESA work-related activity group, which were forced through Parliament recently, 500,000 disabled people will lose £1,500 a year. The real reason why the Government have today backtracked on their further cuts, particularly to PIP, is that they were going to lose the vote. A number of their Members were already rebelling, and they have also been hammered by what the Labour party and the public have said in recent days and over the weekend. I cannot believe that the Government actually had the face to try to push through the cuts in the first place. It is quite incredible that they thought they could get away with it.
One thing the Government failed to address in the Budget is the Women Against State Pension Inequality campaign for women born in the 1950s and the disastrous way in which the Government have handled raising the retirement age. The Government should go back and look further at that.
The Government have once again left the future of local government very uncertain. The Budget announced £3.5 billion of efficiency savings in non-protected areas. It is unclear whether this will fall on local government. We also want to know whether the £4 billion that was going to come from cuts in PIP will fall on local government.
The total reduction in Government grant funding for Halton Borough Council in my constituency is £59 million, or 57%, between 2010-11 and 2017-18. Halton has a very low tax base, with 68% of properties in bands A and B. Only 1,629 properties have been built in the past five years, despite the fact that many more have been given planning permission, against a housing requirement of 2,700. There is little scope to grow the borough’s tax base in the near future. A shortfall of £4.2 million in adult social care funding has been identified, compared with only £0.8 million per annum that the new 2% social care precept would generate. As my hon. Friend Mr Betts asked, where is the compensation for the business rate changes? The council in Halton is not an inefficient council; it is a very efficient council. In its last external audit report by Grant Thornton, the auditors assessed the council’s financial performance as showing strong financial management and delivering value for money.
In the few seconds I have left, I want to turn to the NHS. The Budget said nothing about, and had no answers for, solving the growing crisis of the NHS. Doctors’ leaders have accused the Conservatives of deceiving the public by giving the NHS less than half the extra £10 billion that Ministers regularly cite as proof of their support for the service. The fact is that the Government have no answers to solve the crisis in the NHS. The former Liberal Democrat Minister, David Laws, said on Sunday that those in Downing Street dismissed NHS boss Simon Stevens’s bid for the £15 billion to £16 billion more because they believed he was mad and that it was unaffordable, and they told him to make do with much less instead. The Government are not looking at the real crisis in the NHS, which includes the payment by results mechanism, with ridiculous demands for efficiency being made of the NHS and hospitals. There are no answers in this Budget for the NHS.
I want to pick up on what the Secretary of State said about local plans and particularly about the work of the local plans expert group, which are referred to in paragraphs 2.287 and 2.288 of the Red Book. I had the honour to serve on the local plans expert group throughout. The importance of local plans can be seen in the national planning policy framework, to which the Secretary of State referred. It says:
“Local Plans are the key to delivering sustainable development that reflects the vision and aspirations of local communities.”
That is what is missing when local plans are not produced. During the production of our report, we heard many reasons why local plans were not produced. These included green housing needs, difficulties with the duty to co-operate, a lack of local political will and commitment, a lack of clarity on key issues such as SHMAs—strategic housing markets assessments—and a lack of guidance.
On SHMAs, the lack of an agreed approach has become one of the most burdensome, complex and controversial elements of producing a local plan. What we have suggested is that there should be guidance on how to produce a SHMA, with the aim of taking away significant disagreement and uncertainty over housing numbers. Coupled with that, we need a proper identification of the housing market areas, particularly with local authorities.
The second element can be seen in what the national planning policy framework refers to as local plans being just the start of the process or rather identifying needs as being the start of the process. An environmental assessment of capacity within an area is necessary for councillors to be able to decide how the figures can be adjusted. There is no need for councils to provide for all the houses required where they can show that the difficulties of doing so would outweigh the benefits. Very few companies go along that line; very few provide that sort of information. It is essential to go down that route.
Another important point is the need for an early MOT in the plan process. When it comes to the production of local plans, it too often happens that mistakes are identified at the end of the process and the plan is found to be unsound. That is not a suitable way to carry out the process. There should be at least one or two intermediary MOT sessions where the parties could be told whether they were going in the right direction. They would not be provided with certainty over the figures, but they would be given an idea that progress was being made in the right direction.
Finally, on the five-year housing land supply, we think that it should be taken away completely from the local plans and dealt with through a separate document that is put in the local annual monitoring report of the local council. There it can be monitored and determined on an annual basis, so that figures can be produced against which there can be no argument while they are in that report, and this will determine the amount of housing need relevant to the area.
This Budget does not tackle the still evident fundamental weaknesses in our economy. Despite the lofty rhetoric of the Secretary of State for Work and Pensions today, the Budget still says that Whitehall knows best. It takes from the poorest to boost the incomes of the richest, and it will make the challenges facing our public services even more difficult.
In recent years, the weaknesses in our economy have become ever more marked. We remain hugely dependent on financial services and London. The jobs being created are predominantly short term, low paid and with little employment protection. Critically, too many small and medium-sized businesses still cannot get the capital and the lending they need to create jobs and wealth. Unsurprisingly, therefore, our productivity is lower than that of all our biggest competitors.
Among the many specific disappointments with this Budget is that faster progress towards full fiscal devolution was largely notable by its absence. There is little chance, for example, of really tackling the housing crisis in London if the Mayor and Assembly cannot match the tax regime around housing to help meet Londoners’ needs. Full devolution of all property taxes to London and, in time, to other cities and counties in England, is essential.
