Comprehensive Spending Review

Baroness Nye Excerpts

Monday 1st November 2010 Lords Chamber

[Baroness Nye]

My Lords, I should like begin by thanking your Lordships for the generous and warm-hearted welcome which I have received from all sides of the House. The staff have done their utmost to help me settle in, and I am very grateful indeed for the kindness that was shown to my family on the day that I was introduced. I should particularly like to thank my sponsors, my noble friends Lady Kinnock and Lady Royall. When I say friends, this is not simply the normal courtesy given to a colleague from my own Benches. I can genuinely say that they have been among my closest friends and mentors for—I am almost afraid to say this—nearly 30 years.

Having spent those three decades working in the precincts of the Palace of Westminster, I was labouring under the misapprehension that I knew my way round. I soon discovered that my knowledge ended as soon as the green carpet gave way to the red. I recognise that I have a very great deal to learn.

In a working life dedicated to the Labour movement, I have had the good fortune to have worked for three leaders of the Opposition, two Prime Ministers and one Chancellor of the Exchequer. I have endured 18 long years of opposition—and, yes, 12 very long years of government. Yet I have only one claim that is, I believe, virtually unique in the world of politics: in all that time, I have never before delivered a public speech. So this really is a maiden speech. Be kind!

The background to this debate on the spending review is the events of 2008 and the financial storm that began in America but then spread to all parts of the world. Prior to the global financial collapse, the UK had by far the lowest ratio of public debt to GDP of any of the G7 economies; in fact, it was about half the G7 average. Our budget deficit, the subject of some subsequent criticism, was actually very close to the average for the advanced economies. When the storm hit, there were serious choices to be made. The UK played a leading role in ensuring that the choice of the international community was to intervene in the markets on an unprecedented scale. We can now see that this extraordinary action prevented a very major recession from developing into a slump. We can perhaps too easily forget how close the world came to an economic calamity which could have rivalled the 1930s in its severity and social consequences.

The nationalisation of Northern Rock was not a choice that the Government wanted to make, nor was the injection of capital into other UK banks. But this action meant that no British saver lost money, and virtually all other advanced countries followed the UK's lead. It was not action to bail out the bankers; it was action to protect people's savings and, ultimately, to protect their livelihoods as well. There was also direct government action to restore the wider economy to growth; help for small businesses that were in need of credit; targeted tax cuts to help families at the lower end of the income scale; and investment in infrastructure projects to maintain employment. A housing collapse was avoided by special government support to people who were threatened by the repossession of their family home.

In February 2009, the UK had a historic opportunity to lead the way out of recession when the G20 meeting came to London. The co-ordinated global action agreed at that meeting will stand as a landmark when the history of the recession comes to be written. The global financial crisis caused tax receipts to fall and public spending to rise. It is common ground across the political spectrum that action now has to be taken to reduce the government deficit, and everyone recognises that the incoming Government have a difficult task in choosing the right path for deficit reduction. One thing is certain: the deficit will not be reduced without a plan for growth and a focus on maintaining employment.

I am especially worried about the future for our 16 to 19 year-olds. I was born not far from here geographically into a family where the sole provider, through no fault of her own, was my mother. Although she had left school at 14, her father had made her train as a shorthand typist so that she had a skill that would be her means to support herself and her family. I also left school early, at 17, but I was one of the lucky ones. Opportunities came along which I was able to grasp. For many of today's 17 year-olds, that will not be the case. They need our help.

I know that all sides of the House share the aim of raising the educational achievement of all young people, especially for children from low-income households and disadvantaged backgrounds. This is not only critical for social justice; it is also vital for the competitiveness of the British economy. Young people have always borne the brunt of increased unemployment, and it is the same again this time. The IFS recently reported that,

“low skilled, low-educated and young workers are seeing a bigger deterioration in their job prospects than skilled and educated ones”.

That is why the education maintenance allowance was designed to encourage young people from less well-off households to participate in educational training after the school leaving age. I wish it had been around when I was 17. This allowance is no free lunch. Young people have to turn up, on time and participate fully in their learning agreements. If they do not, then they are penalised by losing their weekly payment. If they do, then a bonus is paid, linked to performance.

The Chancellor has said that the education maintenance allowance is to be replaced by “more targeted support”. I should be grateful if the Minister could provide some detail in his response today. For young people contemplating their future, it is important to know as soon as possible what that more targeted support is likely to mean. This is especially important for students who will find themselves studying in the period between the abolition of EMA in 2011 and the introduction of the raising of the participation age to 18 in 2015. For them, the future starts now, and a great number of them will need our help to achieve their full potential. In an era where some cuts are necessary, this sort of support would be one cut too far.

I should like to end by thanking the noble Lords on both sides of the House who have played formative roles in my political life. One thing I do know about the red carpet is that this is a place where old political foes can become the best of friends. And in that spirit I should like to thank the Minister for his work in the Treasury on financial regulation, when he gave invaluable advice to the then Chancellor of the Exchequer and the Labour Government. I wish him well on his return to the Treasury in his new role.