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House of Commons
Wednesday 4 May 2011
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
1. John Robertson (Glasgow North West) (Lab): What discussions he has had with the Secretary of State for Work and Pensions on the awarding of contracts for the Work programme in Scotland; and if he will make a statement. 
9. Dr Eilidh Whiteford (Banff and Buchan) (SNP): What weighting was given to the involvement of voluntary sector organisations in the assessment process of tenders of prime contractors for the Work programme in Scotland. 
The Secretary of State for Scotland (Michael Moore): Over the past year I have had numerous discussions with ministerial colleagues on the development of the Work programme. The Government are encouraging prime contractors to engage voluntary and private sector organisations in the delivery of the programme.
John Robertson: Does the Secretary of State share my concern that the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), may have broken the ministerial code of conduct in awarding the contracts to some companies? Will the Secretary of State make a statement on the matter, and what is he going to do to protect the companies that missed out on the awards that were given out?
Michael Moore: The hon. Gentleman is making a very serious allegation, which my right hon. Friend absolutely refutes. As with any other instance in which people think something inappropriate is happening, there are appropriate channels through which it can be pursued. If there is some evidence on that or any other matter, those channels should be followed.
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There has been great unease in Scotland about the tendering process for the Work programme contracts. The tender document clearly outlined the expectation that at least 30% of a prime contractor’s subcontracts should be delivered by voluntary sector providers, and it stated:
“This will be a key factor in the tender assessment process.”
Michael Moore: I acknowledge the hon. Lady’s work in the voluntary sector, and I believe that it has a very important role to play not just in getting people back to work but in many aspects of Scottish life. Let us remember that the Work programme is a step change in the provision of support for people to get back into work. We are determined to ensure that we tackle all the problems that have afflicted different parts of Scotland and the rest of the United Kingdom.
The invitation to tender document was absolutely explicit about the criteria, and they were the ones against which bids were measured. As far as the future involvement of the voluntary sector is concerned, the two preferred bidders have indicated that they fully intend to engage with the sector.
Angus Robertson (Moray) (SNP): Does the Secretary of State agree that to secure economic recovery, it is important to listen to the views of the job creators so that we minimise the number of people needing support from the Department for Work and Pensions in the first place?
Michael Moore: Of course it is important that as we recover from the terrible economic situation that we inherited, we focus on creating new jobs. That is why we set out in the Budget continued plans to ensure that we keep interest rates low, reduce corporation tax and reduce the burden of national insurance, compared with the previous Government’s plans. We will continue with those measures, to ensure that we rebalance the economy and create more private sector jobs in Scotland and elsewhere.
Angus Robertson: But does the Secretary of State acknowledge the significance of the fact that 200 leading Scottish job creators have today signed a public statement saying that the best approach for the future is to re-elect the Scottish National party Scottish Government, and Alex Salmond as First Minister?
Michael Moore: Funnily enough, I do not agree with the hon. Gentleman on that point. The best approach to the next Scottish Government is to ensure that we have Liberal Democrats at the heart of it, so that we can reinforce the central part that this Government are playing in rebalancing the economy of the UK as a whole. Our agenda for growth is absolutely essential to our recovery from the situation that we inherited.
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Ann McKechin (Glasgow North) (Lab): I note that the Secretary of State, in his answer to my written question yesterday, stated that at his recent meeting with Scottish voluntary sector organisations, to which he dragged along the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), he had encouraged the successful bidders to
“engage effectively with the voluntary sector”.—[Official Report, 3 May 2011; Vol. 527, c. 662W.]
Will he confirm what he expects that will actually achieve? Can he guarantee that voluntary sector involvement will be more in line with the UK average for the contracts tendered in the Work programme, or is the voluntary sector in Scotland only going to get the crumbs from the table?
Michael Moore: May I first say that I was very pleased to invite my right hon. Friend the Minister of State to the employment gathering in Edinburgh, which was very well attended by representatives of the different stakeholders and by a representative of the Scottish Government? As we made clear at the time, it is our intention to ensure that the voluntary sector is as involved as possible. The two preferred bidders, Ingeus and Working Links, have made it clear that they are going to discuss the role of the voluntary sector in their supply chains. That discussion is ongoing and not yet resolved. Beyond that, there are other streams of work coming out of the Department for Work and Pensions for which the voluntary sector and others will be able to bid.
Ann McKechin: I note that the Secretary of State is still unable to provide us with a figure. Doubt will remain in the voluntary sector, which has suffered a massive drop in income as a result of the Work programme, which offers fewer places than were offered under previous Government-operated schemes. Does he agree that the experience and knowledge of the voluntary sector of the future jobs fund is testament to its strength? Does he agree that Scotland needs a new future jobs fund, so that we can offer places for the thousands of people who are coming out of school and college with nowhere to go?
Michael Moore: I am happy to acknowledge that under the previous Government, of whom the hon. Lady was a member, youth unemployment rose consistently through periods of growth as well as during the recession. I accept that we have a major challenge, which is why I will bring together different employment sector representatives in Irvine in a couple of weeks’ time.
It is important for all of us that we get the voluntary sector engaged. The future jobs fund was a very costly scheme, and its results do not bear out the hon. Lady’s assertions. It is not the case that it led to sustainable jobs—but the new Work programme will do exactly that.
2. Guto Bebb (Aberconwy) (Con): What discussions he has had with the Secretary of State for Work and Pensions on the implementation in Scotland of the Government’s proposals for universal credit. 
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The Parliamentary Under-Secretary of State for Scotland (David Mundell): The Secretary of State for Scotland and I are in regular contact with the Secretary of State for Work and Pensions on a range of issues concerning implementation of universal credit in Scotland.
Guto Bebb: In Scotland, the public sector accounts for about 50% of gross domestic product. If we are to succeed in making the country less dependent on the public sector, we need to ensure that the private sector has access to the personnel that it needs to grow. Does the Minister agree that universal credit will help to make work pay, and that it will contribute to the rebalancing of the economy of Scotland and the UK?
David Mundell: I do indeed agree with my hon. Friend, who will be pleased to note that already during the incapacity benefit reassessment trial taking place in Aberdeen, a large number of people who not only want to work, but also want the support to help them to work, have been identified and have found opportunities to work in the private sector.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): Will the proposed universal credit in Scotland be affected by the Chancellor’s proposed changes in tax and national insurance, particularly in relation to the tax proposals in the Scotland Bill?
David Mundell: The hon. Gentleman has followed the progress of the Scotland Bill in detail, but he will know that in relation to the core aspects of universal credit and benefits, the Government have given an undertaking that no one will be worse off in cash terms when universal credit is introduced.
Iain Stewart (Milton Keynes South) (Con): Does my hon. Friend agree that the current complexity of the benefits system means that too many Scottish claimants do not receive the benefits to which they are entitled, and that universal credit will help to target the right support on the right people?
David Mundell: I certainly agree with my hon. Friend. The amount of benefit that goes unclaimed in Scotland is a national disgrace. The system of universal credit will simplify the benefits system, as well as making work pay and combating worklessness and poverty. That is something that hon. Members on both sides of the House should welcome; it is a marked change from the 13 years of inaction from the previous Government.
“The Plan for Growth”
The Parliamentary Under-Secretary of State for Scotland (David Mundell): Returning the United Kingdom to sustainable economic growth is the Government’s overriding priority. We are doing everything to create the conditions that enable all businesses in Scotland to be successful and create more jobs. Our plan for growth is a plan for the whole of the UK.
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Mary Macleod: What views and reactions is my hon. Friend aware of among our colleagues in the Scottish Parliament and the business community in relation to the Government’s proposals to support small and medium-sized businesses?
David Mundell: The Government’s proposals for reducing corporation tax and for making changes to national insurance have been widely welcomed by businesses across Scotland. Of course, as my hon. Friend will know, small businesses in Scotland have particularly benefited from small business relief, which was delivered by Conservative MSPs.
Ann McKechin (Glasgow North) (Lab): Inflation is at double the Government’s target, growth has been downgraded for the next two years, retail figures are down and consumer confidence is at rock bottom. Will the Minister for once stand up for Scotland and concede that while the cuts may be hurting, they are not working, and that it is time for the Government to have a plan B for growth?
David Mundell: This Government do have a plan for growth—unlike our predecessor. We have set out ambitious objectives to create the most competitive tax system in the G20, to make the UK the best place in Europe to do business, to encourage investment and exports, and to create the most flexible and educated work force in Britain.
I am sure the hon. Lady is good at figures. She will know that her party started the Scottish elections with a 10-point lead, and that today it has an 18-point deficit. That is good work with figures.
Mr Mike Weir (Angus) (SNP): Can the Minister tell us what part of the plan for growth is behind the bright idea of his colleague the Chief Secretary to the Treasury to impose a massive increase in taxation on the oil and gas industry, jeopardising investment and up to 50,000 jobs?
David Mundell: The hon. Gentleman would have some credibility in asking that question had he not repeatedly raised in the Chamber the issue of the costs of petrol and fuel oil in his constituency. It is clear that the Chancellor and the Chief Secretary got the balance right in the Budget between the taxation of the oil industry and the taxation of the motorist. If the hon. Gentleman wants to tell his constituents that they should be paying 6p a litre more on their fuel, he is welcome to do so.
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The Secretary of State for Scotland (Michael Moore): Unemployment has fallen steadily since August 2010 and employment has increased in the same period. This is a welcome sign. Supporting companies to create and sustain jobs and helping people into work are key priorities for the Government. On 19 May I am hosting a seminar in north Ayrshire, in the constituency of the hon. Member for Central Ayrshire (Mr Donohoe), on youth unemployment, and my right hon. Friend the Secretary of State for Work and Pensions will join me at this important event.
Mr Donohoe: I look forward to our meeting on 19 May. On a another matter concerning unemployment, does the Secretary of State think that the separation of Scotland from the rest of the UK would help or hinder employment prospects for people in Scotland?
Michael Moore: It would be an absolute disaster for Scotland to separate from the rest of the United Kingdom. It is interesting that even the Scottish National party appears to recognise that, because it is not campaigning very hard on the subject.
Nic Dakin: In the Secretary of State’s answer to my hon. Friend the Member for Glasgow North (Ann McKechin), our Front-Bench spokesperson, he recognised that youth unemployment continues to rise in Scotland. When does he believe that his actions will begin to bring it down to an acceptable level?
Michael Moore: In response to the question from the hon. Member for Glasgow North (Ann McKechin), I said that youth unemployment had been a problem for a good long period across the United Kingdom, including under the previous Government during periods of growth. The Prime Minister, the Work and Pensions Secretary, I and everybody else recognise the need to bring it down, which is why we are meeting to discuss the core issues behind the problem, and why, through the Get Britain Working programme and the Work programme, which we have discussed already, we are introducing measures to get young and old alike off the unemployment register and back into productive work.
