Bank Bonuses

Anne Main Excerpts

Tuesday 11th January 2011 Commons Chamber

[Mr Osborne]

The right hon. Gentleman may not know it, or perhaps he did not really believe it, but he fought the last election on a manifesto—written, incidentally, by the Leader of the Opposition—that committed the then Government to opposing a unilateral levy. We have introduced such a levy, and it will raise almost £10 billion in the current Parliament. We are extracting from the banks revenue that the last Government did not extract. Indeed, they opposed the method that we have introduced.

[Mrs Anne Main (St Albans) (Con)]

In the future, will my right hon. Friend come to the House and let us know the extent to which the banks have complied with the requirement to lend more to businesses in my constituency? There was little sympathy for them under the last Government, when big bonuses were provided and they received little help from the bankers who received those bonuses.

[Mr Osborne]

An absolute central part of any settlement we might reach with the banks will be a material and verifiable increase in the amount of lending to British businesses, especially medium and small businesses. [Interruption.] Labour Members mutter, but they secured absolutely nothing for British business when they bailed out the banks. They had the money in their hands to give to the banks, and they secured absolutely nothing in return.

Loans to Ireland Bill

Anne Main Excerpts

Wednesday 15th December 2010 Commons Chamber

[Mr Osborne]

Obviously we are not going to prejudge the outcome of any Irish general election. Of course we—not just us, but the IMF and others—negotiate with the Government of the day. Although the principal Opposition parties in Ireland have concerns about the Irish budget and the like, I understand that they have accepted the principle of international assistance, and the IMF has been in direct contact, and has engaged in discussions with them. The international community, including the UK, is satisfied that we are in a position to make this offer to the Irish Government, which is why I am bringing the Bill to the House today.

As I was saying, Ireland agreed to seek IMF and other support worth €85 billion, and the money will be used as follows: €35 billion will be used to support Ireland’s banking sector, with €10 billion going towards immediate bank recapitalisation; and the remaining €50 billion will be used for sovereign debt support. In terms of contributions to the cost of the package, Ireland itself will provide €17.5 billion towards the total. The remaining €67.5 billion will be split, with one third coming from the IMF, one third from the European financial stability mechanism, and one third from the eurozone facility and bilateral loans from the UK, Sweden and Denmark. I have agreed that our contribution should amount to €3.8 billion, or £3.25 billion at today’s exchange rate.

This significant package will help Ireland to deal decisively with its problems. It will help it to recapitalise its banks and set up a contingency reserve for future problems. It will also help the Irish authorities to cover the shortfall in their budget, which was passed by the Irish Parliament earlier this month. Their budget will see a fiscal consolidation of €15 billion by 2014, of which €6 billion will be implemented next year, as part of their strategy leading to a target budget deficit of 3% of gross domestic product in four years’ time.

Of course people ask why we are extending the loan to Ireland. We are doing so because it is overwhelmingly in our national interest to have a strong Irish economy and a stable banking system. This is not just about the Irish economy and Irish jobs; it is about the British economy and British jobs. A loan does not add to our deficit, and any increase in borrowing is matched, of course, by the commitment of the Irish to repay with interest. The answer to the question asked by my hon. Friend the Member for Stratford-on-Avon earlier is that if Ireland takes out all the loan that is being made available to it and pays it back with the interest that has been forecast, it would pay us £440 million in fees and interest over this period.

Let us remember that Ireland is the fifth largest market for British exporters and accounts for 5% of our total exports abroad. An interesting way for the House to think about it is that every man, woman and child in Ireland spends an average of £3,600 per year on British goods—that is how connected our economies are. Indeed, as has often been pointed out, we export more to Ireland than to Brazil, Russia, India and China put together, although we are trying to increase our exports to those four very large emerging markets. For some of our industrial sectors, such as food and drink or clothing and footwear, Ireland is our top export market. Ireland is also the only country with which we share a land border, and in Northern Ireland our economies are particularly linked, with two-fifths of exports going to the Republic.