This Budget offers little for investment in public services, as others, particularly my hon. Friends, have already mentioned. The NHS is struggling to balance its books, with a number of NHS trusts, including those covering my constituency, in what the National Audit Office calls
“serious and persistent financial distress”.
Our local hospital, Northwick Park, has had a deficit in every year but one since 2010, and that deficit has steadily risen to almost £30 million last year. It is therefore hardly surprising that Northwick Park has had one of the worst performances of all English hospitals for waiting times in accident and emergency in the past 12 months.
Our clinical commissioning group, from which Northwick Park receives much of its money, receives less funding than any other London area. It, too, is in deficit, and has been since it was set up. By last year, its underlying deficit had risen to some £20.1 million. So it certainly does not look as though the Budget is going to lead to much improvement in the NHS finances nationally or, I suspect, in my area either.
The position of other public services in Harrow is little better. As a result of the new funding formula, many of the schools in my constituency are expecting a budget cut of up to 1.5%, which is the equivalent of an experienced teacher or four teaching assistants, and that is before the vast costs, in time and money, of being forced to become academies. The number of police officers in Harrow has decreased by 137 since 2010; indeed, we have fewer police officers than virtually every other London borough. Our council is being hit by some £83 million-worth of cuts over the next few years, and according to a Library analysis it remains one of the worst-funded local authorities in London. Westminster, Brent, Camden and Islington all get double the revenue support grant funding that Harrow does. Our other neighbours, Barnet and Hillingdon, get between 25% and 50% more than Harrow does. I hope that, even at this late stage, perhaps in the course of the Finance Bill, the Chancellor will recognise the need fully to change tack, to invest more in public services and to do so in a fairer way. My constituents certainly hope so.
I have just returned from my constituency of Wealden, where the topic over the past few days has been the Budget. I want to share with the House how my constituents are creating opportunities and jobs for their rural community with the support of Conservative Budgets. Wealden has seen at first hand the benefits of having Conservatives in government delivering a strong and stable economy. Unemployment is a little over 400, which is less than half what it was back in 2010 when Labour left office, and there are 380 more registered enterprises and hundreds of smaller businesses thriving across the constituency. In particular, I want to praise the support offered to small businesses by the Chancellor’s Budget measures. Doubling small business rate relief will help businesses up and down the country. More than 600,000 small businesses will benefit from a saving of up to £5,900. This will make it easier for them to flourish, with knock-on benefits for employment and local prosperity. Members on both sides of the House should welcome that.
I represent a rural constituency that the Secretary of State for Communities and Local Government, my right hon. Friend Greg Clark knows well as I have the pleasure of being his constituency neighbour. We must not forget rural people, rural communities and rural businesses, and I am delighted that this Budget is extending the opportunity of devolution to rural areas. In East Sussex, we are hoping to join with West Sussex and Surrey to create a devolved authority, and that is something that I am proud to back. Local people know their areas best, so they know best how to run their affairs. I would welcome an update from the Minister on how this is progressing.
I stand here tonight to make a couple of requests on behalf of the good people of Wealden. The Chancellor has announced a number of infrastructure projects that will benefit local economies and communities, especially the investment in the northern powerhouse. However, I want to champion the rural powerhouse. In Sussex, we struggle with poor road infrastructure, especially on the A21 and the A27, both of which are in need of investment. These are key roads connecting commuter towns and the families who live in them, and they need real improvements, not just aesthetic ones. I hope that Ministers will be able to put gentle pressure on our Cabinet colleagues to look favourably on us in the next round of investment. This is vital to keep pace with the progressive Wealden Council, which is already fulfilling its duty to the next generation by building homes above and beyond what has been requested, and with East Sussex County Council, which is diligently working on infrastructure projects. Those councils’ commitment needs to be matched with real-terms funding for Wealden’s roads.
I was delighted that the Chancellor chose to extend the freezing of beer duty, as well as duty on spirits. I recently conducted a survey of 81 pubs in Wealden, and that is something they asked for, as well as requesting me to come along and pull some pints. But what about a good old glass of wine? What has the humble grape done to offend the Chancellor so much that it has been left out?
This is a Budget for the next generation and for entrepreneurs, but let us ensure that it works for rural and urban communities alike. I urge Members on both sides of the House to do the right thing by supporting communities, opportunities and the progress of small businesses in their constituencies by supporting this Budget with all the enthusiasm they can muster.
Several hon. Members rose—
I am trying to accommodate as many as possible of the colleagues who are left, so I am reducing the time limit to three minutes.
This is a Budget that should have come to the aid of local government. Instead, it continues a course of punishment for local government that has been with us for a number of years, with 20% cuts in local government spending up to 2015 and a further series of cuts announced in the autumn statement and the spending review. The Conservative chairman of the Local Government Association commented on those cuts:
“Even if councils stopped filling in potholes, maintaining parks, closed all children's centres, libraries, museums, leisure centres and turned off every street light they will not have saved enough money to plug the financial black hole they face by 2020.”
I am proud of my city council in Southampton, which has faced cuts of £71 million in the past three years, but by heroic efforts and enormous ingenuity has nevertheless kept the libraries open across the city, road repairing schemes up and running, and all children’s centres open, yet it faces further shortfalls in its budget that it will have to plug every year over the next period. We know where the cuts of £3.5 billion announced by the Chancellor for the next period are almost certainly going to fall—on local government and thereabouts. That will exacerbate the shortfalls that local government faces, not just in Southampton, but across the country.