Jim McGovern: When will the penny eventually drop for the coalition Government? Last week in response to the Scottish Affairs Committee report on the computer games industry, the Government said that there is no case for tax incentives for the computer games industry, which is very important to this country. That was rather callous coming a week after another computer games company in my constituency went bust. Will the Government accept the blatantly obvious fact that if we want companies to set up in this country, we have to offer incentives at least comparable to those offered by our competitors overseas?
First, may I again recognise the hon. Gentleman’s consistent efforts on behalf of the computer games industry? I recognise the importance of the industry not just to Dundee and Scotland, but to the UK as a
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whole. As he knows—and as I hope the response to the Select Committee’s report reinforces—we have considered very carefully the incentives we need to offer not just to the computer games industry, but to a whole range of sectors in Scotland and across the country. It is our judgment that to get ourselves away from the danger zone we were in last May, it is important to tackle the deficit and to get ourselves on the path to growth. We have done that in successive Budgets setting out plans to reduce corporation tax, to keep interest levels low, to reduce the national insurance burden and to set out important new targets for banks and their lending to small businesses. That applies to the computer industry sector as much as to any others. Once again I will be happy to meet him to discuss the matter, if he would like.
Mr Alan Reid (Argyll and Bute) (LD): Unemployment in Kintyre will be greatly reduced if the community group’s bid to buy the former air base at Machrihanish goes ahead. I thank the Secretary of State for meeting the community group recently. I have written to him with a list of outstanding issues that are still to be resolved. I ask that Scotland Office Ministers continue to work with Defence Ministers and the community group to resolve those outstanding issues as quickly as possible, so that the buy-out can go ahead, with exciting prospects for the Kintyre economy.
Michael Moore: Again, I pay tribute to my hon. Friend’s sterling efforts on this issue. I also welcomed the opportunity to meet representatives from the Machrihanish group a few months ago. I recognise that there are still issues that the group wishes to see resolved, and that these involve ongoing discussion with the Ministry of Defence. I will ensure that my right hon. and hon. Friends in the Ministry of Defence are aware of the details of my hon. Friend’s concerns, and that he receives a response to them.
The Parliamentary Under-Secretary of State for Scotland (David Mundell): Banks and other financial institutions are vital to the functioning of the economy. Although no specific work has been commissioned on the banking bail-out in Scotland, a 2010 National Audit Office report states that the total amount at stake is currently £512 billion. As of December 2010, £124 billion in cash had been invested in Government financial interventions. Based on NAO data, the Scottish Parliament Information Centre, SPICe, has estimated that the Royal Bank of Scotland and the Lloyds Banking Group were provided with £470 billion. SPICe also calculated that this figure was three times the annual Scottish GDP, and that the total UK Government intervention of £751 billion was equivalent to just over half of UK GDP.
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crisis on its own? Is it not the case that Scotland’s economy will always be better off inside, rather than outside, the United Kingdom?
David Mundell: I could not agree more with my hon. Friend. It is interesting that as we enter the Scottish Parliament election period, the Scottish National party appears to have forgotten its proclamation about the arc of prosperity and Scotland’s wish to join the economies of Ireland and Iceland. The First Minister, Alex Salmond, also appears to have forgotten saying in the 2007 campaign:
“We are pledging a light-touch regulation suitable to a Scottish financial sector with its outstanding reputation for probity, as opposed to one like that in the UK, which absorbs huge amounts of management time in ‘gold-plated’ regulation.”
Pete Wishart (Perth and North Perthshire) (SNP): That response shows that what has characterised the Scottish election campaign is that positivity wins over negativity. Will the right hon. Gentleman at least acknowledge and recognise that the failure of those so-called Scottish banks was down to UK regulation?
David Mundell: I do not think that the hon. Gentleman was listening to my last response. His leader, Alex Salmond, previously described the UK regulation as “gold-plated” and, at the previous Scottish elections, offered the voters “light-touch regulation”. This is the same Alex Salmond who said that the banking crisis was down to “spivs and speculators”.
John Thurso (Caithness, Sutherland and Easter Ross) (LD): One of the most pernicious effects of the banking failure in Scotland at the moment is the withdrawal by nationalised banks at short notice of funding for small businesses, such as TDI Ltd in my constituency. What will the Minister do to hold the moneylenders’ feet to the fire and get Project Merlin properly adhered to?
David Mundell: The Secretary of State and I are in regular contact with the banks operating in Scotland to ensure that Merlin goes forward as envisaged. We are also willing to take up individual cases such as the one that my hon. Friend mentions, which, if he refers it to us, we will refer directly to the banks in question. [ Interruption. ]
Greg Hands (Chelsea and Fulham) (Con): Thank you, Mr Speaker. Will the Minister join me in welcoming the report by the Independent Commission on Banking, under Sir John Vickers, and will he remind the House who, in the last Parliament, awarded Sir Fred Goodwin a knighthood for services to banking?
David Mundell: My hon. Friend’s interventions at Scottish questions are always welcome. He is quite right to suggest that it was the Labour Government who not only awarded Sir Fred Goodwin his knighthood but involved him in virtually every other initiative that they pursued in Scotland. The Vickers report is to be welcomed in Scotland, as it is elsewhere in the United Kingdom.
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The Parliamentary Under-Secretary of State for Scotland (David Mundell): Government amendments to the Fixed-term Parliaments Bill deferring the 2015 Scottish Parliament elections until 5 May 2016 were agreed by the other place on 29 March.
Karl McCartney: In addition to outlining those measures, will my right hon. Friend update the House on progress towards the establishment of the commission to examine the West Lothian question, on its membership and on when we might expect to see its conclusions and recommendations?
David Mundell: As my hon. Friend knows, the coalition’s programme for government promised to establish a commission to consider the West Lothian question. A commission will be established this year to consider it, and the Government are committed to addressing the issue. We are continuing to give careful consideration to the timing, composition, scope and remit of the commission. It will need to take into account our proposals for reform of the House of Lords to create a wholly or mainly elected second Chamber, the changes in how this House does its business, and amendments to the devolution regimes such as those in the Scotland Bill, which is now before the House.
The Secretary of State for Scotland (Michael Moore): I have regular discussions with ministerial colleagues on a wide range of energy-related issues. Scotland has a growing reputation as a world leader in renewable energy, and we will continue to work with industry and the Scottish Government to develop these opportunities.
Jo Swinson: I thank the Secretary of State for that reply. Last month, six Scottish wind farms were paid a total of £900,000 to stop producing energy because the grid could not absorb it. What will the Government do to strengthen grid capacity and improve energy storage so that that kind of waste does not happen, and so that Scotland can properly harness its vast resources of marine, hydro and wind energy?
First, may I highlight the fact that, under the complex energy management arrangements for the grid, arrangements have to be made from time to time to ensure that we can stop or increase energy production? Through those arrangements, payments are made for stopping and increasing production; that is understood. The Government have set out an ambitious programme for energy reform through our energy market reform proposals. The consultation on that programme was recently concluded, and my right hon. Friend the
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Secretary of State for Energy and Climate Change intends to publish a White Paper on the subject in the near future. Through that, and through other measures such as the transmission grid charges review, we will seek to ensure that we have the capacity and capability to exploit the renewable energy potential not only of Scotland but of the whole United Kingdom. Our other initiatives relating to the green investment bank and the offer to the Scottish Government to release the fossil fuel surplus are indicative of our intention to play a full part in the renewables revolution.
Michael Moore: There have been regular and ongoing discussions with the previous Scottish Government on these issues. I have to record great disappointment that despite our offer to release the fossil fuel surplus—something that eluded the previous Government—they were not keen to take it up. I hope that the new Government elected tomorrow, with Liberal Democrats at the core of it, will take up that very positive measure.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): The Secretary of State may know that the Energy and Climate Change Committee has had meetings with investors in the renewables sector in which concerns have been raised that long-term capital investments are involved, and that if the price of carbon were to change in investors’ favour, future Governments might introduce a windfall tax to compensate electricity consumers. Will my right hon. Friend reinforce the point made in the debate on Treasury matters last night that the Government want to engage with the oil and gas industry to ensure that any concerns about the stability of the tax regime can be dealt with, so that we can have a constructive engagement with the aim of maximising investment in all energy futures for this country?
Michael Moore: My hon. Friend makes an important point. I followed his contribution and that of my right hon. Friend the Member for Gordon (Malcolm Bruce) last night with great interest. As my hon. Friend the Economic Secretary to the Treasury pointed out, their thoughtful and constructive contribution to the debate was very worth while. We are properly engaged with the oil and gas sector, as we will be with the renewables sector, to ensure that we can put in place long-term sustainable tax regimes and other arrangements that will help to boost those important parts of the British economy.
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The Prime Minister was asked—
Jim McGovern: The abolition of council tax, the scrapping of student debt, the £2,000 endowment for first-time home buyers and, of course, the referendum on separatism were all promises made by the Scottish National party prior to the last Scottish elections, all of which were never kept. Will the Prime Minister inform me, the House and the country whether certain political commentators are correct when they say that he would prefer to see the separatists returned in Edinburgh for one reason only—to avoid a Labour victory?
The Prime Minister: I am happy to confirm that what I would like to see in Scotland is the greatest possible showing for Annabel Goldie, who has led the Conservatives with such distinction. I do not think I want to intrude on the private grief between Labour and the SNP, but one thing I will say: whatever the outcome of that election, I, for one, will always stand four-square behind the United Kingdom.
Dr Phillip Lee (Bracknell) (Con): Is the Prime Minister aware of the significant fires raging in Swinley forest in my Bracknell constituency? I am sure he would like to join me in congratulating the fire and police services on the sterling work that is being done, and hope he will guarantee that the Government will be there if any requests are made by those services.
The Prime Minister: I certainly join my hon. Friend in praising the fire and other services taking part in this difficult endeavour. As he knows, there are well tried and tested procedures to make sure that central Government stand behind local government when there are excessive costs. I will happily write to my hon. Friend about that issue.
The Prime Minister: The decisions about police officer numbers will depend on the decisions made by chief constables in individual parts of the country. The point is that we can see in case after case that there are far too many police officers in back-office jobs, doing paperwork and carrying out corporate development work who should be on the front line. Responsible chief constables are getting those officers out on the front line to fight crime—and crime is falling under this Government.
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Edward Miliband: I do not know whether the Prime Minister does not know the answer to the question or whether he chooses not to answer it. Let me tell him the answer: 2,100 experienced police officers with more than 30 years’ experience are being forcibly retired. Let us take the case of former beat officer, Martin Heard, who was forced to retire from Wolverhampton police. He is now being asked to come back to the force as a volunteer special constable—unpaid—to fill the gaps left by the cuts. What does the Prime Minister have to say to Martin Heard?
The Prime Minister: What is absolutely clear is that what we are getting from the Labour party is complete and utter hypocrisy. We know at the time of the last election that Labour was specifically asked, and I quote the interview:
“Can you guarantee if you form the next government that police numbers won’t fall?”
The Home Affairs spokesman at the time, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), said “No”, he could not guarantee that. The question is not whether the budget should be reduced—of course it has to be—but who is going to cut the paperwork, who is going to get rid of the bureaucracy, who is going to trust the local managers to make sure we get police on the front line. Those are steps we are taking; those are steps his Government never took.