I wish to reassure Members representing Northern Ireland that I am very aware of their constituents’ worries and the difficulty they face as a result of the problems in Ireland. That is why my hon. Friend the Financial Secretary recently visited Belfast to discuss these issues directly. I am open to any discussions that Members from Northern Ireland wish to have with me or the Treasury about the economic situation and indeed the banking situation in Northern Ireland. Just as our two economies are linked, our businesses and banking sectors are also interconnected. More Irish companies are listed on London exchanges than companies from any other foreign country. The two main Irish-owned banks have an important presence in the UK, holding between them about £30 billion of customer deposits. In Northern Ireland, two of the four largest high street banks are Irish-owned, accounting for almost a quarter of personal accounts.

[Mrs Anne Main (St Albans) (Con)]

My right hon. Friend has stressed the importance of the export market and our strong links with Ireland. So why did he find it necessary for paragraph 6(h), under the heading “Events of default”, in the summary document to set out that

“the Borrower not being or ceasing to be a member of the European Union”

would constitute a default? I would hope that we would support Ireland if we chose to do so, and not bind it into necessarily having to stay in the European Union, given the length and operation of the loan.

[Mr Osborne]

It is merely an observation that the fact that Ireland is a member of the European Union is not why we are making this loan; it has nothing to do with that. It has to do with the fact that Ireland is deeply connected to us. Indeed, we have just made a loan agreement with Iceland, which of course is not a member of the European Union, in order to seek to recover moneys that were spent on savers in Icelandic banks here in the UK.

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[Dr Alasdair McDonnell (Belfast South) (SDLP)]

I congratulate the Chancellor on the proposal, which I fully support. It is my understanding that this step is being taken because there was a potential domino effect, in that any damage in the Irish Republic could have led to further damage to British banks that operate there and to damage to the Northern Ireland economy, and that in turn would have had a very significant effect on the British economy and British interests. I therefore see this as a generous move, but also a move of enlightened self-interest.

The Irish economy is in its current situation because it had a banking crisis, not an economic crisis. The underlying economy is sound; the potential for growth exists, and that growth will come forward. The pharmaceuticals and other major industries in the south of Ireland are thriving. The economy is expected to stabilise this year and to begin to expand at between 2.5 and 3% in the period 2011-14. The package of measures that is in place is required in order to restore the public finances and banking liquidity by 2014. The Irish Government have rapidly moved to curtail expenditure dramatically and to raise revenue themselves. The adjustment is expected to bring the economy back into balance within four or five years.

Ireland is a small open economy in which long-term sustainable growth depends on healthy international trading, and the conditions for export-led growth are in place: good infrastructure, high-quality human capital, a favourable taxation environment and available credit for viable businesses. The national recovery plan has been put in place, and it is tough and will be difficult. Export-led growth will foster recovery in domestic trading sectors. The growth in GDP is expected to bring unemployment down fairly rapidly, and certainly well below 10% within two to three years. The balance of payments will return to surplus in 2011, so Ireland will be earning its way out of the difficulty that it is in within the next 12 months.

Some Members have referred to Ireland’s membership of the eurozone as a major difficulty, but I do not agree. It is a handicap, but it is not as massive a disadvantage as some claim. Ireland’s membership of the eurozone obliges it to adhere to stability and growth rules and to bring the general Government deficit to below 3%. The Irish Budget contained a very tough package. Initially, the 2010 Budget presumed an adjustment of about €7.5 billion over a four-year period. With hindsight, we know that the figure proved to be almost double that—some €15 billion—as we crept towards the year end. Two thirds of that is coming out of budgetary adjustment achieved through reduced expenditure, and a third out of taxation. However, by 2014, Irish expenditure will be back to 2007 levels. Total Government expenditure as a percentage of GDP will be reduced from 49% to 36% in the next three years.

[Mrs Main]

I heard what the hon. Gentleman said earlier in his speech about why we should support southern Ireland, but I am struggling somewhat with his non-condemnation of membership of the eurozone. The euro seems to be a large part of the problems, but he seems to have glossed over that fact.

