Budget Resolutions and Economic Situation — Amendment of the Law

– in the House of Commons at 12:45 pm on 22nd March 2016.

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Votes in this debate

  • Division number 221
    A majority of MPs voted to approve the March 2016 budget which contained plans to spend £56bn more than was expected to be taken in, introduced a policy of requiring all schools to become academies and introduced a new soft drinks levy.

Debate resumed (Order, 21March).

Question again proposed,

That,

(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.

(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting a supply, acquisition or importation;

(b) for refunding an amount of tax;

(c) for any relief, other than a relief that—

(i) so far as it is applicable to goods, applies to goods of every description, and

(ii) so far as it is applicable to services, applies to services of every description.

Photo of John Bercow John Bercow Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Speaker of the House of Commons

Before I call the Chancellor of the Exchequer, I should inform the House that I have selected amendments (b) and (a), so both can be debated together with the Budget motions today. With the leave of the House, I will call the shadow Chancellor to move amendment (b) after the Chancellor has opened the debate. At the end of the day’s debate, the Question will first be put on amendment (b). As long as time permits before 7 pm, I shall then call Paula Sherriff to move amendment (a) formally, and the Question on that amendment will be put. The House will then proceed to decide on the Budget resolutions.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State 12:57 pm, 22nd March 2016

Let me start by offering all our condolences to the victims, and their families, of the attacks in Belgium. The full details of this morning’s horrific attacks are still emerging, but we know that at least 13 people died in the attack at Brussels airport and that there are reports of multiple dead at Maelbeek metro station. As details of these horrific events continue to unfold, my thoughts and prayers, and indeed those of right hon. and hon. Members in all parts of the House, are with those who have lost loved ones or have been injured.

Earlier this morning, the Prime Minister chaired a meeting of Cobra attended by the Home Secretary, myself and others. The police have confirmed that, on a precautionary basis, they are increasing the policing presence at key locations, including transport hubs, to protect the public and provide reassurance. In London, the Metropolitan police have deployed additional officers to patrol at key locations and on the transport network, and Border Force efforts have been intensified.

It is too soon yet to comment on the details of these attacks, which are still emerging, but the Government would reiterate that the UK threat level remains at “severe”, meaning that an attack is highly likely. We would urge the British people to remain vigilant, and the Home Secretary will keep the House updated. But let us be clear: terrorists seek to threaten our values and our way of life, and they will never succeed. It is a reminder of what a precious thing our democracy is, and this Budget debate is part of that democratic process.

This is the first time in 20 years that a Chancellor has spoken on the last day of the Budget debate, and I think it is fair to say that we have had a livelier debate about this Budget than about many. Let us be clear: the key principles behind this Budget are that if we are going to deliver a strong and compassionate society for the next generation, we have to live within our means, we have to back business to create jobs and we have to make sure work pays by putting more money into the pockets of working people. That is what we committed to in our manifesto. That is what the British people elected us to deliver. That is what this Budget does, and that is what we are going to vote on tonight.

Several hon. Members rose

G

you say "and we have to make sure work pays by putting more money into the pockets of working people."
A very creditable comment but this should not be at the expense of the worker once he has retired should you freeze his pension because he has not retired to a place of your approval ?
The Frozen Pension policy is underhand theft by government abusing the law to impose it..

Submitted by George Morley

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I will give way in a moment, but let me straightaway address the resignation of my right hon. Friend Mr Duncan Smith. I am sorry that my right hon. Friend chose to leave the Government. Let me here, in this House, recognise his achievements in helping to make work pay, protecting the vulnerable and breaking the decades-old cycle of welfare dependency. Together, we had to confront a huge deficit and uncontrolled welfare spending. Of course, there is always robust discussion between the Treasury and the spending Departments when money needs to be saved. The decisions we make to keep our economy secure are always difficult, and where we do not get them right, I have always been prepared to listen and learn.

I am very proud that my right hon. Friend and I worked together longer than any two people who have done our jobs before us in any Government, and we have been part of the team that has reduced the number of people on out-of-work benefits to levels not seen for 40 years, reduced inequality, seen poverty fall, seen child poverty fall and seen pensioner poverty fall, and got a record number of people into work—a long-term economic plan and welfare reform delivering a fairer society for all.

G

Again you say : "reduced inequality, seen poverty fall, seen child poverty fall and seen pensioner poverty fall, and got a record number of people into work , a long-term economic plan and welfare reform delivering a fairer society for all."
And you fail to mention the obvious error of your statement when speaking about pensioners, conveniently leaving out the Frozen Pensioners whose income is effectively reducing due to your discriminative policy of denying any annual increases to a minority of pensioners based on their place of residence in retirement ?
If that is not promoting poverty I don't know what is as the purchasing power of their pension goes down every year.
Not fairer for all is it ?

Submitted by George Morley

Photo of Chris Leslie Chris Leslie Labour/Co-operative, Nottingham East

I am grateful to the Chancellor for giving way. It is less than a week since he stood up to deliver the Budget and made that decision affecting disability independence payments—something that upset many hundreds of thousands of people across this country. He has made a welcome U-turn, but should not he now acknowledge that that decision was a mistake that he should say sorry for?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I am going to come on to speak about the disability benefits and our way forward, but I have made it very clear—I have just said it—that where we have made a mistake, where we have got things wrong, we listen and we learn. That is precisely what we have done. Where is the apology from the Labour party for the things that they got wrong? Why don’t they take a leaf out of that book? Why don’t they get up and apologise for the countless decisions that added to the deficit—that bankrupted our country?

The progress we have made on social justice did not happen by accident. It happened because we in this Government set out to turn our economy around, to control spending, to back business and, yes, to reform welfare.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I will give way in a moment to my former partner in the coalition Government that undertook many of these welfare reforms. The reform has meant difficult decisions to strengthen the incentives to find work and the sanctions for not doing so; to make sure that every hour extra that people work is rewarded, instead of seeing them trapped in dependency; and to cap benefit payments so that our welfare system is fair both to those who need it and to those who pay for it. It has not been easy, and it has often been opposed, but the truth is that many of the acts of progressive social change that we seek to achieve in government are difficult and they are opposed. In any democracy, you have to fight to make lasting improvements in society, and that is what we have done.

Photo of Tim Farron Tim Farron Leader of the Liberal Democrats

I thank the Chancellor for giving way, and I want to associate myself with the remarks that he made earlier about the appalling situation in Brussels.

Does the Chancellor agree with me that the one thing that is more dangerous for our economy than his remaining Chancellor is that we might leave the European Union; and does he agree that his being called out by his former colleague as acting not in the economic interests of the country, but in a short-term political way, introduces a risk that the referendum will be a referendum on him, not on the future of our role in Europe? Will he act in the national interest and resign?

Photo of John Bercow John Bercow Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Speaker of the House of Commons

May I remind Members that interventions should be brief? We want to hear from both Front Benchers, and I want to hear from dozens of Back Benchers. I repeat that interventions should be brief.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

That was like one of those interminable interventions at ECOFIN. I happen to think that it is better to be in that council than not, but that is a debate for another day. We are talking here about the reforms we are making to welfare and to our economy.

Photo of Gareth Johnson Gareth Johnson Conservative, Dartford

I am grateful to the Chancellor for giving way. Is he aware that had he stuck with Labour’s plans for fuel duty, a litre of petrol would cost 18p more than it does? Has he assessed what impact that would have on the lowest-earning people in our society?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

My hon. Friend is absolutely right. If we had stuck with the fuel duty escalator that we inherited from the last Government, it would have cost much more to fill up a car, which would have cost small businesses much more. We took action in this Budget to freeze fuel duty for the sixth year in a row, because we are on the side of working people.

Photo of Simon Burns Simon Burns Conservative, Chelmsford

To put this debate in context, would my right hon. Friend like to share with the House, in both financial and non-financial terms, how much help this Government have given to assist the sick and the disabled since May 2010?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I am coming on to talk about disability benefits, but my right hon. Friend is absolutely right to draw attention to the support we give—close to £50 billion—to disabled people. When we look just at the disability benefits, disability living allowance and personal independence payment, that support has gone up from £13 billion when we came into office to £16 billion today, and it will go up to £18 billion in the future. As my excellent right hon. Friend for Preseli Pembrokeshire (Stephen Crabb), the new Welfare Secretary, made clear yesterday, we continue to give support to disabled people. I will come on to deal with that in detail.

Photo of Yvette Cooper Yvette Cooper Labour, Normanton, Pontefract and Castleford

The Chancellor boasted when he opened the debate that this was the first time a Chancellor had opened the final day of a Budget debate. He will know that that is because it is also the first time a Chancellor has had to drop the biggest revenue raiser in his Budget within two days of announcing it. The former Work and Pensions Secretary, who has just resigned and to whom the Chancellor paid great tribute, described the Budget as “deeply unfair” and “drifting” in a wrong direction that will divide the country, not unite it. He said all those words after the Chancellor announced that he was ditching the PIP cuts. Is the former Work and Pensions Secretary deluded?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I am glad that the right hon. Lady intervened, because I have done a little research and, frankly, I wish that when she was the Chief Secretary to the Treasury we had seen a few more revenue raisers in Budgets, such as savings in welfare and savings in public expenditure. During the period in which she was the Chief Secretary, the deficit went from £76 billion a year to £154 billion a year. The measures that my right hon. Friend and I have been taking over the last six years are to clear up the mess that she and her colleagues in government left.

Several hon. Members rose

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Let me make a little more progress, and then I will come back. The proof that these difficult changes are worth while—

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I will give way to the right hon. Lady. I have said that when we have made a mistake, we have listened and learned. When is she going to apologise and say that she made mistakes and her colleagues made mistakes during that period in government, which is what we have been clearing up for the last six years?

Photo of Yvette Cooper Yvette Cooper Labour, Normanton, Pontefract and Castleford

The Chancellor did not address the issue of the unfairness of his Budget, so will he address the issue of the revenue behind his Budget? He has abandoned £4.4 billion in revenue raisers from his Budget. Where is that money going to come from, or will he change the scorecard that he set out?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I will tell you what is unfair: to saddle the next generation with debts you have no way of paying off. That is what the right hon. Lady did. [Interruption.] That is what she did. I will come on specifically to disability benefits, but let me tell her about fairness and what we have done over the last six years. We have taken action that means 500,000 fewer children are growing up in workless households than when she was at the Treasury, 1 million fewer people are on out-of-work benefits and over 2 million more people are in work than when we came to office. That is the social justice record we on this side of the House are proud of.

I am also proud that the work continues, and in this Budget we are taking further steps to build a stronger society. There is money and reform to improve our nation’s schools. There is action to reduce sugar intake and give our children better healthcare. There is support for the savings of low-income families. There is more help and housing for homeless people. There are personal allowance increases that will lift another 1 million of the low-paid out of income tax altogether, and there is an increased minimum wage ahead of the introduction of the first ever national living wage in just two weeks’ time. Those are all in the Budget we will debate today—all the actions of a compassionate, one nation Conservative Government determined to deliver both social justice and economic security.

G

You said : " We have taken action that means 500,000 fewer children are growing up in workless households than when she was at the Treasury, 1 million fewer people are on out-of-work benefits and over 2 million more people are in work than when we came to office. That is the social justice record we on this side of the House are proud of."
Odd that you should quote that figure because over 500,000 pensioners are currently looking poverty in the face due to your shortsighted discriminative Frozen Pension policy which is seemingly aimed at the Commonwealth countries where the majority of these pensioners live.
There is no social justice for them is there ?

Submitted by George Morley

Photo of Rachel Reeves Rachel Reeves Labour, Leeds West

The new Secretary of State for Work and Pensions said yesterday, in his first statement, that the Government would not be making any further cuts to welfare during this Parliament, but later on he said that there were “no plans” to make further cuts to welfare during this Parliament. Will the Chancellor now confirm, for the sake of disabled people and others, that there will be no further cuts to the welfare budget in this Parliament?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Yesterday, my right hon. Friend the Secretary of State gave exactly the Government’s position, which is that,

“we have no further plans to make welfare savings beyond the very substantial savings legislated for by Parliament two weeks ago, which we will…now focus on implementing.”—[Hansard, 21 March 2016; Vol. 607, c. 1268.]

I will now address the specific issue of welfare savings and disability, but I should have thought that the hon. Lady, when she got to her feet, might have thanked the Government for delivering the flood defence schemes that she asked for her city, and which were in the Budget statement a week ago.

Let me turn to the disability benefits. We are proud that this Government are providing more support to the most disabled people. It was very clear that while the reforms proposed to personal independence payments two weeks ago drew on the work of an independent review, they did not command support. We have listened, and they will not go ahead. Even if they had, this Government are spending more on disabled people than the previous Labour Government ever did.

People have asked what this means for future support for disabled people, for our welfare cap and for the numbers in the Budget. Let me directly address all three points.

Several hon. Members rose

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Let me address these points, and then I am happy to take interventions.

First, over 3 million disabled people are now in work, which is 300,000 more than just a couple of years ago. We are also providing more support than ever before for the most disabled people. The budget has risen, will continue to rise and is much greater than the one we inherited. We are going to take our time, listen, consult widely and continue to build a system of disability support that works much better with our health and social services. As my right hon. Friend the Secretary of State said in his excellent statement yesterday, we will continue to support disabled people, and we will work with him to make sure that we do.

Photo of Paul Maynard Paul Maynard Conservative, Blackpool North and Cleveleys

Does the Chancellor agree with me that we can be a compassionate Conservative Government only if we have a strong, stable economy, with a reduced deficit, to enable us to protect the most vulnerable in society?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

My hon. Friend is absolutely right. I was coming on to make precisely that point.

Several hon. Members rose

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Let me deal with the measures we are taking to control spending, and then I will take some interventions.

The welfare cap is the instrument we have introduced to set out, in a transparent way to Parliament, what we aim to spend on welfare. It is independently judged by the Office for Budget Responsibility every autumn, which is when we either have to comply with the cap or explain to Parliament and the country why we have not done so. I find it incredible to hear Labour Members protesting about the welfare cap. It never existed at all under a Labour Government: there was no cap, no control on the largest area of Government spending, no transparency, no independent forecast, and as a result, welfare costs soared by 60% and the country was brought to the brink of bankruptcy.

Photo of Margaret Greenwood Margaret Greenwood Labour, Wirral West

On Friday afternoon a couple, Mr and Mrs Ford, came to visit me at my surgery. Mr Ford, who is in a wheelchair, is unable to feed himself, dress himself or do anything for himself. They live on £559 a month in PIP, plus £63 per week in carer’s allowance. They still have a mortgage to pay. They have clocked up 80 years of national insurance contributions between them. They ask the simple question, “How are we meant to cope?” They were in a real state of distress. Will the Chancellor please now apologise to such people for the distress that he has caused?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I have already said that we are not going ahead with those changes. [Interruption.] I have addressed these issues. The truth is that that family and many more families are getting increased support under this Government. We would not be able to provide any of that support unless we had a strong economy and we controlled public spending, because the people who suffer most when the economy—[Interruption.]

Photo of John Bercow John Bercow Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Speaker of the House of Commons

Order. I apologise for having to interrupt the Chancellor. [Interruption.] Order. Members are yelling—in some cases, from sedentary positions—very noisily. If people put questions to the Chancellor, they must leave him to respond. The same will go for

Government Back Benchers when they no doubt challenge Members speaking from the Opposition Benches. Let us try to restore some sort of order to this debate.

Photo of Andrew Griffiths Andrew Griffiths Conservative, Burton

Will the Chancellor confirm to the House that this Government are spending £2 billion more on support for the disabled, that inequality is at its lowest rate for 25 years according to the Institute for Fiscal Studies and that there are 2 million more people in work thanks to this Government? Is that not what we are doing for the vulnerable?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

My hon. Friend is absolutely right: more people in work, reduced inequality, reduced poverty, more disabled people in work and, by the way, we got in a freeze on beer duty as well.

Several hon. Members rose

G

And the Chancellor could have added that "We kept the freezing of 560,000 pensioners living abroad even though it is discriminative because they are over there and...

Submitted by George Morley Continue reading

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Let me make a little progress, and then I will give way again.

Not proceeding with the PIP changes means that spending on disabled people will be just over £1 billion a year higher by the end of the decade than was set out in the Budget. This will be an important factor, but only one of many, that will affect the overall forecast for welfare that the OBR will make in the autumn—

Several hon. Members rose

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I am going to make some progress.

At that point, we will assess the level of the cap. What my right hon. Friend the new Work and Pensions Secretary said yesterday, with my full support, is that we do not have further plans to make welfare savings to replace the £1 billion more we will spend on PIP. We made very substantial savings in the Welfare Reform and Work Act 2016, which has just passed through Parliament. We have now legislated for the £12 billion a year of working-age welfare savings we committed to in our manifesto, and we are now going to focus on implementing that.

Several hon. Members rose

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Before I give way, let me say this about benefits to pensioners because it has been raised. People say to me that we are not saving enough from pensioners while, in the same breath, complaining about everything from long-term increases in the state pension age—to keep pace with rising life expectancy—to restrictions on the lifetime allowances for the largest pension pots. The truth is that we have made substantial savings from pensioner welfare—£500 billion of savings—which are vital to the long-term sustainability of our public finances, but we have made these savings in a way that enables us to go on giving people who have worked hard all their lives a decent, generous basic state pension. We committed to that in our manifesto, and I am not going to take it away from people.

G

The truth is that we have made substantial savings from pensioner welfare—£500 billion of savings
But this saving is to the detriment of current pensioners who are deprived of any annual increases which would cost about £580 million and reduce these savings because we have consistently said that we cannot afford to do that and so the unconscionable freezing will continue.

Submitted by George Morley

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

Does the Chancellor accept that poorer people spend a much higher proportion, if not all, of their income, while richer people save? Does he not accept that his Budget, which has transferred money from poor people to rich people—it is a sheriff of Nottingham Budget, robbing the poor to pay the rich—will undermine growth and deficit reduction, which is wrong both morally and economically?

G

Geraint Davies makes a good point and what could be more immoral than the denial of a paid for pension indexation to a pensioner whose pension is frozen because they have retired abroad to join their family that have settled there which in turn then...

Submitted by George Morley Continue reading

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Under this Government, the richest 1% are paying a higher proportion of income tax receipts than in any single year of the last Labour Government whom the hon. Gentleman used to support when he was a Member of Parliament for Croydon—until he was replaced by a much better Member of Parliament for Croydon.

Several hon. Members rose

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Let me make progress, and then perhaps I will take more interventions. On the Budget numbers, I find it ironic to receive all these expressions of concern from Labour Members about making the sums add up when they presided over the biggest single fiscal fiasco in the country’s history and have a black hole in their current plans so large that it would break the Hadron collider.

Several hon. Members rose

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I will give way in a moment, but let me make this point. The central fiscal judgment of the Budget, and of this Government, is clear: borrowing has been cut from £155 billion when we came to office to £55 billion next year, and there have been falls every year; and higher spending on people with disabilities will be reflected in the autumn statement forecast, and we do not propose to make any further changes ahead of that. We can afford to absorb such changes when we are getting public spending under control, and we can make those changes and still achieve a sensible surplus of 0.5% of GDP by 2019-20. In short, we will go on delivering the economic security that this country elected us to provide.

Photo of Graham Evans Graham Evans Conservative, Weaver Vale

Talking of Labour fiascos, may I remind the House of Gordon Brown’s 10p tax fiasco? We have taken 3 million of the lowest paid workers out of tax altogether.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

My hon. Friend is absolutely right—what a contrast! This Government turned the 10p tax into 0p as we raised the personal allowance and took the poorest out of tax altogether.

Photo of David Anderson David Anderson Opposition Whip (Commons)

If it has been relatively simple to absorb this change, why on earth did the Chancellor introduce it in the first place and frighten the life out of seriously disabled people in this country? People were terrified about what was being proposed, yet the Chancellor has just said that we can absorb this change easily. Why did he do it in the first place?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

If we take no decisions to control welfare spending and public expenditure, we destroy the nation’s finances, and the people who suffer are precisely the most vulnerable in society. Yes, we have taken difficult decisions, but where we have not got them right, we have listened and we have learned. If we had not taken those decisions, the country would be in an even bigger mess than the one we inherited.

G

But regrettably you consistently turn a deaf ear to the Frozen Pensioners and make untrue and invalid statements when questioned suggesting that the Frozen Pension policy has been in place for decades which does not make it right or we would still have...

Submitted by George Morley Continue reading

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

The Chancellor mentions security, including for the poor. Does he realise that until Monday, 340,000 people on PIP were worried that their benefits were going to be cut? If he just apologised and changed that, we could move on and discuss the economics.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I could not have been clearer. I said that we listened, we learned, we made a mistake, and we withdrew the proposals. The hon. Gentleman talks about days of the week, and Thursday would have been the day when Scotland separated from the United Kingdom if the nationalists had had their way. They would have plunged that new country into a fiscal crisis the likes of which few western countries have ever seen. They would have impoverished the Scottish people and driven businesses away. They based all their numbers on oil revenue forecasts that were totally fanciful, and it is time that they got up and apologised for leading the Scottish people into that potential trap. Thankfully, the Scottish people thought better.

Several hon. Members rose

G

I could not have been clearer. I said that we listened, we learned, we made a mistake, and we withdrew the proposals.
But you have been deaf to the Frozen Pensioners and have learned nothing - why ?

Submitted by George Morley

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Let me make some progress. We have taken difficult decisions to control public expenditure and reduce a crippling budget deficit.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I have given way twice to the right hon. Lady so I will now make progress and explain what we have done to clear up the mess she left. We took more decisions last week in the Budget, but we will also implement these decisions today to ensure that the work of reducing our deficit is done fairly, and that we ask more from the well-off. Look through the measures. They include provisions on dividends, lifetime pension allowances, stamp duty on second properties, banks and hedge funds, and a host of measures to tackle evasion and avoidance. The Institute for Fiscal Studies has been quoted a lot over the past four days in the Budget debates, and its head stated that

“the very highest earners have seen significant tax increases”.

I think that has been a reasonable thing to ask of the most well-off when faced with such a budget deficit, because we are all in this together.

G

You mention lifetime pension allowances ?
But the Frozen Pensioners are still living ! What have they done to deserve being treated like the criminal that was sent to Australia which does not happen today because we are now in the 21st Century and neither should this harsh, illogical and irrational unfair policy be in place now.

Submitted by George Morley

Photo of Christopher Pincher Christopher Pincher Conservative, Tamworth

On personal economic security, during the Chancellor’s Budget statement, my constituent, Dan Ball, who is aged 19 and from Amington, tweeted to say, “This lifetime ISA—where can I get one?” Does that not demonstrate that young people up and down the country see in this Budget an opportunity for their generation to save?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

My hon. Friend is right to raise his constituent’s concerns about where he can get hold of the new lifetime ISA. It will be coming in from April next year, but his constituent can open a Help to Buy ISA now, roll it into the new lifetime ISA when it becomes available, keep the Government bonus, choose to save for a home or a pension, and not have to face the agonising choice that so many people have faced in the past. It is part of a Budget that backs savers.