Edward Miliband: He is the guy who came along and said that cuts not of 12% but of 20% were necessary for efficiency savings in the police budget. It is his choice; why does he not defend it? Perhaps one reason people are so angry is that a year ago the Prime Minister said on the eve of the election:
“Any cabinet minister who comes to me…and says ‘Here are my plans’ and they involve frontline reductions, they’ll be sent”
The Prime Minister: What the Home Secretary is doing is what police leaders up and down the country are doing: trying to get more police on the beat. In my own force in the Thames valley, that is exactly what is happening.
When it comes to defending front-line services, is it not time that the right hon. Gentleman talked to Labour local authorities such as Manchester city council, which, although the average cut in local government spending power is just 4.5%, is cutting services by 25%? Are not Labour local authorities playing politics with people’s jobs?
Edward Miliband: The Prime Minister knows that he cannot defend his broken promises on policing. Let us talk about the other broken promises led by the Deputy Prime Minister. We know that the majority of universities are proposing to charge tuition fees of £9,000 a year. Can the Prime Minister tell us how many of them he expects to have their proposed fees cut by the Office for Fair Access?
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The right hon. Gentleman talks about broken promises. The fact is that it was the last Government who introduced tuition fees and top-up fees—but we have a new doctrine on the leader of the Labour party’s attitude to the last Government, which he announced in an interview with The Sun. He said:
“I am not going to defend what happened in the past just because I happen to have been in the last Government.”
Edward Miliband: Once again, the Prime Minister has not answered the question. We know from the Office for Fair Access that it is not going to cut the fees of the universities. The assistant director said at the weekend:
“We are not a free pricing regulator: that is not our role...we wouldn’t say to an institution we would only allow a fee of ‘X’ or ‘Y’.”
Will not the Prime Minister admit that on top of a broken promise not to raise tuition fees and a broken promise that £9,000 would be the exception, he is now breaking another promise on the capping of excessive fees?
The Prime Minister: The fact is that we will have to wait until July, when the access regulator—[Interruption.] Let me make this point to the right hon. Gentleman. Degrees have not suddenly started to cost £7,000, £8,000 or £9,000. Degrees have always cost that much. The question is, who will pay for them? We say that successful graduates earning more than £21,000 a year should pay for them rather than taxpayers, many of whom do not go to university.
I have to say this to the right hon. Gentleman. He made a promise: a promise that he would have a fully costed alternative to our fees programme by the end of the last year. Where is it? Another broken promise!
Edward Miliband: That is what we have come to expect from this Prime Minister. He is hazy on the facts, and unable to give a straight answer to a straight question. I know how the Energy Secretary must have felt in Cabinet yesterday. Remember what was said a year ago about two parties working
“Together in the national interest”?
What the public are saying, in relation to police cuts, tuition fees and the NHS, is “This is not what we voted for.” Given that the Government have broken so many of the promises that they made a year ago, how can the public believe anything that they say at the elections tomorrow?
The Prime Minister: Even the jokes have been bad this week. The fact is that what this coalition Government have done over the past year is freeze council tax, cap immigration, lift a million people out of income tax, introduce a pupil premium, link the pension back to earnings, cut corporation tax, and set up more academies in 10 months than the last Government set up in 10 years. At the council elections tomorrow, people should remember the mess that Labour left us in, and resolve not to let Labour do to their councils what it did to our country. [ Interruption. ]
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Q2.  Caroline Dinenage (Gosport) (Con): Does the Prime Minister agree with the comment of Lord Glasman, special adviser to the Leader of the Opposition, that the last Government lied to the British people about the extent of immigration?
The Prime Minister: My hon. Friend raises an important point, which is that the last Government did not tell it straight to people about what was happening on immigration and that it has fallen to this Government to take the steps to get the numbers under control. Indeed, Lord Glasman said something that I have said many times, which is that under the last Government there was
“very hard rhetoric combined with a very loose policy”
Mr Jack Straw (Blackburn) (Lab): Does the Prime Minister share my profound anxiety about the recommendation of the advocate-general to the European Court of Justice for a European-wide ban on the patenting of stem cell research based on human embryos? Does he agree that were such a ban to be confirmed by the ECJ, it would have profoundly damaging effects on our science base and our pharmaceutical industries? Is he able to say what contingency plans the Government are putting in place to minimise the effect of any such ban?
The Prime Minister: The right hon. Gentleman makes an important point, and I thank him for giving me some notice of this issue. The point I would make is that this House and the House of Lords have had extensive debates to arrive at the policy that we have. I believe that it is right to try to maintain the UK as a world leader in stem cell research. Under European law, uses of human embryos for industrial or commercial purposes are exempted from patent protection. As I understand it, the legal opinion of the advocate-general at the ECJ on the scope of this exemption is advisory and does not bind the Court. As such, the opinion currently has no impact on British researchers, but we should keep this position under review.
Q4.  Jeremy Lefroy (Stafford) (Con): Several manufacturing businesses in Staffordshire, including Alstom in my constituency, have recently committed to significant investments and are increasing their work force. What measures does my right hon. Friend believe are necessary to ensure that the welcome growth in manufacturing in the UK continues for the long term?
The Prime Minister: My hon. Friend makes an important point, which is that we do want growth in manufacturing, which is very strong at the moment and has been over the past year, to be maintained. I well remember visiting the Alstom plant, although I was slightly less successful in winning Stafford than he was at the last election. Such plants will benefit from our policies of cutting taxes, boosting apprenticeships, investing in capital projects and doing everything we can as a Government and as a country to support our export industries and sell Britain around the world.
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Mr Bob Ainsworth (Coventry North East) (Lab): On 25 June last year, speaking on the Ark Royal, the Prime Minister told our armed forces that he would enshrine the military covenant in law. Why is he watering down that commitment to a useless referencing?
The Prime Minister: I do not believe for a minute that that is what is being done. What is going to happen is that we are going to clearly reference the covenant in law and then the covenant will be published and debated in this House every year. It is vital that we are able to update and improve it every year, because our military personnel face so many changing circumstances. We are looking across government at all the things we can do, for example, on health care, on education, and on things such as council tax for soldiers serving overseas—these are many of the things that the last Government failed to do—to look after our armed service personnel.
Q5.  Jane Ellison (Battersea) (Con): Later this month, Edward Lister, the Conservative leader of Wandsworth council for nearly 20 years, moves on to be the chief of staff to the Mayor of London. Will the Prime Minister join me in paying tribute to him for his leadership in consistently delivering the UK’s lowest average council tax along with top-rated front-line services? Will the Prime Minister urge more councils to follow suit?
The Prime Minister: I thank my hon. Friend for her question. It gives me the opportunity not only to praise Edward Lister, who has done a fantastic job over many years, but to pay tribute to Sir Simon Milton, who occupied that position and is admired on all sides of the House for the work he did at Westminster and then at the Mayor’s office. What Wandsworth has shown over many years is that it is possible to combine low taxes with good services if all the time you are trying to improve efficiencies. That is what councils up and down our country should be focused on, particularly in a year when we have to make spending reductions.
Pamela Nash (Airdrie and Shotts) (Lab): One of Scottish Labour’s key manifesto commitments is the First Foot initiative, which will help thousands of first-time buyers to get a foot on the property ladder. What is this Prime Minister doing to help this generation of home buyers, who are crippled by unemployment, student debt and rising living costs, and therefore cannot save a deposit for a House?
The Prime Minister: The proposal in Scotland sounds quite like our proposal in the Budget for Firstbuy, which will help tens of thousands of young people to get on the property ladder by helping them with the deposit that many families find it extremely difficult to raise. There is a real worry in our country that the age of the first-time buyer is getting older and older, and that many families are finding that unless they have family help behind them they simply cannot get on the housing ladder. We must ensure that that is not the case and Firstbuy is a very good proposal that we are introducing in England. I will be interested to see what happens in Scotland.
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and selling surplus property to help protect front-line services. Meanwhile, in next-door Labour-run Halton, the council is cutting back on bin collections and road maintenance instead. What does my right hon. Friend think can be done to help councils reach fair and sensible decisions?
The Prime Minister: I would encourage all councils to look at costs that can be cut that are not on the front line. Many Conservative councils are sharing chief executives with their neighbouring councils and cutting councillors’ allowances and chief executive pay. There are too many examples, particularly in Labour councils, of chief executives being paid far too much and of not nearly enough attention being paid to cut the back-office costs so we can keep the services going.
Jack Dromey (Birmingham, Erdington) (Lab): The Government are cutting the police and Birmingham city council is cutting care to the elderly and disabled. There is dismay in my constituency that high-need, high-unemployment Birmingham is being hit far harder than the leafy shires such as Surrey. Will the Prime Minister therefore answer the question put to me by my constituents—why have the Tories got it in for Birmingham?
The Prime Minister: A coalition between Conservatives and Liberal Democrats has been doing a great job for Birmingham, ensuring that council tax is kept down, investing in housing and ensuring that there are good public services. Many of the things we have done, such as the regional growth fund, are targeted at areas such as Birmingham. The hon. Gentleman should go back to his constituents, and after he has apologised to them for the fact he was the winner of an all-woman shortlist he should tell them that coalition government between Conservatives and Liberal Democrats is working at Westminster and working well in Birmingham.
Q7.  Mr James Clappison (Hertsmere) (Con): In 2005, the previous Labour Government agreed to hand back part of the UK’s EU rebate at a cost to UK taxpayers of £9.4 billion over the lifetime of this Parliament. Has my right hon. Friend seen any evidence of what precisely was obtained in return for that remarkable generosity?
The Prime Minister: My hon. Friend makes an important point. Part of the rebate was given up and it was not given up for any proper promise in return. We were told that there would be a promise of real reform of the common agricultural policy and that did not appear. That shows me that we have to be incredibly tough in the budget negotiations this year and next so that when we go into the financial framework for the next seven or eight years we ensure that we keep the costs of this organisation under control.
Kelvin Hopkins (Luton North) (Lab):
The Government’s savage cuts are set to destroy some half a million jobs in the public sector and, according to PricewaterhouseCoopers, a similar number in the private sector. With thousands more on the dole, paying no taxes and dependent on benefits, the deficit will increase rather than reduce. As sure as night follows day, we will see a collapse in the housing market, a collapse in
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support for the Tories and a return to Labour government. Will the Prime Minister enjoy saying goodbye to most of his colleagues and sitting on this side of the House?
The Prime Minister: I thought the hon. Gentleman was from Luton, but he sounds like he is from fairy dairy land. Let me remind him that compared with this time last year 400,000 more people are in jobs in the private sector. That is what has happened through our getting the deficit under control, getting the economy growing and ensuring that we deal with the mess we were left by the Opposition.
Q10.  Andrew Selous (South West Bedfordshire) (Con): Is my right hon. Friend aware that Conservative-run Central Bedfordshire council has been rated as the highest performing council of all its statistical neighbours by PricewaterhouseCoopers for value for money, effectiveness and service delivery? Is this not the type of example that we should encourage more councils to follow?