[Dr McDonnell]

Some of us see the euro as a problem and some of us do not. Being in the euro has been an advantage to Ireland for many years. It has become a handicap at present because of the restrictions and constraints, but the eurozone works and has worked very well for many years. In the present crisis it has its handicaps and limitations. Some people are predicting that the eurozone will collapse shortly; I do not accept that, and that is not the view of everybody.

The point I am trying to make is that Ireland’s underlying economy is healthy. Its membership of and involvement in the eurozone is healthy, and in the long-term it will come round and sort itself out. Ireland has a financial crisis—a banking crisis—that was brought about largely by a property bubble and a lack of liquidity, rather than a flaw in the underlying economy. I want to assure people that the money will be paid, in my opinion and assessment, and that in due course—

Equitable Life (Payments) Bill

Anne Main Excerpts

Wednesday 10th November 2010 Commons Chamber

[Mark Durkan]

Yes, I do. There is no escaping the constraints that the cap will create. In the last group of amendments, we considered the questions that arise when the cap comes together with the cut-off. That conspires to create a pretty selective injustice for a group of people who are then left with very marginal compensation.

Even a very independent process, such as that proposed in the amendments, will be constrained by the cap. However, people would trust a credible independent process applying that cap with due consideration for all the concerns, rights and needs of policyholders more than they would trust the Treasury. In the last debate some Government Members said confidently how impressed they had been with the Treasury since they came into the House. That might well be—we are in the early stages of this Parliament and this Government and the first few pages of the exercise book are lovely, neat, impressive and perfect—but degeneration creeps in later on and even the Treasury will revert to its traditional roots and habits.

[Mrs Anne Main (St Albans) (Con)]

I have confidence in the Treasury trying to sort this out—I am sure that the hon. Gentleman will not be surprised to hear that. However, I am concerned about anything that pushes this matter into the long grass. We do not need any more delays caused by trying to set up other bodies. That is why I would like to say, “Get on with it and get the Treasury doing it.”

[Mark Durkan]

I do not believe that the hon. Member for Harrow East, for example, is trying to sow or fertilise long grass. This is about getting something that is credible, competent and reliable and the Committee should try to help in that regard. That is the spirit of these amendments.

There has been much criticism of the underperformance, to put it mildly, of the previous Government on this issue over more than one Parliament. Let us remember that those Ministers were not deliberately ignoring the plight of their own constituents who were coming to them or the problems highlighted by many of us from constituencies across the United Kingdom. They were constrained by the advice that they were getting from the same Treasury that people are now so happy with. The Treasury was advising that serious precedents and problems would be created.

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[Charlie Elphicke (Dover) (Con)]

rose—

[Mrs Main]

rose—

[Chris Leslie]

I will give way first to the hon. Member for Cardiff North (Jonathan Evans) as he has attended the entire debate.

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[Mrs Main]

Will the hon. Gentleman give way?

[Chris Leslie]

I think the hon. Lady was one such Member.

[Mrs Main]

I rise to gently chide the hon. Gentleman. We have had discussions with EMAG representatives, and I do not think they were under any illusions that they were necessarily going to get back every single penny that was lost. I have talked to my local representatives, and I think they are realistic enough to realise that we have done the best we possibly can. I am not happy with the situation for the pre-1992 annuities, but even so, what we are giving them is 100 times better than previously. They look to us to deliver that, but they are realistic enough to know that, in these hard times we cannot give them everything. I think for the hon. Gentleman to say, “I didn’t sign the pledge” is just copping out.

[Chris Leslie]

I disagree about the pledge, and I did not sign it for particular reasons, but my point is simply that the hon. Lady signed the pledge before the general election and it committed her to a number of things, one of which was somehow to fulfil the aspirations of those policyholders who interpreted the pledge in a particular way. I, too, have met EMAG representatives and they are not as happy and understanding as the hon. Lady suggests.