We also face a business rates revolution, which at most can be described as half-baked because of the ill thought-out way it will come to the aid, if at all, of local government. This change in business rates will result in local government having to rely entirely on business rates and local taxation by 2020, but no thought has been given to changes in small business relief. We do not know how changes to business rates will be distributed. We do not know whether the change from the retail prices index to the consumer prices index will mean a substantial reduction in the pot for local government, relying as it does on business rates.
In short, the Budget does nothing to come to the aid of local government at a time when that is needed by people who rely on local government services now and in future. The Budget has failed those people and, unless rapid changes are made, it will continue to fail them.
I could not disagree more with Dr Whitehead about the impact of this Budget on local government. The Budget should be welcomed by all in local government with self-confidence and belief in their own communities. The opportunities offered by the devolution of business rates and other financial measures are real and should be seized.
The business rates devolution is particularly welcome. I note that in opening the debate the Secretary of State properly recognised that where, as a result of national policy, the tax base is reduced by increasing the reliefs on small businesses, that will be compensated for by the section 31 grant. I hope the Minister replying to the debate will take on board the importance of that being uprated on any future changes of Government policy, so that the tax base of thrifty and effective local authorities is not thereafter eroded.
The second point I want to make is on the setting of the baseline for the retention of the business rate, on which the Department’s is currently conducting a six-month consultation. That is a complicated matter. It is nonsense to suggest, as one hon. Member did earlier in the debate, that business rate-rich areas such as Westminster will retain everything. There is always an element of redistribution, but we have to get the system right, because we do not want too frequent resets—there has to be a long-term run to give local authorities a real incentive to invest.
I hope we will use the ability to calculate the baseline to do greater justice to authorities such as mine in Bromley that have a long record of efficiencies. In the past, we have tended to calculate local government finance settlements on the basis simply of a needs-versus-resource matrix. That does not take account of the fact that some local authorities have been more effective and efficient than others in using their resource. When we look at the baseline, I hope we will find a measure that recognises and rewards councils with records of historical efficiency. It is perfectly possible—indeed, it has already been demonstrated—that we can achieve comparable unit costs for services in similar authorities. We need to look at that carefully in setting the baseline, because it will give a further incentive to authorities that use their money well. That is an important step forward.
Finally on business rates retention, I welcome the news that the Greater London Authority will have 100% retention advanced to 2017. The logic is surely—I hope the Minister will confirm this—that that should apply to the London boroughs too, because they are the collecting authorities for both tiers of business rates, and they often participate together in funding the kinds of ambitious devolution project in London that we are keen to bring forward. The logic, therefore, is that all of London should, rightly, have 100% retention at the earliest opportunity.
In the time allotted, I cannot cover all the items that make up this ultra-shambles of a Budget, but I will set out a few.
The Government believe that the complete academisation of our schools by 2020 will help to address the widening gap in educational outcomes for the most disadvantaged in our schools. Yet there are many concerns about what that will mean in reality, especially for children with special educational needs and disability.
Since the publication of the Department for Education White Paper, many parents and organisations have contacted me regarding their concerns about what the proposals will mean for children with autism, dyslexia or other special educational needs or disabilities. Evidence has shown that academies have higher rates of exclusion of children with SEND, who are then pushed into local authority maintained schools. Once all schools are academies, who will take the excluded children with SEND? Those children are as worthy as any others of receiving a high-quality education, and I hope the Government will ensure that we continue to have an inclusive education system and that children with SEND are not sidelined or excluded in the fully academised school system they are creating.
Other announcements by the Chancellor failed to recognise the need for further investment in the north-east. That was seen clearly when he announced £80 million for Crossrail 2 in London and the next phase of high-speed rail—High Speed 3—which will go only as far as Leeds. Some of us live more than 100 miles further north, in the north-east, and I wait with bated breath for the day when HS4 or HS5—or will it be HS 67?—reaches us in the north-east.
The Chancellor obviously sees himself as the King in the North, with his northern powerhouse project, but he needs to realise that there is a lot more of the north before he gets to the wall—that is Hadrian’s wall, not the one in “Game of Thrones”. If he truly wants to be the King in the North, and we all know he has—or should I now say had?—ambitions for higher office, he needs to realise that there is a large section of the north between Yorkshire and Scotland called the north-east and to ensure that investment is directed to our region too.
However, there is still something the Chancellor can do now—invest in the future of the Tyne and Wear Metro. The rolling stock has not been updated in its 36-year history. However, for an estimated £400 million, a much-needed completely new fleet could be built, which would future-proof the network into the 21st century, with options for dual voltage giving it the ability to procure vehicles suitable to support future route extensions, such as the expansion into Washington via the Leamside line, which I have campaigned for more than 10 years. That would help not only to drive economic growth, with improved connectivity to other parts of the region, but provide the vital jobs we need through the building of the new fleet.
It is a pleasure to be able to speak, albeit briefly, in this debate, and I thank you, Madam Deputy, for accommodating as many speakers as possible.
The Budget contains welcome measures to improve our schools so that all children get the best start in life. It includes extra money to every school in England either when it becomes an academy or when it is in the process of conversion. That process is relevant to the DCLG, as the role of local education authorities will be reduced. The academies programme is transforming education for thousands of pupils across the country.