Several hon. Members rose

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Let me make a little progress and then I will take more interventions. It is a classic socialist illusion to think that we can solve all society’s problems with taxes on the very richest, and it is the age-old excuse for not managing public spending or welfare costs. That brings me to a central point that I want to make to the House today: there is not some inherent conflict between delivering social justice and the savings required to deliver sound public finances—they are one and the same thing. Without sound public finances, there is no social justice.

G

Without sound public finances, there is no social justice.
Correct !
And without social justice there is no equality for the Frozen Pensioner !
Why ?

Submitted by George Morley

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I will give way in a moment to the Member for the taxi business.

It is the easiest thing in the world to do this job and say yes to every new demand for Government spending and to please all the people all of the time, but we know where that leads. We know that because before me we had a Chancellor who spent a whole decade going around the country saying yes to even more spending and ever higher welfare bills, and we know what happened then: it brought our country to the brink of collapse. That was not compassion; it was economic cruelty, and the people who paid the price are those who always pay the price when Government spending gets out of control and welfare bills spiral. It was not the politicians at the time who paid the price—no, they are happily sitting on the Opposition Benches—it was the poorest who paid the price and the most vulnerable who suffered. Those people lost their jobs and had their livelihoods snatched from them, and those are the people I am fighting for—real, decent, hard-working people, not numbers on a Treasury spreadsheet: people whose lives would be impoverished, and whose hopes and aspirations would be crushed, if we had gone on spending more and more than the country earns. Getting things right for those people is what I am all about, and that weighs on every decision that I have taken as Chancellor over the past six years. Those are the people whom we in the Conservative party have been elected to serve.

G

Getting things right for those people is what I am all about, and that weighs on every decision that I have taken as Chancellor over the past six years.
Oh you forgot to add - to the exclusion of the Frozen Pensioners. Why ?

Submitted by George Morley

Photo of Wes Streeting Wes Streeting Labour, Ilford North

The Chancellor rightly talks about learning lessons, but it is also important to have clarity about the future. The Government line seems to be that there are no plans to reduce further the welfare budget, but yesterday the Secretary of State for Work and Pensions said in the House

“we will not be seeking alternative offsetting savings”,

and that

“the Government will not be coming forward with further proposals for welfare savings.”—[Hansard, 21 March 2016; Vol. 607, c. 1279-86.]

Will there be further welfare cuts or not? What is the answer? The Chancellor has not offered any clarity this afternoon.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

That is exactly the position set out by my right hon. Friend the Secretary of State, and agreed by me and the Prime Minister. We understand that if we do not control spending, we will have a fiscal crisis. Because we are controlling spending and have passed difficult welfare legislation in recent months, the deficit is coming down and we are delivering economic security.

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and we are delivering economic security.- to all but Frozen Pensioners !

Submitted by George Morley

Photo of Chris Philp Chris Philp Conservative, Croydon South

Given what the Chancellor just said about the importance of fiscal responsibility, will he confirm that, had he listened to the advice of the Labour party over the past five years, our national debt would be £900 billion higher?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

My hon. Friend is absolutely right. The analysis shows that, had we not taken the decisions to reduce the structural deficit, we would have added £1 trillion further to our national debt. That is proof that we can never trust Labour with the nation’s public finances.

Photo of Maria Caulfield Maria Caulfield Conservative, Lewes

Does the Chancellor agree that Conservative Members will not take lectures in fiscal management from the Labour party? Its legacy from 13 years in government was a Post-it note saying that there is no money left.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

My hon. Friend is absolutely right. That is all we found in the Treasury—a letter saying, “I’m sorry. There’s no money left.” After 13 years of a Labour Government, that summed up their economic achievement.

Several hon. Members rose

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Let me make a little progress before I give way again.

We will go on driving down the budget deficit. We are down from borrowing £1 in every £4 when I became Chancellor to borrowing just £1 in every £14 next year. We will then be on to the security and good times of a budget surplus—a country earning more than it spends, and a generation that does not pass its debts on to its children and grandchildren. That is what we committed to do in the manifesto and what we were elected to do, and it is what this Budget delivers.

Finally, let me turn to the measures in the Budget that back enterprise and business. Again, I completely refute Opposition Members who say there is a choice between backing business and promoting social justice. We cannot have social justice without a strong economy, and we cannot have a strong economy unless we have a tax system that backs business and enterprise.

Photo of James Cartlidge James Cartlidge Conservative, South Suffolk

We inherited an unprecedented budget deficit. It is not just about controlling spending—the country has to earn more. Is it not the case that the only way to do that is to cut corporation tax and capital gains tax so that our entrepreneurs can go out into the world, compete and earn this country the living it needs?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

My hon. Friend is absolutely right. Without a strong economy, we cannot have social justice, and we cannot have a strong economy without successful, vibrant businesses.

Photo of Steve Brine Steve Brine Conservative, Winchester

My right hon. Friend spoke a lot last week about the next generation and Chancellors who always said yes. One thing he said yes to last week that was very much welcomed by many young people in Southampton and across the south was the backing of the new children’s hospital in Southampton with £2 million of match-funding. That is what looking after the next generation looks like. May I say thank you on behalf of many people across the south?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

My hon. Friend campaigned tirelessly for that extra money for the hospital in Southampton—he raised the matter countless times in the Chamber. That shows that, if Members persevere on getting the vital services for their local constituency, the Government listen and deliver for them in this Chamber.

Several hon. Members rose

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"That shows that, if Members persevere on getting the vital services for their local constituency, the Government listen and deliver for them in this Chamber." The Frozen Pension policy has been raised time and time again but a true and...

Submitted by George Morley Continue reading

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Let me make a couple more points and then I will take another intervention.

Yesterday, the Leader of the Opposition stood at the Dispatch Box to reply to my right hon. Friend the Prime Minister. People have focused on what the Leader of the Opposition failed to say, but I am focused on what he did say. He said we should not be reducing taxes on business. In other words, he thinks the answer to the challenge of low productivity and of growth in an uncertain world is that taxes on business should be higher. I totally disagree with that approach. That is Labour’s answer these days: pile the taxes on business and increase the basic rate of income tax on working people, as they propose in Scotland. Again, the price would not be paid by Labour Members. It would be paid by the young people who cannot get jobs—they cannot get jobs in countries where business taxes are too high and where enterprise is stifled. It would be paid by people who work in our public services, whose resources would be drained as the economy became more and more uncompetitive. It would be paid by the whole country, as living standards declined and the nation got poorer.

If that is the Budget hon. Members want, they should vote in the No Lobby tonight. If they want a small business Budget that cuts taxes for small firms, takes 600,000 businesses out of paying business rates, and reforms commercial property tax so that small premises pay less, that is the Budget we are voting on tonight. If they want an enterprise Budget that boosts investment in our small and medium-sized firms, with lower CGT, dramatically reduces burdens on our vital oil and gas industry, and gives us the lowest headline business tax rates of any of our competitors, that is the Budget we are voting on tonight. If they want a one nation Budget that increases the resources for education, supports children’s healthcare, devolves power across our nation and builds infrastructure for our future, that is the Budget we are voting on tonight. If they want a Budget for working people, that helps them to save for their future, freezes their fuel duty and cuts income tax so they keep more of the money they earn, that is the Budget we are voting on tonight.

It is a Budget that delivers security, that helps the next generation and that backs working people. It is a one nation, compassionate Conservative Budget, and I ask the House to support it tonight.

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer 1:36 pm, 22nd March 2016

I beg to move amendment (b), in paragraph (2), after “tax”, insert—

“(except in relation to value added tax on insulation, solar panels and any other category of energy-saving material or their installation)”.

I and my party share the sentiments expressed by the Chancellor and those across the House in condemnation of what happened in Brussels today. Our thoughts and prayers are with the victims and their families. We support the security measures, of course, taken by the Government and say to the people of Belgium that we stand with them.

I am glad to see the Chancellor has at least turned up today. Let me make it clear from the outset that, in my view, and I believe the view of many others, the behaviour of the Chancellor over the last 11 days calls into question his fitness for the office he now holds. I also believe that it certainly calls into question his fitness for any leading office in government. What we have seen is not the actions of a Chancellor, a senior Government Minister, but the grubby, incompetent manipulations of a political chancer.

For the record, let us go back to last Friday week. The Chancellor personally forced through cuts in personal independence payments. The statement issued by the Government that Friday on PIPs was not a consultation and not a suggestion; it was a statement of policy. Personal independence payments are the benefits that, for many disabled people, make life worth living. They help them get to work. They help them have some normality in their lives. Often, they keep people out of residential care. The Chancellor was willing to cut away that vital support to some of the poorest and most disadvantaged members of our community. Do not tell us that we are all in this together.

Photo of Kevin Brennan Kevin Brennan Shadow Minister (Business, Innovation and Skills)

Would it not at the very least help to dispel the impression that the Chancellor is acting in his own political interests, rather than in the national economic interest, if he made it clear today that he was not going to stand for the leadership of the Tory party so that he could concentrate on his job as Chancellor of the Exchequer?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

The reason I refer back to fitness for office is because many of us know the distress that has been caused to so many people over the past week.

Photo of James Cartlidge James Cartlidge Conservative, South Suffolk

The hon. Gentleman makes a very personal point about fitness for office on the day of a major terrorist attack. Will he withdraw his previous support for terrorist organisations that have attacked this country?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

Mr Speaker, you heard me share the sentiments of the whole House on the issue of Belgium. To bring that into the debate as a political point at this stage is unacceptable. [Interruption.]

Photo of John Bercow John Bercow Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Speaker of the House of Commons

Order. I made it clear earlier that attempts to shout the Chancellor down were unacceptable. That was made very, very clear and I do not think anybody would doubt or deny it. I make it similarly clear that no attempt in this Chamber will be successful if it is an attempt to shout down the shadow Chancellor. Get the message: it ain’t gonna happen.

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

On that Friday before last, there was outrage among disability groups—the Multiple Sclerosis Society, Parkinson’s UK and Disability Rights UK. Why? Because all of them, like many of us, had gone through that process of agreeing the criteria—at least coming to some compromise on what would constitute the criteria for access to this benefit. But Chancellor moved the goalposts, those already agreed through consultation. Disabled people and their families have been sick with worry about the threats to their benefits.

Photo of Thomas Tugendhat Thomas Tugendhat Conservative, Tonbridge and Malling

The hon. Gentleman has called into question the morality of the leadership of my right hon. Friend the Chancellor, but would the hon. Gentleman please discuss with this House the morality that allows him to stand with bombers who murdered my friends in Northern Ireland and to question the integrity of the Chancellor? [Interruption.]

Photo of John Bercow John Bercow Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Speaker of the House of Commons

Order. Before we proceed further, perhaps I can just say to the House, on my own account and on the basis of sound procedural advice, that we must stick to the matter of the Budget. [Interruption.] Order. I do not require any comeback or any comment, agreement or disagreement. Let us proceed in a seemly manner with the debate. That is in the House’s interest, and that is what the country has a right to expect.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

During the Chancellor’s opening speech, we heard him say that the Government have legislated to make £12 billion-worth of savings within the welfare budget. That means that this £4.4 billion attack on PIP was in addition, and it was based neither on social justice nor on compassion. Does that not show that this Government are mean-minded and prepared to attack people who have disabilities? It is not necessary to make these cuts in welfare and they should guarantee that they are not going to return with this cut.

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

The proposals that came forward did not just shock those on our side of the House; they shocked many Members from across the whole of the House with their brutality.

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

No, I have given way enough—I will come back to the hon. Gentleman.

There is scheduled to be a 6% real-terms decline in spending on disability benefits between 2015 and 2020. After that Friday, when we reached the Wednesday of the Budget, we discovered that these cuts to disabled people were being made to pay for capital gains tax cuts benefiting the richest 5% in our society and for corporation tax cuts. Of course, a deep feeling of unfairness was felt in this House, among Members in all parts of it. I welcome the expression of concern by Mr Duncan Smith during that period and his conversion to our cause of opposing these benefit cuts. But the first person to call attention to the scandalous targeting of people with disabilities was my hon. Friend Debbie Abrahams. She rightly said, in response to the announcement:

“In coming to this decision, the Tories are yet again ignoring the views of disabled people, carers and experts in the field, trying to press ahead with changes, just two years since the introduction of the system.”

After it became clear that the cuts to PIP were planned as a way to fund tax cuts for the wealthy, my right hon. Friend the leader of the Labour party made this issue a key part of his excellent response to the Budget last week, and he was not alone in doing so. My hon. Friend the Members for Ilford North (Wes Streeting) and for Nottingham East (Chris Leslie) were among several Opposition Members who pressed the Chancellor on the issue, as I did when opening the Budget debate last Thursday. I want to give thanks to everyone on our Benches and across the House who has helped to force this rethink and helped end the worry that thousands of disabled people have been experiencing in the past week.

Photo of Andrew Bridgen Andrew Bridgen Chair, Regulatory Reform Committee

The shadow Chancellor is right about U-turns being embarrassing, but I remember his embarrassing U-turn on the fiscal responsibility charter. Does he regard himself at the moment as a socialist or a Marxist, and does he agree that all that the politics of the far left offers people is an equal share of misery?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

This is a debate about the threat of cuts facing some of the most vulnerable people in our society. This is not a time for engaging in student union politics in this Chamber.

By Friday of last week, the Chancellor was facing so much criticism that he needed to find someone to blame. So, in one of the most despicable acts we have witnessed in recent political history, the Chancellor sent out his large team of spin doctors to try to lay the blame on the former Secretary of State for Work and Pensions, the right hon. Member for Chingford and Woodford Green. That was a disgraceful act of betrayal of one of the Chancellor’s own Cabinet colleagues to save his own skin and his leadership hopes.

Photo of James Cleverly James Cleverly Conservative, Braintree

Will he give way? [Hon. Members: “Ooh!”]

Photo of John Bercow John Bercow Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Speaker of the House of Commons

Order. [Interruption.] Order. Leave me to deal with this. Mr Cleverly, I have known you for years and you have always struck me as a very polite fellow. You are getting over-excited, young man. You will have an opportunity to intervene, perhaps in due course, but you don’t do it like that. Learn from a few old hands.

Photo of Pete Wishart Pete Wishart Shadow SNP Westminster Group Leader (Leader of the House of Commons), Chair, Scottish Affairs Committee

I am surprised that the shadow Chancellor is taken in by some of the crocodile tears from the Tories and this concern for the disabled. Surely he agrees that this is nothing to do with the Tories’ new-found concern for the disabled in this country—it is all about their euro civil war?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

Let me move on. I appreciate the point made. The betrayal was why the right hon. Member for Chingford and Woodford Green resigned. I have not agreed with a single policy that he has brought forward, but I do not doubt his sincerity in the policies that he has pursued.

Photo of Rupa Huq Rupa Huq Labour, Ealing Central and Acton

Does my hon. Friend not agree with the words of Mr Duncan Smith that this Chancellor’s policies are

“in danger of drifting in a direction that divides society rather than unites it”?

Was the right hon. Gentleman not right when he said that?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

I believe that the right hon. Gentleman’s interview on the Marr programme on Sunday expressed a profound concern that he had about the unfairness of the Budget, and we agreed with this. As I said, I have not agreed with a single policy he has pursued, but I do not doubt his sincerity. The right hon. Gentleman saw—

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

I will in a minute. There is no need to shout out so loud again.

The right hon. Gentleman saw the unfairness of the PIP cuts to disabled people in the Budget. As he said, it is a Budget that benefits high earners. He also saw himself being set up by his own Cabinet colleague.

Photo of Catherine McKinnell Catherine McKinnell Labour, Newcastle upon Tyne North

The shadow Chancellor is right to say he does not agree with the former Secretary of State’s policies. Indeed, even with the U-turn on PIP disabled people are still left distressed by the reforms that will still be going through. Will he join me in urging the Chancellor and the new Secretary of State for Work and Pensions to look again at this very flawed process?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

I fully concur. The same week that this was being discussed, ESA was being cut by £30 a week.

Photo of James Cleverly James Cleverly Conservative, Braintree

I thank the hon. Gentleman. He has been speaking now for 14 minutes. He has criticised Conservative Members for making this about politics and people, but I was just wondering when he will actually get around to talking about any of the Budget proposals.

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

The role of the Opposition is to hold the Government to account. We are holding this Chancellor to account for a potential attack on disabled people that I believe would have devastated their lives.

What I find most disgraceful through all of this is that there has been no word of apology from the Chancellor or any Conservative Member. Apologise, I say. I say apologise for the pain and anguish he has caused disabled people and their families in the past two weeks. We all make mistakes. I understand that. But when you make a mistake and correct it, you should at least apologise.

Photo of Anna Turley Anna Turley Shadow Minister (Cabinet Office)

Does my hon. Friend share my view that the most distressing thing the former Secretary of State said this weekend was the point he made about

“it doesn’t matter because they don’t vote for us”?

Is there not a constant thread running through everything—from the bedroom tax, local government cuts to this Budget—that this is a deeply political Government who do not care unless people vote Tory?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

I find a form of electoral politics, where you target a vulnerable group in society just because they do not vote for you, unacceptable. Not a word of apology! One nation Conservativism? It is a contradiction in terms.

Photo of Chris Philp Chris Philp Conservative, Croydon South

May I remind the shadow Chancellor that the richest 20% are now paying 52% of all income tax, which is up from 49%, and that the national living wage is putting money into the pockets of our country’s poorest citizens?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

The hon. Gentleman refers only to income tax. If he had looked at last weekend’s analysis of the overall cuts and what has happened with regard to tax and benefits, he would have seen that it is actually the poorest decile who are paying the most. The two groups hit hardest are young women with children and older women with caring responsibilities. Some 81% of the cuts are falling on women. This is a discriminatory Budget.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Innovation and Skills), Shadow Minister (Culture, Media and Sport)

We are pleased that the Chancellor has found that the PIP cuts are a cut too far, even for this ideological Government. Does the shadow Chancellor agree that characterising all benefits claimants as workshy, stay-in-bed, lazy scroungers, which the Chancellor of the Exchequer has done on many occasions, contributes to an atmosphere in which it is acceptable to enrich the better off at the cost of the poorest among us?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

That language has been used by the Conservative party. Let me return to the Budget. James Cleverly, who has now left us, asked me to return to the Budget, so let me press on.

Even worse, there is still no certainty about further welfare cuts. We were told yesterday by the new Secretary of State for Work and Pensions—this was repeated today—that there were to be no further cuts to welfare in this Parliament. Within minutes, the Treasury were briefing to correct the Secretary of State, as that then became “no planned cuts”. There is complete confusion—chaos on chaos. Nobody believes or has any confidence in the mealy-mouthed assurances that are being given today.

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

In a second.

The PIP withdrawal now leaves a £4.4 billion hole in the Chancellor’s Budget, as has been consistently pointed out by my right hon. Friend Yvette Cooper.

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

Let me finish this point.

The simple fact is that the sums in the Budget, as my right hon. Friend pointed out, simply do not add up anymore. They simply do not compute.

Photo of Yvette Cooper Yvette Cooper Labour, Normanton, Pontefract and Castleford

The shadow Chancellor will be aware that page 26 of the Red Book states that the Chancellor will set out plans to meet the welfare cap by this autumn, and that page 198 of the OBR report says that that will require further welfare savings of £3 billion a year. Did he hear the Chancellor say clearly this afternoon that he was going to ditch the plans for £3 billion a year of additional welfare cuts by the end of this Parliament?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

Cuts upon cuts, and who to? The most vulnerable in our society.

Photo of Steve Brine Steve Brine Conservative, Winchester

I believe that the shadow Chancellor and the Leader of the Opposition, with whom I have served on Select Committees, are decent men. The shadow Chancellor said five minutes ago that he did not agree with a single policy introduced by the former Secretary of State for Work and Pensions during his time in office. Given the shadow Chancellor’s new fiscal responsibility, with the new rules he announced just a week or so ago, will he tell the House—people will be looking to him, because he is the shadow Chancellor—whether he would keep the welfare cap? If he cannot tell me that, will he tell me just one single saving that he could make from the welfare budget?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

We supported the welfare cap. I find it ironic that that point is being made on behalf of a Government who are not meeting their own welfare cap. They are breaching it and then moving it up. They are moving the goalposts again.

Let us be clear that the £4.4 billion black hole in the Chancellor’s Budget means either further cuts in departmental budgets and to benefits, or stealth taxes. No solution has been announced today. We are told that all this will be resolved by the autumn. Between now and then, no public sector job, benefit or service will be safe.

Photo of Tim Farron Tim Farron Leader of the Liberal Democrats

The hon. Gentleman is right that the Chancellor has a £4.4 billion black hole that needs to be filled by cuts to public services or by stealth taxes, but that is in existence only because the Chancellor has set himself a false target. Does the hon. Gentleman agree that the real problem at the heart of the Chancellor’s credibility is the fiscal charter?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

I am grateful for the hon. Gentleman’s intervention and I will come back to that point in due course. I realise we are under pressure of time, Mr Speaker, so I will try to be as brief as I can.

The Chancellor’s political manoeuvring has real consequences. The drama over Budget week has clouded a further astounding revelation about his behaviour.

His former Government colleague, David Laws, revealed at the weekend that the Chancellor pressurised senior officials to reduce their estimates of the funding needed to maintain the NHS. We discovered that the Chancellor had forced through a cut of almost half the funding—this was independently assessed—needed by the NHS. The result is that the NHS and hospital trusts around the country cannot plan. They are facing a crisis: waiting times are rising, staff are under intense pressure and morale is at rock bottom. At the start of the year, the NHS recorded its worst ever performance as services struggled to cope with demand. It is now facing its biggest funding crisis for a generation and that is putting patient care at risk.

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury), Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Education)

Does not the welfare cap, and support for it, suggest that if welfare spending goes up, we will have to revisit that spending? At that stage, would the shadow Chancellor cease to support the cap, or would he support measures to keep within it?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

We support a welfare cap, and we believe we have better policies—building homes, for example, rather than spending money on housing benefit—that would enable us to meet it.

Nothing in the Budget says that the NHS can find £22 billion in savings over the next few years. The idea is pure fantasy written into the Budget. It is typical of this Chancellor to opt for spin and presentation over addressing the real problems. He needs to stop living in fantasy land and to start being honest with the public over his own numbers.

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

I have been extremely generous in giving way, but we are running out of time.

On schools, this was far from a Budget for the next generation, as the Chancellor claimed. Not only is the plan to turn every school in the country into an academy unpopular with parents and teachers, but we now know that schools face an 8% real-terms cut in their funding. This is the first time since the 1990s that schools’ funding has been cut.

As Tim Farron said, at the heart of all this failure is the Chancellor’s economic incompetence. His huge mistake was to force through a fiscal rule that has proved to be unworkable. Against all sound economic advice, he put politics above economics and imposed a fiscal rule that now, like his Budget sums, simply does not add up. Virtually every target he set himself has been missed. On the deficit, which he promised would be eradicated last year, he has failed. The debt was supposed to be falling, but it is rising.

Photo of Rushanara Ali Rushanara Ali Labour, Bethnal Green and Bow

The former Work and Pensions Secretary described the cuts to PIP as deeply unfair when juxtaposed against tax cuts for the wealthy. Does my hon. Friend agree that the Chancellor should consider scrapping that tax decrease for the wealthy to help to fill the £4.4 billion black hole, which might help to improve his competence?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

That is the sort of proposal we should be considering and voting for today.