The Prime Minister: My hon. Friend is absolutely right. Well-run councils that ensure they are cutting back-office costs can provide good services. When one looks at the figures, one can see that those Conservative councils are not just costing less for a band D property but doing better on measures such as recycling and other service delivery. It is simply not true to say that by cutting costs councils harm services. They have to be effective at keeping their costs down to provide good services.
Q11.  Kerry McCarthy (Bristol East) (Lab): Next Wednesday, the Hardest Hit campaign will be lobbying MPs in Parliament through constituents of ours with severe disabilities and chronic illnesses who are bearing the brunt of this Government’s attack on welfare benefits and public services. Will the Prime Minister have the courage to meet some of those campaigners face to face next week so that he can hear from them at first hand about the devastating impact that this callous and uncaring Government are having on their lives?
The Prime Minister: I make two points to the hon. Lady. First, the most important line of defence to help people with severe disabilities and severe need is the national health service and it is this Government who are putting more money into the national health service—£11.5 billion extra. That money would not have been available if we had a Labour Government; we know that because we can see Labour cutting £1 billion off the NHS in Wales. In terms of reforming benefits, I thought we had the support of the Labour party to reform benefits to make sure they are helping those who need the help most.
Q12.  Jason McCartney (Colne Valley) (Con): Last week, I joined 170 other Huddersfield Town fans in cycling from Huddersfield to Brighton to raise £200,000 for the Yorkshire air ambulance. Will the Prime Minister join me in praising Huddersfield Town for raising that money and will he also look into why the air ambulance has to pay VAT on its fuel although the Royal National Lifeboat Institution—another emergency charity service—does not?
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The Prime Minister: First, I would like to congratulate my hon. Friend on his bicycling feat, as well as all those who took part from Huddersfield Town. I also pay tribute to our air ambulance crews across the country, who do an amazing and brilliant job. I have looked specifically at this issue. As he probably knows, the EU VAT directive does make an exemption for lifeboats, but there is no equivalent provision for supplies used by other charities and we are not able to change that. However, we are able to do more for charities, as we did in the Budget, including with the inheritance tax exemption, which I think is going to make a huge difference for charities up and down our country. I hope that he will do everything he can to encourage them to make use of that.
Q13.  Tony Lloyd (Manchester Central) (Lab): Child poverty is a cancer that means that children in our society go to bed hungry in homes that their parents cannot afford to heat. The Prime Minister will be aware of the recent Organisation for Economic Co-operation and Development report that says that the great progress that was made has now stalled and that the numbers are once again due to go up. If the Prime Minister agrees with me, as I think he will, that this is a moral imperative for any Government, will he tell the House what he will do now to change policy and make sure that our innocent children will not be the victims of Government cuts?
The Prime Minister: I do believe it is a moral imperative and I have looked at the OECD report carefully, which does show that things stalled under the previous Government in recent years. What I would say is that despite having had to take difficult decisions in the Budget we did make sure that there has been no increase in child poverty as a result of the Budget. I think it is time, frankly, for a more mature, cross-party debate on how we can make sure that we get people out of poverty rather than just looking at the transfer of money between rich and poor. That is why we are looking at things such as the pupil premium, free nursery education for deprived two-year-olds and making sure that Sure Start is working properly, because it is all those things that will help children out of poverty in a more sustainable way.
Q14.  Greg Hands (Chelsea and Fulham) (Con): This week, the three top-rated councils of Hammersmith and Fulham, Kensington and Chelsea and Westminster are discussing extending their combined services to save £35 million a year while still improving front-line services. What can the Prime Minister do to encourage this approach rather than that of Labour-run Hounslow, which is closing day care centres, squeezing parks maintenance and cutting mental health services in a slash-and-burn approach?
The Prime Minister: I think this is a very important point and I hope that councils up and down the country will look at it. Three large councils are coming together and saving £35 million because they are sharing back-office services, executive teams and so on. Frankly, if they can do it, as large councils that have big responsibilities, many other councils should be doing it in London and elsewhere. Until we see that happening, I do not think it is realistic to say that it is necessary for councils to cut front-line services.
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Mike Gapes (Ilford South) (Lab/Co-op): More than 100 years ago, Parliament legislated to make sure that local authorities provided allotments. Healthy local food is a very good part of good British values. Why therefore are the Prime Minister’s Government scrapping the obligation on local authorities to provide allotments?
The Prime Minister: I was as concerned as the hon. Gentleman when I read that report. I immediately checked, and found that that is not the case. It is extremely important that allotments are made available. Many Members will find that when they ask about that in their constituencies there are massive queues for allotments, as many people want to grow their own vegetables and food and understand more about where food comes from. It is a great movement, and it has my full support.
Q15.  Mark Menzies (Fylde) (Con): The chief executive of Conservative-run Fylde borough council has taken a 5% pay cut, whereas Labour-run Blackburn has cut services to young and vulnerable people while increasing its reserve to £12.7 million. What can the Prime Minister do to encourage councils to behave more responsibly like Conservative-run Fylde?
The Prime Minister: One of the most important things that we can do is make all that information available. This Government have massively increased transparency. Every council in the country has to declare its spending on any item over £500, and people have found that useful in seeing how much council executives are paid, how much councillors are paid, and making sure that they bear down on those costs. I commend what is happening in Fylde, and it is a matter of great regret that there is still one council—Labour-controlled Nottingham—that will not make that information available.
Mr Michael Meacher (Oldham West and Royton) (Lab): Given that private borrowing was falling at the last election why, according to the Office for Budget Responsibility, do the Government plan to ramp it up by half a trillion pounds to a total of more than £2 trillion by 2015?
The Prime Minister: What the Government are doing is getting control of Government borrowing—that was the real crisis at the last election. It is an important point to make, particularly on a day when we read about Portugal going for an enormous bail-out. It is worth reminding ourselves that today we have a bigger budget deficit than Portugal. The reason we are not in Portugal’s position is that we took action in two brave Budgets and a spending round to clear up the mess left by the right hon. Gentleman’s hon. Friends.
Dr Thérèse Coffey (Suffolk Coastal) (Con): I am sure, Mr Speaker, that you and the Prime Minister have enjoyed the good weather, especially last Friday, the day of the royal wedding, and perhaps visited tourist hot spots such as Southwold and Aldeburgh. Just down the road from those hot spots, farmers might be about to suffer a drought, and are genuinely concerned about the lack of rain, as their ability to abstract water may be limited. Will the Prime Minister meet me to discuss those genuine concerns about restricting water for our farmers?
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The Prime Minister: I am happy to meet my hon. Friend. Everyone has been enjoying the recent weather, and it was fantastic that the weather was so good for the royal wedding. However, farmers face real issues because, at a time of year when they expect a lot of rain, they have had virtually none.
Mrs Mary Glindon (North Tyneside) (Lab): With the strong likelihood that the Lib Dems will come off worst in tomorrow’s local elections, and hopefully the rejection of the alternative vote in the referendum, what political words of comfort will the Prime Minister have for his by then beleaguered deputy on Friday?
The Prime Minister: Of course, we do not agree about the future of our electoral system. We are having a referendum and a debate about it, but the reason for having a coalition Government coming together and sorting out this country’s problems in the national interest is as good an argument today as it was a year ago, when we came into government to clear up the mess made by the Opposition.
Rory Stewart (Penrith and The Border) (Con): In the light of the success of the royal wedding for public diplomacy, does the Prime Minister believe that it reinforces the importance of a different narrative for the diamond jubilee from the Olympics, in terms of what it can do for Britain’s international reputation?
The Prime Minister: We have a fantastic opportunity next year to show all faces of Britain, both modern and traditional. We are going to celebrate the jubilee, and I think that people will want to celebrate the incredible public service that Her Majesty the Queen has given over many years as an absolutely amazing model public servant. People will also want to celebrate the Olympics as a celebration of sport and all that is best about Britain. The royal wedding, as the Major of London said, was in many ways a dry run for how we handle some of those events, and everyone in the country has a lot to look forward to next year.
Alison McGovern (Wirral South) (Lab): Many of my constituents in Wirral worry about the quality of care that older people, especially those with dementia, receive in hospital. How does the Prime Minister think that his now paused, top-down reorganisation of the NHS will help to make sure that older people are looked after with real dignity?
The Prime Minister: One of the aims of the changes that we are making to the NHS must be better to link the national health service, social service provision, local authorities and how we look after the elderly. All of us have seen too many cases in hospital where people who should be in residential or nursing care or being looked after at home are stuck in a large district general hospital or in a community hospital, when they should be getting alternative pathways of care. That is what the whole change should be about. What I am finding as I go round the country listening to doctors, nurses and clinicians is that we must make sure we take the opportunity to get this absolutely right. That is what the reforms should be all about.
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Bob Russell (Colchester) (LD): In last year’s general election in Essex 49% of the votes cast went to the Conservatives, but 95% of the seats went to Conservative MPs. It was an outcome that would embarrass Robert Mugabe. Apart from the fact that Essex is now a Labour-free zone, does the Prime Minister think that that result was fair?
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The Prime Minister: My hon. Friend tempts me into debate. In Colchester everyone had one vote, it was counted once and he won. I congratulate him. In other parts of Essex everyone had one vote, they were all counted once and many of my hon. Friends won. But for all that he brings to the House, what the Liberal Democrats lack in number, he makes up in stature as a Member of Parliament for Essex.
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Dear Mr Speaker,
As you know I have decided to retire at the end of September when I will have completed forty four years of service to the House, over a decade of which has been at the Table.
It has been an immense privilege to serve what I unashamedly regard as a Parliament second to none. Over this long period—which began during the Speakership of Horace Maybray King—there have been great challenges and many changes. There have been crises that have rocked the institution. Throughout these times it has remained my firm belief that only by having confidence in itself, in its ability to adapt to the new while keeping to the tried and tested, can the House retain its pre-eminent position as the sovereign body at the centre of our national, democratic life. Unwarranted and unfounded criticism from whatever quarter should not deflect Members from their duties which will necessarily ruffle and disturb the peace of consensus.
I would like to put on record my great debt to members of the staff of the House, at all levels, who have given me unstinting support. They make up a loyal and very effective workforce. I would like to thank my colleagues on the Management Board and in my own office for their invaluable help without which many of the changes that have happened in recent times could not have been made effective.
Friendships with Members and colleagues in the scattered Commonwealth parliaments, which together form an important parliamentary community, have given me much pleasure. Here at home fellow Clerks have kept me on my procedural toes and I have enjoyed working, across party divides, with Members of the House, past and present and with Members and colleagues in the other place.
Finally Mr Speaker may I thank you and your Deputies, with whom I have worked closely, for your trust and for the camaraderie we have enjoyed together which has greatly lightened what can be serious and sometimes difficult moments.
There will be an opportunity to pay the traditional tribute to the Clerk at a later date. [ Applause .] That spontaneous reaction demonstrates the respect and affection in which the Clerk of the House is held.