My closeness to the issue and my personal experience as a teacher mean that I sympathise entirely with many of the frustrations that teachers sometimes express towards LEAs, but I do not want to speak with vitriol—quite the reverse. I do not think that LEAs have been all bad. In many circumstances, they have empowered staff and they will play an important role in continuing school improvement over the next four-year transition period. I emphasise that it is important that the Government get the policy clear, and I hope it will be implemented in a considered way, without rancour from either schools or local authorities.
Most importantly, this Budget accelerates the move towards fairer funding for schools, which I welcome after a long campaign. Indeed, last December I presented to the House a petition calling for a fairer school funding formula, which was signed by hundreds of local parents and teachers in my constituency. I am delighted, on behalf of my constituents, that their voice has been heard.
My right hon. Friend the Chancellor confirmed on Wednesday that the arbitrary and unfair system of allocating school funding will be replaced by a fairer national funding formula. Under the proposals, every school and local area, no matter where they are in the country, will be funded fairly, according to need.
The starkness of the current discrepancy in funding was brought home to me when I visited a school in Stockport on Friday. The Pendlebury Centre pupil referral unit works with some of the most vulnerable students from my constituency, yet its per-pupil allocation is several thousand pounds lower than that in neighbouring authorities. I therefore congratulate my right hon. Friend the Chancellor on this bold and important policy.
I also welcome the new £20 million-a-year northern schools strategy, which will help transform northern schools and tackle the discrepancies in school performance that have resulted in educational progress in some parts of the north lagging behind that in the rest of the country.
In conclusion, I welcome many elements of the Budget, particularly those to which I have referred, but I will add my voice to those welcoming the rethink by Her Majesty’s Government over disability benefit matters. It is important to keep our country on the right track to recovery and to continue to grow faster than any of our European neighbours. It is also important that we take the right decisions to make people better off, protect the vulnerable, help business, boost jobs and invest in our children and the next generation.
There are moments when events have a profound effect on politics, and I believe that this Budget and the subsequent resignation of the Secretary of State for Work and Pensions is one of those moments. He said that this is a “deeply unfair” Budget and that we are
“drifting in a direction that divides society rather than unites it”.
He also said:
“it just looks like we see this as a pot of money, that it doesn’t matter because they don’t vote for us”.
That strikes at the very heart of any sense from the Conservatives that we are all in this together. It also reinforces the public’s view of the Conservatives that, ultimately, they will not govern for the whole of the country. This is a profoundly dangerous moment for the Conservatives.
The Budget is unfair in two particular respects, both relating to the rich and poor. It cuts taxes for better-off people while striking at those with a disability. At the same time, it completely protects the interests of better-off older people while putting all of the burden of welfare cuts on those of working age. That is not fair. The former, well-respected Conservative Minister, David Willetts, has talked about the break in intergenerational fairness, and this Budget is an example of that.
In the time available to me, I want to focus on the NHS and care. Of course, they were not mentioned at all in the Budget, but it seems to me that we are sleepwalking towards the edge of the precipice. It is accepted by everyone that we are looking at a gap of about £30 billion in the NHS budget by 2020, and a gap of about £6 billion in social care, according to the Independent Health Foundation. That does not take into account another £1 billion for the increased cost of the minimum wage. We are due to spend a reducing percentage of our national income on health and care between now and 2020, at a time when demand is rising massively. If we are to have any chance of achieving the objective of genuine equality for those who suffer from mental ill health, investment is required, but such investment is not forthcoming from the Government.
I repeat my plea to the Government that we should work together on this. Partisan politics have failed to come up with a solution. We need a cross-party commission to get to grips with the problem and come up with a long-term settlement for the NHS and for care—a Beveridge report for the 21st century.
I want to speak about two issues: the northern powerhouse and devolution. Neither of those initiatives is perfect, and I have some thoughts and suggestions on both, but they are an awful lot better than anything we have seen for the last 20 years. The Opposition might want to remember that.
I also want to talk about the direction of travel of the Budget. When we came into office, £1 was being borrowed for every £4 that was spent. We are trying to fix that. Labour Members are right; it has taken us longer than we thought. Perhaps they wanted us to cut harder. This evening, however, we have heard that as well as the bedroom tax being wrong, every single cut that has been made was wrong. The NHS apparently needs more, and the police need more. We have even heard from Liam Byrne—this is a new one—that the pension age should not have been changed. Mr Thomas has told us that the schools funding formula is wrong. I was waiting for an intervention, but it did not come. Mr Reed talked about the need for credibility. Labour Members would be credible if they occasionally said, “That cut is reasonable”, instead of just saying, “It is all wrong.”
Does my hon. Friend agree that the real lack of credibility is in the failure to recognise that some public services can be based only on sound economics, and that unfunded costings and more and more debt constitute cruelty, not compassion?
It comes back to credibility. The hon. Member for Copeland made a plea for credibility from his Front Bench team—a plea that, I fear, has fallen on deaf ears. It is true that we have had to make cuts, and I do not think that anybody likes to do that. I do not think that the cuts are ideological, but they are necessary to get from that 4:1 ratio to something close to balanced. It looks as though we made a mistake in this Budget; that has been acknowledged, and it will be fixed. The Labour party’s contribution has not been to say, “That was a mistake”, but to say, “Everything is a mistake.” That is an extraordinary position.