[Mrs Main]

Will the hon. Gentleman give way?

[Chris Leslie]

Well, if the hon. Lady understands something different, I will give way to her again.

[Mrs Main]

Did those EMAG representatives give the hon. Gentleman some reason to suspect that they were happier with his stance of delivering a much lesser amount?

[Chris Leslie]

The difference is that I did not raise people’s hopes for electoral purposes—because I wanted to harvest their support—only to dash them after the general election. We are very used to Conservative Members making pledges on a whole series of things—not least student finance, which is quite pertinent right now—and then breaking their promises. I am not saying that Members are necessarily in breach of their pledge. All I am saying is that it is for them to honour it, in accordance with their consciences and what their constituents will say to them as to whether the compensation outcome amounts to a fair payment scheme and proper compensation.

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[Chris Leslie]

I disagree with that. The hon. Gentleman certainly did not say before the general election that this would be £1.5 billion—[Interruption.] Oh, did he? Where did he say before the general election that this would be £1.5 billion? I shall give way to him if he can give a reference for that. Answer came there none—proof in point that after the general election a different set of expectations was set out by the Government than those that might have been an interpretation of the Minister’s words before the election.

[Mrs Main]

Will the hon. Gentleman give way?

[Conor Burns (Bournemouth West) (Con)]

Will the hon. Gentleman give way?

Draft EU Budget 2011

Anne Main Excerpts

Wednesday 13th October 2010 Commons Chamber

[Kerry McCarthy]

Again, we are not here to answer questions. We are here to put the questions and to get—[Interruption.] The Minister should accept that the Conservatives are now in government. She cannot just do what she did in opposition and talk tough—

[Mrs Anne Main (St Albans) (Con)]

Will the hon. Lady give way?

[Kerry McCarthy]

I want to make progress. The Minister cannot just talk tough on European issues and pander to people who want to take us out of the EU. She is here to make progress in negotiations and to fight Britain’s corner. I have asked her what she would see as success in doing that.

On the specifics, we are here to debate whether, when EU member states and regions are all engaged in belt tightening, the EU itself should engage in a similar exercise. The Minister has said that sizeable austerity measures are being implemented across the EU. Does that not in itself prove that this economic situation is a global phenomenon that affects all EU member states and not, as the Government say every time Ministers get to their feet in the Chamber, the result of profligate public spending by the previous Government?

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[Mr Douglas Carswell (Clacton) (Con)]

I am grateful to my hon. Friend the Member for Stone (Mr Cash), who has done as much as any Member to encourage this House over many years to consider its duties in a wider European context. He is the best kind of Committee Chairman—one who never forgets that the role of his Committee is to hold the Executive to account, regardless of which party is in government. I thank him.

All hon. Members face spending cuts in their constituencies—cuts that none of us wanted and cuts made all the more painful by the economic downturn. With the exceptions of health care and overseas aid, every Government Department is looking for budget reductions of between 25% and 40%. At the same time, however, our net contributions to the EU are rising by 60% over the next two years—from £6.4 billion this year to £8.3 billion in 2011-12 and to £10.3 billion in 2015.

Our gross contributions, of course, are higher still. Currently £13.3 billion, they are scheduled to rise to £19 billion. Although it is true that some of that money is spent in the United Kingdom, it is by no means always spent on projects that we ourselves would have chosen to spend it on. In any case, normal practice in politics is to measure what people actually pay rather than to deduct the notional cost of services they receive in return. Would any Member argue that the basic rate of income tax is not 20p in the pound but zero, on the grounds that the entire sum is given back in the form of roads, schools, hospitals and so forth?

The sum of £19 billion is, of course, colossal—enough to give the entire country a 50% rebate on council tax in perpetuity or to pay off our Olympic debt in a single year. The scope of amendment (b), however, is not nearly so ambitious. It would not strike out the entire EU budget—it is not about that—and it would not even strike out the increase in the year-on-year EU budget. All this modest proposal is designed to do is to reject the additional sum that the European Commission demanded over and above the increases already built into the 2011 budget.