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Points of Order
Paul Flynn (Newport West) (Lab): On a point of order, Mr Speaker. As Many Members were inexplicably absent at 4.30 this morning, they will have missed an important debate that drew attention to a great weakness in our role: we are able to heap praise on certain individuals, but we are forbidden the privilege of everyone outside the House to be critical of those individuals. Can you suggest a way in which we can ensure that that rule, which demeans the office of MP, is changed and we can enjoy the freedom of everyone outside the House to be critical of anyone when necessary?
Mr Speaker: Criticism of the kind and in the direction that the hon. Gentleman has in mind can always be made on a substantive motion. That is the specific solution to the problem that he has just identified. More widely, if he is concerned, as I know he is, about the current Standing Orders and seeks their reform, it is open to him to seek support for such a proposition across the House. I must leave it there for today.
Derek Twigg (Halton) (Lab): On a point of order, Mr Speaker. I ask for your advice, please. The hon. Member for City of Chester (Stephen Mosley) has inadvertently misled the House today by suggesting that the bin collection service in Halton has been cut. As someone who is not only the Member of Parliament for Halton but who actually lives there, I must say that this was the first I knew about it. The service has not been cut. There is a pilot scheme, which has come about as a result of consultation in two wards, to look at alternative bin collections as a result of the demand for more recycling and more recycling receptacles. There has been no decision to cut the weekly bin collection service, so the hon. Gentleman is wrong.
Mr Speaker: I am grateful to the hon. Member for Halton (Derek Twigg). I know that he may find this difficult to accept, but this is a matter of debate, and he has put his point firmly on the record—probably not for the first time, and certainly not for the last.
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Sex Education (Required Content)
That leave be given to bring in a Bill to require schools to provide certain additional sex education to girls aged between 13 and 16; to provide that such education must include information and advice on the benefits of abstinence from sexual activity; and for connected purposes.
I am sure that many Members will be aware of the broadcaster Dame Joan Bakewell. I always had the impression that she and I were on separate sides of the political divide, but I was intrigued a year ago to read something that she had written in the Radio Times and in the newspapers, in which she said that Mary Whitehouse, who campaigned against declining moral standards on television, was right to fear that sexual liberation in the 1960s would damage society.
Dame Joan was a long-time and fierce opponent of Mary Whitehouse, and that is why her piece was intriguing. She has now changed her mind in terms of her opposition, saying that the freedom granted by the introduction of the pill has been abused, resulting in the sexualisation of young girls and the prevalence of pornography. She said:
“The liberal mood back in the ’60s was that sex was pleasurable and wholesome and shouldn’t be seen as dirty and wicked. The Pill allowed women to make choices for themselves. Of course, that meant the risk of making the wrong choice. But we all hoped girls would grow to handle the new freedoms wisely. Then everything came to be about money—so now sex is about money, too. Why else sexualise the clothes of little girls, run TV channels full of naked wives, have sex magazines edging out the serious stuff?”
Nadine Dorries: That is a typically glib comment from the hon. Gentleman, who just does not understand and will oppose this measure. Indeed, it will be interesting to see a man stand and oppose a Bill that is about empowering young girls.
Let us move on to look at some of the examples that are now available. Primark, a store that is frequented by many young girls, including my own daughters, was recently chastised for selling padded bikinis for seven-year-olds. Without going into too much detail, I am sure that everybody in the House understands why women would buy padded bikinis, but to make them available to and target them at seven-year-old girls seems to epitomise how far the sexualisation of young girls has gone within our society.
On 5 March 2010, explicit videos were shown in schools which depicted to seven-year-olds a cartoon graphic of a couple having sexual intercourse. This resulted in some children being removed from schools
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that showed those videos. It will not be a surprise to any mother, or parent, in the House that seven-year-old children do not want to see a cartoon of a couple having sexual intercourse. I have never yet met a mother who said, “I want my seven-year-old to see cartoons of couples having sexual intercourse”, so why on earth would schools think it appropriate to show such videos to seven-year-old children in the classroom? Some children were reported to be frightened, alarmed and disturbed by the videos.
In July 2009, a Sheffield NHS trust released into secondary schools—to children from the age of 11—a pamphlet which told them that sex every day keeps the doctor away. It also said that for too long experts have concentrated on the need for “safe sex” and loving relationships. Alongside this, there was a slogan saying that
“an orgasm a day keeps the doctor away”.
“Health promotion experts advocate five portions of fruit and veg a day and 30 minutes’ physical activity three times a week. What about sex or masturbation twice a week?”
We have to ask ourselves whether, in the midst of this kind of society, with the over-sexualisation of children, we have got our sex education in schools right. It is often argued that compulsory sex education and effective teaching of “safe sex” will help to tackle a high pregnancy rate among teenagers and underage children. Sadly, the evidence suggests that this is not the case. The British Medical Journal found that 93% of teenagers who became pregnant had seen a medical professional prior to the pregnancy and 71% had discussed contraception. The journal found that
“teenagers who become pregnant have higher consultation rates than peers and most of the difference is owing to consultation on contraception”.
According to data published by the Office for National Statistics in 2007, Britain has the highest teenage pregnancy rate in western Europe, so we must be doing something wrong. That is why I am introducing this Bill.
I believe that the answer to ending our constant struggle with the incredibly high rate of teenage sexual activity and underage pregnancies lies in teaching our girls and boys about the option of abstinence—the ability to just say no as part of their compulsory sex education at school. I recently spoke to a 16-year-old who used these very disturbing words: “The thing is, if you reach the age of 18 and you’re still a virgin, and you meet somebody you’d like to be your boyfriend, he’s going to think you’re a freak.” It never enters the minds of young teenage girls, who are taught in sex education classes about “safe sex” and about making their decisions on whether to have sex based on how they feel that day or on their wishes—“feelings” and “wishes” are the key words—that they are empowered and have the ability to say no. That is not taught alongside information on making the decision based on their feelings and wishes and on “safe sex”, but it should be an equally viable option.
We have to re-examine thoroughly the content of sex education that is provided in schools, and consider whether what is currently offered is in the best interests of our children and society as a whole. Children learn
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about puberty and intercourse at the age of seven, and about pregnancy and contraception from the age of 11. Teaching a child of seven to apply a condom to a banana, without telling them that they do not have an obligation to go and do it, is almost like saying, “Now go and try this for yourself.” At no stage of the curriculum does the teaching cover anything about relationships and the option to say no. Girls are taught to have safe sex, but not how to say no to a boyfriend who persists in wanting a sexual relationship. They are given no guidance on that whatsoever.
“As a 14 year-old girl, I have had to attend four talks in the past nine months from a woman from a family planning clinic. I have been taught three times how to put on a condom; how easily pupils can acquire condoms free at a clinic; how to recognise sexually transmitted diseases and have them treated confidentially at a clinic; and that we do not need to tell our parents, GP, the police or anyone else in authority about being provided with contraception, or even having an abortion. There was not one mention of abstaining or any discouragement of sex.”
For a girl or boy to have sex before 16 is unlawful, but they are told in school, “It is unlawful, but it’s okay. You can have the condoms anyway.” They should be told, “It is unlawful. You can have the condoms anyway, but why don’t you consider, because it is unlawful, saying no and waiting until it is lawful?” That just is not taught to girls at school.
One factor constantly ignored by society is that peer pressure is a key contributor to early sexualised activity among the children of our country. Society is focused on sex. Our sex education teaches children how to have sex, not how to say no to sex. We ignore at our peril the fact that many girls feel pressurised into having intercourse when they are far too young, when what they actually need is their childhood.
In our sex education programmes, we need to promote the notion of abstinence and all the advantages that it brings, such as self-respect and not making relationship mistakes. It needs to be seen as a safe alternative. We need to let young girls know that to say no to sex when they are under pressure is a cool thing to do; it is as cool as learning how to apply a condom. It is as important as all the other issues that they are taught in sex education. It has to be taught alongside everything else so that young girls can say, “I have been told to say no.”
Chris Bryant (Rhondda) (Lab): I note that the hon. Member for Mid Bedfordshire (Nadine Dorries) said that it would be a disgrace, or something like that, if I were to speak on this matter because I am a man. Of course, I am a gay man, so I am not exactly an expert on heterosexual sex or sex with girls. However, I say to her that this is the daftest piece of legislation that I have seen brought forward. I agree about many of the problems that she has highlighted, and I will come on to those, but this is not the way to solve any of those problems.
For a start, the Bill is just about girls. I said that I am not an expert, but it seems axiomatic to me that if we want to tackle teenage pregnancy, we have to talk to the boys and the girls. Secondly, the Bill is just about 13 to
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16-year-olds. I did a lot of research on teenage pregnancy a few years ago, and one of the great distresses for a large number of girls was that they got to their first period without knowing what was happening to their body. I think that proper education in schools, which gives girls and boys an opportunity to seize hold of their lives and make good decisions for themselves, should start long before a girl’s first period.
Thirdly, the hon. Lady talks about an abstinence programme. Of course, the single most important thing that we can give any child in their education, boy or girl, is the self-confidence to make good decisions for themselves and, when they have made bad decisions, to be able to stand up to the consequences. There are things that we need to do through housing allocation and the benefits system to address those issues. However, there is no evidence anywhere in the world that an abstinence programme of sex education works in delivering the outcomes that she wants.
Fourthly, the hon. Lady refers only to sex education; she just wants sex education. She refers to the number of youngsters who are told how to put a condom on a banana. I have never understood why putting a condom on a banana or a cucumber is of any use to anyone, but she is absolutely right in saying that if sex education is just about teaching people the mechanics of having sex, it is effectively an advert. Rather than the present legal situation where the only obligatory bit is sex education—in other words, the mechanics and teaching people about sexually transmitted infections—there should be proper sex and relationship education starting at an early enough age to make a real difference.
The level of teenage pregnancy in my constituency is probably higher than in the hon. Lady’s, because the map of high teenage pregnancy figures is the map of poverty in this country. I feel absolutely passionately about trying to cut the number of teenage pregnancies. Indeed, I have done a great deal of work on trying to do that in my constituency. The hon. Lady rightly refers to the statistics showing that we have the highest rate in Europe. It is not just higher than anywhere else; it is fives times higher than in Holland, three times higher than in France and twice what it is in Germany. Yet countries such Holland, France and Germany have much better sex and relationship education in their schools that starts at a much younger age and is much more explicit. That is part of the difference.
There are many other elements to trying to rectify this situation, but one of the reasons why many Opposition Members think that teenage pregnancy is such an important issue is that it is not just wealth that is inherited in this country; all too often, poverty is inherited, in many cases because of teenage pregnancy. Lots of teenage mums are absolutely wonderful—they triumph against the odds—but many of the babies that are born to teenage mums are much smaller and have more health problems, and if they are girls, they are three times more likely to become teenage mums. We thus perpetuate the cycle of poverty, particularly in certain parts of the country. That is why I believe that we should have far better sex and relationship education in schools.