We had a lecture this evening from the Scottish National party, which was particularly interesting, because it is the progressive party in this place. We heard about what the Scottish Government are doing on homelessness, and how much better that is than what we are managing in England. If the SNP was progressive, and if it really cared about homelessness in England, its members would look at the Barnett formula and say, “We will go for a formula based on need. We will not just take everything that we can get, as our major policy initiative, and still call ourselves the progressive party.”
Before I move on to talk about the northern powerhouse, I have a point to make about tax cuts. “Tax cuts for millionaires”—we have heard that, have we not? Capital gains tax has been cut from 28% to 20%. I do not particularly approve of that, but at 20% that rate is still 2% higher than it was for the entire period of the last Labour Government. One could not make it up.
I said that I was going to talk about the northern powerhouse. I will not talk about it for very long, other than to say this. The problem that the northern powerhouse is trying to fix is the difference in gross value added between the north of our country, the English regions, and London, in particular. We are very London-centric. That difference reached a peak in 2009, in the last year of the previous Labour Government, when the City was allowed to run berserk. It is right that that has been fixed. I see that the Secretary of State is in his place, and I have got time to make one final point. I would like clear metrics to be assigned to the northern powerhouse initiative for GVA and transport infrastructure. It is rather hard to equate the money being spent on Crossrail 2—£28 billion—with any sort of real intent around the northern powerhouse.
In the short time available, I would like to make just a couple of points about what I believe to be a cynical and desperate Budget. It is cynical because it is designed to deliver appealing messages to some parts of the electorate, while hoping that no one will notice how these benefits are being delivered. It is desperate because the context is the Chancellor’s failure to meet any of the targets he has set himself and he is scrabbling around throwing all common decency out of the window to safe face.
The proposal to deliver cuts in corporation tax and capital gains tax, overwhelmingly benefiting large firms and well-off individuals, by cutting personal independence payments to disabled people was a despicable plan. Further cuts to support for disabled people are straightforwardly unacceptable. Making such cuts to precisely the type of support that enables many disabled people to have greater control and lead more independent lives is as incompetent as it is cruel. People across the country have made their outrage at this proposal clear. I am relieved that the Government have U-turned on this plan, but quite frankly it beggars belief that the Chancellor ever thought it was acceptable.
I am compelled to draw attention to the announcement in the Budget relating to homelessness. The Chancellor was so pleased with this announcement—£115 million to tackle rough sleeping—that he leaked it to the Evening Standard the day before the Budget. The Communities and Local Government Committee, of which I am a member, is currently undertaking an inquiry into homelessness. Last week we visited The Connection at St Martin’s, which supports rough sleepers just a few hundred metres from this place. Its dedicated staff told us how the number of rough sleepers is increasing, how they struggle to keep up with the demand for their services and how Government policies, across a range of different areas, are contributing directly to making the problems worse.
Homelessness has increased by 36% since 2010 and rough sleeping in London has doubled. In Lambeth alone, there are over 1,800 households in temporary accommodation, including almost 5,000 children in one single borough living without the security of a permanent home. Additional funding to help rough sleepers is of course welcome, but while £115 million sounds like a big number it is a sticking plaster on a severed artery.
There are an additional five housing measures in the Budget, all of which raise more money for the Treasury. Does my hon. Friend think that they will have an impact on homelessness, because they relate to some of the core fundamentals of providing housing in this country?
The Government’s approach to housing is broken from top to bottom. The Government must recognise, as the previous Labour Government who reduced homelessness by 62% recognised, that tackling the causes of homelessness is within their gift. The single biggest cause of homelessness in London is now the ending of a private sector tenancy, yet the Housing and Planning Bill will do nothing at all to reform the private rented sector. Even to the Chancellor, it should be crystal clear that rough sleepers cannot afford starter homes and will not benefit from lifetime ISAs or the cut in capital gains tax. The growth in homelessness in London in the 21st century is this Government’s shame. In that context, it is imperative that the Government rethink the Housing and Planning Bill and ensure that sufficient public sector resources are being directed into the building of the genuinely affordable homes that are so badly needed.
This is a cynical, desperate Budget and I think the Chancellor has been found out. I hope the Government will take the opportunity that has been presented to them this weekend to rethink the Budget comprehensively, and that the Chancellor himself will come back to the House with a fair deal for disabled people, a fair deal for our councils, and a plan for addressing the causes of homelessness, not just the symptoms.
We were told earlier by Lucy Allan that this was a Budget for Telford. Well, it is certainly not a Budget for disabled people, young people or low-income families. It is not a Budget for businesses either. A Budget that projects a systematic reduction in funding for the Department for Business, Innovation and Skills cannot be good for businesses.
I am aware that I have a very short time, but I want to briefly mention city deals. The Aberdeen city deal, with £125 million from the UK Government, was announced earlier this year. That is roughly a third of what Manchester got per head, so I suggest that the UK Treasury is not particularly for Aberdeen either.
It has been suggested that the lifetime ISA, which was mentioned earlier, will be helpful for families, but the technicalities mean that it will not be helpful for anybody not looking either to buy a home or to support themselves in their retirement. For example, the money could not be withdrawn to support a couple who have just started having children.