At a time when every one of the 27 member state Governments are struggling to find savings, the EU must show some willingness if not to reduce its budget, at the very least to be satisfied by the increases we have already given it. Why has the EU come back on 15 September and asked for more resources? The Commission has been admirably frank that the additional funds are earmarked for three institutions: the European External Action Service, Europol, and the three supervisory agencies that will regulate financial services. I remind Members that the European External Action Service is the EU’s diplomatic corps. It already has about 20 times the budget of our Foreign and Commonwealth Office. Europol is the EU’s police agency, and the three new supervisory agencies have been widely denounced as likely to drive revenue away from the City of London to non-EU financial centres.

In other words, we are being asked for this extra money to fund three projects that are not in the interests of this country to start with. How much is the bill? To be precise, the EU has awarded itself a €3.6 billion budget increase this year, and Britain’s share of that increase—not its share of the budget—is £380 million. The bail-outs and the financial stimuli around the world have, of course, recalibrated our sense of monetary value, but even by today’s standards we are talking about significant sums. Given this morning’s headlines about the pressure on public sector jobs, it might be helpful to calculate how that £380 million could be translated into Government spending. It would pay for 6,022 NHS doctors, 12,666 NHS nurses, 14,600 police constables, or 22,332 Army privates.

The purpose of the legislature is to control the Executive. In the last analysis, that is why we are all here. The additional work that we do in scrutinising laws, taking up cases for our constituents and participating in debates is valuable, but essentially supplementary. When we strip it down, we see that Parliament exists to ensure that the Government do not spend our money wrong-headedly. That has been the elementary function of our predecessors since the Tudors, if not the Plantagenets.

[Mrs Main]

I will support the amendment, because I could not look the people of St Albans in the eye if I asked them to make economies and explain why cuts are necessary, and then voted for a measure that would mean the EU’s sucking out more and more of our money. I do not think other Members could explain that to their constituents either.

[Mr Carswell]

I am grateful to my hon. Friend, and to the other 32 hon. Members—many of whom are present—who supported the amendment. The £380 million increase comes at a time when there will be costly cuts in my hon. Friend’s constituency and in others—cuts that none of us wants to see—and when it is surely wrong to reduce spending on public services in order to increase the money that we give to EU institutions.

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[Andrew Percy (Brigg and Goole) (Con)]

It is a delight to follow the hon. Member for Glasgow South West (Mr Davidson) and I agree with much of what he had to say. I have no intention of criticising the Economic Secretary tonight. Indeed, I support the new Government’s position on the European budget and it is much more robust than was the previous Government’s. In fact, I pay tribute to the Economic Secretary’s contribution to the debate, which contrasted starkly with what we heard from Ministers in the previous Government. There is no suggestion that any one part of the coalition is directing another. It is especially unfair to suggest that the Liberal Democrats are not here for the long run. I fully understand that a Lib Dem is not just for Christmas—if you’re lucky, there will be some left over.

I also thank the shadow Minister for her remarks. She did a great deal of good for the argument made by those of us who believe that the European Union and its budgetary processes have gone too far. In fact, by confirming that the Opposition have no policy on the issue of the European Union, she has made our job much easier. The Opposition’s position is very strange. They complain about spending cuts across the country, but they fail to say what they think about the European budget. Do they think that their constituents should be deprived of spending commitments in this country for the sake of an increase in the EU budget? That is a bizarre and strange position, but it is one that I do not have to defend to my constituents.

I urge the Economic Secretary to ignore the advice of the right hon. Member for Rotherham (Mr MacShane), who suggested that we should engage in some sort of trail of dinner parties—presumably paid for by EU taxpayers’ money—as, he said, the previous Government did. Where did that get us? It lost us our rebate and saw the previous Government committing to increasing the EU budget even further. We need no lectures from the Opposition on how to address this process.