Incidentally, I am delighted that a Labour Government, through resolute work between the Department for Education and the Department of Health, managed to cut the figures significantly in this country. History shows that the time when the figures grew most dramatically
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was under Mrs Thatcher. We have now seen the figures for 2009, and they show that we have reached a record low compared with 1980. I am not at all complacent about that, because there is a great deal more to do. My own ten-minute rule Bill is in a charabanc situation and as unlikely to become legislation as the hon. Lady’s.
We need to address other associated problems. The number of children in care in this country is a shock and a disgrace, and it has risen dramatically to 65,000 in England. It has gone up from 3,000 to 5,000 in six years in Wales. It is difficult to find good care arrangements for many of those youngsters. Hospital admissions for self-harm, particularly among young girls, have risen by some 30% in Wales over the past few years.
Yes, we have achieved great things for young people in recent years. Drug use has decreased over the past decade—some 7% of youngsters between the ages of 16 and 24 have used a class A drug. Contrary to what hon. Members will read in the national newspapers, drinking among 15-year-olds has decreased quite dramatically. Ten years ago, 58% of boys said that they drank alcohol; the figure is now 36%. The figure for girls is down from 54% to 30%. [ Interruption. ] Government Members may ask what that has got to do with teenage pregnancy, but every time that I talk to young people about teenage pregnancy, they tell me what happens: everyone has a great idea and a strong set of moral principles at 6 o’clock in the evening, when they have not had a drink, but by the time that they are blotto at 11.30 at night, all those choices disappear out the window, and they start to take much more risky decisions. That is why tackling the consumption of alcohol by youngsters is just as important as every element of sex and relationship education.
Some of those figures relate specifically to girls, but many more young men commit suicide than young women. Although the number of suicides among young people has fallen by a third over the past few years, the single most important thing that we can give to any young person is a sense of their own worth. Of course, some of them are in families or schools where they do not feel valued, but to introduce legislation that applies only to girls and refers only to sex education, rather than to the broad experience that young people have to have fulfilled, is a complete mistake.
Better legislation would ensure that girls and boys had proper, thorough sex and relationship education in all schools, with no school allowed to opt out. Yes, if parents want to opt out, that is fine. Yes, they should be able to draw up the curriculum, but schools should not be able to opt out because, as Ofsted has pointed out, the provision of sex and relationship education is very patchy in England, and we are letting down far too many of our youngsters.
Many teachers are frightened of providing such education because it is not a formal part of the curriculum. Youngsters pick up that fear, and that informs some of the bad choices that they end up making. Yes, we should teach self-confidence and self-worth. Some work done by the Joseph Rowntree Foundation showing that many young girls choose to get pregnant almost as a vocation or are so careless about having sex that they end up pregnant is very distressing. They often have no self-worth, they are not valued at home, and they find the educational arrangements at school difficult; but the moment they get pregnant, suddenly everyone comes
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round and provides them with support. Would it not be better if we gave them the support that they needed before they made that wrong decision for themselves?
In addition, we need to enhance out-of-school activities. I worry that many local authorities will cut youth services because of the situation with local authority grants. Youth services are often where young girls and boys have a positive role model for the first time in life that is not just an authority role model in school. That is why those services play such an important part in changing all this.
Finally, the only thing that I would add is that, sadly, many youngsters get only 10 minutes of sex education in their whole lives. They do not get proper sex and relationship education; they spend less time on it than we have had to debate the issue today.
The House divided:
Ayes 67, Noes 61.
Amess, Mr David
Bagshawe, Ms Louise
Brazier, Mr Julian
Campbell, Mr Ronnie
Cash, Mr William
Chope, Mr Christopher
de Bois, Nick
Gale, Mr Roger
Gray, Mr James
Hollobone, Mr Philip
Jenkin, Mr Bernard
Jones, Mr Marcus
Lilley, rh Mr Peter
Main, Mrs Anne
McCann, Mr Michael
McCrea, Dr William
McIntosh, Miss Anne
Nuttall, Mr David
Offord, Mr Matthew
Redwood, rh Mr John
Scott, Mr Lee
Turner, Mr Andrew
Walker, Mr Robin
Walter, Mr Robert
Tellers for the Ayes:
Mr Brian Binley and
Dr Thérèse Coffey
Abbott, Ms Diane
Bailey, Mr Adrian
Barron, rh Mr Kevin
Begg, Dame Anne
Chapman, Mrs Jenny
Clwyd, rh Ann
Cunningham, Mr Jim
Donohoe, Mr Brian H.
Huppert, Dr Julian
James, Mrs Siân C.
Morris, Grahame M.
Offord, Mr Matthew
Raynsford, rh Mr Nick
Reid, Mr Alan
Robinson, Mr Geoffrey
Ruddock, rh Joan
Sanders, Mr Adrian
Sharma, Mr Virendra
Sheerman, Mr Barry
Skinner, Mr Dennis
Smith, rh Mr Andrew
Smith, Sir Robert
Watts, Mr Dave
Winnick, Mr David
Tellers for the Noes:
Kelvin Hopkins and
Mr Andrew Love
Question accordingly agreed to.
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4 May 2011 : Column 686
Finance (No. 3) Bill
[Mr Lindsay Hoyle in the Chair]
The Exchequer Secretary to the Treasury (Mr David Gauke): It is a great pleasure to begin today’s proceedings by winding up today’s debate, or at least the first of our debates this afternoon, which was one of our debates this morning. It is on clause 4, which sets out the main corporation tax rate for the financial year beginning on 1 April 2011, reducing it to 26%. The measure introduces a further reduction of 1% for this financial year, in addition to the 1% cut that was legislated for last year. Further 1% reductions to the main rate will be made in each of the next three years, taking the rate to just 23% in 2014-15.
Those changes will lower the tax bill of around 45,000 companies that pay tax at the main rate, and of 40,000 companies that are taxed at the main rate but that benefit from the marginal relief. To explain that further, the changes will affect incorporated businesses that have profits of between £300,000 and £1.5 million that pay corporation tax at the main rate reduced by marginal relief, and those that have profits of more than £1.5 million that pay corporation tax at the main rate in full. As I said, clause 4 sets the rate at 26%—the adjustment to the marginal relief fraction is made in clause 6.
Clearly, a thriving private sector must be at the heart of our plan for growth. As we reduce spending, as we must if the UK is to live within its means, only the private sector can spearhead the recovery. We must therefore show that the UK has an attractive tax system and is open for business. This Government are taking action to show the international business community just that. The UK is the right place to do business, and our tax system is one reason why. Our priority is securing strong, sustainable and balanced growth, and clause 4 will help to see to that by supporting investment and by incentivising activity across the economy.
Mr David Hanson (Delyn) (Lab):
I realise that we debated this much earlier this morning, but much of our discussion was on the outcomes of this process. The Opposition do not object to the purpose of the corporation tax cut, but I would welcome clarity from the Minister. How many jobs does he believe will be saved because companies do not move abroad because of the cut, how many new jobs will the cut attract by bringing new investment into the country, and what growth does he
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expect to result from the investment that we are taking away? As was said last night, we are forgoing a considerable sum of corporation tax income, and I should like clarity on what the Minister believes will be the solid outcomes of that.
Mr Gauke: First, I warmly welcome what the right hon. Gentleman says about supporting the reduction in the corporation tax rate. In seeking to persuade investors to invest in the UK, it is important that we have a strong, solid, cross-party consensus that the UK should have competitive, low rates of corporation tax. To the extent that the official Opposition take a clear, supportive view of what the Government are trying to do, that is helpful to our ambitions, and I welcome it. I am keen to ensure that they maintain that position.
The right hon. Gentleman asked about the specific impacts and outcomes of the measure. If he will be patient and let me first set out why I think the steps that the Government have taken on corporation tax are helpful, I will say as much as I can about the likely outcomes later. I should also thank him for quoting at considerable length one of my speeches on this subject. I am tempted to refer him to his own speech when he quoted my speech, but that would be a little circular.
Mr Edward Timpson (Crewe and Nantwich) (Con): On anticipating the outcomes of reducing corporation tax, does my hon. Friend recall that one key aspect of the Federation of Small Businesses general election manifesto was a reduction in corporation tax and the benefits that that would have to small businesses around the country?
Mr Gauke: I am grateful to my hon. Friend, because he brings me to the subject of the small profits rate of corporation tax. That is not specifically addressed by the clause, but the previous Government intended to increase the small companies rate, as it used to be called, from 21% to 22%. In the previous Budget, this Government announced that we would not increase it to 22%, but reduce it to 20%. That policy, along with our policy on employers’ national insurance contributions, was warmly welcomed by the FSB. That demonstrates the Government’s commitment, at a difficult time for the public finances, to ensuring that we have the strong, private sector growth that the economy so badly needs.
Let me briefly set out why reducing corporation tax rates is important. A competitive rate helps to sell the UK as a place to do business, and encourages businesses to invest and thrive here, which is vital if our economy is to grow. My right hon. Friend the Chancellor has had to take some difficult decisions since the election, and clearly, because of the size of the deficit we inherited, we cannot rely on unsustainable public sector spending to carry the economy. We need to rebalance the economy and to remember the value of enterprise. Growth in the public sector feeds the deficit, but growth in the private sector feeds the recovery that the country needs.
Budget 2011 delivers a fiscally neutral package of measures, and the Government remain on course to deliver our fiscal consolidation plans. The costs of policy decisions announced in the Budget are broadly offset in each year by measures that raise revenue, but
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within that fiscally neutral envelope, Budget 2011 includes action to support private sector recovery and to improve the long-term sustainability of the public finances.
The Government published our plan for growth, which is the first phase of the growth review, which involves action across the economy. The further 1% reduction in the main corporation tax rate will help us to achieve the ambition of growing the private sector, regaining even more of the competitive advantage that we have lost in recent years.
However, that is only one part of the Government’s strategy to remove barriers to growth. In his speech much earlier today, the right hon. Member for Delyn (Mr Hanson) argued that corporation tax rates are not everything, and he is right, but the Government have set out in our plan for growth policies that aim to put the UK on the path to sustainable, long-term economic growth. It is worth quoting John Cridland, the director-general of the CBI, who said:
“This Budget will help businesses grow and create jobs. The Chancellor has made clear the UK is open for business…The extra 1p cut in corporation tax will help firms increase investment.”
Mr Andrew Love (Edmonton) (Lab/Co-op): When the Office for Budget Responsibility was informed late of the additional 1% reduction in corporation tax, it commented that the impact on growth would be minimal. How does the Minister explain that in the context of the claims he is making for that reduction?
Mr Gauke: Let me turn to the impact of this measure. When the OBR analysed the corporation tax package that was announced in 2010, it made it clear that that would help with the cost of new capital investment in the UK. It expected that the recovery would be supported by business investment, and the reductions in corporation tax underpinned its forecast for strong business investment growth over the next five years. In June, the OBR increased its estimate for expected investment and gross domestic product in response to the corporation tax package. Its analysis was that the resulting 3% reduction in the cost of capital would
“promote a higher level of business investment…than would otherwise have been the case.”