Several hon. Members rose

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

I want to finish the next section of my speech. I am straining your patience, Mr Speaker, so I shall press on.

The Chancellor is set to leave our children with £1.7 trillion of Government debt. Hundreds of billions have been borrowed under his watch. The welfare cap, which Sammy Wilson mentioned, is set to be breached each year until 2020. The OBR confirmed to the Treasury Committee that it would be breached by £20 billion over five years. The Chancellor has broken two of his own rules already. The third—the overall surplus—now hangs by a thread, and only with some seriously creative accounting will he meet it.

Meanwhile, across the country, the Chancellor’s economic approach is failing, as was evidenced by last week’s OBR report: forecast for growth—down; forecast for wages—down; forecast for productivity—down; and forecast for business investment—down again. Why will he not take responsibility for the last six years?

Photo of Antoinette Sandbach Antoinette Sandbach Conservative, Eddisbury

Does the hon. Gentleman celebrate the fact that 1,700 of the lowest paid in my constituency will be taken out of tax altogether as a result of the Budget, and that 1.3 million of the lowest paid have already been taken out of tax altogether in this Parliament?

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

That is why we support the increase in the lower-rate threshold, but we have concerns that shifting the thresholds in that way actually benefits higher earners too much.

At the bottom of the Budget is a Chancellor who, as some have mentioned, is more interested in his political career than the welfare of disabled people, and more interested in becoming the leader of his party than in the health of our economy. He is not a Chancellor but a political chancer. I pay tribute to colleagues on both sides of the House who forced him to U-turn on his proposed cuts to disabled people.

This is not a one-nation, compassionate Budget—nobody believes that—but a Budget shot through with unfairness at its heart. Even one of the Chancellor’s own Cabinet colleagues last week denounced it as fundamentally divisive and unfair. It is not a competent Budget. It fell apart within a couple of days, and the Chancellor still cannot explain how he will fill the £4 billion hole. This is not a Budget for the long term either—a long-term economic plan that lasts three days? It is a Budget built around short-term political tactics and it has backfired spectacularly. They used to say that a week was a long time in politics but, under this Chancellor, a weekend is the length of a long-term economic plan. What a failure!

This is not a Budget for the economy or the country, either, but one that is constructed around self-imposed austerity. It is about politics—incompetent politics at that —not economics, and it has blown up in the Chancellor’s face. For the sake of his party—he might think about that—and certainly for the sake of the country, it is time for him to go.

Photo of Kenneth Clarke Kenneth Clarke Conservative, Rushcliffe 2:06 pm, 22nd March 2016

I congratulate my right hon. Friend the Chancellor on reviving the tradition of the Chancellor speaking on the last day of the Budget debate. It is one of the many things that my successor, Gordon Brown, should not have abandoned. I think we will agree it has enlivened the debate very considerably, compared with what usually happens. I also congratulate him on his extremely effective and spirited performance in defence of his Budget. He rightly took pleasure in his achievements so far in his term as Chancellor.

It is remarkable that we are having such a lively debate on the Budget at a time when, as we have just discovered from listening to the shadow Chancellor, there is absolutely no alternative economic strategy or policy on offer—no doubt my party will make up for that lack of challenge in its own curious way, but meanwhile I congratulate the Chancellor on where he has got so far.

In case the Chancellor is worried about the controversy surrounding the Budget, let me tell him that it is not unusual. I have been here so long that I have seen much worse. Geoffrey Howe’s 1981 Budget was extremely controversial, and passions ran higher, and far more seriously, than they have on this occasion. Nigel Lawson had his Budget speech interrupted, and the House was suspended because of disorder, when he tried to cut the taxes on the higher paid.

I had merely one defeat on a Finance Bill. I lost to a rebellion on the Floor of the House. My mitigation was that it was not my proposal—it was Norman Lamont who proposed VAT on domestic fuel—although I still think it was perfectly sensible. I immediately came back with more tax proposals to get the revenue I had lost, but my right hon. Friend is quite right to wait for events between now and the autumn statement and then to continue the fiscal discipline he has rightly maintained so far.

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

The right hon. and learned Gentleman probably knows that the Royal College of Physicians has announced that 40,000 people are dying a year, at a cost of £20 billion, from diesel emissions and pollution. Does he think the Chancellor should reconsider promoting green transport, public health and savings and rebalancing the tariffs on electric, diesel, hydrogen and petrol in order to save lives and money?

Photo of Kenneth Clarke Kenneth Clarke Conservative, Rushcliffe

We have been extremely active on that front, but scientific knowledge is moving on. I remember when diesel was positively subsidised by Governments because it was thought to be more environmentally friendly. In a more appropriate debate, those issues are well worth pursuing. I understand the problem. I turn to what the Chancellor has to devote himself to: the Budget judgment and its implications for the economy. The Chancellor accepted, as he has to, that that is his principal responsibility. The Chancellor has the most difficult job in government, because he has to spend all his time challenging all the lobbies that demand extra expenditure and challenging his colleagues to find savings or improvements in the budgets of their Departments in order to close the gap.

What this Chancellor has not done is take a short-term view at any stage. That is why he has achieved such remarkable economic success. What I liked about his Budget speech was when he stressed how it was for future generations. What he said a few moments ago—a soundbite, if I may say so, which I had not heard before: there is no social justice without sound finance—is one of the best summations of one-nation Conservatism I have heard for a very long time.

Photo of Kenneth Clarke Kenneth Clarke Conservative, Rushcliffe

I shall be in trouble with the Speaker and everyone else who wants to speak if I give way. Otherwise I would love to give way to the right hon. Gentleman.

Photo of Kenneth Clarke Kenneth Clarke Conservative, Rushcliffe

I am trying to be reasonably concise rather than too expansive. I apologise to Keith Vaz.

I tried to think of what I would have done had I been Chancellor in the present situation. Before the Budget was delivered, I expected a much tougher Budget. Thank the Lord that I am not in my right hon. Friend’s position; I never had to face problems of the kind that he inherited from his predecessor. My instincts are classic, traditional stuff for anyone for whom the iron of the Treasury has entered the soul. This is the first Budget after an election, we have not made fast enough progress in eliminating the deficit and debt, and we will not have sound future progress with a modern rebalanced economy unless we have done that, so my first thoughts would have been to get on with it.

I would have introduced a Budget, as I frequently did in my time, raising taxes and cutting public expenditure. I am glad to hear, for reasons that I shall return to later, that my right hon. Friend has committed himself to his continuing long-term objective, and has decided to pause. I thought this was going to be a popular Budget. People speculate as to why we chose an easier path. [Interruption.] The Chancellor has in the short term relaxed fiscal policy. It is good that the Bank of England is retaining a very relaxed monetary policy, but it will tighten it if we were to abandon fiscal discipline. In the short term, my right hon. Friend has lowered taxation and lowered Department spending targets for cuts. He has eased off on public spending and lowered taxation. I was surprised by that.

I assume that this was partly caused by the considerable uncertainty that the economy faces. No one has addressed that issue in any of these debates, although the Chancellor did in his Budget speech. The global economy is slowing down, and mainly as a consequence of that, the British economy is slowing down. The uncertainties for our economic prospects over 2016 are very concerning. There are many uncertainties, all of which would threaten most of the developed economies if things go wrong. We still do not know whether China, for example, is going to achieve a soft landing; I think it will. In the emerging markets—there are associated problems with emerging market debt—there is volatility and some unsoundness in the financial world.

And there is the risk of Brexit. I am very glad that the Governor of the Bank of England decided to reassure people by setting out publicly that he was prepared to take action if we had a flight of capital from this country should people be alarmed about the referendum.

So far, such risk has led only to a big decline in the value of sterling and the freezing of most people’s investment plans. One would be a bit of an idiot to invest in the British economy in anything that had the slightest risk when we do not know what the circumstances and trading patterns are going to be in six months’ time.

I assume one reason why my right hon. Friend took a more relaxed view than a traditional Chancellor would have done and did not make those big spending cuts or increase taxation—in fact, he eased taxation for businesses and the low-paid—was to avoid the mistake of being too severe when circumstances might well worsen as the year goes on. That underlines the point that, in the long term, one cannot forecast and fix these kind of things further forward.

A great deal of the debate around the Budget centred on the forecasts and the Office for Budget Responsibility. The fact that the OBR’s forecasts keep changing so rapidly just underlines what I am saying about the uncertainties for the immediate future. Fortunately, thanks to my right hon. Friend, the British economy has been the fastest growing developed economy in the last 12 months, and we are probably less at risk than most others. However, the fact remains that this was a time to be cautious. Personally, I would have maintained the squeeze—it has all been put off until the latter half of this Parliament, and into the next if we are not careful—because so long as the economy continues to grow, and there is a reasonable prospect that it will, we should not be running a deficit of this percentage of GDP, piling up more debt for our successors.

My doubt is whether this pause was totally justified. I accept that it probably was; but certainly we must resume things. I listened to a shadow Chancellor who plainly does not have an idea in his head about how he would save any money or do anything other than continue spending and borrowing. It is totally profligate stuff, as we have seen very much in the past.

I am very glad that my right hon. Friend made the changes to business taxation. When I was in office, I put up taxes, but I never put up business taxes because I was trying to encourage growth. We still need to make our economy stronger, so it is welcome that the Chancellor stepped in, keeping our corporation tax level at a competitive rate. I particularly welcome the help he has given to small and medium-sized businesses. Encouraging business is, of course, the best way of protecting ourselves against economic risks for the future in this uncertain world.

My right hon. Friend has not been wholly generous towards big business. He and the Government have been leading in the OECD on attempts to tackle the problem of tax evasion and tax avoidance on the part of big multinational companies. He has incorporated the first serious attempt for a long time to attack the problems of tax relief on interest when it is exploited and misused, on royalties and on past losses. I get told a lot about how the Chancellor should be collecting more from big international companies, but no Government have done a blind thing about tackling this tax avoidance for the past 20 years. This Government are leading international discussion towards agreement, which is what is needed, and in this Budget, the Chancellor has started to act.

We are told that we are relieving tax on the rich, but everybody knows—I certainly know, and not just from the newspapers—that the Treasury has been looking at the idea of doing more on tax relief for the wealthy when they contribute to their pension funds. If they have very high earnings, tax relief on pension funds is the way of avoiding tax and it is a great way of ensuring that 45% tax is not paid on a very considerable part of one’s income. That was the case, but we have now put a cap on it. I feel that we are still rather too generous, but in today’s politics that was another lobby, and when someone leaked it, it was seen off by the pensions industry in about 10 days flat. So my right hon. Friend was not allowed—on that occasion, I suspect, because of fear about what would happen on this side of the House—to proceed with fairly modest changes in tax relief for the rich.

As far as other tax moves that my right hon. Friend has made, on personal allowances and the thresholds for the higher rate, because the higher paid—the rich—now pay such a huge proportion of tax, it is almost impossible for Chancellors to ease the tax burden on the low-paid and the ordinary citizen without its being possible to demonstrate mathematically that they have done quite a lot for the rich as well. If Chancellors bought that argument every year, they would never move the threshold at which people start to pay tax, and they would never raise the 40% rate for the people who are currently in modest jobs and find that they are subject to a marginal rate of 40% because Gordon Brown started the habit of freezing the threshold in order to secure stealth taxation. Raising these thresholds is welcome, and I am glad that my right hon. Friend felt able to do it.

Other measures should be seriously canvassed. The pensioner benefits, to which I am entitled, are discussed every now and again. I am always told that we have put things in a manifesto, but I have yet to meet a candidate or an elector who read the last general election manifesto, which, although it seems to contain considerable detail, was certainly not crucial to my constituency victory, or, I suspect, to anyone else’s. We have ruled out ever raising income tax, ever raising national insurance, ever raising VAT; we appear to have ruled out doing anything at all that would stop the very wealthiest people having free bus passes and receiving the winter fuel allowance. I am not going to advocate the breaking of manifesto pledges, but I know of no prosperous pensioners, and certainly none who are in full-time employment like me, who would object to, at the very least, those benefits being made taxable.

I think that there is a case for considering those measures and various alternatives, but I will not risk going into it any further, first for reasons of time, and secondly because, given today’s populist politics, I fear that if I do, some lobby yet unknown to me will descend on me in the next two or three days in order to mount a campaign, through our ridiculous media, to blow that case out of the water.

Of course we must judge the Budget on its own merits, and I understand why my right hon. Friend has got to where he is. No two Chancellors have ever done the same in respect of every measure. Within our system, a Chancellor makes an overall judgment, and this Chancellor retains my full confidence: I am prepared to support his judgment.

I have another reason for supporting my right hon. Friend’s judgment. As I have already said, the present Government are in a strange position. Absolutely no alternative proposition is being advanced by anyone outside. Some pundits, and, as a result, some politicians, seem to believe that we are wrong to maintain our target of a balanced budget over the cycle, or however we choose to put it. They suggest that, actually, there are no problems, and the answer is simply always to run a deficit, on and on and on. After all, it is free money. It is a bit troublesome that interest rates might return to normality one day, but meanwhile, just let it pile up: it will sort itself out.

People on the far right say “Tax cuts, that is all you want. Tax cuts will inspire such tremendous entrepreneurship that jobs will be created, wealth will be created, and it will all be paid back. You will not be in debt for long.” On the left, the argument is “Boost every welfare payment, increase public spending on every public service, and that will generate such demand from the grateful taxpayer recipients that they will pump it into the economy, and it will pay for itself.” That is Mickey Mouse economics, as practised by the last Labour Government, and it got us into this trouble that we are still—thanks to my right hon. Friend—getting out of now.

As for my final reason for backing my right hon. Friend’s judgment, his record, after eight Budgets and six years, is absolutely amazing. I must concede, having been one of his competitors at one point, that he is far the most successful departmental Minister in this Government to date. If anyone had said, when he took over the state of affairs that he took over more than eight Budgets ago, that he would stand here, in charge of the fastest growing economy in the developed world, with near-full employment and with employment at record-breaking heights, able to demonstrate the steadily improving state of not only the public finances but the condition of the poor, as well as the alleviation of social problems across the country, that person would not have been believed. It is a quite remarkable performance.

So I back my right hon. Friend’s judgment. I am also delighted that he is helping us all to avert the risk of Brexit in the forthcoming referendum, because, if the public were so ill advised to vote for it, that would be the only thing that could really send this economic recovery off the rails in a big way.

Several hon. Members rose

Photo of John Bercow John Bercow Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Speaker of the House of Commons

Order. Before I call the spokesman for the Scottish National party, it may be convenient for the House to know that, owing to the level of demand among those wishing to contribute to the debate, a five-minute limit on Back-Bench speeches will have to take effect immediately after his own speech.

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian 2:26 pm, 22nd March 2016

Let me begin by associating the SNP with the words of the Chancellor and the shadow Chancellor in expressing sympathy for the people of Belgium—Flemish, Walloon, and recent immigrants—at this tragic hour.

I must give the Chancellor his due. He gave us a bravura performance: in my view, a more assured and more interesting performance than we were given last week. However, I am always worried when he goes into his expansive, emotional mode. What is he hiding? We know what he hid last week, which was the fact that he would have to come back and tear up his Budget and create a new one, but what did he hide this week? He hid what he always hides and never addresses: the crucial issue of productivity. Without productivity growth, there can be no tax growth, no jobs growth and no wage growth. The truth is that, under this Chancellor, productivity has risen at an annual average of 0.1%. Since the top of the boom in 2007, the cumulative increase in UK productivity has been less than 1%. That is the Chancellor’s failure.

I have great respect for the Chancellor, but he is not a Chancellor who ever had a real job. He is not a Chancellor who ever worked in the private sector. He is not a Chancellor who ever had to lie awake at night—as I have, and as, I am sure, have many other Members on both sides of the House—and worry about how to pay the next wage bill. This Chancellor is an intellectual Chancellor: that is his problem.

Photo of Chris Philp Chris Philp Conservative, Croydon South

I have spent the last 15 years setting up and running businesses. As someone who has done that, I am glad that it is this Chancellor who is sitting in that seat, because he is the man who has created jobs and helped businesses like mine! [Interruption.]

Photo of John Bercow John Bercow Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Speaker of the House of Commons

Order. May I just say, for the benefit of the House, that moderation and good humour are the precepts of “Erskine May”. Members on both sides of the House can learn from Mr Clarke, who has just given a textbook example of a robust speech made with good humour. Many Opposition Members can do the same, and new Members could learn from them.

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

Thank you, Mr Speaker. I serve on the Treasury Committee with Chris Philp, and I did not take what he said personally.

If we do not get productivity, what happens? We do not get growth. Mr Clarke gave us a wise presentation, as he normally does, but he slipped up a little. He said that, under this Chancellor, the United Kingdom had experienced the fastest growth in the developed world. That is not true. As he phrased it, it is not true—unless, of course, Australia is not developed; unless, of course, the United States is not developed; unless, of course, Sweden is not developed; unless, of course, Korea is not developed; unless, of course, Spain is not developed. All those countries experienced faster GDP growth than the UK in 2015, largely because they experienced faster productivity growth. That is what this Chancellor has not delivered. That is not what this Budget contains. And that is this Budget’s weakness.

If we look at the failure of productivity growth in the UK under this Chancellor, we see that productivity is lagging in practically every commercial and industrial sector. Crucially, productivity has been falling by an average of 1% a year in the financial services industry—our flagship industry, our key service industry, the industry that is leading our service exports. This Chancellor has devoted a lot of time and effort to reconstructing the financial services sector—I grant him that—but what have we got? Falling productivity. According to the

Office for National Statistics, productivity in the British financial sector, including insurance, is now behind the level of financial services productivity in France and Italy. That is not a great record, Chancellor. Here is the bottom line: if we do not have productivity growth, the cash economy will not grow, wages will not grow and income to the Treasury will therefore not grow.

Photo of Marcus Fysh Marcus Fysh Conservative, Yeovil

Does the hon. Gentleman not recognise that there is a lot in this Budget to improve the performance of the economy? Does he not agree that a massive cut in business rates will deliver exactly the productivity that he is talking about?

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

I utterly accept that point. This is at the core of what I am saying. The kind of business rate cuts for small companies that the Chancellor has belatedly introduced in this Budget have long been available in Scotland. What has happened to productivity in Scotland? Despite the Scottish Government’s limited drivers for economic growth, productivity in Scotland has gone up 4.4% since the recession. That is more than four times what this Chancellor has managed to deliver. In Scotland, our limited tax powers have forced us to concentrate on the supply side, and my bill of fare against the Chancellor is that he does not do that. Yes, there are lots of bits and pieces in the Budget that I welcome—particularly the move to clamp down on transfer pricing in multinational companies—but in the end, there is no strategy. The Chancellor has no strategy apart from his rendezvous with 2020 and trying to run a budget surplus.

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury), Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Education)

Does the hon. Gentleman accept that he is perhaps being a bit harsh? There are many supply-side measures in this Budget, including improved investment in infrastructure and the digital economy and cuts in corporation tax and business rates, all of which should help investment and therefore increase productivity.

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

Indeed, and I welcome all the supply-side measures, but—[Interruption.] Wait for it! We have had five Budgets in the past 15 months. Why did those measures not appear in the last four of them? In fact, if we count today as well as last week, we have had six Budgets in that time. Why did those measures not appear before? This is not about the Treasury officials, who are bright men and women; this is about the fact that there is no strategy apart from trying to run a budget surplus in a particular year, because the Chancellor knows that if he does not deliver in 2020, what is left of his reputation after this week will be in shreds.

Photo of Steven Baker Steven Baker Conservative, Wycombe

I should like to draw the hon. Gentleman’s attention to page 2 of the Red Book. It states:

“This is precisely why the UK has been working through its long-term economic plan. Since 2010 the plan has been focussed on reducing the deficit, while delivering the supply side reforms necessary to improve long-term productivity growth.”

Will he at least concede that the Chancellor has in his Red Book precisely the kind of strategy that he is criticising him for not possessing?

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

I cannot accept that. There is a tension in the Chancellor’s mind. It is like good and evil sitting on either shoulder. One side is telling him to run a budget surplus, because that is an easy road to take.

That is not badly thought out. Given the number of rules that Chancellors have thought up over the years and then failed to implement, running a budget surplus is an extremely simple rule. It is just too crude, however. That argument vies with the supply-side strategy.

Following on from the question from Mr Baker, another friend from the Treasury Select Committee, let us look at what the Office for Budget Responsibility says in its report about how the Budget supply-side measures will work. It states:

“We also expect smaller positive contributions to potential output growth over the next five years from population growth, while average hours worked are expected to trend down over time.”

With a decrease in average hours, in input and in population growth, where is the productivity increase going to come from? I should like to hear the answer from the Chancellor.

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

Does the hon. Gentleman agree that we have such hopeless productivity growth because our research and development is very low, by international standards, as is infrastructure investment? Also, the rights and security of people in work are now low, making it easier for them to be sacked. In Germany, where people can stay in work, employers have to invest in their productivity because they cannot get rid of them. Here, however, we are destroying rights and creating short-term, low-paid jobs, which is resulting in lower productivity.

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

I could not agree more with the points made by all three hon. Members who have intervened on me.

The Red Book also shows that public sector net investment—capital investment in the public sector—is set to fall for the next four years. I have to ask Conservative Members this question. With industry in trouble and manufacturing contracting, as it has done in the past quarter, how will it help productivity if we have to cut public sector net investment in the capital side of the economy in order for the Chancellor to meet his rendezvous with destiny in 2020 and have his budget surplus? We need investment in capital in order to have productivity—that is where it comes from.

It is interesting to see what the OBR thinks we will have to do in order to get the books to balance. It believes that UK private sector business investment will have to make up the difference. It believes that private business investment will come to the rescue and contribute a quarter of the expenditure contribution to GDP growth in the period to 2020 in order to achieve the Chancellor’s fabled budget surplus. So, to make all the sums work, there has to be growth. Where is the growth coming from? According to the OBR, a quarter of all the potential expenditure in the economy between now and 2020 has to come from business investment. [Interruption.] Bear with me as I go through the numbers, because they are important. According to the OBR, business will have to contribute 0.6 percentage points each year to GDP in order for the economy to grow sufficiently to deliver the taxes to enable the Chancellor’s budget to come into balance.

There is only one problem. Historically, from 1990 to 2008—that is, throughout the boom period—the level of investment that British business managed to achieve as a percentage of GDP annually was 0.3, which is precisely half what the OBR thinks that business will have to invest between now and 2020 if the Chancellor’s numbers are to work. That is not going to happen.

Photo of David Rutley David Rutley Conservative, Macclesfield

The hon. Gentleman says that the Chancellor lacks strategy, but that is clearly not the case. He was clearly not listening to the same Budget speech that I was listening to. That speech included supply-side measures, with business taxes going down and infrastructure being improved. We are seeing massive Government investment in the northern powerhouse to tackle the challenges, and private sector investment is coming in on the back of it, including £1 billion of investment in Manchester airport over the next 10 years. Is not that the sort of leverage that the Government should be seeking?

