Oral Answers to Questions

Lord Redwood Excerpts

Tuesday 24th January 2012 Commons Chamber

[Mr Hoban]

The hon. Lady makes an important point, but let me be clear: as she will know, youth unemployment in her constituency peaked in December 2009—it is actually lower today than it was then. No one should be complacent about youth unemployment, but she should recognise, as the right hon. Member for South Shields (David Miliband) did, that youth unemployment is not a problem that this Government created, and that it is a long-term challenge and grew even when the economy was booming. We are taking steps—such as the youth contract and boosting the number of apprenticeship places—that will benefit every constituency in the country, including hers.

[Mr John Redwood (Wokingham) (Con)]

When will we see more of the details of the credit easing scheme and what is the Minister’s forecast of the monthly draw-down for the rest of this year?

[Mr Hoban]

We are working with banks on the details behind the national loan guarantee scheme. We have set aside £20 billion to enable the rates that are charged to small businesses to fall by up to 1%. The utilisation of the scheme will very much be driven by the demand from businesses for debt finance.

Youth Unemployment and Bank Bonuses

Lord Redwood Excerpts

Monday 23rd January 2012 Commons Chamber

[Rachel Reeves]

I will make a little progress, because we know that many Members want to speak. I will try to give way again later.

Although many of our constituents are very fearful about the future, not everyone is looking to the future with fear and trepidation—not for all the question of how their money will last until the end of the month, or whether they can afford to heat their homes and eat three meals a day. For the past week, we have been hearing stories of banks preparing to pay bonuses to a few hundred senior employees amounting to hundreds of thousands, even millions of pounds in another multi-billion pound bonus season.

The Opposition believe in rewarding hard work and encouraging enterprise that contributes to the prosperity of the economy, but this is about fairness, responsibility and proportion. It is about the difference between rewards for success and rewards for failure.

When millions of families are struggling to find work, businesses are having their loan applications turned down and banks are continuing to rely on taxpayers’ hard-earned money for their very survival, the vast majority of people in all our constituencies find the idea of such sums being paid to a small number of individuals unacceptable. People rightly feel that we did not bail out the banking system to perpetuate a business-as-usual model or to pay big bonuses when ordinary workers are losing jobs. Surely we bailed out the banks to protect the businesses and families that depend on banks serving and supporting the wider economy.

[Mr John Redwood (Wokingham) (Con)]

Will the hon. Lady explain why Labour Ministers accepted and approved such grotesque contracts for RBS, so that they now personify payment for failure?

[Rachel Reeves]

We introduced a bank bonus tax to get some money back from the banks. The Government refused to go ahead with it and, instead, gave the banks a tax cut this year. That is not acceptable, and that is what the motion is about.

While banks seemingly return to the business-as-usual model, aided and abetted by the current Government, last week the Office for National Statistics published another set of dreadful unemployment numbers. Total unemployment is now at its highest since the summer of 1994. Women’s unemployment is the highest it has been since autumn 1987. Youth unemployment is now the highest since comparable records began. The number of young people claiming jobseeker’s allowance for six months or more has doubled in just 12 months.

Those figures on their own are shocking enough and should be sufficient to end all debate and drive the Chief Secretary and the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), to urgent action. However, most worrying is the fact that, on every measure, and according to every forecast and to the Government’s Office for Budget Responsibility, unemployment is set not to fall, but to get worse.

The Office for Budget Responsibility’s projection, alongside last year’s autumn statement, showed unemployment rising to 2.8 million this year. The OECD expects unemployment to rise to 9% in 2013. If unemployment continues to rise at the rate that it has done in the past six months, it will reach 3 million this summer. The economy may well be headed back to recession—we will hear the grim reality on Wednesday.

However, it is clear that, although the situation is now perilously close to tipping point, and the Government’s failures are mounting, they could still take action. Yet since taking office in 2010, the backfiring of their attempts to cut too far and too fast has added a shocking £158 billion in extra borrowing.

Connecting Europe Facility

Lord Redwood Excerpts

Thursday 19th January 2012 Commons Chamber

[Mr Hoban]

My hon. Friend’s point is outside the topic of the debate this afternoon. He is aware of the Chancellor of the Exchequer’s comments and assurances on that matter.