I am a committed Eurosceptic. My antipathy to our membership of the European Union is widely known, and I made it very clear to my constituents at the election that I would seek a different relationship between this country and the European Union. However, that is not the debate we are having tonight. We are talking about whether we should approve sending more of my constituents’ hard-earned cash to Brussels to be spent elsewhere. I am not happy to support that position, and I will certainly not support it.

What are we being asked to pay for? We are being asked to pay for a 2.5% increase in the administration costs of the European Union, at the very time when we are telling councils and Government agencies across the country that they have to reduce their administration costs. How can I square that circle to my constituents? We are being asked to approve a 5% increase in contributions to the pension budget. At the same time, I am telling my constituents that their public sector pensions will be linked to the consumer prices index, rather than the retail prices index. We are also proposing to spend an extra 4.15% on the EU schools budget, at the very moment when we will be asking schools in this country—including, possibly, the one at which I taught just a few months ago—to spend less.

We are also asking Government Members and taxpayers to approve more money for the European External Action Service. I am pleased to say that when we had the debate on the European External Action Service, I was one of the Members in the No Lobby. As was mentioned earlier this evening, we were assured that the programme would be cost-neutral, but we now know that we will spend an awful lot more taxpayers’ money on a body to represent my constituents overseas for which they did not vote.

I do not need to talk about what the extra money going on this budget increase could be spent on. We have heard about the 12,000 extra nurses or the 14,000 police constables on which it could be spent. I am not certainly going to go back to my constituents and tell them that I have voted to spend money that could have been spent on front-line NHS nurses, teacher support in schools or our brave servicemen.

We have heard a great deal today about the previous Government and what they gave up. It is an absolute disgrace that they gave up our rebate, for absolutely no reform. For the past 30-odd years, we have repeatedly been told, “Well, we’ll accept this little budget increase in Europe in return for some reform.” We have always been told that some reform is coming down the line, but it never comes, because the European Union is institutionally incapable of reform. There can be no doubt about that at all.

[Mrs Main]

There is no incentive.

[Andrew Percy]

Indeed, as my hon. Friend says, there is no incentive for any sort of reform.

Those who support the budget increase have made great play of the fact that the amount spent on the common agricultural policy has reduced. It has indeed reduced: it is down to about 42%. However, even without the fraud and mismanagement that we all know about, the OECD has warned that the real cost of the CAP is £125 billion a year, so we could go a great deal further. The hon. Member for Glasgow South West mentioned the fact that we are now in the strange situation whereby farmers are effectively farming subsidies. However, I have talked to many of the farmers in my constituency, and I have to say, “If only they were.” Instead, we are asking them to manage environmental schemes, and at the very time when we are becoming more and more reliant on imported food.

I mentioned in an intervention on the shadow Minister that we cannot get away from the fact that the EU budget has not been signed off for some 15 years, and there is no doubt that it will not be signed off again, as my hon. Friend the Member for Daventry (Chris Heaton-Harris) said. Like other right hon. and hon. Members who are present, I am expected to go to my constituents and tell them that we would like to take more of their money to put into an institution that cannot guarantee that the money will be spent where it says it will be spent. I am not prepared to do that on behalf of the good people of Brigg and Goole who sent me here and whom it is my privilege to serve.

There is a broader issue, about the relationship between this country and the European Union, which touches on people’s engagement with and perception of the European Union, which was mentioned in earlier speeches. I note that Open Europe, which is a very sound pressure group, conducted a poll that found that 54% of people agreed with the statement that the Government should drop the Lisbon treaty and not try to ratify it. That 54%, as was proved in other polls, was ignored; the previous Government forced the Lisbon treaty through and broke an election promise. Some 65% of people believe that the European Union is out of touch with normal people, but sadly it is normal people’s hard-earned cash that is used to fund the EU, while 88% could not name their MEP. I wish that I did not know the names of some of my MEPs. Turnout for European parliamentary elections was at its highest in 2004, an abysmal 38.5% when I was up for election as a councillor, and it is a pretty poor pass when councillors such as me are used to drag up the European election turnout.