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

If the hon. Gentleman had been listening carefully instead of following his script, he would understand that I am in favour of all the supply-side measures that we can get, because that is how we get growth. I am simply pointing out that the Budget figures that we have been presented with in the Red Book, alongside the OBR’s independent analysis, suggest that business investment will have to be double the level of its historical average, at a time when the global economy is slowing, in order for the Budget numbers to work. That is not going to happen.

David Rutley made a reasonable point, however, and I shall follow on from it by asking: how do we boost business investment? The Budget includes a cut in corporation tax, yet our rate is already the lowest in the G20. How can a further cut produce any more inward investment? The incentive is already the biggest it is going to be, so cutting it even more at the margins will not increase incentive. That will just waste funds. Even with that—I have raised this in the House before—because there is so little outlet for investment at the moment, much of companies’ profits from reduced corporation tax is going into share buy-backs, which is a complete waste of time because it does not add to productivity.

The other tax issue in the Budget is the cut in capital gains tax. There is an argument for cutting capital gains tax, but here’s the point: which Chancellor raised capital gains tax in 2010? It was the Chancellor who is sitting there. Where is the long-term plan in raising it and then lowering it? The confusion of signals is exactly why businesses are not investing. They do not know what taxes will be from one Budget to another, which, at the moment, is every three months. [Interruption.]

Photo of David Rutley David Rutley Conservative, Macclesfield

I thank the hon. Gentleman for giving way. I was not seeking to make a point, but I will now. The Chancellor has clearly demonstrated that he has his public finances under control—[Interruption.] The deficit is massively down and he is now in a position to take forward the changes to which George Kerevan refers.

Photo of Natascha Engel Natascha Engel Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. George Kerevan has been on his feet for 15 minutes and is taking an awful lot of interventions—he is very generous like that —but over 40 Members want to speak and I do not think that I am going to get everybody in. If he limits the number of interventions he takes, I will be very grateful.

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

As ever, Madam Deputy Speaker, I am at your service and the service of the House. I will come to my final point, because I am sure that we will be discussing this at the next Budget in another three months.

The Chancellor talks about living beyond our means. He prioritises the budget surplus. He talks about intergenerational fairness. He says that if we do not get overall national debt down, it will be a burden on future generations. Let us test that and go back to the late 1940s and 1950s, when the national debt as a share of GDP was more than twice what it is now and was coasting at over 200% at one point. For most of the ’50s it was 150%, which is twice what we have at the moment. Where did it come from? It came from Governments, particularly Conservative Governments, borrowing money. Most of the rise in national debt did not come during world war two, but during the late ’40s and early ’50s as we tried to rebuild Britain’s infrastructure following the depredation of the war. Harold Macmillan was building a million houses a year. We invested and the national debt was pushed up.

Here is the thing: if huge national debts weigh heavily on future generations, let us look forward. What happened to baby boomers such as the right hon. and learned Member for Rushcliffe and me? Our generation has houses and pensions. We have benefited from state-funded investment in national infrastructure. The whole notion that investing and running up a budget deficit places a burden on future generations is not historically true. Did the economy grow fast in the ’50s and early ’60s? Yes, it did.

Here is my final point and my message for the Chancellor to reflect on: when trying to control public spending, what matters is what it is spent on. Harold Macmillan and the Conservative Governments of the 1950s invested in infrastructure. This Chancellor is borrowing to invest in current spending, which gets blown away by the wind, and if we do that, we fail. It is no wonder that the Chancellor wants his rendezvous with destiny in 2020. He wants to pretend that he can run a budget surplus. It may never happen. Even if it does for one year, it is unsustainable. The Chancellor does not understand business or how the economy works. He pretends he does and talks a good game, but he has not delivered productivity, which is the core thing that we need in this country.

Photo of Maria Miller Maria Miller Chair, Women and Equalities Committee 2:44 pm, 22nd March 2016

It is a great pleasure to follow George Kerevan, who always speaks so eloquently, but I must say that I disagree with absolutely every word he said. Boosting productivity is at the heart of this Government’s Budget, which is plain for everybody to see. My right hon. and learned Friend Mr Clarke said that the global economy is slowing down and that we need to be fighting fit for the future. This Budget will help put Britain in that place.

I pay tribute to the Chancellor for delivering such a strong Budget, but what we should all do first is pay tribute to our nation’s wealth creators. It is them, not us sitting here in Parliament, who have put Britain back on top with one of the world’s strongest economies. They are the farmers whom I met last week in Hampshire. They are the partners who run the new John Lewis store in my constituency. They are small and medium-sized businesses up and down the country. They are people like Beryl Huntingdon, who runs Absolutely Offices, or Graham Murphy, who runs RDT. They are the people, innovators and entrepreneurs putting Britain back on top. We must acknowledge their immense hard work in getting our country into the position it is now in.

Photo of Maria Miller Maria Miller Chair, Women and Equalities Committee

If the hon. Lady will forgive me, I want to make progress because of the number of people who want to contribute.

The Government have recognised their role in creating the right conditions for business success. They have created an environment in which businesses feel confident about investing by putting in place the right reductions in business and job taxes to encourage growth and success. They have put in place the right infrastructure investment—the £100 billion going into infrastructure over this Parliament, including Crossrail 2, which will do so much to reduce pressure on other parts of the rail network, such as the Wessex route, which affects many hon. Members and is well over capacity. The Budget is also investing in people, underlined by the commitment to 3 million new apprenticeships by 2020, including 5,000, some of which will be degree level, in my constituency at the Basingstoke College of Technology.

People are the biggest asset of most organisations. According to the CBI, some of the biggest challenges facing business in the UK today are retaining top talent and getting appropriately skilled staff. We may have record employment levels, which is to be applauded, and the highest number of women in work, but if we are to be fighting fit for the future, we must get the best out of every single member of our community. While much has been done, there is still more to do, particularly on women’s role in the workforce.

Record numbers of women are in work and the Chancellor is to be congratulated on that, particularly because of the investment he secured for doubling the amount of free childcare. There are 2 million women who would like to be in work and 1 million working women who would like to work more, but they cannot find the right jobs. Some 41% of women in this country work part time, many because they cannot get hold of the right flexible work that fits around their family and caring responsibilities. I gently draw the Chancellor’s attention to the second report of the Women and Equalities Committee, which is all about one of the Government’s great aspirations: to eliminate the gender pay gap in a generation. We can do that if all jobs are more flexible, if men are better able to share care in their family life, and if there are national pathways for women to get back into work.

I also draw the Chancellor’s attention to an Equality and Human Rights Commission report, published today, on the level of maternity discrimination that 77% of pregnant mothers and people on maternity leave are enduring. We are not making the best use of women in this country, and I would like the Government to pledge to take active steps to change the situation, so that every woman can do a job that they want to do in order to make the biggest contribution they can to boosting productivity in this country.

Photo of Paula Sherriff Paula Sherriff Labour, Dewsbury 2:48 pm, 22nd March 2016

I rise to speak to amendment (a), tabled in my name and those of the hon. Members for Glasgow Central (Alison Thewliss) and for Berwick-upon-Tweed (Mrs Trevelyan) and my hon. Friend Greg Mulholland. I served on the Finance Bill Committee with the hon. Member for Glasgow Central last year, and it was during that Bill’s passage that she and I first tabled amendments on this issue. I hope that we will finally see them reflected in legislation this year.

I thank the hon. Member for Berwick-upon-Tweed, who, as a Government Back Bencher, co-sponsored the amendment, and my right hon. and hon. Friends who have given their support, but it is the campaigning work of so many others outside this Chamber that has driven us forward, including more than 300,000 people who signed Laura Coryton’s petition on the issue. The campaign against the tampon tax will serve as an inspiration. It is an example of how grassroots campaigns and Back-Bench Members can make a positive change at the highest level.

It is one of the absurdities of our tax regime that tampons and sanitary towels are treated as luxuries, when periods are simply a fact of life for women. Last week, we heard appalling reports from food banks about how women, who were unable to afford tampons, were resorting to using newspapers and socks.

Photo of Maria Miller Maria Miller Chair, Women and Equalities Committee

Will the hon. Lady join me in thanking the Financial Secretary, who is in his place, for all his hard work in taking the fight directly to the European Union and in negotiating the change that the Government have put on the table today?

Photo of Paula Sherriff Paula Sherriff Labour, Dewsbury

I do thank the Financial Secretary in the same way that I thank everybody who has supported this long-standing campaign.

It cannot be acceptable that women are having to use socks and newspapers as a substitute for sanitary protection. I hope that, as well as cutting prices across the board, we can ensure that all women have access to the protection that they need.

This campaign is not just about money. It is about time that we removed the stigma attached to the basic facts of women’s lives. The Prime Minister said yesterday that he will always remember explaining this issue to the 27 Heads of Government at the European Council. The fact that they had to address this issue directly is itself a great step forward for women.

I am glad that the Government have now taken on board the campaign’s message. It makes me the first Opposition Back-Bench MP successfully to move an amendment to a Budget resolution. If nothing else, I will at least achieve lasting fame as a parliamentary pub quiz answer. That does not mean that our work is done here. There are a couple of outstanding issues that I hope the Minister can address.

Most pressingly, there is the question over what will happen to those women’s charities that have benefited from the tampon tax fund since the autumn statement back in November. I hope the Minister will confirm today that even after the tax is scrapped he will continue to provide the financial support that they so desperately need.

We will also need to take the final step by legislating for the measure the Finance Bill, and at European level. It would be fitting if this House could pass those amendments before the referendum in June, and I hope that the Minister can commit to that timetable today. On the latter point, I hope that he will be back at the Dispatch Box tomorrow with the expected announcement of the EU VAT action plan.

There is also a challenge to ensure that women get the full benefit of the tax cut, and that the cut does not simply result in increased profits for the manufacturers and retailers of sanitary products. I am writing to them on that matter myself, and I encourage the Government to join me. Those companies might be able to provide part of the answer to the issue of future funding for women’s charities. I hope that it would not be too much of a test of our powers of persuasion to encourage them to advertise women’s charities on their packaging, and make donations themselves. Women have no choice but to pay companies for their products, and I hope that those companies will make the choice to help pay for our services.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Cities)

I thank my honourable sister for giving way on this point. I thank her for her support and for the work that we have done on this. I fully support what she is suggesting about the charitable giving from the sale of packets of tampons and sanitary towels. Does she accept that the definition of sanitary products needs to be widened slightly to cover items such as breast pads for mothers who breast feed, maternity pads for women who have just had children and incontinence pads, which are not always available to people free of VAT?

Photo of Paula Sherriff Paula Sherriff Labour, Dewsbury

I thank the hon. Lady for her intervention, and I very much look forward to campaigning with her on the issues that she has just mentioned.

This evening we have the opportunity to make right an historic injustice by making clear our intent to abolish VAT on female sanitary products. The amendment allows us to do just that, and I hope that the whole House will support it.

Photo of Graham Evans Graham Evans Conservative, Weaver Vale 2:54 pm, 22nd March 2016

Thank you, Madam Deputy Speaker, for calling me to speak in this very important debate. It is a pleasure to follow Paula Sherriff, to whom I pay tribute. Given the mark that she has made on this place—I am pretty sure that I speak for the whole House in this regard—she will be more than just an answer in a future pub quiz. It is also a pleasure to follow my right hon. and learned Friend Mr Clarke. He is certainly still a big beast. He was a big beast in the Treasury and he is now turning out to be a bit of a national treasure on the Government Benches.

This Budget puts the next generation first—I have to declare an interest here, as I have three young children—and it continues our long-term plan to reduce the deficit and achieve a surplus, and sets out the long-term solutions to long-term problems to ensure that Britain is in a strong economic position for the future.

Thanks to the work of my constituency neighbour, my right hon. Friend the Chancellor, Britain is set to be the fastest-growing economy in the G7, with the Office for Budget Responsibility predicting growth rates in excess of 2% for the remainder of this Parliament. [Interruption.] We are still the envy of the European Union, and we are stronger together. The challenges that the country faces are growing: global stock markets have had the worst start to the year for 45 years, prospects for emerging markets have worsened, and the sharp fall in the price of oil and commodities has contributed to lower global growth.

Eight years ago, the UK was one of the worst prepared countries to face the financial crisis. Today, it is one of the best prepared. We have fixed the roof while the sun was shining. Against that backdrop of global uncertainty, this Budget delivers security for hard-working taxpayers. Small businesses are the engine room of our country. They account for 99% of all private sector businesses, employing 15 million people—60% of all private sector employment. The combined annual turnover of SMEs was £1.8 trillion last year, nearly half of all private sector turnover in the United Kingdom.

Along with many small businesses across Weaver Vale, I welcomed the announcement in last week’s statement that business rate relief would be doubled permanently. Businesses with a rateable value of £12,000 and below will receive 100% relief. Some 600,000 small businesses across the country will now pay no business rates whatsoever.

Photo of Simon Danczuk Simon Danczuk Labour, Rochdale

On that point, I also welcome the fact that, from 2017, 600,000 small businesses will be taken out of business rates, but it does not happen for a year. Retail business rate relief, which is worth £1,500, has also been abolished, but small shop owners will still have to pay that £1,500 for the next 12 months. Is that not disappointing?

Photo of Graham Evans Graham Evans Conservative, Weaver Vale

I bow to the greater knowledge of the hon. Gentleman, who does a great job as a small business owner in Rochdale. We cannot do everything at the same time, but overall I welcome this Budget. I am sure that he, too, welcomes the overall message to small businesses as they receive help with those reliefs.

Businesses with a property rateable value between £12,000 and £15,000 will receive tapered relief. Two thousand properties in Halton Borough Council and 7,000 properties in Cheshire West and Chester have a rateable value of below £15,000 and will all benefit substantially from the changes.

Building a northern powerhouse and rebalancing the national economy is a core part of this Government’s economic strategy. In 2015, over half a million more businesses were established outside London and the south-east than in 2010. A third of new businesses are in the northern powerhouse, and the overwhelming evidence is that those new businesses are creating more and more jobs.

In my constituency of Weaver Vale, unemployment is down by 57% since 2010. Almost three quarters of the growth in employment has been in full-time jobs, and real wages are rising strongly. Since 2010, there have been around 4,000 new housing starts in Cheshire West and Chester, and just under 2,000 new starts in the Halton and Runcorn area.

Nationally, housing starts are at their highest levels since 2008, and are up by 91% when compared with the low point in 2009. Local authorities will be able to access the £1.2 billion starter home land fund to help prepare more brownfield sites for starter homes, such as the legacy brownfield sites from ICI in Northwich in my constituency. This Government are helping generations of younger people in their 20s and 30s to buy their first home. Crucially, they are protecting our green belt while at the same time helping more young people to get on the property ladder.

The UK was the fastest growing major advanced economy in 2014, the second fastest in 2015 and it is forecast by the OECD to be the fastest growing in 2016. Under Labour, £1 in every £4 spent by the Government was borrowed, which was absolutely outrageous. Now it is £1 in every £14. The deficit has been cut by two thirds, and we will run a surplus by the end of this Parliament.

This Budget moves Britain from a high-tax, high-welfare, low-wage economy to a high-wage, low-tax, low-welfare economy. Next year, the long-awaited Mersey gateway bridge will be opened by a Conservative Government—and a Conservative Chancellor has made that happen. That reminds the world, if it ever needed reminding, that Great Britain and the north of England are open for business.

Photo of Iain Wright Iain Wright Chair, Business, Innovation and Skills Committee, Chair, Education, Skills and the Economy Sub-Committee 2:59 pm, 22nd March 2016

I would like, if I may, to advance the argument made by George Kerevan about the downgrading of productivity. Productivity was the central economic challenge of this Parliament—so said the Chancellor last year. A failure to address the productivity gap between ourselves and our main economic rivals would undermine our competitiveness and reduce living standards, so to address that, the Government published their productivity plan in July 2015.

In our inquiry into the plan—our first in this Parliament—my Select Committee found it to be somewhat worthy but vague, and without the firm delivery and implementation measures needed truly to address the productivity challenge. Of course, it is difficult for any Government to turn around something as substantial and structural as the productivity gap, especially only nine months after the publication of their report, but the downgrade to productivity in last week’s Budget reinforces the Committee’s view that although many measures in the plan were welcome, collectively they did not constitute a radical departure or step change that would really help to boost productivity. Crucially, as the OBR stated in its report last week:

“Lower productivity growth means lower forecasts for labour income and company profits, and thus also for consumer spending and business investment. In aggregate, this reduces tax receipts significantly.”

Productivity improvements require a long-term and sustained approach to business investment, yet the Red Book shows how much business investment—that engine that will power better competitiveness, increase wealth creation and employment generation and, ultimately, bring about higher wages and rising living standards—has stalled. Real business investment fell in the final quarter of last year. The manufacturing sector in our country is in recession. The OBR forecasts that business investment will be 2.6% in 2016, a massive 4.9 percentage points weaker than only four months ago at the time of the autumn statement.

The Government are not helping through their policies. The Chancellor should be encouraging firms to invest in the latest technology, plant and machinery to ensure that they can compete with the most modern kit anywhere in the world, as well as investing in research and innovation to ensure that British-based firms are coming forward with the goods, services and products that the world wants to buy.

Photo of Robert Jenrick Robert Jenrick Conservative, Newark

Is that not exactly why the Chancellor has cut corporation tax and capital gains tax: to encourage companies of all sizes, particularly small and medium-sized businesses, to invest in research and development, new products and the jobs of the future?

Photo of Iain Wright Iain Wright Chair, Business, Innovation and Skills Committee, Chair, Education, Skills and the Economy Sub-Committee

I would suggest that the approach on capital gains tax is contrary to having a long-term economic plan, as it encourages short termism—people do not scale up, but sell out quickly. That is a major structural concern.

To a large extent, the Chancellor has done positive things in this Parliament to encourage investment. In particular, the changes to the annual investment allowances are very welcome and will allow firms to invest with greater certainty. Other countries, however, are doing much more, and Britain risks missing out. Addressing the huge disincentive in business rates for firms wanting to invest in new plant and machinery should have been at the very top of the Chancellor’s list, and although the changes to business rates for small businesses were welcome and constituted the largest tax cut of this Budget, it seems ridiculous that the Chancellor did not resolve the ludicrous situation whereby a firm faces a larger tax bill in the form of higher business rates by choosing to invest in new plant and machinery. For a Government who pledged to do all they can to rebalance the economy towards manufacturing and specifically, in the past six or seven months or so, to help the hard-hit British steel industry, the omission of that single measure from the Budget was a significant blow for industry, particularly the steel industry, which wanted the Government to give a favourable signal to invest.

Photo of Angus MacNeil Angus MacNeil Chair, Energy and Climate Change Committee

It seems that there is only one club in the Conservative golf bag for tackling productivity, and that is tax alone. The Conservatives have to face up to infrastructure, to the low-wage economy and to the lack of housing. Owner occupancy is at a 20-year low and house building is low as well. Workers need houses, and if that growth does not happen, combined with infrastructure, productivity will remain low.

Photo of Iain Wright Iain Wright Chair, Business, Innovation and Skills Committee, Chair, Education, Skills and the Economy Sub-Committee

The hon. Gentleman makes an important point about infrastructure, and there was very little in the Budget to address that. Earlier, I mentioned the possibility of rebalancing. In 2012, we were promised an export-led recovery, and the Government announced proudly a target of £1 trillion of exports by 2020. I am all for ambition and for stretching targets, but given the Government’s limited ability to shift the needle on the value of exports by companies, that ambition seemed at best somewhat misplaced and, at worst, even very foolish.

The OBR stated last week that the Government will miss its target by 36%, which is £357 billion, and that net trade will actually be a drag on economic growth for every single year of this Parliament, but there was nothing in this Budget to boost exports. The word “exports” did not even pass the Chancellor’s lips in his statement on Wednesday and it was not mentioned again this morning. Does that mean that the Government have shelved that target? Will Ministers consider providing assistance and encouragement in the form of export vouchers so that firms from Britain can invest and export?

A further way to boost productivity is by investing in skills, and the flagship skills policy of this Government is the target of 3 million apprenticeships by 2020, funded through the apprenticeships levy. Now, only 2% of larger firms will pay that, so what will happen to the other 98% of firms, as well as the detail of the levy? We were promised by the Minister for Skills in the run-up to the Budget that all would be revealed, including this new shiny model, in the Chancellor’s Budget statement, but for a Budget billed as putting the next generation first, there was precious little detail about how the apprenticeships levy—only 12 months from its start—will operate in practice. As with exports, the word “apprenticeships” was not even mentioned by the Chancellor.

Photo of Roger Mullin Roger Mullin Shadow SNP Spokesperson (Treasury)

Does the hon. Gentleman agree that one of the biggest drags skillswise on productivity in our economy is at the intermediate and higher intermediate skill levels? We have had this problem for more than 30 years.

Photo of Iain Wright Iain Wright Chair, Business, Innovation and Skills Committee, Chair, Education, Skills and the Economy Sub-Committee

The hon. Gentleman makes an important point. My point is that by trying to ramp up the quantity of apprenticeships while making a major—possibly the major—change to the institutional architecture of apprenticeship delivery, the Government risk missing their target and that, as a result, the skills policy in this country will be affected adversely.

Budgets are rarely remembered past a couple of weeks or months. This one will be remembered, but for all the wrong reasons: incompetence, callousness, clumsiness and the resignation of a Cabinet Minister. It is also concerning that it will be remembered for downgraded productivity and a failure to address it, leading to lower economic growth, relatively falling living standards, lower tax receipts and deteriorating public finances. The Budget has helped to make this country somewhat poorer.

Photo of Steven Baker Steven Baker Conservative, Wycombe 3:07 pm, 22nd March 2016

I rise to support the Budget and, in particular, to welcome the Government’s supply-side reforms. This has been a dramatic Budget, and I would be failing the Government if I did not concentrate on the areas of drama. First, on the disability reforms, the challenge before the Government is clear: to deliver a policy that we can all be proud to defend in our constituencies and in front of any objective scrutiny. I do not think we would have been able to do that if the Government had not wisely made the decisions that they have over the past few days.

When I look at page 150 of the OBR’s report, on the successive forecasts for spending on disability benefits, I can see that the Government’s envelope within which to deliver this humane disability policy is very clear. When we came to power in 2010, the Government were spending £12 billion on disability benefits, which rose to £16 billion by now, which is an increase of a third. The figure is forecast, with the reversal of the PIP measures, to reach £18 billion by 2020-21. It is clear that the Government have an envelope within which to work to ensure that we have a world-class policy that any of us can defend, even in an environment of fierce and partisan political attack.

I signed the two amendments on VAT to highlight the extent to which VAT is controlled by our membership of the European Union. Neither amendment has legislative effect. I congratulate Paula Sherriff on her amendment, which, as she said, makes clear our intent to zero rate tampons and other sanitary products. Of course, both amendments are pursuant to Government policy, and this is the bitter irony of our membership of the EU. We had to have a dramatic row over VAT in the context of an EU referendum in order to secure the following commitment from the European Council:

“The European Council notes that the Commission intends to publish shortly a communication on an action plan on VAT. It welcomes the intention of the Commission to include proposals for increased flexibility for Member States with respect to reduced rates of VAT, which would provide the option to Member States of VAT zero rating for sanitary products.”

