I thank the hon. Gentleman for his intervention. The number of children in relative poverty—this was before the definition was changed—was reduced by 300,000 over the course of the last Parliament. As I mentioned in response to the previous intervention, although families on low incomes will receive less in tax credits than they currently do, that will be more than made up for by the increase in the minimum wage, and it will, therefore, be fair to people on low incomes. I do not think that the issues the hon. Gentleman just raised will come to pass in the way he described, although I am sure that further analysis will be done on this topic.
Ultimately, tax credits are a subsidy paid to employers who underpay their staff, and Members on both sides of the House will deplore employers who pay their staff less than is required to live on. A combination of reducing tax credits while increasing the minimum wage
will end this abuse by some employers who do not pay their staff properly. A reform such as this is long overdue. For far too long, the general taxpayer has been subsidising employers who underpay their staff, and I am delighted that today’s Budget has taken a step towards ending that.
We have heard a great deal from Opposition Members about productivity, and it is right to say that productivity in this country needs to improve. I am delighted that somebody as distinguished as Jim O’Neill will be leading on that. I say to Labour Members who have raised this issue that the biggest fall in productivity in recent history—2.6% in a single year—occurred in 2009, on the Labour Government’s watch. They should therefore be a little careful when they seek to lay the blame for the productivity level on Conservative Members.
One contributory factor to low productivity is low wages, which are fuelled by tax credits: if employers can pay their staff very low wages, there is very little incentive to invest in IT, training, equipment or machinery because they can simply hire very low-paid staff. One side-effect of today’s increase in the minimum wage may be to increase productivity, because companies will be paying higher wages and so will be further incentivised to make sure that their workers, who will be costing them more, really are productive.
A second reason behind the relatively flat productivity figures is the relative decline of the oil and gas sector and the financial services sector after the recession. Both sectors had very high productivity, so if their participation in the economy is reduced, there will naturally be a bit of a drag on productivity. I am sure that the productivity plan, which will be published shortly, will go a long way towards addressing many of the issues.
The Chancellor mentioned aggressive claims management companies, which I do not think anyone has picked up on so far. He said that those companies are targeting people who have been involved in accidents and inducing them to make fraudulent claims. I had that experience a year ago, when my wife and I—I do not wish to pin the blame on either of us—had a small bump on the motorway. [Hon. Members: “Ah!”] It was nothing too serious. But in the year after that, my wife and I were inundated with phone calls on an almost weekly basis. Goodness knows how these people got our phone numbers. The insurance company or the accident pick-up company must have given them to this ambulance-chasing law firm. The firm phoned us up on a weekly basis, trying to persuade us to pretend that we had some sort of injury, such as whiplash or backache. No matter how many times we told them that we had no injury of any sort, they continued to try to persuade us fraudulently and falsely to claim that we were injured, which we obviously did not do. Some people may be tempted, and that would be outright fraud. Anything the Chancellor can do to stop this outrageous abuse is very welcome. Personally, I advocate an outright ban on payment protection insurance—PPI—or personal injury cold calls because people are being induced to make fraudulent claims, which act as a drag on the entire economy. I welcome the fact that the Chancellor made reference to this in his Budget statement.
Finally, I wish to touch briefly on housing. The timing is appropriate as the Minister of State for Housing and Planning is now in his place. I congratulate the
Government and him on the national planning policy framework, which was launched in the previous Parliament, under which housing starts have significantly increased. In fact, the number of housing starts per year is around 50% higher than it was in 2009 and 2010. The Government can be very proud of the action they have taken so far to encourage house building. In my borough of Croydon, the number of housing starts increased fourfold in 2014 compared with 2013—they went up from 500 a year to about 2,000 a year. The Government have a good track record of making progress in this area. I have every confidence that the housing Bill, to be introduced in Parliament in October by the Minister of State, will put in place further measures that will increase house building even further. As we increase supply, affordability will improve as well.
On the subject of council housing, to which a previous speaker referred, we should note that over five years the coalition Government started more council houses than Labour did in the previous 13 years put together. That is a record of which the Government can be proud.