There is a general view in this country that the political elite is out of touch with the British public on the issue of Europe. My concern is that, if we approve yet more cash for the wasteful institution that is the EU, the gap between what the public expect and the position of the political elite will widen yet further. That would not be healthy.

Finance (No. 2) Bill

Anne Main Excerpts

Monday 11th October 2010 Commons Chamber

[Ms Eagle]

I shall give way in due course, but not at the moment.

I was just saying that the Somme offensive cost—

[Mrs Anne Main (St Albans) (Con)]

On a point of order, Mr Deputy Speaker. Is this rather long revisiting of first world war history directly related to the Finance Bill’s Second Reading?

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[John Mann]

Of course the British Government, cowardly as they are in their relations with China, cannot do so alone—it has to be done on an international level among all the capitalist economies of the world.

If that issue is not dealt with, the danger of a second recession will loom—for whoever is in power in whatever country, to be fair. We are shying away from that. It is not tenable to develop economies where everyone proceeds on the basis that we will continue to export to China as many aggregates and other raw materials as we can, to import the cheapest possible—virtually slave-labour—products, and hope that we will regenerate our economy based on the sale of those products. My own local economy benefits more than most from that in distribution networks, but I can see that it is not a sustainable model in the longer term. The China syndrome has to be dealt with in the near future, because if China fails to rebalance its currency there will be a second, much greater world recession.

Instead of that, we have this piffling little Bill with virtually nothing in it, not even the break-up of the big banks promised by the Liberals—the only Liberal economic policy that seemed to get adopted by the Conservatives, and an absurd irrelevance in the context of where we are. How the banks are run and regulated is absolutely vital to all of us, but who cares how they are structured? At the start of the crisis, Lehman Brothers, an investment bank, and Northern Rock, a building society, both collapsed. Such infantile politics is not surprising coming from the Liberal former so-called shadow shadow Chancellor, from Twickenham in south London, who is now in an important position in government, but it is quite extraordinary coming from the Conservative party. It is an incoherent economic policy based purely on political expediency. I note that it is not in the Bill, and it will never be put forward. It is just pure politicking to try to hide away from the fact that this is a Government whose economic policy is based on hope.

I want to make a few points about what the Opposition’s policy should be on the Bill and the economy. It is not consistent to argue that there should be no tax increases or spending cuts. That is economic illiteracy, which needs to be broken. In the current economic crisis, I have no problem with taxation going up as part of rebalancing the public finances. Therefore, if the Government propose increasing the higher rate of taxation, I am relaxed about that being necessary. Similarly, I am relaxed about VAT going up. The alternative would be to raise income tax. If the Opposition support that, they should state that view. I would disagree with it; for all its flaws and regressive nature, it is more sensible to increase VAT. I believe that £8 billion is the agreed figure that derives from the VAT increase. I will not argue against such an increase, which would thereby suggest a further £8 billion-worth of public sector cuts and job losses in my constituency, leading to a further recession based on the multiplier effect of those job losses. That would be a wishy-washy cop-out.

The Opposition need to strengthen their economic policies. They need more courage in working through what is happening—it is lazy to do otherwise. It is nonsense to suggest that there are other ways of increasing the tax take, based on projected economic growth—the current position—instead of the VAT increase. Again, that is economic illiteracy. Of course we want economic growth—so do the Government and so does every party in the House—but that is not an economic policy; it is a hope. Labour Members know that the incoherent coalition has a weak policy—the Bill lacks proper ideas and procedures for dealing with what the private sector needs. We will not, therefore, experience such growth and we, as an Opposition, cannot predicate economic policy on growth that the Government will not achieve. That is nonsense. Some serious thought and discussion should take place about the taxes that should increase and the cuts that should be made.