That is welcome, and it is clear that the Government’s policy and the House’s wish is that sanitary products should be zero-rated. It is welcome that the Government have secured this change of EU policy but, particularly as a participant in the campaign, I do not want us to have an EU membership referendum every time we want a different policy on our second largest tax.

Photo of Kenneth Clarke Kenneth Clarke Conservative, Rushcliffe

Will my hon. Friend accept that British Governments have always supported the idea of having an EU framework on VAT? Otherwise, the problem is that there is pressure on Governments to compete with each other in lowering the tax on selected products when they think that their manufacturers or producers will benefit. Also, it is very difficult to operate an open trade area if everybody is going for competitively different tax rates. If we go too far down that path, the main beneficiaries are smugglers.

Photo of Steven Baker Steven Baker Conservative, Wycombe

My right hon. and learned Friend raises some interesting points and, although I am grateful for the additional minute for my speech that he has given me, I cannot touch on all of them. He illustrates the difficulty of operating a customs union among interventionist nation states. The old doctrines of liberalism did not require that one got rid of non-trade barriers, for the most part. There were no non-trade barriers because laissez-faire was the norm. I abridge an argument that could be made at much greater length, but at the heart of the exchange that we have just had is the difficulty involved in interventionist nation states attempting to engage in free trade. In a world of globalisation, air travel and the internet, we need some degree of harmonisation on a global scale, provided that that enjoys democratic consent. That is probably a subject for another debate, but I am grateful to my right hon. and learned Friend for his intervention.

Until the VAT directive 2006/112/EC is changed, it will be technically unlawful under EU law for any amendment to be introduced in UK law, even if it is not applied and takes effect in the future. That is the situation that we face. It is similar to the situation concerning insulation products, on which a judgment in the European Court of Justice on 4 June 2015 ruled that

The United Kingdom cannot apply, with respect to all housing, a reduced rate of VAT to the supply and installation of energy-saving materials, since that rate is reserved solely to transactions relating to social housing.”

That is the position in law while we are in the EU. Although I hear what my right hon. and learned Friend says, it is a fact that while we remain in the EU, we cannot control what is currently our second-biggest tax. I am grateful that we have had this opportunity to put this part of the EU membership debate on the public record and have it discussed in the media. I am particularly grateful that the Government will not be opposing either amendment. If there is a Division, I shall certainly vote for amendment (a) and I shall probably abstain on amendment (b).

Perhaps the most dramatic aspect of the Budget is a subject that I have talked about at every Budget. It is a subject that I mentioned in my maiden speech—the insane state of monetary policy all around the world. If the European Central Bank was printing €80 billion of new money every month in paper and shipping it around the continent in articulated lorries, it would already have destroyed faith in paper currency. Yet, because the process is one of buying Government and corporate bonds, we simply notice a recirculation of money and celebrate the coarse aggregate results. In 25 seconds, I cannot give a lecture on capital-based macro-economics—[Hon. Members: “Oh!”] If Opposition Members would like to call a Back-Bench debate on the subject in their own time, I would be glad to give them the lesson. I welcome this Budget, but its dramatic consequences will be felt much later as a result of easy money.

Photo of Rachel Reeves Rachel Reeves Labour, Leeds West 3:14 pm, 22nd March 2016

The Budget was a story of missed targets for the Chancellor and missed opportunities for our country and, like the Budget of 2012, it is rapidly turning into a total mess. I am pleased to see some of the U-turns, but much more is needed.

I associate myself with the remarks of my hon. Friend Mr Wright, the Chair of the Business, Innovation and Skills Committee. He spoke powerfully about the importance of rebalancing our economy. That is so much needed, especially after some of the numbers we saw in the Budget last week. As a result of the lower productivity, the lower exports and the other things my hon. Friend spoke about, economic growth has been revised down for every single year of this Parliament. A staggering £71 billion has been knocked off our tax revenues. As a result, the Government are now set to borrow an extra £38 billion over the next five years. That is why, after breaking his promise to clear the deficit in the last Parliament, the Chancellor has now broken his pledge to bring the debt down as a share of GDP in this Parliament as well.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

Would the hon. Lady’s argument not have a lot more weight and credibility had her party—as she well knows because of her position on the Front Bench—not opposed every single one of the £83 billion-worth of welfare cuts that had to be made in the wake of the 2010 fiscal inheritance?

Photo of Rachel Reeves Rachel Reeves Labour, Leeds West

I wonder whether the hon. Gentleman still thinks we should go ahead with the cuts to personal independence payments. It certainly sounds like it from those remarks.

Let me deal with the specific issues surrounding personal independence payments and the impact that this Government have had on disabled people. While the fiasco is unfolding around us, let us remember the broader points. This is a Government—the Chancellor, the Prime Minister, the former Secretary of State for Work and Pensions and the current Secretary of State for Work and Pensions—who forced through the bedroom tax, affecting 500,000 people, the majority of them disabled, by about £700 a year. This is the Government who forced through the closure of the independent living fund. This is the Government who forced through cuts to employment and support allowance only last summer, affecting 500,000 people and worth about £30 a week or £1,500 a year. The U-turn on personal independence payments, although welcome, is only a fraction of the damage and the pain that the Government have caused to disabled people in all our constituencies.

Let us be clear what this U-turn means. The new Secretary of State for Work and Pensions came to the Chamber yesterday and said that the Government are not going back to the welfare bill and to disabled people for further cuts. But in the course of yesterday’s statement, that was watered down a little. The Government now have “no plans” to come back to the welfare budget and disability benefits. That is reminiscent of when they had no plans to increase VAT and all the other things they had no plans to do, until they did them and until they hurt the people who least need to be hurt.

When the Chief Secretary winds up the debate this evening, I would like to hear whether there are no plans, or whether the Government can guarantee that there will be no further cuts to the welfare budget or to the benefits of disabled people. We know that there is a black hole of £4.4 billion in the public finances. If it is not the wealthy and not disabled people, who is going to pay the price? Are there going to be further cuts to education, health, defence and our police? Will there be further increases in taxes—on VAT and taxes for ordinary working people? Something has to give and we need some answers about the black hole in the Budget that we are voting on, although we do not know what it means. What does it mean for all those different groups of people?

As the Chair of the Office for Budget Responsibility told us at the Treasury Committee meeting this morning, the issue is not just that there is a £4.4 billion black hole in the social security budget, but that the Government have failed to meet their welfare cap. They are going to fail in every year of this Parliament, by a staggering £20 billion—£20 billion more on social security spending in this Parliament than the Government set out, a further black hole in their public finances. Why did they get into this mess in the first place? It is because they wanted to cut taxes for the wealthiest in society. They wanted to cut capital gains tax, increase the threshold before people started paying the 40p rate of tax, and increase the ISA limit from £15,000 to £20,000 so that we can all save the full £20,000 a year tax free. That is great for those who have the money, but most of our constituents are lucky to earn £20,000 a year, let alone put it away in savings. That is why the Government raided the social security budget yet again to give tax cuts to their friends, the wealthiest and the most privileged in our society.

Last week’s Budget could have been different. For example, the Government could have put more money into infrastructure investment. In my constituency, we are paying a heavy price for the floods on 26 December. The Chancellor said earlier that I should have welcomed the money for flood defences, but in 2011 the Government cancelled a flood defence scheme in Leeds worth £135 million. Last week, they announced £35 million for Leeds. Well, I am sorry for not thanking the Chancellor, but an offer of £35 million rather than £135 million is not really worth the thanks, and the businesses in my constituency will pay a heavy price if the rains come again.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Defence)

I was with the Environment Agency just last night, and it told me it will not have sufficient funds to put in place measures—particularly catchment management measures —to prevent future flooding.

Photo of Rachel Reeves Rachel Reeves Labour, Leeds West

Last week, the Government announced £150 million for York, Calder Valley, Leeds and Cumbria. However, as I said, the scheme that was cancelled in Leeds was worth £135 million, and that £150 million is for flood defences, flood resilience and flood maintenance. Yet again, the Government are short-changing people who need them to step up to the mark, as our volunteers in York and Leeds and across the north of England did when the rains fell, the rivers rose and buildings—houses and businesses—were flooded.

Last week’s Budget could have been different. It could have been a different Budget for disabled people. It could have been a Budget that helped ordinary working people and the most vulnerable in our society. It could have been a Budget that put money into the northern powerhouse and the infrastructure that we need. However, it was a different Budget, because this Government have different priorities. That is why we need a Labour Government on the side of ordinary working people and the most vulnerable in our society.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough 3:21 pm, 22nd March 2016

Rachel Reeves made a strong case, but, unfortunately, it is desperately flawed. As she knows, the fact of the matter is that, in the 13 years of the Labour Government, the gap between the richest 10% and the poorest 10% widened. During her party’s period in government, we had record numbers of children in workless households, and unemployment, including youth unemployment, rose.

Photo of Graham Evans Graham Evans Conservative, Weaver Vale

My hon. Friend is making a powerful point. During 13 years of Labour, many gaps were created, but particularly the north-south divide. Does he therefore welcome the Chancellor’s announcement of the High Speed 3 line from Manchester to Leeds, which will significantly cut train times—by 30 minutes?

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

I do. My hon. Friend is absolutely right. The fact of the matter is that this Government are taking the difficult decisions on infrastructure—on things such as nuclear power and airport capacity.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

I will not at the moment, but I might later.

The previous Labour Government, in very benign economic circumstances—mainly driven, of course, by debt and borrowing—failed to take those decisions.

I welcome the Budget in general terms—of course, I took issue with the Chancellor’s comments about Brexit, and I think the OBR’s anodyne comments on Brexit were misrepresented. However, there were some good things in the Budget, which was not a redistributive Budget from poor to rich, but largely a redistributive-neutral Budget, as the Institute for Fiscal Studies said.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

I will not at the moment.

I welcome the lifetime ISA. I welcome the tax crackdown on offshore property developers and transfer pricing. It was good to see the changes in the personal allowance, which will take many of my constituents out of tax.

Indeed, my constituency is in a very fortunate position, and I pay tribute to the Chancellor for delivering nothing short of a jobs miracle. We have seen the largest reduction in youth unemployment in the history of my seat—and probably in England as a whole—at over 70%, and there has been a more than 60% reduction in adult unemployment. We also have record numbers of apprenticeships. That is taking people out of poverty. That is the great record of this Government.

The decision to resile from the commitment on PIP was absolutely right. There is a moral, social equity issue—[Hon. Members: “A U-turn.”] It is a U-turn—that was well spotted by Labour Members. However, it was absolutely right to make that decision. It was right for my right hon. Friend Mr Duncan Smith to point up the juxtaposition of tax reductions for well-off people and the change in PIP. However, it ill behoves Labour Members to lecture the Government, when they voted against every welfare change in the last Parliament. What would they have done, and what would they do now? It is incumbent on the Opposition to come through with a coherent, comprehensive alternative on fiscal policy, public expenditure and tax.

Let me raise two issues that have caused me some concern with the Budget. The problem the Government have encountered, which we have discussed over the last few days, has given rise to a proper debate about intergenerational fairness. We need to look again at pensioner benefits. We cannot discuss welfare without looking at things such as the triple lock and pensioners benefits. I rarely agree with my right hon. and learned Friend Mr Clarke, but he is absolutely right that we cannot see these things in a vacuum, and it is important that we look again at means-testing and pensioner benefits. It is morally wrong to make large transfers of wealth from the young to the old. There has to be a consensus on this issue.

One suggestion I would make is that, if we are going to means-test pensioner benefits, we should perhaps link that to the most acute societal issue we have at the moment, which is adult social care. We should have co-ordination and integration between acute district hospitals and the provision of care and housing for older people. I think there are older pensioners who would understand that, and it is something the Treasury needs to go forward with and look at very seriously.

The second concern is that, as we speak, Cambridgeshire County Council—it is not my local authority, because Peterborough City Council is a unitary authority—is looking at the devolution plans for East Anglia. At the moment, those do not stack up. We have not had enough information—in some senses, I am reprising the comments of my hon. Friend Sir Henry Bellingham yesterday—and we need more. The proposal has been rushed to get it in the Budget statement. It needs to be finessed. We need to carry businesses with us. Neither local enterprise partnership agrees with it. The majority of councils are, at best, ambivalent, and that includes Cambridge City Council, which has rejected it. We need to look at this proposal again.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

I will not at the moment.

It may be that there are synergies between Lowestoft and Peterborough, or between Norwich and Ipswich, but I have yet to see them. Let us have more information about funding, governance, infrastructure spending, the role of an executive mayor and what will happen to the existing local government structure. I am not against this in principle, but we cannot promise £30 billion of spending over the next 30 years without more facts. We need to see those, and that is the challenge I give to those on the Treasury Front Bench.

Photo of Catherine McKinnell Catherine McKinnell Labour, Newcastle upon Tyne North 3:28 pm, 22nd March 2016

We learned many things from last week’s Budget, and we have learned perhaps even more from the fallout since. However, the overriding message we seem to be getting is that, six years into his job, the Chancellor cannot keep a promise and does not seem to learn from his past shambolic Budget mistakes. He promised to balance the books by last year, to get debt falling as a percentage of GDP each year and to keep welfare spending within his welfare cap, but on virtually all of his own fiscal targets, as the independent Office for Budget Responsibility confirmed last week, he has failed to deliver.

Of course, this Government’s shortcomings go much further than the Chancellor’s own meaningless targets. A mere six months ago, the Prime Minister told his party conference that he would govern according to “one nation, modern, compassionate” Conservatism. This is the same Prime Minister who last week cheered on a Budget that cut capital gains tax, raised the threshold for the 40p rate, further cut corporation tax, and would see the poorest losing about £1,500 a year in the next few years while some of the richest gain £200. To top it off, the Chancellor pledged to slash disability benefits by up to £1.3 billion a year, which the OBR estimated would lead to some 370,000 disabled people losing an average of £3,500 a year.

Photo of Robert Jenrick Robert Jenrick Conservative, Newark

I want to give some context on the important point about capital gains tax that is being made by the Opposition. Jim Callaghan created capital gains tax when he was Chancellor in 1965, but it has always been lower under Labour Chancellors than under Conservative Chancellors. Even after this change, capital gains tax will be 2% higher under this Chancellor than it was under Alistair Darling, and indeed Gordon Brown in the previous Labour Government.

Photo of Catherine McKinnell Catherine McKinnell Labour, Newcastle upon Tyne North

I do not understand the hon. Gentleman’s point. He is digressing on details of capital gains tax when the point I am clearly making is about the context in which the cut has been made, where the burden of this Budget very much falls on the poorest and the most vulnerable in our society. If that is compassionate Conservatism, bring the nasty party back!

I am pleased and relieved that the Government have backed down on this issue within less than a week. However, I am angry that those people who rely on the personal independence payment, including 1,100 people in Newcastle upon Tyne North, have endured days and weeks of huge anxiety about how they would cope if this level of support was cut. It is unforgivable. I remain equally concerned about how the existing reforms to PIP are quite clearly failing disabled people. Constituents continue to get in touch with me following my recent question to the Prime Minister because they have been told that they are no longer eligible for a Motability vehicle despite its clearly being the only means by which they can leave the house, or indeed get to work. The new PIP assessment is fundamentally flawed. I strongly urge the Work and Pensions Secretary and the Chief Secretary to the Treasury to revisit this issue with fresh eyes and look at reforming the current PIP changes before they embark on any further welfare reform.

Despite the Chancellor’s so-called

“revolution in the way we govern England”,

with the pledge last May to give local areas greater control over local transport, housing, skills and healthcare, it appears that he does not place the same faith in local communities when it comes to our schools. Last week’s Budget confirmed that, far from handing control to local communities, the Government are about to embark on the greatest ever centralisation of our schools system, which will see an end to the role, now a century old, of democratically accountable local authorities as the stewards of our children’s education. My Front-Bench colleagues have already highlighted the glaring black hole in the finances of this plan—£560 million—which raises questions about the extent to which the schools budget will be raided to make up the shortfall.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

My hon. Friend mentions the schools budget. I do not know whether she is aware that in Coventry one or two academies are already in serious trouble because of falling numbers as a result of certain changes in the education budgets.

Photo of Catherine McKinnell Catherine McKinnell Labour, Newcastle upon Tyne North

I appreciate my hon. Friend’s point. It is not just local academies that are in trouble—there are some much bigger and more serious questions that we need to raise. First, why are the Government doing this? There is no proof whatsoever that academies, per se, raise educational standards. It is a distraction that schools now need to focus on this rather than on their educational attainment. Secondly, how will the Government enable the local political leadership to drive up standards and work together, as worked so effectively with the London Challenge, if the power and decision making is so centralised in Whitehall?

Is the Department for Education even fit for purpose to deal with over 20,000 schools across the country—about 3,400 secondaries and almost 17,000 primaries? There are signs that it is already struggling with its current workload of 4,000 schools. As the Education Committee, of which I am a member, recently uncovered, the Department could not even deliver its annual accounts to Parliament in time and required a statutory extension, and there remains doubt as to when it will ever be able to present them. This mass rush to conversion will only add to the current mess. We need only look at the fiasco of the free schools application process, where there is no clear rhyme or reason to the Department’s decisions to authorise new schools.

We see a Department in disarray. Of particular concern for my constituents is how the forced academisation process will fit alongside the large-scale programme of house building that is planned for our area. As a result of the coalition’s national planning policy framework, some 21,000 new homes are expected to be built in Newcastle by 2030, a large proportion of which will be in my constituency. That will require new school capacity, but who will be the guiding mind that will match and create that new school capacity in an area that will be controlled by Whitehall? Newcastle City Council already finds itself in the impossible position of being unable to establish new community schools to cope with existing demand. How on earth will it be able to deliver the right school places across Newcastle upon Tyne North when every school is accountable to the Secretary of State?

Finally, in addition to the fact that apprenticeships were not mentioned in the Chancellor’s Budget even though we were promised that they would be, another glaring omission was the lack of any announcement about how the Government intend to protect our regional airports from the impact of devolving air passenger duty to Scotland. That is crucial to Newcastle airport, which supports 12,000 jobs in the region, and through which £300 million of goods are exported every year. All talk of a northern powerhouse will be completely undermined if the Chancellor fails to deal with the issue urgently.

Photo of Chloe Smith Chloe Smith Conservative, Norwich North 3:35 pm, 22nd March 2016

It is a pleasure to follow Catherine McKinnell. This Budget, like my right hon. Friend the Chancellor’s previous Budgets, helps to create jobs. That is the right thing to do, which is why I continue to support the strategy of lowering business taxes to encourage growth. The corporation tax cut will benefit 1 million companies in Britain, and the business rates measure will help 600,000 small businesses. Cutting capital gains tax, as my hon. Friend Robert Jenrick has carefully laid out, will help to boost enterprise. Reforming stamp duty and abolishing national insurance contributions will help the smallest businesses of all.

The Government have my wholehearted support in putting the next generation first. Our philosophy in the Conservative party is that debt is the most unethical thing of all to leave to the next generation, and I am proud that we continue to pay down the country’s debts; to reduce spending, which cannot possibly have the consent of those who are yet to come; and to steer towards a surplus, which will put the public finances in the strongest position for today’s youngest.

Making it feasible for young people to buy a home or to save in a pension is crucial to intergenerational fairness, which is why I think that the lifetime ISA in this Budget is a positive thing. It should be seen alongside all the other measures that are already helping people in every corner of this country to get their first home. Ultimately, building homes is the most important way to provide homes at a price that can be afforded, and I urge the Chancellor and Housing Ministers to continue to build.

Photo of David Anderson David Anderson Opposition Whip (Commons)

With the average pay for somebody on a zero-hours contract at £189 a week, how does the hon. Lady expect them to save in an ISA or buy a house?

Photo of Chloe Smith Chloe Smith Conservative, Norwich North

I make two points to the hon. Gentleman. First, the percentage of people on zero-hours contracts remains about 2.5% of all who are in work. Secondly, as he will know from the small print of the Budget, for every £4 that somebody saves, the Chancellor will put in £1. That means that at the rate that the hon. Gentleman cites, for example, it is possible to consider taking up a savings product.

It is vital that those who come out of education and skills training have every possible opportunity, which is why the Budget is right to keep up job creation and investment in infrastructure. It is also crucial that we try to represent the values of the next generation. Generation Y —my own generation—and those coming after us value enterprise. Many will set up their own businesses, and many will work in a totally different pattern over their lifetime, so the Budget is smart to turn attention to the growing army of the self-employed. Many of the smallest businesses of all will welcome a drop in their NIC burden.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

Will my hon. Friend use this opportunity to congratulate the Government on the start-up loans scheme, which has done so much to help young people to go into business and fulfil their entrepreneurial objectives?

Photo of Chloe Smith Chloe Smith Conservative, Norwich North

I certainly will, and I welcome my hon. Friend’s reminder of that. I am sure he will agree with me on my next point, which is that we should also prize the ethical approach to business of many of those entrepreneurs. We should welcome the measures in the

Budget that begin to make sense of taxing multinationals in the 21st century. The Government have my full support in ensuring that our tax system demands and gets a fair contribution from companies large and small, domestic and global.

Let me turn to the welfare measures in the Budget. As is well documented, Generation Y has a sceptical approach to the welfare state, and support for the welfare state has steadily declined by generation. We should therefore remind ourselves of the basic principles of what welfare is for. It is a safety net for when we are unable to look after ourselves, perhaps because of sickness, old age or disability. It is a safety net that we will all need in one way or another, so we all have a responsibility to maintain it. Because we are going to live longer on average than previous generations, we need to make sure it is affordable for the future. We also, of course, expect the richest to pay most. In summary, we need a sensible method of working out who needs most support and how to get it to them.

I did not support the measures announced in the Budget seeking to reduce support for the disabled through PIP. The manifesto on which I and my hon. Friends stood at the last election made it clear that we would spend less on welfare, but that we would do so by protecting the most vulnerable. I have supported the Government’s welfare reforms since 2010, principally because they put work first. Universal credit puts work first, as does the most recent reform of the rate for those who are on employment and support allowance and can work. In the 21st century, we should not write off people from work and independence; the policy of spending more on helping people to work despite a disability or a health condition is right.

In some cases, our welfare reforms have been about injustice in other ways, such as in relation to the removal of the spare room subsidy. For example, the pay to stay policy in our current Housing and Planning Bill will relieve taxpayers of subsidising the housing of those who may well earn more than they do, such as, dare I say it, the leader of Norwich City Council. These reforms are about fairness for taxpayers who foot the bill for a benefit they themselves could not expect to enjoy.

I am in the Chamber today to speak up for many constituents who simply want us to use limited resources to provide properly for those who need support. I helped constituents to record their concerns during the consultation on aids and appliances, and I am very pleased that my right hon. Friend the new Secretary of State for Work and Pensions has stopped that measure. We should protect the disabled and make savings elsewhere.

Our manifesto clearly pledged us to back pensioners. At some point in the future, however, we will have to look again at universal benefits. As I have said, the welfare state is a safety net, which means that pensioners need a decent income. That is why I wholeheartedly support the triple lock. But it does not necessarily mean that the most well-off pensioners need benefits as well, as my hon. Friend Mr Jackson and my right hon. and learned Friend Mr Clarke have already argued. When others are more in need—and, indeed, when there must be a balance with other generations—is it right to maintain such policies?