As a Member for Aberdeen, I might be expected to talk about oil and gas, and we welcome the changes made, such as the effective abolition of the petroleum revenue tax and the halving of the supplementary charge, but there are still major issues for the oil and gas sector in relation to banking. It is difficult for companies to find finance at the moment. I am talking not about large infrastructure projects, for which there is the opportunity for loan guarantees, but about day-to-day business. Given the oil price just now, it is really tough for companies, and they are struggling to find finance. Some of the banks, although they are saying nice words to parliamentarians, are not actually lending to oil companies. They are pretty much saying, “Nah”, to supply chain companies, for example, which are the companies we need to be supporting just now.
I welcome the measures on decommissioning, but the UK Government will have to shell out about 62% of the cost of decommissioning oil rigs, so the longer it can be pushed out, the better for the UK Treasury, and this would be a benefit. It is very important that the UK, as one of the first fields to reach maturity, learns fast and becomes good at exporting that expertise. We need to support that.
My hon. Friend commented on the lack of time available. Does that not speak to the wider concerns expressed several times, not just about the budgetary process but about the estimates process in the House? Does she agree that this is an urgent matter for the Procedure Committee to consider?
I thank my hon. Friend, who is a member of the Procedure Committee, for bringing that up, because it plays nicely into my next point, which is about how the Budget process works. We have had very little time for speeches today.
The Budget and the documentation we are provided with contain a total lack of clarity about Barnett consequentials in relation to the budget lines. For example, there are budget lines around cathedrals and cultural investment but no clarity, even in the statement of funding policy, about whether those things will generate Barnett consequentials and, if so, what the percentage of comparability is. It is very difficult for MPs to scrutinise these matters. The Tax Law Review Committee said:
“the House of Commons has neither the time nor the expertise nor, apparently, the inclination to undertake any systematic or effective examination of whatever tax rules the government of the day places before it for its approval”.
That is partly because of the complexity of the tax rules. Obviously, tax is levied on individuals personally, and then tax reliefs and benefits are provided to families, so it is quite a complex thing to work out. MPs lack the time—we have hardly any time to discuss it today—and the information to scrutinise the Budget effectively. This process needs to be improved as a matter of urgency.
Indefensible, deeply unfair, distinctly political—my words for the Budget but also the words of the recently departed Secretary of State for Work and Pensions. It is Labour’s judgment of the Budget, but it is also the judgment of many fair-minded Government MPs and, most importantly, of the British people, the large majority of whom, when polled over the weekend, said the Government had got their priorities wrong.
If this is a political crisis, it is one of the Chancellor’s own making. It was the same failure of political judgment that led him to slash working tax credits, before being forced to backtrack, and the same failure of political judgment that led the ex-Secretary of State to say:
“It…looks like…it doesn’t matter because they don’t vote for us”.
The IFS and the Resolution Foundation both say that this is a starkly regressive Budget, with the rich getting the most and the poor getting the least. We saw a tycoon tax cut of over £3 billion benefiting the very richest; an income tax cut of £2 billion benefiting the better-off; and alongside that, a cut in disability benefits worth over £4 billion. Well, that was Wednesday; and today, five days later, we have heard from the Secretary of State for Work and Pensions that there will be no more welfare cuts. The Chancellor’s long-term economic plan—his long-term fiscal plan—therefore lasted just five days, and if we take the new Secretary of State for Work and Pensions at face value, the Chancellor of the Exchequer still has a £4.4 billion shortfall to meet his deficit plans.
While we are on policy confusion and fiscal chaos, the Secretary of State for Communities and Local Government, who opened this debate, told the House that none of the costs of the business rates cuts would come out of local government funding. All will be compensated for in full by section 31 grants. He tried to tell the House that line 15 on page 84 of the Red Book explained that, but it details the cuts to business rates, not the source of the compensation, and there is no other reference in the Red Book. That leaves the Chancellor of the Exchequer with a further, fresh fiscal shortfall of £6.7 billion over five years, or it means that the Secretary of State will have to find that money from savings in his own budget.
The Chancellor may have caused a political crisis for the Conservative party, but much more serious are the fiscal and economic problems he is causing for the country. These were laid bare in the Budget—downgraded growth, downgraded pay, downgraded productivity, and the Chancellor’s new fiscal mandate broken already, as the OBR confirmed that the debt-to-GDP ratio is rising, saying that there is only a 50:50 chance that he will hit his deficit target. Never mind omnishambles: this is the ultra-shambles Budget. It really comes to something when No. 10 Downing Street briefs over the weekend to play up the Conservative party’s splits on Europe because its splits on fiscal and social policy are even more damaging.
I do feel for the 27 hon. Members on both sides of the Chamber who have spoken, being limited first to five minutes, then to four and finally three minutes. To be quite honest, the loyalists were out in force on the Government Benches, although I would like to have heard more from William Wragg about his belief that local education authorities have an important role and how they have not been, as he said, all bad. I would like to have heard more from Iain Stewart about the National Infrastructure Commission, a good idea—a Labour idea—that I am glad to see the Government are putting into practice.
I would like to have heard more from Paul Maynard, who said, quite rightly, that we have to be ultra-careful not to write off those who cannot work. As he said, there is no hierarchy of human value. I would also like to have heard more from Sir Henry Bellingham about his deep opposition to mayors, imposed by the Chancellor as a condition of all devolution deals.
On our side of the Chamber, the House should have heard more from my hon. Friend Mr Hepburn. The Budget has fallen apart like the Chancellor’s reputation, he told us—quite right. I would like to have heard more from my hon. Friend Mr Lewis, who warned the Chancellor about the flawed devolution deal for Greater Manchester, especially when it comes to skills, school improvement, social care and council funding; or from my hon. Friend Jo Cox. As she said, without the funding commitment to make them work, infrastructure announcements were actually re-announcements—quite right.