I ran a private sector business—that makes me rather unusual in Parliament. I set one up from my garage, so I know about the decisions that people who have no inherited wealth or banks lending to them make about how to invest. I had a capital-intensive business with my family. I know how interest rates work, and what that means for making decisions. I know about capital investment policies and how to squeeze a bit of extra capital out of them, and about decisions on the best timing. We were successful, and, like hundreds of thousands of other small businesses across the country, we made a profit—there is nothing wrong with that. We contributed an appropriate bit of tax—every business thinks that it is too much—to the Exchequer. However, we were not operating in a vacuum. Who will buy the products and services if people have been thrown out of work? Again, that underlines the coalition Government’s economic illiteracy. They have a vain hope that the private sector will turn up, but it will not, based on rational decision making. That is why the Deloitte survey, which was published today, should be so concerning to the Government and to us all.

We all like to criticise the Government—I love to criticise a Tory Government—but I do not want my constituents to suffer from recession and job losses because you lot have got it wrong. My people will be hurt first and my economy will be hit hardest. That has happened before and it will happen this time, so I want to help the Government by making some suggestions. I hope that they are making notes. The private sector cannot fill the void because of the pace of the cuts. That is the big error that needs to be put right. The speed at which the cuts are made and how they are made are crucial matters.

There is another fundamental error, on which I want to elaborate because it is a critical point. I know, Mr Deputy Speaker, that it is important to the people of Chorley. The Government’s cuts will have a disproportionate impact on the traditional English towns. The Government have the same civil servants, with the same civil service mentality, who failed to crack the problem previously. They are therefore making the cuts in the same way as other Governments made them. The civil servants think, “Ah—centralise.” The Secretary of State for Justice decides to cut magistrates courts. Which ones does he cut? He cuts those in the small English towns more than anywhere else. In Worksop, that means 16 jobs, and a couple more than that in Retford. Those are small numbers, but the jobs are relatively well paid. Those people buy sandwiches, go to jewellers and other small traders in the town centres.

I am newly elected to represent the town of Retford, due to boundary changes. It was previously Tory for a few years, but it is Labour now. The magistrates court in Retford is going. The police face a 13% cut. Which police stations might go? One of the early candidates for closure is Retford. The fire service in Nottinghamshire faces a 30% cut. Which fire stations will go? Retford is rather old and needs capital investment. Merging it with somewhere else is already being considered. What about social services? Nottinghamshire county council—one of the worst run local authorities in the country—is shifting social services, and Bassetlaw district council is also shifting its workers. Her Majesty’s Revenue and Customs is cutting the tax office. All those cuts could be rationalised individually, but add them all up. Who else works in town centres? The butcher, the baker—the candlestick maker has gone—the sandwich maker and the small pub are there, and the public sector workers provide the key income in the small towns.

[Mrs Main]

I am really enjoying the hon. Gentleman’s speech as he canters through all the things that he does not like. He promised that he would give us some encouragement about what should happen. When will he do that instead of listing all the things he thinks are dreadful and should not happen?

[John Mann]

It is very simple. You do not make the cuts so fast. You do not decimate small English towns such as Retford and Chorley—I am sure that the hon. Lady represents a small English town as well.

[Mrs Main]

It is a city.

[John Mann]

Well, the majority of the Tory heartlands—they may be former Tory heartlands in future—will get the cuts. It is fundamentally wrong that small English towns should bear the brunt of the cuts. If 50 jobs are lost in a big city, it is bad for those people, but it does not affect all the businesses. If 50 jobs in Retford, Skegness or Boston, or 100 jobs in Worksop are lost, there is a major crisis in those town centres. What do you think the very people whom you are rightly trying to get off incapacity benefit, perhaps to start small businesses in Worksop or Retford, will start doing—major, advanced science and technology? No, they will think, “I could run a sandwich shop.” Good luck to them—it is entrepreneurship, and it would be brilliant, but not if there is no one to buy the sandwiches. Who owns the small businesses and the market stalls? Those people will lose their jobs because they are on the cusp and the banks are not lending them money; they are lending even less than they were previously. Those people and the taxi drivers and the small builders come to my surgery—they suffer the knock-on effects. That is why you have got it wrong and why you should think again and slow down the cuts—