A Mrs Brown recently wrote to the Norwich Evening News letters page:

“Excuse me, but as a baby boomer I was…brought up in post-war abject poverty. We got an apple or orange for Christmas...I worked for everything I have. We never had credit and only had anything we could pay for or we went without.”

She is of course right. I deeply respect her and all my constituents, from any generation, who have worked hard and done the right thing. I am making an argument for fairness in the future, for helping those who most need it and for balance between the generations.

Photo of Susan Elan Jones Susan Elan Jones Shadow Minister (Wales) 3:43 pm, 22nd March 2016

It is a pleasure to follow other speakers in this Budget debate.

There is not a single Member of the House who has not received scores of letters in the past couple of weeks from people deeply concerned by what the Budget proposed on personal independence payments. Let me give the House just one example from my constituency. A woman living in a rural area, about 15 miles from the nearest railway station, was about to lose her Motability vehicle, which she uses to get to work, and she has a pretty severe disability.

I think it is abhorrent and extraordinary that the changes—we welcome them, whether they be resiled from, U-turned or whatever—have come about because of the internal workings of the Tory party, not because of the requirements of people in the most need and those of disabled people across our country. There is no morality in the way that decision was made, and the Government should hang their head in shame for all that has happened in the past few days.

On infrastructure, others have noticed—indeed, my hon. Friend Rachel Reeves wrote an article about it—that according to latest figures from the National Infrastructure Pipeline, which monitors public and private sector projects at more than £50 million, only 114 of 565 major projects are under construction. In 2013 The Economist published an article entitled, “Let’s try to catch up with Mali”, which noted that OECD figures showed how low Britain ranks for infrastructure investment, including for rail, roads, airports and energy.

The Government now claim, as the Chancellor said, to be opening the door for growth in north Wales, but it is difficult to open a door to anything if people cannot get there. All the rhetoric about a northern powerhouse matters precious little if we do not deal with things such as tackling accident blackspots and single-track highways on both sides of the A483 and A5, or if we do not make it quicker and safer to travel on both sides of the border. We must also start speeding away with HS2 to Crewe, which will transform the economies of north and mid-Wales, and we need more direct trains to London on the Wrexham to Shrewsbury line to take the pressure off the Chester line and give us better connectivity. We should sort out a proper north Wales train infrastructure to Manchester and Liverpool airports, and we should consider what should be happening with 4G. I was intrigued to see astronaut Tim Peake out in space wishing us all a happy St David’s day, because he would not have managed to do that if he had been on a mobile phone in Llandrillo.

Chloe Smith spoke about an ethical dimension for corporate taxation, but one issue that the Government did not consider in the Budget—although they needed to—is the insidious closure of banks across our country. In Wales, 130 bank branches have closed or will close over the next five years. That is simply unacceptable, and those banks that close their branches are not paying anything back to wider society.

My final point is about measures on philanthropy or rather the lack of them in the Budget. Gordon Brown introduced millennium gift aid in a previous Budget, and if Mr Clarke were here now, he would say how either he or John Major introduced the initial gift aid proposals in 1990. There was no mention of anything to do with philanthropy in this Budget, however, and it is time to consider that issue in greater detail. That might involve the implementation of a gift aid package for text donations, or another look at corporate philanthropy—those are just some of the measures that I am trying to fit into a five-minute speech on a mixed Budget.

Finally, in my last few seconds, I welcome what the Chancellor said about EU membership. There are three MPs in Denbighshire. I might be the only one who welcomes the stay-in vote, but I do.

Photo of Rishi Sunak Rishi Sunak Conservative, Richmond (Yorks) 3:48 pm, 22nd March 2016

I am grateful for the opportunity to support this one nation, responsible and pro-enterprise Budget. Tucked among the beautiful Yorkshire dales in my constituency is a thriving community that is built on the jobs provided by our small and medium-sized businesses—businesses such as the Wensleydale Creamery, whose cheese has taken a slice of Yorkshire to kitchen tables around the globe, or Tennants Auctioneers, a fourth-generation family business that is now one of the UK’s largest private auction houses.

Before I arrived in this place, I spent my career investing around the world in companies such as those, and providing the capital to help them grow. I am delighted that this Budget recognises what my own experience has taught me: for growing SMEs, there are few more important ingredients for success than solid access to finance. Indeed, there are few more important ingredients for our nation’s success than growing SMEs. Small and medium-sized businesses account for more than half of private sector employment. They are responsible for three quarters of the jobs created since the recession. They are also delivering social justice—the unemployed are six times more likely to find work with a smaller company.

Those companies need the fuel of deep capital markets to power their growth, but despite improvements, it is still not always easy for SMEs to get the funding they need. The challenges they face fall into two distinct categories: debt and equity. For debt finance, companies can go either to banks or to the corporate bond market, but our bond markets are underdeveloped. Europe’s economy is the same size as that of the United States, yet its bond market is only a third as big, which means that our companies are too reliant on banks for their debt needs. Indeed, they are four times more reliant on banks than their American counterparts. At a time when banks are rightly deleveraging, the reality for British companies is that far too many loan applications go without success.

There are also problems for companies wishing to access equity finance. Although we are a European leader, the UK’s venture capital market still has room to grow. Adjusted for GDP, the US’s VC market is seven times the size of the UK’s. We also lag behind Sweden, South Africa, Ireland and Israel. That matters because equity is the kind of capital that SMEs need to grow beyond their early stages. Thanks in part to the policies of this Chancellor, our nation has become one of the world’s start-up capitals, but we must now focus our energy on growing those start-ups, for just 3% of British companies manage to expand beyond 10 employees, which is half the success rate of companies in the United States.

The Government have consistently shown that they understand those challenges, which is why they created the seed enterprise investment scheme, which has helped more than 3,000 companies to raise early-stage finance; why they launched the funding for lending programme to ease credit for SMEs; and why they fund the British Business Bank to power our growing companies.

Photo of Neil Parish Neil Parish Chair, Environment, Food and Rural Affairs Committee, Chair, Environment, Food and Rural Affairs Sub-Committee

I agree wholeheartedly with my hon. Friend. Getting enough capital, and venture capital in particular, and allowing small businesses to grow, especially those that traditional banking systems do not necessarily support, is key to stimulating more growth in our economy. I very much welcome his comments.

Photo of Rishi Sunak Rishi Sunak Conservative, Richmond (Yorks)

I am grateful to my colleague, the Chair of the Select Committee on Environment, Food and Rural Affairs, for those comments. I will go on to some of those points in due course.

I am delighted that the Budget goes even further to encourage investment in our businesses and our job creators. I am confident that reducing capital gains tax rates together with a brand-new 10% rate for long-term investments in private businesses will unlock millions in much needed funding. From speaking with investors this past week, it is clear that those policies have cut through and generated a fresh wave of enthusiasm for investing in British companies. On debt, I welcome the Budget’s further help for businesses rejected by traditional banks, which will now more easily be able to access alternative providers of finance.

Whether it is cheesemakers in the Yorkshire dales or FinTech companies in Old Street, the Chancellor has always backed the aspirations of Britain’s growing companies. By continuing to close the tax loopholes that Labour left open, the Budget has another message: Britain is becoming not only the best place to do business, but the fairest place to do business. This is a Budget for the little guy, for a new generation of British ideas, and for a country where the rules do not bend for big balance sheets. It is a responsible, one nation, pro-enterprise Budget that will get our companies the vital funding they need to unleash their potential, and I commend it wholeheartedly to the House.

Photo of Karin Smyth Karin Smyth Labour, Bristol South 3:54 pm, 22nd March 2016

I want to focus on apprenticeships and the levy, which is key to opportunities for young people in Bristol South. I support the 3 million target by 2020. It is an ambitious target but we should be ambitious for our young people.

In many ways, Bristol is a booming city, with the highest household income outside London and easily the highest productivity of any big conurbation outside the capital, but apprenticeships are important in Bristol South because, as UCAS tells us, it sends fewer of its young people into higher education than any other constituency. Other opportunities are a lifeline to Bristol South’s young people. Apprenticeships and training are the route to a better future for so many people living in our communities. Although Bristol South is not home to a huge number of large companies, very many small and medium-sized enterprises are based there, owned by and employing local residents. I may disagree with the hon. Member for Richmond (Yorks) (Rishi Sunak), but I am glad he mentioned SMEs. I am particularly interested in the role that they are going to play in the delivery plan for apprenticeships and how the levy is going to work for them.

Last week, three important interventions emerged and caused me concern. First, the co-chair of the Government’s delivery board confirmed that SMEs will not be in the levy system when it launches, and that only firms paying the levy will have access to the new funding system from April 2017. Secondly, at the FE Week annual apprenticeship conference, we heard from the former Business Secretary about concerns that the levy may in fact be a revenue-raising measure, rather than a genuine one. Thirdly, we saw comments from the Social Mobility and Child Poverty Commission, which was concerned that the number of young apprentices has flatlined since 2010 and that many of these apprenticeships do not offer people a foundation they can build on.

I would like the Government to guarantee that every penny of the £3 billion this levy is expected to raise will be invested back into improving training and apprenticeships; that SMEs will have their fair share; and that the special and unique opportunities and challenges that SMEs bring to the apprenticeship table will be fully taken into account. How will young people, business, colleges and other training providers in Bristol South be able to access these opportunities? What guarantee can the Government give that my constituency will receive its share?

The Government plan for apprenticeships seems very much at the drawing board stage, so I am inviting firms in my constituency to help. I have issued an open call to SMEs in Bristol South to set out their ambitions for the shape of apprenticeship schemes over the next decade. I am sure the Government agree that the reaction and responses of employers to the levy will make or break the target. Will the Government therefore please accelerate the publication of the action plan, showing how the target will be met, how the levy will work and other fine details of the grand plan, so that I and others can work in Bristol South, alongside employers, colleges and other training providers, to promote and encourage full engagement?

An additional key consideration is the number of Bristol South residents who are not yet ready to take up an apprenticeship, so the detail of the Government’s plans for pre-apprenticeship training is of interest. It is essential we ensure that Bristol residents are not blocked from accessing these valuable opportunities because of a lack of existing skills.

I also have concerns about the realism of the 3 million target by 2020. Do the Government agree that there is a genuine danger that an apparently arbitrary target will risk a dangerous trade-off between quantity and quality? I heard of a call to my constituency office this week about a young person in Bristol South who was on an apprenticeship and was being asked to work from 7 am to 7 pm, with very poor support. That highlights the importance, in driving towards the 3 million target, of not ignoring the quality of that experience and support offered to young people. I also fear that post-19 loans will deter people from accessing training for the skills that employers need, which would have a negative effect on my constituency, so I look forward to reassurances on that from the Minister.

Earlier today, the Chancellor said to a Conservative Member—I hope he extends this to others—that where constituency MPs raise the issue of vital services for their constituency, this Government are listening.

In concluding, let me say that for me this is not a party political issue; I make my points in the spirit of co-operation and what is best for the people of Bristol South, who have sent me here to represent their interests. This is key to their ambition and aspiration.

Photo of Richard Fuller Richard Fuller Conservative, Bedford 3:58 pm, 22nd March 2016

Parents in Bedford and Kempston will have wanted a Budget that said, “Yes, we are going to make sure you get a good job. Yes, we are going to make sure you get a decent amount of pay, whatever job you do. Yes, we will make sure you can keep as much of your taxes as possible. And, yes, we will deliver a Budget that will make sure that your children have a better future than you do.” The Chancellor, in his robust performance today, has demonstrated that this Budget can deliver on all those items.

I was shocked to hear the response from the shadow Chancellor, as he seemed to spend 20 minutes of his speech trying to hold the Chancellor to account for something that the Chancellor is not doing. That shows part of the Labour party’s problem: there is no coherence in its approach to this Government. I would therefore like to provide a bit of coherence in my criticism of one aspect of this Budget—the sugar tax. I do so because it is not what it says it is, it will not raise the taxes ascribed to it and it will not achieve the health benefits that were its original vaunted purpose.

It is clear that this is not actually a sugar tax. There will be no tax on sugar in cakes, puddings or confectionary. That might be great for food manufacturers, restaurant owners and chefs, but it is not actually a tax on sugar. It is not even a tax on soft drinks, because sugars in milk-based drinks or fruit juices are not covered either. In fact, it appears to be a tax not on sugar, but on five companies: Coca-Cola, Britvic, AG Barr, Nichols Vimto and Lucozade Ribena Suntory. The Government ought to be careful about having very specific taxes targeted on very specific companies, because they will be open to challenge at the Commission or in the courts.

Photo of Seema Kennedy Seema Kennedy Conservative, South Ribble

My right hon. Friend the Chancellor made it very clear in the Budget that one of the objectives of the so-called sugar tax was to get companies to change their behaviour by making low-sugar drinks rather than full-sugar drinks. I used to drink a lot of full-sugar Vimto, but I now drink no-added-sugar Vimto. Does my hon. Friend accept that that is also one of the aims of the tax?

Photo of Richard Fuller Richard Fuller Conservative, Bedford

It is bizarre for the Government to attack one of the sectors of British industry that has done the most to innovate and bring in new products, while ignoring other parts of the industry that have not made the same changes. As my hon. Friend rightly says, the core of the issue is the impact on obesity. Office for National Statistics figures show that obesity among adults doubled between 1993 and 2013. The proportion of obese children in 2013 was 9.5%, which was higher than in 2012, but lower than in 2006-07. The products being targeted originate from way before the current obesity issue. Irn-Bru, which is often described as the national drink of Scotland, was introduced in 1901. Robinsons Barley Water was introduced in 1935, and Coca-Cola in 1886.

The Government are ignoring the advice of Public Health England which, in its October 2015 report, said that it is not possible to compare the impact of price increases achieved by, for example, the introduction of a tax on sugar sweetened drinks, with other factors, such as the demonstrated effects of marketing on children or the impact of in-store promotions on purchasing habits. Nevertheless, the general tone of the available evidence is that restrictions on marketing and promotions may be more effective than fiscal measures.

Photo of Neil Parish Neil Parish Chair, Environment, Food and Rural Affairs Committee, Chair, Environment, Food and Rural Affairs Sub-Committee

Does my hon. Friend not think that it would be better for the Government to work with the companies to reduce the amount of sugar in their drinks, rather than bringing in any form of tax? In the end, all we will do is to make it more expensive for poorer people to buy these drinks. That will not necessarily stop them drinking them, whereas if the amount of sugar in them could be reduced, that might have a greater effect on their diet.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

My hon. Friend, the Chair of the Environment, Food and Rural Affairs Committee, speaks with enormous sense and knowledge. He is, of course, absolutely right. It is much better to engage the industry than arbitrarily to impose a levy, especially one with such great uncertainty. The OBR states:

“The tax will operate with a specific revenue target of £500 million for the second year of implementation”.

It goes on—here is some real Budget gobbledegook—to say:

“From a pre-behavioural yield of over £900 million, the behavioural responses lower the yield to around £500 million a year. As a new tax likely to prompt a large behavioural response, these estimates are clearly subject to significant uncertainty.”

Well, there we have it—not a clue at all.

Photo of Maggie Throup Maggie Throup Conservative, Erewash

Surely the two-year lead-in for the sugar levy is the right approach because that tells the manufacturers to reformulate. Surely the future and health of our children are more important than anything else.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

The health of our children is, of course, extremely important, but, as I said, the sector is already innovating. There have been remarkable reductions in the sugar content of soft drinks compared with what has happened in other sectors, in which there has been no change in the amount of sugar that people consume. There are question marks about whether the levy will have the impact on health it is supposed to achieve.

In Mexico, for example, where a sugar tax was recently introduced, the calorie reduction amounted to six calories a day. This regressive measure goes much against the principles that the Chancellor himself rightly outlined as the overarching ethos of the Budget.

Photo of Mary Glindon Mary Glindon Labour, North Tyneside

Does the hon. Gentleman agree that this tax, which has many ambiguities, simply indulges our celebrity chefs and gives them more credence than they deserve?

Photo of Richard Fuller Richard Fuller Conservative, Bedford

I could not be more delighted to have given way to the hon. Lady, because she is quite right. The sugar tax is a passion of TV chef Mr Jamie Oliver, who is just the latest in a line of celebrities—think of people such as Mr Russell Brand and Mr Benedict Cumberbatch—to use their position to influence public policy. To quote TheIndependent, the

“chief beneficiaries of star-studded attempts to raise the profile of a good cause are the celebrity themselves”.

Can we have a new levy on policy pronouncements by well-heeled celebrities who sprinkle their fame to dazzle Ministers into ill-thought-through changes? The levy could pay for the unintended consequences for the public of their brief, highly jaundiced opinions. Emma Thompson’s pronouncements alone should secure the defence budget.

Photo of Phil Boswell Phil Boswell Scottish National Party, Coatbridge, Chryston and Bellshill 4:05 pm, 22nd March 2016

The Chancellor of the Exchequer’s Budget and the figures reported by the Office for Budget Responsibility—considered by many to be a contradiction in terms—demonstrate yet again the Chancellor’s inability adequately to manage the economy. He has failed on several key economic indicators and missed the targets the Tories have set for themselves. Notably, debt, deficit and borrowing levels are even worse than he promised last autumn.

Given time constraints, I shall summarily mention a few of the problems with the Budget, before focusing on a concern that has not been adequately covered by others. Page 136 of the OBR forecast shows that inflation is set to rise significantly from its current close-to-zero rate.

Photo of John McNally John McNally Scottish National Party, Falkirk

Does my hon. Friend agree that a sharp rise in inflation can have a negative impact on working households?

Photo of Phil Boswell Phil Boswell Scottish National Party, Coatbridge, Chryston and Bellshill

Yes, I completely agree. With the sterling depreciation, thanks in part to the uncertainty created by the UK Government’s EU referendum, consumer inflation has started to rise. The OBR has predicted that CPI will rise from 0.7% this year to 1.6% next year. Likewise, RPI is set to rise from 1.7% this year to 3.2% in 2017. Such a spike in inflation can have a negative impact across the economy, as my hon. Friend mentioned, because it means that many households around the country that are already struggling, including in my constituency, will find that the price of necessities rise at a time when they can least afford it.

Exports, which are already weak, will likely see further decline. Total export sales fell from £521 billion in 2013 to £513 billion in 2014, yet the Chancellor has declared an export target of £1 trillion by 2020. It is no surprise, then, that he is already likely to fall short of the target by over £300 billion, as was touched on by Mr Wright, who is no longer in the Chamber.

On business investment, which was mentioned by my hon. Friend George Kerevan and the hon. Member for Hartlepool, there is more bad news with regard to productivity, and research and development. Page 12 of the OBR’s “Economic and fiscal outlook” states that business investment will grow by only 2.6% this year, which is substantially less than the 7.4% predicted just three months ago in the autumn statement. Furthermore, the level of investment in 2019 is predicted to be a staggering 10% lower than predicted in December. So far, not so good.

I move now to an area of concern to myself. Page 27 of the Red Book states that the Government expect to raise £25 billion from the sale of the Royal Bank of Scotland. Given several factors, however, including the current price of oil, I fear that this price might be exaggerated. In focusing on this issue, which I have grave concerns about, I would point out that between 2011 and 2014, RBS arranged £14.3 billion in leveraged loans to the oil and gas industry. In fact, RBS has been a leader among UK banks in arranging these high-risk loans. The falling price of oil has resulted in an increase in the default rates of these loans, however, and many of them have been repackaged into derivatives for sale to investors in the form of collateralised loan obligations—a derivative product starkly similar to the collateralised debt obligations that contributed to the 2007-08 financial crisis. How many of these risky loans RBS still has on its books remains uncertain, hence my concern for that particular £25 billion.

Let me take a minute to highlight what I view as a failure on the part of the Government to address the systemic risk inherent in the financial system and the wider economy in relation to the price of oil and leveraged investment. Alongside RBS, a number of US lenders with a large and active presence in UK markets have a high exposure on energy, due to leveraged lending in the oil and gas sector. For example, JP Morgan currently has $13.8 billion in outstanding debt relating to loans out of the roughly $100 billion in leveraged loans it issued to the oil and gas sector between 2011 and 2014. Wells Fargo arranged $98 billion in leveraged loans to the sector in that same time period, many of which are non-investment grade, and $17.4 billion of which is already outstanding. Alarm bells should be ringing somewhere.

On 15 December 2014, when the price of Brent was at $60 a barrel, the Financial Times predicted that if the price of oil were to continue to fall,

“there is a stark parallel with the US property market collapse that heralded the start of the 2008 global financial crisis—and upended banks along the way.”

Yet the systemic risk inherent to the financial system due to these high-yield loans and the “slice and dice” nature of derivative products relating to these loans that have been sold to investors were not even mentioned in the most recent Bank of England stress test result.

Finally, in the years since the 2007-08 financial maelstrom and ensuing recession, the Tory Government have demonstrated their expectation that the most vulnerable in society should pay the price for the mistakes of the financial institutions. In 2011, the Bureau of Investigative Journalism found that over 50% of Conservative funding came from the City. We know whose interests the Conservatives have at heart. The Budget clearly highlights the fact that this attitude has not changed, as evidenced in the £3.5 billion of new cuts that it introduces. This Budget is not good enough, and if the Chancellor really wants to be head boy, he should heed his report card, which should read “Must do better”.

Photo of Richard Drax Richard Drax Conservative, South Dorset 4:12 pm, 22nd March 2016

Let me first condemn the outrage in Brussels today and those who perpetrated it. My sympathies and prayers go out to all the victims and their loved ones.

While some highly respected colleagues are sitting on the Treasury Bench, may I put in a plug for the armed police in Dorset and around the country, and not least in our capital, to receive more money for training? As a former soldier, I know full well the complications of storming buildings and dealing with civilians who are fleeing from bombs, as they were doing in the departure lounge this morning, as well as about the chaos, the blood, the gore, the mess and the noise. To go into a building that has been attacked, armed police need an incredibly high degree of training, otherwise even more problems could be caused.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

Does my hon. Friend recall the Prime Minister saying after the events in Bataclan that he would support continued funding for the police and particularly for our armed police?

Photo of Richard Drax Richard Drax Conservative, South Dorset

I do, and I welcome the Prime Minister’s comments. I am simply expanding on the need for highly specialist training. All kinds of things—images that can change during an attack and different lights—are needed in what will be a highly strategic attack. Our armed police would not be able to stay outside and wait for the Special Air Service to come; they would have to get into the building and save lives, as I am sure they would. I do not doubt for one second their courage or dedication. I am requesting that the Treasury and the Prime Minister look carefully at the moneys available to train our armed police to deal with assaults such as what we saw this morning which, sadly and tragically, are becoming more common.

Speaking of the military, may I congratulate my right hon. Friend the Chancellor on resorting to military tactics? It is always said that attack is the best form of defence, and my right hon. Friend’s robust performance in the House today was a very good example of that.