My hon. Friend Mr Reed, who is no longer in his place, made an important point about how the Chancellor is unable to make his sums add up in this Budget. He is failing my hon. Friend’s constituents; he is failing the country. My right hon. Friend Liam Byrne reinforced that, saying that this is a Budget that is failing the young generation and this is a Chancellor who is failing Britain’s youngest city, Birmingham.
My hon. Friend Derek Twigg was quite right when he talked about the Chancellor’s creative accounting. My hon. Friend Mr Thomas said that the Chancellor is making the challenges facing the public services in this country much more difficult to meet, and he was right. My hon. Friend Dr Whitehead described this Budget as continuing the punishment of local government that we have seen over the last five years. My hon. Friend Mrs Hodgson rightly said that when all schools are being forced to become academies, the House should be deeply concerned about pupils with special educational needs.
My hon. Friend Helen Hayes was dead right about the Chancellor’s failure to meet his own targets, and also about his failure on housing. The Secretary of State for Communities and Local Government, who opened the debate, clearly lacks the clout to be able to argue his Department’s case with the Chancellor, for the Budget had nothing to say about housing and did nothing to reverse six years of failure, from rising homelessness to falling home ownership. What a contrast with the Labour Government’s record! We more than halved homelessness. There were 1 million more home owners during our time in office, and 2 million were homes built.
When it came to housing, there was a huge hole in this Budget. There was nothing about new affordable homes to rent and buy, nothing about investment, and nothing about tackling the causes of rising homelessness. In particular, there was nothing to ease the housing pressures in London, where housing is the No. 1 issue. The Budget has completely exploded the claim of the wannabe Mayor, Zac Goldsmith, who has said “I can get a good deal from this Conservative Chancellor.” It makes more urgent, and more clear, the case for electing a Labour Mayor, my right hon. Friend Sadiq Khan, who will be a Mayor for all Londoners.
This was billed as a Budget for the future. There was big talk of big infrastructure schemes, but the small print showed small sums, mostly for design and feasibility studies throughout the rest of the Parliament. I say to Members on both sides of the House, “Do not listen to what the Chancellor says; look at what he does.” In 2009-10, the last year of the last Labour Government, infrastructure investment was 3.2% of our wealth—3.2% of our GDP. In 2010-11, the Chancellor cut that to 2.5%. By the end of that first Parliament, the figure was 1.9%, and now the Chancellor is doing it again: at the end of this Parliament, it will be just 1.5%.
In truth, the Chancellor is too tightly bound by his own misjudged fiscal rules for the good of the country. His plan to achieve a £10 billion total budget surplus by 2019-20 will prevent him from doing what is needed most, and investing for the future: investing in good homes, good jobs, and good infrastructure projects. In the debate that followed the Chancellor’s statement, Mr Tyrie, the Chairman of the Treasury Committee, said:
“He has altered his plans of only four months ago, and so long as the rule remains in place, he will have to do so again after the next fiscal event. That is…why the Treasury Committee concluded… that it was ‘not convinced that the surplus rule is credible in its current form.’”—[Hansard, 16 March 2016; Vol. 607, c. 976-77.]
We have fiscal policy without credibility, and a Chancellor without credibility. What we were given in this Budget was a downgraded economy from a diminished Chancellor who was speaking to a divided party and for a damaged Government. This is a black hole Budget: a Budget which, like the Chancellor, does not deserve support from any party in the House.
John Healey had certainly prepared his soundbites earlier.
In every region of the United Kingdom, the policies announced in the Budget will bring the economic security that Britain needs. They are the commitments that we set out in our manifesto last year, and the Budget will help to deliver them. Over the past six years, we have worked hard and made the tough decisions. That has brought our country’s economy back from the brink, and growth and jobs are now delivering greater economic security for everyone. Today, I am proud that, here in the United Kingdom, a record number of people are in work, the deficit is down by two thirds and we are well on the path to surplus. Our whole economy is set to grow faster next year than any other major advanced economy in the world. However, with the pace of growth in the global economy showing signs of weakening, now is the time to redouble our efforts, and that is precisely what the Budget does.
Today’s debate is about devolution and local government. The foundations of our long-term success are laid in each and every corner of this country. Every region makes a distinctive contribution to the UK’s economic success and every region benefits from this Budget’s programme for growth. Hon. Members should listen to the facts. Employment is growing quickest in Wales, and it is a shame that we did not hear Welsh voices today. Youth unemployment is falling quickest in the west midlands. Liam Byrne said that we were not delivering a budget for the next generation, but the next generation is finding work in the west midlands, which I am sure he will welcome. The number of people claiming unemployment benefits is falling fastest in Yorkshire and the Humber. Through a combination of greater devolution, greater investment and targeted support, the Budget will allow our regions to continue growing from strength to strength.
The Budget also delivers for the devolved Administrations. To help Scotland, there are tax breaks worth more than £1 billion to support the North sea oil and gas industry through challenging times and a freeze in duty on Scotch whisky. The Scottish National Party had three demands for the Budget—action on oil and gas, action on fuel duty and action on Scotch whisky—and we have delivered on all three fronts. To help Wales, there is a £1.2 billion deal for the Cardiff capital region and a 50% reduction in tolls on the River Severn crossings in 2018. To help Northern Ireland, there will be enhanced capital allowances for investors in the Northern Ireland Executive’s pilot enterprise zone near Coleraine. For all three of our devolved Administrations, the Budget delivers the benefits of being part of a strong, successful United Kingdom, with the opportunities that come with devolution.