The right hon. Member for Delyn asked about particular businesses and sectors. However, the best way to run an economy is not the Government dictating from the centre. Running an economy is about providing a competitive environment in which businesses from all sectors can grow. Making sectoral forecasts tends to be difficult, and there are severe accuracy questions.
Mr Hanson: I am trying to be helpful and to seek clarity on what the Exchequer Secretary would regard as success, given the investment he is making through not collecting the previous level of corporation tax. In our discussions on the National Insurance Contributions Act 2011 before Christmas, an amendment was tabled to ensure an opt-out in certain parts of the United Kingdom. An assessment was made of the number of jobs that would be created by the measure. I am asking whether he has made a similar assessment with his officials of the potential of this measure to have an impact on growth and jobs in our economy.
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Mr Gauke: As I said, the OBR considered the package in the June 2010 Budget and incorporated the changes along with other announcements. From that it anticipated an increase in business investment, and clearly there was a link between the corporation tax package and that increase in investment. We believe that by reducing the cost of capital, we will increase business investment above the levels that would otherwise have been the case.
I was struck by the right hon. Gentleman’s speech this morning in which he took considerable time to outline more than once the unemployment numbers in various regions of the UK. I was struck by the contrast between the argument he appeared to be making this morning, which was that the corporation tax cut needs to be targeted at regions with higher unemployment, and the argument he made during our considerable debate on the National Insurance Contributions Act, which was that it was wrong for us to target the national insurance contributions holiday at regions where the public sector was strong and unemployment high. I am not sure there was much consistency there, but there was great ingenuity in his speech earlier today.
Jim Shannon (Strangford) (DUP): Obviously any advantage to industry is to be welcomed. I understand that figures released show that only 4 million people are employed in the manufacturing sector. Has the Exchequer Secretary discussed how the corporation tax changes will benefit that sector? Is the cut acceptable to the sector? Does it feel that it will achieve the recovery in that important sector? The Government have recognised it as an important growth industry, so I would be interested to hear his response.
Mr Gauke: I suspect that we will debate manufacturing at greater length in the next group of amendments. However, manufacturing will benefit from the package as a whole, including the changes to capital allowances. It will benefit considerably. Indeed, it is one of the sectors that pays a great deal in corporation tax. We also believe that the changes will benefit all regions. It is perfectly right for the right hon. Member for Delyn to highlight the different requirements in different regions, and as the hon. Member for Strangford (Jim Shannon) will know, the Government are exploring the case for greater flexibility for corporation tax in Northern Ireland. We continue to explore that matter.
On the subject of jobs, the OBR, in its 2011 Budget publication, forecast that 2010-15 total employment would increase by about 900,000. That will not all flow directly from the corporation tax cut, but that reduction will play a part in it. We also have to recognise that most of the recent academic analysis—certainly a recent report published by the OECD—makes the case that taxes on corporation income are the most growth-inhibiting ways of raising revenue. They are inefficient, so it is right that we seek to have a lower rate of corporation tax to help the economy.
May I press the Exchequer Secretary on the benefits for growth and potential employment arising from these measures? According to the Red Book, the corporation tax decrease in the Budget will cost £1 billion by 2015. That is on top of £4 billion from the previous Budget. However, the changes in allowances and other
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aspects of the corporation tax bring in only £2.7 billion. That leaves a significant gap. The Opposition would not be doing their duty properly if they did not ask what benefits will be delivered by that significant cut in corporation tax.
Mr Gauke: I am grateful to the hon. Gentleman for acknowledging that it is a significant gap. It is a considerable tax cut for businesses in order to get them to grow. Reducing corporation tax will reduce the revenue we take from an inefficient tax, thereby increasing the rate of return on investment and resulting in greater business investment, greater productivity, higher wages and salaries and more jobs. It is important that we have a dynamic private sector, and that is exactly what we are about.
We have to be internationally competitive. Our tax system is not as competitive as it once was. Over the past decade, our competitors have seized the opportunity to cut their corporation tax rates faster than we have. In 1997, the UK had the 10th-lowest main rate of corporation tax among the 27 EU countries, but by 2010 we were 20th. As a result of the reforms announced in the Budget by my right hon. Friend the Chancellor, the UK will have the fifth-lowest corporation tax rate in the G20, and by the end of this Parliament, it will be the lowest of any major western economy and the lowest rate this country has ever known. By taking our corporate tax rate right down to 23%, we are going further in restoring Britain’s international competitiveness with a corporation tax rate 16 percentage points lower than America’s, 11 percentage points lower than France’s and seven percentage points lower than Germany’s. It will be the lowest corporation tax rate in the G7. We are pleased that we have been able to make progress in this area.
Mr Gareth Thomas (Harrow West) (Lab/Co-op): I am sorry to have missed the many speeches yesterday by the Exchequer Secretary and in particular my right hon. Friend the Member for Delyn (Mr Hanson). I missed them because I was campaigning in west Worcestershire with 50 young people protesting against the decision of Worcestershire country council to withdraw funding from Rubery youth centre, which has played a key role in lowering antisocial behaviour in the area. Have the Exchequer Secretary or his Treasury colleagues considered the impact of the corporation tax cut on the funding of crucial public services, such as youth services?
Let me make this point. The hon. Gentleman talked about being in west Worcestershire. I was there two weeks ago for a meeting with local businesses. I met manufacturers who had full order books and were expanding, investing, welcoming the opportunity to expand their businesses and recognising that the Government were putting in place the conditions for strong private sector growth. It is through such growth that we can have sustainable public finances and we can afford to have the public services that we would all like. However, it is no good spending money that we do not
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have. The move towards a lower rate of corporation tax will enable us to have stronger, sustainable public finances and a dynamic private sector. It supports the Government’s ambition to achieve the most competitive tax system in the G20, and I therefore commend clause 4 to the Committee.
Mr Hanson: You have caught me slightly off guard, Mr Hoyle. I was expecting my hon. Friend the Member for Hayes and Harlington (John McDonnell) to participate in the previous debate, but I shall plough on as ever. It is good to see you back in the Chair. I hope that you had a refreshing evening’s sleep after we had considered earlier matters.
Clause 4, which we have just agreed without a Division, and clause 10 are inextricably linked. I hope that there will be another opportunity to discuss and probe with the Minister the impact of the proposals in clause 10, as they relate to the proposals in clause 4 that we have just approved. The effect of clause 10 is to reduce the rates of writing-down allowances for new and unrelieved expenditure from the relevant dates, which are 1 April 2012 for corporation tax and 6 April 2012 for income tax. As the Minister will know, the main rate will be reduced from 20% to 18% and, for special rate expenditure, from 10% to 8%. Special rate expenditure includes expenditure on long-life assets, thermal insulation and integral features, as well as expenditure incurred on or after 1 April 2009, with cars with CO2 emissions of more than 160 grams per km due for consideration under the clause. For chargeable periods that straddle the relevant date, the rate of the writing-down allowance is a hybrid of the rates before and after the change. The purpose of the amendment is not necessarily to oppose clause 10, but simply to ask the Government for a review of the impact of the abolition of capital allowances for smaller businesses and businesses that are more likely to invest, such as manufacturers generally.
Andrew Gwynne (Denton and Reddish) (Lab):
My right hon. Friend is making an important point that is indeed linked with the previous clause. Clause 4 deals with the corporation tax cut, which is one side of the coin, but the other side is obviously investment. Constituencies such as mine are still heavily dependent on manufacturing industries—indeed, almost disproportionately so. Although local businesses that have spoken to me about the Budget measures have welcomed the corporation
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tax cut, they are incredibly concerned about the changes to capital allowances, which they think will serve as a disincentive for them to invest in the long term.
Mr Hanson: My hon. Friend makes some valid points. I know that he defends his constituency and the whole of the north-west region strongly when it comes to the importance of manufacturing industries. One issue that I want to explore with the Minister is the very question of whether the capital allowance reductions proposed in clause 10—as well as other in clauses, which we will consider in due course upstairs in Committee—will have an impact on the job creation and investment proposals that we are considering today. Unemployment in my hon. Friend’s region in the north-west will be very high, at around 9%, which again indicates the importance of generating and regenerating manufacturing industries in those areas.
Capital allowances allow businesses to write off the cost of certain capital assets, including plant and machinery, to arrive at their business profits. Capital allowances take the place of commercial depreciation, which is not allowed for tax. There are certain first-year capital allowances that allow 100% of a business’s expenditure on specific, environmentally-beneficial plant or machinery to be written off in the year that the expenditure is incurred. There is also the annual investment allowance, which allows businesses to write off the whole of their expenditure on most plant and machinery, up to a limit in the year in which it is incurred. Expenditure on plant and machinery not covered by the allowances also attracts writing-down allowances, at either the main rate or a special rate.
The changes in clause 10 are part of the package of corporate tax reforms announced in the Government’s 2010 Budget, as the Minister will undoubtedly explain later. The amendment calls for a review of the impact of the Government’s abolition of capital allowances for smaller businesses in 15 to 16 months—that is, October next year—when these allowances will have been operational and we can see what the growth potential in the economy has been over that period thanks to the corporation tax measures in the Budget, as well as the impact of stringent public spending cuts and rising unemployment across the UK.
Jim Fitzpatrick (Poplar and Limehouse) (Lab): In the debate yesterday evening and earlier today, there were many references from Opposition Members to the concerns raised by the British Chambers of Commerce and the Federation of Small Businesses, and my right hon. Friend has referred to the CBI. Can he say whether those organisations support the review that is being requested, and whether he has had a chance to discuss the Government’s plans with them?
Mr Hanson: I want to refer to a number of comments that have been made in this debate. Perhaps I could start by being helpful to my hon. Friend and referring him to what Lord Northbrook said. Lord Northbrook does not take the Labour Whip in another place or even the Liberal Whip; he takes the Conservative Whip. He considered a range of issues on Second Reading in another place, and said of this proposal:
“How does the reduction in capital allowances square with the Government’s wishes to encourage a more manufacturing-based economy?”—[Official Report, House of Lords, 26 July 2010; Vol. 720, c. 1172.]
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That is a tempered criticism, but it raises the very question that I wish to raise with the Minister. On the one hand, to help growth we have corporation tax cuts—which the Committee has just supported, although we want to see an estimate of the outcomes—but on the other hand, we have massive reductions in capital allowances, which are specifically designed to encourage businesses to invest in plant and machinery, and environmentally efficient equipment, all of which will help to build jobs and growth for the future. However, I will return to my hon. Friend’s point in due course.
The key reason to consider the matter in depth is that, as the Office for Budget Responsibility—the Government’s own creation—has said, even after this year’s Budget, which the Chancellor has dubbed a “Budget for growth”, growth will be lower this year and next year than it was predicted to be around this time last year, when my right hon. Friend the Member for Edinburgh South West (Mr Darling) was Chancellor of the Exchequer. Slower growth and rising unemployment will make it harder to make the deficit fall. It is therefore even more important that we encourage as much growth, manufacturing and manufacturing investment as we can, to help counterbalance the massive effects of large spending cuts, which will put many people out of work and have a knock-on effect in the private sector.