I welcome much of what is in the Budget. I welcome the raising of the tax-free personal allowance, the increase of the higher-rate threshold to £45,000, the freezing of fuel, beer and cider duties, and the expanding of the savings culture. The Chancellor also reduced corporation tax and cut taxes for small businesses, and I want to direct my remarks about those measures to Opposition Members. We heard the shadow Chancellor say that they constituted a tax cut for the rich. May I remind the Opposition that such businesses are the engine room of our country? Many people risk their homes to invest in businesses and struggle for years to make a profit. They then pay for all the people whom we are trying to get into work, while also taking vast risks in making all the goods that we need for the economy to run, and generating the money that we need to spend on, for instance, schools and hospitals.

The more money those business people keep, the more they can reinvest in their companies. It is not a matter of people jetting off in their 747s. I have visited many businesses, and I am sure that Opposition Members have done the same in their constituencies. I know that small engineering companies are now having to buy equipment that is worth £600,000, £700,000 or £800,000, and that profits are minimal. We need to help such companies for the sake of the future of our country, and the future of those whom we want to get back into work.

I agree entirely with my hon. Friend Richard Fuller about the sugar tax. I, too, have doubts about it, and I hope that Ministers will think again. I am also concerned about the effects of raising the business rates threshold for small businesses and exempting some businesses altogether. I am sure that someone will correct me if I am wrong, but I understand that more and more local authorities, particularly rural authorities like mine, will rely increasingly on business rates, because central Government funding will be reduced to zero. If that is the case, and if businesses are to be exempted from business rates—which I absolutely applaud; do not get me wrong—where will the money come from for small rural councils such as mine? I should be grateful if the Minister could answer that question when he sums up the debate.

Let me now say something about the personal independence payment, and all that has happened in that connection. Like others, I have huge praise for my right hon. Friend Mr Duncan Smith. Having been the leader of our party, a lesser man would have gone off into a cave and stayed there, but not this man; he went out and did all that he could do, and has done, for the poorest in our society. He has dedicated so much of his life to that, and I commend him for it.

I want to draw attention to an aspect of the PIP that greatly concerns me. Many constituents come to my surgeries and say that they have been assessed unfairly or lazily—whatever it may be. It is a tick-box culture, and I have never liked the ticking of boxes. In some instances, support has been withdrawn from my constituents while their cases are assessed, although many of them have had doctors’ certificates explaining why they need the money. May I strongly urge the Government to look closely at the assessing system? We need occupational therapists, family members and doctors to contribute to assessments. It is true that that would probably be more expensive, but at least we would get the assessments right, rather than causing huge distress to those who are least able to deal with it by taking away what support they have, and then giving it back to them x months later when a Member of Parliament has become involved.

Finally, let me point out that virtually every departmental budget is now ring-fenced. Which areas can we stop ring-fencing? There must be savings to be made, not least in overseas aid, which I am sure could be spent and targeted in a far better way.

Photo of Stella Creasy Stella Creasy Labour/Co-operative, Walthamstow 4:18 pm, 22nd March 2016

Let me begin by associating myself with the comments made by Richard Drax about the dreadful situation in Brussels.

This debate has seemed to be more about astronomy than about the Budget, because we have all been talking about black holes. However, there is a clear analogy to be drawn. It will be remembered that Stephen Hawking famously described what he called the “black hole paradox”: the idea that information could simply disappear into a black hole, never to be restored, although all matter contained information that was to be held in perpetuity. What a perfect analogy that is, given that, at this point, we simply have no information about how the Budget will stack up. Our colleagues in local government would rightly be horrified.

Where can we find information about the impact of the Budget? We can find it in our constituencies, and obtain it from the people whom we represent. In the time that I have been granted, I shall offer three areas of information on which we can judge the Chancellor’s work. The first is personal debt; the second is savings; and the third is productivity. Those are three areas in which this Budget signally fails the British people.

It is no accident that personal household debt in this country is going up and up. “Unprecedented” is the term that the Office for Budget Responsibility has used to describe the impact of the Chancellor’s plans on our constituents. Unsecured personal debt is set to reach 3% of GDP and to stay at that level. This is a black hole into which the Chancellor is asking the public to pour their own money to pay for his mistakes. Just how bad is the situation? The Bank of England tells us that people are now borrowing £1 billion a month in this country. In January alone, people put £500 million on their credit cards, and Aviva tells us that the average family debt is now £13,000, up £4,000 from last summer’s level.

Those on the Conservative Benches who are casual about credit miss the point. Not everyone is paying the same level of interest. Some are being charged excessive amounts for the debts that they are getting into to pay for the Chancellor’s mistakes. The hon. Member for South Dorset talked about people putting their houses up to fund their businesses, but many in our communities have long given up on the dream of home ownership as a result of the debt that they are now in. Wages have risen by just 4% in the last few years, but house prices have gone up by 76%. We know that every single penny matters. That is why it is such a problem that people face these levels of debt. This Chancellor is banking on the British habit of borrowing, but that is like putting Wayne Rooney in charge of a stock-take in a Nike shop.

This is not just about people’s borrowing habits. The fact is that we are now a nation that cannot save either. We are saving just 4% of our disposable income, which is half as much as we were saving four years ago. That is the lowest level of personal saving since 1963. Help to Save will do little for the 26 million people in our country who do not even have access to £1,000 for an emergency. On this Government’s watch, they have no rainy day money. Lifetime ISAs are out of reach for those people who have too much month at the end of their money.

We are seeing a situation of rising personal debt, and low or no savings, in which wages are now stalling. This has an impact on our public finances, because it leads to lower tax receipts. They are down £44 billion on the projections made in 2011. That is why we on this side of the House are angry when we see that those who will do well out of the Budget are those who can well afford to pay. We know that 80% of the gains from the Budget will go to those in the top half of the income distribution, and that half of that amount will go to the top 20%. Meanwhile, debt is locking our people out of opportunities.

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

Is the hon. Lady aware that the very act of running a budget surplus—that is, putting more in than we take out—forces the public accounts into a situation in which private borrowing increases?

Photo of Stella Creasy Stella Creasy Labour/Co-operative, Walthamstow

The hon. Gentleman might not know of my long-held concerns about the way in which this Government are managing the public finances. We do not have time today to talk about PFI debt, or about PF2, which is going to lead to even more problems.

We on this side of the House get the fact that we need to get the deficit down, because every single penny that we pay in interest, and every single penny that we use to pay for the mistakes in this Government’s borrowing, is money that could be invested in our people. It could be invested in the public services that our communities need in order to succeed. That is the point about this Budget. It is not just about the damage that it is doing to people today, or about the debts and destitution that they face now. It is about the narrowing of their horizons tomorrow, too.

We can see the Government signally failing to deal with the productivity gap Britain faces, and the 18% difference between ourselves and our competitors. They are failing to invest in our young people. By the end of this Parliament, China intends to produce 195 million graduates. Not just China is investing in its people; Brazil, Russia and Argentina are as well. Our children will have to compete with graduates from those countries, but our Government are offering them nothing in that regard. We can see the consequences for them in the productivity gap. And when the Government are forcing every school to become an academy, we can see that they are rejecting their own responsibility.

How very different this is from when we sat here a year ago and listened to the Chancellor claim that he was fixing the roof and that Britain would be able to walk tall again. He is a bit like one of those builders we see on the “Watchdog” programme. I would encourage the British people to go to their trading standards officer about him, but the Government have cut that service too. They are left with only one alternative, to look to an alternative party of government—the Labour party—to offer a genuine investment in the future of our young people and a genuine recognition of why fiscal responsibility matters. This is a black hole that is sucking everything out of this country—including, hopefully, the Chancellor’s career.

Photo of Bob Blackman Bob Blackman Conservative, Harrow East 4:24 pm, 22nd March 2016

It is a pleasure and an honour to follow Stella Creasy. As a graduate in physics and maths from the University of Liverpool, I both congratulate and condemn her on managing to get both Stephen Hawking and Wayne Rooney into the same speech.

I want to send my condolences to the families of the victims in Brussels. I was in Brussels shortly after the Paris attacks and the degree of security being implemented demonstrated that the authorities were already on high alert. It is clearly a devastating tragedy.

The events of the past few days seem to have over-shadowed a remarkably good Budget from the Chancellor. Reducing business taxes to promote growth to enable people to have the dignity of earning a living, rather than a life on benefits, should be applauded on both sides of the Chamber, not condemned. I trust that that will be the Government’s focus over the next four years.

London has done particularly well out of the Budget, but I have not heard many details mentioned in the Chamber. The Chancellor has invested £80 million in Crossrail 2, which will be this country’s single biggest transport operation outside HS2 and something that we clearly need to get on with. I am looking forward to Crossrail 2 enhancing north-west London and my constituency in particular. It will be excellent for everyone involved in transport across London. Transferring business rates powers to the Mayor of London and London councils is remarkably important and will mean that the transport projects that London desperately needs will be funded by the business rates paid by London’s businesses, with that money being appropriately retained. Kick-starting the redevelopment of Old Oak Common will be central to the generation of new homes, new jobs and new businesses and a much better transport infrastructure for London.

Combating rough sleeping across the country is important. Ensuring that people do not experience a second night out is vital, particularly in London. I ask the Chief Secretary to the Treasury, my right hon. Friend Greg Hands, to make it clear when he replies to the debate how much of the money will go to London, because London has the biggest homelessness problem and we all want to see it combated. I recently visited FirmFoundation in my constituency, which does a brilliant job of dealing with single homeless men, but it needs additional resources to assist such men and to enable them to get back into a proper home and get their lives back together again. It desperately wants to know how it can apply for the extra money being made available, so I trust that we will hear more details later.

In contrast to my hon. Friend Richard Fuller, I applaud the Chancellor for introducing the sugar tax. Given that behaviours can be driven by taxation, something of which I strongly approve, the Chancellor has missed an opportunity. I welcome the increase in tobacco duty, particularly on rolling tobacco, to encourage people to give up smoking. However, given that the Chancellor has said that the sugar tax will be spent on things to encourage a reduction in obesity, let us drive behaviour by adding additional duties. Just a penny increase on every cigarette smoked in this country would raise £500 million, which could be invested in initiatives such as encouraging people to give up smoking or, even better, not to start in the first place.

The other issue that I want to mention is something that is not going to go away: seeking justice for Equitable Life policyholders. I had hoped that we would hear something in the Budget about further compensation for both the pre-1992 trapped annuitants and the people who have not received compensation thus far. Let me put the Chancellor on notice that we will continue our campaign until we get justice for those who suffered as a result of that terrible scandal.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Housing) 4:29 pm, 22nd March 2016

It is a pleasure to follow my namesake, Bob Blackman. I did not agree with everything he said, but I associate myself with his comments about the dreadful events in Brussels today.

I am not sure that I buy everything that Mr Duncan Smith said at the weekend, but he was right when he said on “The Andrew Marr Show” that the Budget was unfair and widely perceived to be so. When the Budget was announced last week, it contained cuts to support for disabled people while giving tax breaks to the wealthy and to large corporations. Although I agree with the right hon. Gentleman on the unfairness point, it is a pity that his conscience did not jump into life some years ago so that we could have avoided the suffering that his cuts—or the cuts that he supported—to tax credits, employment and support allowance and other benefits have caused to so many vulnerable people.

The decision to abandon the cuts to PIP are welcome, but we must not forget the distress that was caused to many, many people who have visited our surgeries in recent weeks. Those people were really concerned about how they would manage should the cuts go ahead. I have not finished worrying yet, because we do not know from where the £4.4 billion of cuts will come, never mind the £3.5 billion-worth of efficiency savings that are also mentioned in the Red Book. It is really irresponsible to ask Government Members to go through the Lobby tonight in support of the Budget when they know so little about the detail and where the cuts are going to be made.

The Chancellor said many, many times that this was a Budget for young people and for the future, but it most certainly was not. Where was the step change in new investment for our universities and colleges, allowing Britain to build the knowledge-based economy that the Prime Minister is so keen to talk about and that would provide high value jobs for young people and others? As the organisation Million+ said, universities will have to foot the bill for increased employer contributions to pension schemes without any additional funding, and it is very disappointing that the overall reduction in capital expenditure for the Department for Business, Innovation and Skills remains in place until 2020.

Similarly, the National Union of Students has been reminding everyone that the removal of education maintenance allowance, the scrapping of maintenance grants and the repayment hike for student loans have been devastating for many young people. The union, like others, is pleased about doctoral loans and some limited new money for lifelong learning—the individual savings account—and the apprenticeship levy, but, as it says, those measures are too little too late. It says:

“While George Osborne’s promises might sound appealing, his words do not make up for his actions. The government has forced cut after cut onto students who are already struggling to get by. If the chancellor truly wants to help young people, he could start by reversing his own damaging decisions.”

We all know that science funding is extremely important to our economy, so I hope that the Minister will ensure that the materials catapult centre proposed by Durham university gets the go-ahead.

The Budget was also unfair to regions. Once again, the north-east got very little out of it. There was some mention of a future upgrade to the A66 and A69, but nothing significant to reverse the continued underinvestment in the region from this and the previous coalition Government. The chamber of commerce said of the autumn statement—it has spoken for many—that it was disappointed by the lack of substance around the northern powerhouse, particularly what it means for the north-east, and it has said the same of this Budget. We all know that north-east councils, along with other authorities in more deprived areas of the country, have had their budgets hit hardest, so how will this northern powerhouse be delivered? As my hon. Friend Catherine McKinnell said earlier, there was nothing about air passenger duty and how Newcastle airport will be supported to expand. The north-east could benefit from a huge increase in resources to renew our infrastructure, build our green energy sector, grow our automotive businesses and extend our processing sector, but there is nothing to support that, just ridicule for our schools.

Photo of Maggie Throup Maggie Throup Conservative, Erewash 4:35 pm, 22nd March 2016

I am delighted to contribute to today’s Budget debate and I congratulate my right hon. Friend the Chancellor on continuing to deliver a long-term economic plan that has seen unemployment in my constituency fall by a record 63% since 2010.

I have always been a passionate believer that for those who can work, work is the only real way to get on in life and succeed. This is not just a personal view but one that is shared by people up and down the country, and I am proud to belong to a Government who support a strong work ethic and are helping more families to keep more of what they have worked hard for. As a result of the measures announced in the Budget, in Erewash alone more than 45,000 people received an income tax cut and around 2,000 people were taken out of tax altogether.

Turning to business support, I warmly welcome the huge boost to the midlands engine, which includes £16 million of investment in our world-class aerospace industry, including support for Rolls-Royce, which has just announced that it is to create 350 new jobs locally as it prepares to ramp up the production of the new Trent XWB engine. Locally, SMEs and those who are self-employed stand to gain significantly from changes to small business rate relief and the abolition of class 2 national insurance contributions. These measures not only provide a welcome boost to the Erewash economy, where many of our businesses are small furniture manufacturers or engineering firms, but recognise the fact that those businesses are the real backbone of the British economy.

As chair of the all-party group on adult and childhood obesity and as a member of the Select Committee on Health, I want briefly to address the new sugar levy. The atrocities in Brussels today are a sharp reminder that the first duty of any Government is the protection of their citizens, but we rarely consider that phrase from anything other than a national security point of view. There is no doubt that obesity and the problems that arise from being obese, such as diabetes, cancer and heart disease, are becoming a serious issue within our society. Responsibility for tackling that lies on many heads—manufacturers, retailers, Governments, educators, health professionals—and, of course, on people taking individual and personal responsibility for the matter. By introducing the sugar levy, the Government are accepting their duty to protect the health of our citizens and of generations to come. In that, I must disagree with my hon. Friend Richard Fuller, who is no longer in his place.

I urge drinks manufacturers to step up to the mark and play their part in tackling the obesity crisis by reformulating drinks and recipes over the next two years to reduce added sugars. We cannot tackle the obesity crisis by a sugar levy alone, and I look forward to the Department of Health announcing further measures in the forthcoming weeks and months.

In my view, this is a fiscally responsible Budget for the long term, supporting workers, businesses and our future generations. More importantly, it is a one nation Budget that truly puts the health and wellbeing of our nation first and I commend it to the House.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Innovation and Skills), Shadow Minister (Culture, Media and Sport) 4:38 pm, 22nd March 2016

It is a pleasure to contribute to such an important debate and to follow so many speeches from my hon. and right hon. Friends. Although I might not have agreed with what Maggie Throup said, I commend her focus on jobs and the importance of delivering a high-wage, job-based economy for our country. By contrast, the Chancellor opened with the mix of bluff and bravado, arrogance and malice that has become his trademark, but even so, I was absolutely astonished to hear him refer to social justice. This is a Budget with unfairness at its heart and misery in its veins. The Chancellor’s record of failure—failure to achieve any of his own debt targets, failure to deliver decent wages—

Photo of Suella Fernandes Suella Fernandes Conservative, Fareham

Does the hon. Lady agree with me and the Institute for Fiscal Studies, which reported yesterday that since the Chancellor has been in place, the gap between rich and poor has narrowed because most people have got into jobs? That is the way to bring about social justice.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Innovation and Skills), Shadow Minister (Culture, Media and Sport)

I would thank the hon. Lady for that contribution, but it flies in the face of the lived experience of my constituents, who are on low-wage jobs, cannot make ends meet and find themselves attacked by this Chancellor’s Budget. The Chancellor has failed to deliver for working people. His failure to raise productivity has been trumped in the past few days, in media terms at least, by his failure to deliver a Budget that lasts 48 hours.

The 1,443 PIP claimants in Newcastle will, like me, be pleased at least that that cut proved an ideological attack too far, but it is undoubtedly the case that by demonising and attacking all benefits claimants, the Chancellor hoped to create an atmosphere in which it was acceptable to enrich the better-off on the backs of the poorest and most vulnerable among us. It will be some compensation for them that members of the Government are now attacking and reviling each other almost to the same extent as they have attacked and undermined benefits claimants.

I do not want to focus on the 48 hours following the Budget as experienced by the Chancellor. Instead, I want to give three examples of events that I attended in those

48 hours that highlighted the huge gap at the centre of the Budget, which was a failure to address our future economy and the future of the next generation, as he put it. On Thursday I visited the Big Bang fair organised by EngineeringUK with engineering professional bodies and businesses from across the country, where 70,000 young people discovered or rediscovered the excitement offered by a career in science, technology, engineering and maths. Those are the jobs of the future, the ones I want for my constituents, high-paid—not minimum wage, minimum skill—jobs.

But where were such jobs mentioned in the Budget? Where was the investment in the future to help create those jobs? There were, it is true, tax breaks for those hiring out their assets in the digital economy, but there was nothing for manufacturing or technology. There was no investment in digital infrastructure. There was no more detail on apprenticeships, which we need to ensure that we have the skills of the future. This was a Budget that left behind the technology that we need for our future.

That evening I visited the Creative Newcastle Get Digital summit, celebrating one of the fastest-growing sectors in the north-east, only hundreds of yards from where Stephenson’s Rocket was built. That was the real northern powerhouse, powering our economy into the future. But the Budget offered a few hundred million pounds for investment in north-east transport, against the tens of billions of investment in transport in London. This Budget did not offer any investment in digital infrastructure, and we stand to lose the millions of investment from the European Union, thanks to the referendum and the chaos on the Government Benches over that.

Finally, on Friday morning I visited St Paul’s primary school, where 10 and 11-year-olds were taking on the Pioneer challenge with employers and other schools across the region to promote STEM and entrepreneurship. Those children are the future basis for our economy in the north-east. They are proud Geordies, yet what the Budget did for them was to force the academisation of their school, taking it out of the local authority and the community that it seeks to support and atomising it—in effect, privatising it and taking away responsibility from the local parents and putting it on a desk in Whitehall, which is also where the northern powerhouse is found.

This Budget offered nothing for the future of our young people, for the north-east economy or for our country.

Photo of Chris Philp Chris Philp Conservative, Croydon South 4:44 pm, 22nd March 2016

I would like to start with fiscal responsibility, as the Chief Secretary is on the Front Bench. Fiscal responsibility is very important —for the sake of our children, if nothing else. I have two-year-old twins, and there is nothing noble, moral or ethical about consistently spending more than we can afford and sending the bill to the next generation. Moreover, as the Chancellor eloquently put it earlier, without fiscal responsibility we cannot deliver the services that are so important.

Clearly, a good start has been made on fixing the deficit left behind in 2010; about half of it has been eliminated. Labour Members are right to point out that there is still more work to do, but it does not seem entirely appropriate for them to give angry lectures on the topic, when they have opposed every measure proposed by the Government over the last five years to reduce the deficit. In fact, had we followed their advice during the last Parliament, our national debt would be £900 billion higher than it is today.

During his thoughtful speech, my colleague on the Treasury Committee, George Kerevan, suggested that high spending during the late 1940s and 1950s demonstrated that we could in fact spend money to grow. I am afraid that I dispute that analysis, because that spending spree ended in 1976, when we had to go cap-in-hand to the IMF. Even Denis Healey, the then Chancellor of the Exchequer, said:

“You can’t spend your way out of a recession”— a lesson we would do well to remember.

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

My point was to go not into the 1970s, but into the very specific period of the 1950s, when national debt as a share of GDP was significantly higher—twice as high—in many years than it is now. That did not lead to a burden on the generation that was young then—my generation—which is in fact extremely well-off as a result of that spending. I was trying to look at whether borrowing per se disbenefits future generations, and it does not—it depends on how we spend the money.

Photo of Chris Philp Chris Philp Conservative, Croydon South

I must respectfully disagree with the conclusions of my Treasury Committee colleague. If we look at economic performance in the 1960s and 1970s, we see that the enormous debt overhang, with the state spending too much money, was a drag on the economy and culminated in the 1976 bail-out. That was the natural conclusion of the overspending that started in the 1950s and continued through the post-war consensus period, which ended only in 1979.

The second main criticism levelled at the Budget by Opposition Members is on the issue of fairness. I am afraid I disagree with the comments made over the weekend by my right hon. Friend Mr Duncan Smith. This is a fair Budget, but let me produce some evidence to substantiate that.

Over the last five years, spending on disability benefits has increased by £3 billion, and it is forecast to increase further. That strikes me as fundamentally fair. We are spending more than we ever have on the NHS and on education—particularly on pupils from low-income backgrounds, via the pupil premium. Moreover, we are introducing the highest-ever national minimum wage—the national living wage—which takes effect in about a week’s time. We have taken millions of people out of income tax entirely, which disproportionately benefits people on low incomes. We have frozen petrol duty once again, which also disproportionately benefits people on low incomes, because things such as petrol duty are inherently regressive.

If we consult the Treasury’s distributional analysis, we see that the lowest 20% of earners pay just 6% of tax; we would expect that to be 20% if everything was even. They will pay the same in 2019-20 as they paid in 2010, while the top quintile will pay 52%—up from 49% five years ago. The highest earners will therefore pay proportionately more in five years’ time than they did five years ago. This analysis excludes the effect of the national minimum wage; if that is included, the skew will go even further. I believe that this Budget is a fair Budget. It protects spending on the most vulnerable, and those with the broadest shoulders are bearing the burden.