For the cities and regions of England, this is a Budget that creates fresh opportunities and opens new doors. For the north, there is greater devolution to Liverpool and Manchester, a schools strategy for the northern powerhouse, more than £700 million extra for flood repairs and resilience, and the go-ahead for HS3, bringing Leeds and Manchester closer together. For the midlands, the midlands engine investment fund will get £250 million, and there is a new devolution deal for Greater Lincolnshire and a strong statutory body to help provide the transport that the midlands needs.
For East Anglia, we have another new devolution deal, and I can confirm to my hon. Friend Sir Henry Bellingham that the £30 million is indeed new money and that an elected mayor will be the single point of accountability. I can also confirm for my hon. Friend Iain Stewart that we plan to make the most of the Oxford-Cambridge-Milton Keynes corridor. For the south-west, almost £20 million will help young families on to the housing ladder. For London, the green light has been given for Crossrail 2. In addition, policies such as the cut to businesses rates and our reform of commercial stamp duty will revitalise high streets up and down the country, including those in Bury South.
This is a Budget for a nation of shopkeepers whether they are in Cardiff or Cornwall or Chester or Chelmsford. We have heard from 27 Back Benchers from all over the country in tonight’s debate: North West Norfolk, Glasgow Central, Rugby, Jarrow, Telford, Sheffield South East, Blackpool North and Cleveleys, Bury South, Poole, Batley and Spen, Milton Keynes South, Copeland, Bolton West, and Birmingham, Hodge Hill.
I will not as I have very little time, but I will get to the hon. Gentleman’s point. The list continues: Chesham and Amersham, Henley, Harrow West, Wealden, as well as Southampton, Test, and Bromley and Chislehurst, Washington and Sunderland West, Hazel Grove, North Norfolk, Warrington South, Dulwich and West Norwood, and Aberdeen North. A number of common themes came up in those speeches.
Almost everybody welcomes the business rates cut and the help for the self-employed. This is a Budget that puts our small business job creators front and centre. Many points were made about northern infrastructure, so I draw everyone’s attention to page 77 of the Red Book. I am not referring to Mao’s little red book on this occasion. Page 77 gives a list of projects, including £130 million of road repair funds to deal with the damage caused by Storm Eva and Storm Desmond, in Cumbria and elsewhere.
A number of colleagues mentioned devolution and the impact on business rates. I can confirm that local government will be compensated for the loss of income as a result of the business rates measures announced in the Budget with a section 31 grant. The impact will be considered as part of the Government’s consultations on the implementation of 100% business rate retention in summer 2016.
I would love to give way, but I have not got time to do so. The NHS was discussed by a number of colleagues, and I am sure that they welcome the record amount of cash going into our NHS, thanks to our strong economy. A number of colleagues welcomed the fairer funding for schools and the ultimate devolution of power to academies. I can confirm that an extra £1.6 billion is going into schools, with no change at all to the special educational needs obligations on schools. [Interruption.] We have heard a fair number of rants, whinges and lectures from the Opposition tonight, but we will take no lectures from the party that crashed the economy in the first place. We will take no lectures from the Labour party, whose plans, had we followed them, would have led to—
On a point of order, Mr Speaker. I wonder whether you could advise me on something. I have asked the Minister, who is speaking so ably and fluently at the Dispatch Box about a Budget, certain elements of which have been well welcomed on both sides of the House. I have asked her to give way on two specific points that I raised in my contribution to this debate. Could you advise me whether it is in order for the Minister to decline, on account of the amount of time left for speaking, when a considerable number of minutes are left until 10 o’clock?
In that case, I will simply commend this Budget to the House.
Ordered, That the debate be now adjourned.—(Julian Smith.)
Debate to be resumed tomorrow.
“After the business under consideration at the moment of interruption has been disposed of, no opposed business shall be taken, save as provided in
As I read it, the Order Paper contains a sittings motion on the business of the House on the High Speed Rail (London - West Midlands) Bill and if it comes to the Floor of the House after 10 pm, it does not have to be debated. It is possible to object to that business of the House. Of course, Mr Speaker, you will appreciate that I raised a point of order earlier—[Interruption.]
Order. It is fairly uncharacteristic of one of the Whips on duty, Gavin Barwell, who normally behaves in a most seemly manner, but the amount of noise he is making prevents me from attending to the right hon. Lady’s point of order, which I am keen to hear, so she will doubtless now continue.
If this motion is heard after 10 o’clock in this House, I want to confirm that there is no debate, that a Member can object to it and that the Government can bring it back and put it on the Order Paper on the following day. It is important that we understand that anybody who chooses to object to this piece of business on the Order Paper is not impeding the Government at all, as it is perfectly in order for them to bring it back on to the Order Paper tomorrow, and indeed, if it is objected to tomorrow, it can be put on the Order Paper the following day, but without the penalty of taking time out of the very valuable debate that I have been trying to get extended and would want to protect in terms of the measly three hours the Government have given us.
The interpretation by the right hon. Lady is entirely correct. I trust that she is satisfied with that matter.