Even after the measures in the Budget are taken into account, the OBR has said that growth will be much lower this year and next. In 2011, growth is now forecast to be just 1.7%, compared with a forecast of around 2.6% a year ago. The estimated rate of unemployment has been revised upwards to 8.2%, from 8%. Despite all the discussions and the measures that we have seen so far, there is still fragility out there. We are not sure how the economy will perform in the next 12 months, nor are we sure whether it will retain its strength and grow, or whether manufacturing investment in particular will grow. We are taking a potential risk by balancing the growth in corporation tax, which the Minister believes will occur because of the cuts that have been proposed, against the cut—admittedly of 2%, but still a cut—in capital allowances proposed by clause 10.
The amendment simply says that at some point in the future—October 2012—we should have a break point, when we review what has happened since the allowances came into effect, which will be next year, against the corporation tax cuts, which come into effect now, and the other issues in the economy, which, although they are not before the Committee, are still relevant to this debate. As I did last night, I wish to refer to the fact that unemployment is still high across the United Kingdom. We need to grow the economy and grow manufacturing jobs, yet the cut in clause 10 may well impact on our current fragile growth. As I mentioned last night, unemployment in the UK is highest in the north-east, at 10.2%. I notice that my hon. Friend the Member for Hayes and Harlington is here, as well as my hon. Friend the Member for Poplar and—
I still think of my hon. Friend as the Member for Canning Town; it is a habit that is hard to break. Just as I was about to say “Canning Town”, I realised that I was wrong, which is why I paused for a
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moment. In London—including the constituency of my hon. Friend the Member for West Ham (Lyn Brown)—the unemployment rate is 9.4%. London is a centre of prosperity, and it has growth in many parts, but if we are to encourage manufacturing industry in London to soak up those unemployed people and get them back into jobs and spending, it will be necessary to have an assessment of whether, downstream, the capital allowance cuts have been good or bad for unemployment rates.
The unemployment rate in the west midlands is 9.9%. In Yorkshire and the Humber, it is 9.3%. In my own region, Wales, it is 8.7%, and in Scotland it is 8.1%. Those are high levels of unemployment, and I want the Government to make an assessment of whether the capital allowance cuts will particularly hurt manufacturing industry in the north, the north-west, Yorkshire and the Humber and in the north-east, where my hon. Friend the Member for Tynemouth (Mr Campbell) has his constituency, more than it might do in the south, the south-east and the south-west, where the unemployment level is only 6%. That level is still high—it is 100% for those people who are unemployed—but it is still only 6%, compared with the higher levels at the heart of challenging constituencies in London and in the north and north-east.
Jim Fitzpatrick: When I won the seat of Poplar and Canning Town in 1997, the level of unemployment there was almost 17%. When Labour left office last year, it was down to about 9%. That was still between two and three times the national average, but it was a lot less than it was when we won the election in 1997 because of the efforts that the Labour Government put into attacking unemployment as the scourge of our economy. My right hon. Friend is making a strong argument that unemployment is not now going to be attacked as aggressively as we would hope, because of the economic policies of the coalition Government. I would like him to continue in this vein and to outline how we think it ought to be attacked, because it is the scourge of our economy.
Mr Hanson: I am grateful to my hon. Friend for making that valid point. I know that he is committed to bringing jobs and investment to his part of east London, as indeed my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) is to the north-west and elsewhere.
I am not saying that we will not approve the cuts in capital allowances in due course. I am simply asking the Minister to monitor their impact, and if they are becoming detrimental, given the corporation tax cut to which they are inextricably linked, we shall need to look at how the process will continue.
My right hon. Friend is right to say that we shall need a regular assessment, because the regional economies do not stand alone. The decisions taken in one region might have an impact on another. An example is Mono Pumps, a manufacturing company in the Tameside area, part of which my constituency covers. It was one of just 50 schemes announced in the regional growth fund, and it is to relocate to a new facility on the Ashton Moss regional employment site in my constituency. That move is now being jeopardised because of supply chain issues with a manufacturing
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company based in Gloucestershire and south Wales. We need to ensure that manufacturing as a whole is supported across the United Kingdom, and only the kind of assessment that we are proposing will ensure that such regional disparities are properly looked into.
Mr Hanson: My hon. Friend makes my case for me very powerfully. I am simply saying to the Committee that these are important changes. We have approved the corporation tax cut, but we are still sceptical about whether the capital allowance cut will be a successful policy, rather than simply an addition to the public spending cuts that the Government are making across the board, which will have a knock-on effect on the private sector just as much as on public sector jobs.
Mike Freer (Finchley and Golders Green) (Con): Just a quick question: if the higher corporation tax and the capital allowances were so valuable, why did manufacturing jobs shrink under the previous Government?
Mr Hanson: The hon. Gentleman will know that there are many challenges across the board, and manufacturing is always going to be a changing, moving field. In my area of north Wales, for example, manufacturing grew quite dramatically. In my constituency, we make the Airbus aeroplanes, which you will know very well from your constituency in Bristol, Ms Primarolo. That has been a major growth industry, in partnership with Government investment, Government backing for investment and Government loans and grants to help to grow the private sector and create jobs. The people who have those jobs then spend their wages in the local economy, creating further jobs in shops and in other manufacturing areas across the board. It is therefore an ever-changing field.
I have tried to make it clear to the Minister that we support the general direction of travel on cutting corporation tax, because we do not want the UK to be uncompetitive with our neighbours. In our discussion on clause 4, I was simply seeking an assessment of how the Minister will measure the success of the provision, because we will be forgoing a considerable amount of resource and we will need to measure a success that we do not yet know. The proposal on capital allowances goes hand in hand with the proposal on corporation tax. We will be paying for that cut in part with a major slashing of investment allowances by £2.6 billion under these proposals. Again, I am simply asking for an ongoing assessment of the impact of the measure, because it might work and it might not. I fear that cutting the allowances will lead to a lack of investment, a lack of growth and a further reduction in the manufacturing industry that the hon. Member for Finchley and Golders Green (Mike Freer) is seeking to protect and develop. I want to test the Minister on these issues so that he can justify to the Committee why he is making these cuts.
Nigel Mills (Amber Valley) (Con): The right hon. Gentleman is making an interesting case. Would he care to comment on whether any work was done by the previous Government when the capital allowance rate was reduced from 25% to 20% to determine whether that cut had the kind of damaging consequences that he now envisages with the cut to 18%?
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Mr Hanson: To be honest, I do not know. I was not a Treasury Minister in the last Labour Government. I spent my time in Northern Ireland, in prisons, in probation and in the Home Office—[ Interruption. ] Perhaps that is not an area into which we should progress this afternoon, however. In the spirit of cross-party discussion of these matters, I acknowledge that the hon. Member for Amber Valley (Nigel Mills) has made a valid point, but, whatever the previous Government did or did not do, the economy was stronger than it is now when those cuts were made to the capital allowances. We can debate the reasons for that for a long time, and we can disagree or agree on the issues, but we now have growing levels of unemployment, slowing growth and public spending cuts that have not yet hit the public and private sectors. There are estimates that up to 500,000 people in the public sector will lose their jobs, which will have a knock-on effect on the private sector. We are seeing the squeezing of the middle in relation to child benefit and working families tax credits, and poverty and wage freezes are hitting hard.
All those factors are going to hit the economy hard in the next 18 months to two years. The Minister is proposing to cut the capital allowances from April next year, and all we are asking in this modest amendment is that the Government review where we are in October 2012, given the tortuous procedures that we are going to go through in the next 18 months as the squeeze has its effect. The Minister will undoubtedly accept that that is going to happen, because it is part of the Government’s policy to make it happen, and we are keen to ensure that, at the end of that period, we do not lose valuable manufacturing capacity and jobs.
Mr Love: Is not the key point here the Minister’s inability to give us hard figures on the improvement in growth and employment? Our request, through the amendment, is that we look carefully at that, because the Government are making major claims about growth in the economy as a result of these measures, as well as rebalancing the economy away from financial services towards manufacturing. Surely the amendment will give us the opportunity to test those claims.
Mr Hanson: Indeed. We are dealing specifically with clause 10, but it overlaps, as will be discussed further, with clauses 11 and 12. Manufacturing is a key part of our economy, but it needs support in order to fuel future jobs growth. The Government thus need to explain today and later in Committee upstairs why they are cutting investment allowances for manufacturers by about £75,000 and using that money to give a corporation tax cut that will go predominantly not to manufacturing, but to financial services industries.
I have made a claim, and I am happy for the Minister to challenge it and to explain why the corporation tax cut we considered and agreed in clause 4 will be skewed towards the financial services industries which are not creating manufacturing jobs. I originally hoped to have clauses 4 and 10 considered in tandem as they are inextricably linked. The key issue is that the corporation tax cut is going predominantly to a certain sector, while the manufacturing capital allowance cut will predominantly hit manufacturing industry. We need to reflect on that.
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1% corporation tax cut at the final moment. We know that, because the Office for Budget Responsibility said in paragraph B13 of the Budget 2011 policy costings:
“The OBR was notified of the change to corporation tax and the 1p cut in fuel duty from 1 April 2011 too late to incorporate any indirect effect of these measures in the economy forecast.”
If so, the capital allowances under clause 10 will come into effect with that reduction next year, but there is no assessment of whether the additional corporation tax cut, along with the fuel duty rise and other issues I have mentioned, will impact positively or negatively next year. Given the lack of thought and consultation on those issues, we need to reflect on them at an early stage, which is what the amendment says.
John McDonnell (Hayes and Harlington) (Lab): There is anxiety about the lack of assessment; it was undertaken so perfunctorily by the OBR because it was a last-minute decision by the Chancellor. Will my right hon. Friend comment on the grounds for that decision being taken in such a last-minute manner? Was it a political stunt? Was there a rationale for it? How does he understand not just the decision itself, but the fact that it happened literally in the final 24 hours—at the last minute—before the Budget?
Mr Hanson: I could speculate on those points for my hon. Friend, but the Minister might be in a better position to comment on them. I will give my hon. Friend one thought, however. Perhaps the Chancellor realised that unemployment is rising because of the squeeze on public spending over the year; that growth is slowing because people feel uncertain in their jobs and businesses are not willing to invest; and that the level, depth and speed of public spending cuts over the next two years will lead to growing unemployment—not just in the public sector, but in the private sector, as people in private businesses depend on public investment. For those reasons, I suggest, the Chancellor has had to make additional changes to do what I believe is the right thing: to try to stimulate private sector growth.
If last-minute thought has been given to the impact of corporation tax changes and if full assessments have not been made of the impact of VAT on public spending cuts, we need to be aware that capital allowance reductions are coming into effect in April next year. The amendment simply says:
“The Chancellor shall publish, by 31 October 2012, an assessment of the impact of the changes to capital allowances on the UK economy.”
I find it difficult to think of anybody who would object to that. I am sure that the Treasury would make such an assessment as a matter of course in any case. Any good business—and the Treasury is a good business—would look at its outputs, outcomes and impacts and reflect on how they will affect the customer base, which in this case is manufacturing industry.