Let me turn briefly to business. Before coming here, I spent 15 years setting up and running entrepreneurial businesses. There is a reason why our economy has created 2.4 million jobs in the past five years, and why youth unemployment in my constituency is down by an incredible 62%—it is not an accident. It is because corporation tax has been cut, which has encouraged businesses to invest in creating jobs. I am delighted that the Chancellor is continuing this very successful long-term economic plan—[Interruption.]I see it commands widespread support—with further cuts in corporation tax and capital gains tax to encourage investment. My Treasury Committee colleague suggested that lower corporation tax encouraged share buy-backs, which is a bad thing. I would respectfully suggest that share buy-backs cycle money back into the investor community, who can then reinvest in other opportunities.

I welcome the Government’s action on international tax evasion through the BEPS initiative, although they could forerun that with further moves on transparency and disclosure unilaterally in the UK, as has been suggested. There is a consultation document on giving the Financial Policy Committee further powers to direct buy-to-let mortgage lending, which appears to be very high. I urge the Government to look seriously at those proposals and enact them at the earliest opportunity.

I support this Budget. It is good for business and good for our country—and most of all, it is fair.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South 4:51 pm, 22nd March 2016

I am interested in something that Chris Philp said when he mentioned Denis Healey. There was another individual who said, “You never had it so good” in 1959, but by 1963 the economy of this country was in very serious trouble. People should be very careful when they start sloganising like that.

To be charitable about this Budget, the most one can say about it is that it is divisive. Frankly, it puts the burden of the national debt and the national economy on the shoulders of the poorest. Over the past few days—I will not rehearse it now—we have had the fiasco with the Chancellor and the Secretary of State for Work and Pensions. If the Chancellor had an economic plan, why was he blown off course over the past 48 hours or so? He would not have needed to be blown off course if he knew what his economic plan was. Did he not know the implications of the cuts he was inflicting on the poorest members of our society?

During the general election, the Conservatives bandied about a figure on cuts in benefits—I think it was £12 billion —but when they were pushed to spell out exactly where they would find that sum, they never answered the question. There has been a deception on the British public based on the argument that the country was in an economic mess that they inherited when in fact it was the world economic situation that had deteriorated. If Ministers really want to know about this, they should watch the second part of the BBC 2 programme about Obama. The first part was about how Obama dealt with the debt that he inherited—from a conservative Republican, George Bush, by the way. Interestingly, at that stage Obama spent $85 billion on bailing out the motorcar industries, so I have no doubt there was an economic problem.

The Government are preparing the ground for some of these measures by always hinting at the international economic situation, so if we listen to them very closely, we can expect more cuts. It is no economic strategy to continually inflict cuts on the poorer people in society, and on local government and the public services. On the one hand they say they value those in the public services, but on the other they only give them a 1% wage increase. If they really value the nurses and the doctors in this country, then they ought to give them a decent increase.

Equally, in fairness to the Government, I have to say that I certainly welcome the help given to small businesses. That is an important factor, because 3 million or 4 million jobs have been created in this country by small businesses, but sometimes they are picked up by the larger companies. People tend to forget that.

Not enough is being invested in skills, and we must be careful about that. It is one thing to have a target of 200,000 apprentices, but the question is: are those quality apprenticeships? More importantly, we had the recent example of student nurses, whose grants have been cut. A married woman who suddenly wants to study part time will no longer qualify for that grant.

Once again, the Government have placed the burden on local authorities. Over the next few years, Coventry City Council will have to find between £70 million and £90 million for something that has been slipped out in the Budget. Not a lot of people have picked up on this, and it certainly has not been mentioned today, but Government grant will be shifted on to local authorities. When local authorities have to put up council tax to counter that and to deliver public services, the Government may come along and call local authorities prolific spenders, or they may want to cap it three years down the road. These are things that we should be conscious of. In the west midlands, the police budget is 80% funded by Government grant. Can people not see the implications for those services and for local government in terms of jobs? As I have indicated, local government is paying a terrible price, along with the poor of this country.

I will finish by talking about academies. An academy is closing in Woodlands ward in Coventry, which is in the constituency of my hon. Friend Mr Robinson. I do not want to intrude on his territory, but I intend to start taking the matter up with Ministers, as a route for consultation, and with the local authority.

Photo of Seema Kennedy Seema Kennedy Conservative, South Ribble 4:56 pm, 22nd March 2016

Since 2008, all developed economies have struggled with low confidence, lack of investment and sluggish growth. How each finance Ministry has responded to that challenge is quite clear from the growth and unemployment rates of our competitor economies.

The long-term economic plan is not just a slogan; it is a plan that we can be proud of. Since 2010 it has delivered for our constituents record levels of employment, stable interest rates and low inflation. Those are not just dry, dusty economic terms. They mean that in our constituencies, people have jobs; that we are not seeing mass house repossessions like we did in previous recessions; and that savings have kept their value. We have only to look at countries that are almost on our doorstep, such as Greece, to see that mass unemployment has massive social consequences when Governments lose control of their economies.

Our economy still faces great challenges. My hon. Friend the Member for Richmond (Yorks) (Rishi Sunak) talked about access to finance and investment, and I want to touch on those measures briefly. Many colleagues have quite rightly pointed out that cutting taxes leaves businesses with spare cash to invest. That leads to more recruitment and more tax take; it is a virtuous circle. I very much welcome the cut in corporation tax, and I disagree with George Kerevan that we do not need to cut it any further because it is already low enough.

I welcome the 10% rate on long-term investment in small cap companies. We need to do more to foster a culture of long-term investment, and the Budget goes some way to addressing that. Access to finance is still a barrier for some businesses. I was glad to see that the British Business Bank will carry on supporting SMEs through the Help to Grow programme from this spring, supporting at least £200 million of lending, and that the enterprise finance guarantee programme will be extended until 2018.

I have long been troubled not only by the brakes on investment but by the barriers to entry that prevent entrepreneurs from starting up in the first place. Business rates are one such barrier, because they are a fixed cost paid by businesses before they even start up. When I have spoken to small businesses in my constituency, they have welcomed the extension of small business rate relief. I also welcome the discussion paper on the revaluation of properties for business rates, because the three-year cycle will fit in a lot better with standard rent reviews.

I welcome most the changes in stamp duty land tax for commercial properties. Again, this tax is a barrier to businesses opening or expanding. In my previous life as a commercial property solicitor, I saw small businesses unable to open or grow because of the stamp duty land tax, or they adopted avoidance behaviours, which did not help anybody.

I want to speak briefly about investment infrastructure in the north, which I feel passionate about. We need more investment, particularly in east-west connections. I respectfully ask Treasury Ministers if there could be some money in the next Budget for the Ribble bridge.

The aim to have £1 trillion of exports by 2020 will boost our economy, and the investment in UK Trade & Investment is most welcome. Yesterday was the festival of Nowruz, when Iranians celebrate their new year. I very much welcome the fact that my right hon. Friends the Chancellor and the Business Secretary will visit Iran in May, and I wish them the best of luck.

The record shows that this Government’s long-term economic plan is working in the face of a difficult global economy. This Budget focuses on investment, and I shall be happy to support it tonight.

Several hon. Members rose

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

Order. There are still a great many Members who wish to speak, so I will have to reduce the limit to four minutes.

Photo of John McNally John McNally Scottish National Party, Falkirk 5:01 pm, 22nd March 2016

I give the Chancellor credit for one thing—he is consistent. After all this time, he is still failing: he has failed on key economic indicators; he has missed the targets that he has set; he has failed on his target debt and GDP; he has failed to hit his target on the current account and on public sector net borrowing. The one thing that the Chancellor has achieved is to prove beyond doubt that the Tories’ claim to economic credibility now lies in tatters. The Budget announcement clearly reveals that the Chancellor and the UK Government made the move to a decade of austerity through choice, certainly not through necessity. No matter what further U-turns are announced, his Budget means that society’s poor are in effect still paying for the mistakes of society’s rich. This pursuit of austerity—this Government’s callous actions favouring society’s rich—means, as the Chancellor confirmed this afternoon, that it is always the poor who, in his words, “pay the price.”

Photo of Phil Boswell Phil Boswell Scottish National Party, Coatbridge, Chryston and Bellshill

Since the Bureau of Investigative Journalism found in 2011 that over 50% of Conservative party funding under the current Prime Minister comes from the City of London, does my hon. Friend agree that we can see whose interests the Conservatives truly have at heart?

Photo of John McNally John McNally Scottish National Party, Falkirk

I thank my hon. Friend for that very valuable point. I hope Conservative Members will think deeply about what he has said.

I want to take this opportunity to welcome the Secretary of State for Work and Pensions to his new position. I urge him to use his portfolio to protect, support, enable and empower the most vulnerable in society, and return to them some peace of mind. The Chancellor did not provide an answer earlier today when he was asked about the plans for welfare cuts. To my mind, he succeeded only in causing the disabled more stress than they are already experiencing.

Not only have the Government managed to fail on the economic and productivity targets they set themselves, but we can clearly see that the deficit, the debt and the level of borrowing are worse than was promised last autumn. In contrast, the Scottish National party has set out a sensible alternative to austerity, which would return the public finances to a sustainable path, while continuing to invest in public services.

It is worth noting that, after much debate, wrangling and negativity, the UK Government have, in my opinion, seen sense and agreed to introduce a graduated sugar tax on soft drinks in 2018. Let us hope that we see some corporate responsibility among manufacturers and that they will willingly announce reductions in the sugar content of their products.

Health is a subject about which I have been deeply concerned for some time. I spoke during the sugar tax debate in November, when I gave my support to Jamie Oliver, the celebrity who has been mentioned today, and the other MPs present that day who have fought hard to bring this issue into the public domain and bring about change. I met Jamie at a House of Commons debate on diabetes, and I agreed with his aim of offering the public clear and reliable information about the sugar that we all consume—indeed, the planned confusion on some labelling reminds me of the Budget that we are discussing. I am grateful for the Government’s U-turn from their position before the debate in November, when they stated that they had

“no plans to introduce a tax on sugar-sweetened beverages”.

Photo of Phil Boswell Phil Boswell Scottish National Party, Coatbridge, Chryston and Bellshill

Does my hon. Friend agree that the sugar tax is as much about taking the first step to reduce sugar consumption as about raising awareness?

Photo of John McNally John McNally Scottish National Party, Falkirk

Absolutely. It is the first step in raising awareness throughout the land, and as I said, perhaps more manufacturers should take cognisance of the fact that sugar is causing a lot of problems in this country.

I am delighted that the SNP was joined by the FairFuelUK campaign and The Sun in calling for a freeze on fuel duty. We have successfully pressured the Chancellor not to raise fuel duty—a victory for small businesses, rural communities, and family budgets across Scotland and the UK. I praise my hon. Friend Alison Thewliss and other MPs—particularly Paula Sherriff—for their help to remove VAT on women’s sanitary products. I would like the Chancellor to go further, and I refer him to the gender pricing debate that colleagues and I took part in on 2 February, so that we make the added cost of living for women in the UK a thing of the past.

I am pleased that the Chancellor has followed the example of the Scottish Government and realised that small and medium-sized businesses are a huge driver of economic growth. I welcome the Chancellor undertaking a review of business tax, which is designed to be a road map to a more competitive tax. He will do no better than matching the Scottish Government’s commitment to supporting SMEs—a commitment which has meant that spending on economic development in Scotland is more than double the UK average. Over the last quarter, Scotland’s overall employment rate has increased by more than the UK equivalent. Finally, I seek the Chancellor’s reassurance that before Members make arrangements for a summer break, he will announce to the House the date of a corrective Budget.

Photo of Mike Wood Mike Wood Conservative, Dudley South 5:07 pm, 22nd March 2016

The Budget builds on the Chancellor’s strong record over the past six years of restoring sanity to the public finances, rebuilding the nation’s economy and securing growth. It is a shame that the shadow Chancellor is no longer in the Chamber, but I am sure that the shadow Chief Secretary to the Treasury will pass on the message that despite the shadow Chancellor’s mean-spirited comments to the Chancellor, such a feeling is not reciprocated on the Government Benches. Indeed, I am sure that I speak for all Conservative Members when I say that I hope that the shadow Chancellor will remain in his position for many years to come.

The Budget contains many measures that will benefit people and businesses in Dudley South by creating opportunities that are the hallmark of any compassionate society. There are nearly 3,000 small and medium-sized employers in Dudley South, many of which will benefit from the permanent increase in small business rate relief thresholds, as well as the increase in thresholds at the higher rate of business rates. As Mr Cunningham was generous enough to acknowledge, such measures are indisputably good for small businesses. About 2,000 self-employed people in Dudley South will benefit from the abolition of class 2 national insurance contributions as part of an ongoing simplification and modernisation of the taxation system.

For me, the most significant announcement in the Budget last Wednesday was of a new enterprise zone for the Waterfront in my constituency. I had been running a campaign about that since before the general election, so I put on record my personal thanks both to the Chancellor and to the Minister for Communities and Resilience, who has responsibility for devolution, who have taken the time to meet me, to listen to the arguments for the enterprise zone and, more importantly, to understand and act on them.

The enterprise zone will create more than 4,000 net new jobs—[Interruption.] As Rob Marris said, it will create significant benefits not only for Dudley borough, but for the wider region, which I happily acknowledge. It will mean a 100% business rate holiday alongside 100% capital allowances on large investment in new plant machinery, which has been extended for eight years. It is a big boost to our local economy and promises to add millions of pounds to local prosperity. I thank Dudley Council and the Black Country local enterprise partnership for all the work they did in making that possible.

The Budget is a big step forward in creating opportunities for all nations and all regions of our country. The black country is well placed to take full advantage, and I will certainly support the Budget this evening.

Photo of Melanie Onn Melanie Onn Shadow Deputy Leader of the House of Commons 5:11 pm, 22nd March 2016

I want to focus my comments on homelessness and the effects on it caused by the Budget and the changes over the past six years, specifically because I attended an event this weekend organised by Rucksack, a charity that gives advice and clothing to homeless people in Grimsby and the surrounding area. It directs rough-sleepers to hostels with spare beds and other organisations that can offer help, such as the YMCA, Salvation Army and Harbour Place, which is a well-known local organisation. They all do fantastic work but, due to the recent surge in homelessness, some local hostels have extensive waiting lists of 15 people who cannot get beds. Rucksack tells me that each of those organisations is substantially overstretched in offering their provision to local people in dire straits. Homelessness is not caused by fluctuations in the economy; it is about people’s support structures.

In my area—I am sure the situation is replicated across the country—there is a critical shortage of appropriate properties for people suffering varying degrees of disability, and their partners, children or people they care for, because of the funding available for adaptations in social housing and private housing for people with disabilities. It is becoming more difficult not only because the funding is decreasing significantly, but because the thresholds that people face to qualify for it are so high.

It is a test for our society. I heard colleagues say eloquently yesterday that the debate is about whether we are compassionate enough to ensure that help is there for people in their most difficult time. We have failed that test in recent years. The Treasury briefed The Sun before the Budget that the Chancellor was drawing up plans to eradicate homelessness. How typical was that of the Chancellor? There was a great pre-Budget story for the papers, complete with a celebrity endorsement from Richard Gere to catch attention. On the day itself, that grand scheme turned out to be nothing more than a sticking plaster. I defy any Government Minister to stand up and say, with a straight face, that the scheme will get us anywhere near to eradicating homelessness. As the chief executive of Crisis said, the measures do little to tackle the underlying problems.

I am no spreadsheet geek, by any stretch of the imagination, but I have had a look at tables 2.1 and 2.2 in the Red Book, which deal with measures in this Budget and those in previous Budgets and autumn statements that are due to come into effect this year. They relate to housing benefit changes, the temporary accommodation funding mechanism and reductions in social housing rents, which have impacts on the ability of housing associations to invest in existing properties or to build new ones. All those things have a significant impact on homelessness and the likely increases in it. The £115 million proposed is therefore a case of giving with one hand and taking significantly away with the other. I know that organisations such as Rucksack and other small charities in my constituency, such as Harbour Place, will say that they are not clear where that £115 million is going to go. It really needs to go to those who need it the most and the organisations that provide direct care and help. Under their welfare reforms, the Government made those under the age of 25 ineligible for housing benefit. That is another cut within this Budget, but I will end there.

Photo of Chris White Chris White Chair, Committees on Arms Export Controls (formerly Quadripartite Committee) 5:15 pm, 22nd March 2016

A number of measures in this Budget will have a positive impact on smaller businesses, and it is absolutely right that we continue to stimulate growth in the size and number of small and medium-sized enterprises as they have undoubtedly been a key contributor to a strengthening economy, both locally and nationally.

The midlands is vital to our economy, and I am pleased that the Government—

Photo of Chris White Chris White Chair, Committees on Arms Export Controls (formerly Quadripartite Committee)

And Opposition Front Benchers are generous enough to recognise it as such.

Some 96,000 more businesses have been formed in the midlands since 2010, which amounts to about 52 a day. The announcement of the midlands engine investment fund, which will see more than £250 million invested in smaller businesses across our region, will be a boost for the local economy and will go some way to ensuring that the progress made in recent years is built upon.

It is worth recognising the tremendous impact that the reform to business rates will have. As the Chancellor outlined on Wednesday, it will mean that 600,000 businesses will pay no business rates at all. The Federation of

Small Businesses has said that its members welcome this as an “important step”, and I echo that sentiment. The further cut in corporation tax to 17% by 2020, the freeze on fuel duty, and the action on VAT on overseas firms to create a more level playing field are all welcome measures.

We must not lose focus, however, on enterprise policy and the idea of the “march of the makers”, which is particularly relevant. Manufacturing is key to the midlands and an important aspect of rebalancing our economy. As co-chair of the all-party group on manufacturing and a member of the Business, Innovation and Skills Committee, I have worked closely with industry to discuss and hear about some of the challenges that it faces. High-value manufacturing catapult centres have been a revelation, and I am pleased that the Government continue to back them, with more than £200 million of investment since 2011 and an increase in financial support in the latest autumn statement. Fostering an environment in which innovation thrives has to be a priority when thinking long-term, and these catapult centres, which bridge the gap between businesses, academia and some of the UK’s world-class research centres, are instrumental in achieving that. However, such action must be matched by a supply of skills, and apprenticeships are of huge significance. In my constituency, Warwick Trident College works with industry—it partners with industry—and is providing hundreds of students with the necessary skills to succeed. Empowering further education colleges to extend the provision of tailored courses should be an important part of the Government’s future apprenticeship agenda.

Another underestimated sector is video games, which contributes a huge amount to our economy, not least in my constituency. There is no doubt about the value of the games industry to the economy: we are talking about £1.4 billion in gross value added, support for 23,900 jobs nationally and the generation of £429 million in tax receipts. We must continue to support this very important sector.

Photo of David Anderson David Anderson Opposition Whip (Commons) 5:19 pm, 22nd March 2016

It has been a bad week for the Chancellor. It was his eighth Budget and sixteenth economic statement, so he ought to know better. The Budget unravelled in 24 hours and then it got worse: outrage at PIP cuts as it became clear that the disabled were being sacrificed for the rich; education in chaos as he forced academisation on every school, using our kids in his war against local government; stealth cuts on the NHS and local government, with changes to employer pension contributions; and, to cap it all, the Secretary of State for Work and Pensions giving in after six years.

This latest mess only builds on the Chancellor’s catalogue of failure. He is still nowhere near to eliminating the deficit, despite his plans to have done so two years ago. In February, we had the lowest manufacturing output for four years. National debt is up 50% under this Chancellor—up to an eye-watering £1.6 trillion—and he has lurched from one missed target to another. He has blamed everybody and everything except himself. He blamed the Greeks. He blamed the Queen for having a jubilee holiday. He even blamed the snow. He did not find any money down the back of the settee this week, unlike the £27 billion he found miraculously before Christmas.

Who pays for the Chancellor’s folly? Who else but the poor, the vulnerable and the sick—those least able to fight back. The Resolution Foundation has him bang to rights. It showed that what the Budget really means is that on average the richest will get a £225 rise, while the poorest might get a measly rise of £10 a year. In fact, it shows that, with other changes and the cuts announced since last year, the richest in our nation can expect to be £235 a year better off, while the poorest will be £375 a year worse off by the end of this Parliament. He is the Robin Hood-in-reverse Chancellor. He has made a career out of making the poorest in our country even poorer.

It is worse than that, however, because in an amazing show of puffed-up pride, the Chancellor stated in his speech that the northern powerhouse is

“the most radical devolution of power in modern British history.”—[Hansard, 16 March 2016; Vol. 607, c. 960.]

Has he not heard what is happening in Scotland and in Northern Ireland, where they are running their own affairs, getting extra money and having proper devolution?

Photo of Mary Glindon Mary Glindon Labour, North Tyneside

Does my hon. Friend agree that devolution for the north-east is no deal at all? It is a raw deal, because we cannot even agree between councils what we want. We are just not getting the real democracy we need.

Photo of David Anderson David Anderson Opposition Whip (Commons)

I thank my hon. Friend for her intervention. I will come on to the north-east in a moment.

The Chancellor should be aware of what is happening in this city, where £2,000 a head is being spent on transport, while in my part of the world the figure is £5 a head. Where is the fairness in that?

The institutions of devolution were set up properly under a Labour Government who trusted the people with referendums and democratic discussion, but that is unlike what has happened in my part of the world. It is one thing to exaggerate—we all do it in this House, and I am as guilty as anybody else, believe it or not—but last week the Chancellor said from the Dispatch Box that

“powerful elected Mayors have been agreed for Manchester, Liverpool, Tees Valley, Newcastle and Sheffield.”—[Hansard, 16 March 2016; Vol. 607, c. 960.]

At least in the case of Newcastle, that is simply untrue. Newcastle is not being offered an elected mayor. That is exactly as it should be, as it is less than four years since the people of that great city rejected a mayor in a referendum by 62% to 38%. What is actually on offer is an elected mayor for the north-east, but that has certainly not been agreed yet. In fact, this morning Gateshead Council, one of seven councils involved, threw that out. Northumberland Council says is will agree to it only with certain additional powers that do not look like being given. Durham County Council has already said it wants a delay and not to be forced to make a decision on Thursday on proposed legislation that has not even gone through this House and will not do so until November.

So did the Chancellor—the great manipulator; the political strategist; the man who does not get out bed in the morning without weighing up the political advantage; the Machiavelli of Downing Street—make a mistake? He might have. If he made a mistake by saying that that had been agreed in the north-east, he should come and apologise for it. If he did not make a mistake, however, and if he deliberately tried to mislead the House, he should come back here and tell the truth—that he was deliberately misleading the nation and pretending that the so-called northern powerhouse was up and running in the north-east of England, as it is struggling to do in the rest of England. I have been really chuffed in these past two days to hear Norman Lamb and Mr Jackson—I never, ever thought I would agree with the hon. Member for Peterborough—share exactly the same concerns as me and my hon. Friend Mary Glindon, and saying very clearly that what is on offer is not fair, not democratic and not open to proper consultation.

The proof is in what the Chancellor said last Wednesday. This is a party political Chancellor who puts his and his party’s interests first. He said last week, in relation to the £20 million for building houses in the south-west:

“it is proof that when the south-west votes blue, their voice is heard loud here in Westminster.”—[Hansard, 16 March 2016; Vol. 607, c. 961.]

Unfortunately for those of us who vote red, our voice is never heard, but we are going to keep on shouting at ’em.