As I have said, at home, we have taken tough decisions to tackle our deficit and demonstrated leadership. We expect exactly the same leadership on spending in Europe from the European Commission, but whether on the annual budget or the financial framework, such leadership has been completely lacking. Instead of finding ways to cut spending or to drive better value for money, the Commission, through the connecting Europe facility, proposes to increase spending on transport, energy infrastructure and telecommunications by 400% as part of a multi-annual financial framework that increases payments by more than €100 billion over its duration.

Just as at home, where we have prioritised spending on growth while tackling the deficit, the Government would like a higher proportion of a restrained EU budget spent to promote sustainable growth. The proposal does not achieve that objective. We are arguing that spending should be lower, and that what spending remains should be focused on areas that offer genuine added value across the EU.

[Mr John Redwood (Wokingham) (Con)]

A number of people who have written to me condemning the High Speed 2 project have alleged that Britain has to build it under the EU network ruling. Will the Minister confirm that Britain remains free to make its own decision on whether to have High Speed 2?

[Mr Hoban]

My right hon. Friend is, as is often the case, spot on. There is no requirement under the proposal for us to build High Speed 2.

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[Chris Leslie]

It is important that the European Commission, and the eurozone in particular, focus on getting economic growth. My simple point is that it is not happening. An austerity-only approach is being taken, but it is not working, just as it is not working in this country. Of course we have to ensure that we reduce the proposed budget increases—we do not disagree with that—but there are ways to stimulate an economy within that envelope, including through a phased approach towards the European spending review process. That is my point. It is the glaring omission from the Government’s plans so far.

[Mr Redwood]

Will the shadow Minister bring us up to date with Labour thinking on the IMF having more money to lend to save the euro? Does Labour think that it would be a good idea because it would promote growth, or a bad idea because it would damage the British budget?

[Chris Leslie]

We are all waiting to see what proposals come forward. The Chancellor has said that he will come to Parliament and let us have a say on many of these things. Indeed, perhaps the Minister can help us out with the timing of those proposals—[Interruption.] If he would care to listen to my questions, perhaps he could also tell us when we will get the Bill to enact the European financial stabilisation mechanism permanent bail-out fund. We are all waiting for that. The eurozone countries are supposed to be rolling together the European financial stability facility and the EFSM into that permanent arrangement, but as I understand it we will have to legislate for that. Will he tell us when that will happen, because it is related to this question about potential IMF funding? We need clarity from the Government—and from the IMF as well.

Banking Commission Report

Lord Redwood Excerpts

Monday 19th December 2011 Commons Chamber

[Mr John Redwood (Wokingham) (Con)]

Will the Chancellor take urgent action with RBS to create three new competitor banks from its assets and liabilities so that we can have real competition and more promotion of growth?

[Mr Osborne]

I have set out our view as the largest shareholder of RBS. We have to be careful of the shadow director rules and the like, but I was very clear in my statement that we expect and hope to see RBS shrink the size of its investment bank and focus on the UK and its UK customers. That is our proposal as an RBS shareholder. Of course, the question of how to dispose of our shares in RBS, which might arise in future, is one that we will address at the time.

Northern Rock

Lord Redwood Excerpts

Monday 21st November 2011 Commons Chamber

[Mr Hoban]

Clearly, there are two parts to the Northern Rock business that the previous Government nationalised: the business that we are selling—Northern Rock plc—and Northern Rock Asset Management, which holds a lot of the old mortgage book. The previous Prime Minister assured the House that both would make a profit for the taxpayer.

[Mr John Redwood (Wokingham) (Con)]

I hope that Sir Richard Branson can turn this business into a profit-making, growing business, generating more jobs and paying some tax. Will the Minister remind us how much this bank has lost in state hands, which accounts for the fact that it is no longer worth what the Labour party paid for it?

[Mr Hoban]

The previous Government injected £1.4 billion-worth of capital into Northern Rock plc. That has gone down to £1.2 billion because of the losses incurred, and we expect further losses in this financial year and in the next. The challenge for Virgin is to use the platform it will have in Gosforth to grow the business, attract new customers and use its reputation for challenging incumbents.

European Budgets 2014 to 2020

Lord Redwood Excerpts

Tuesday 8th November 2011 Commons Chamber

[Mr Hoban]

No, let me continue.

The best way to restrain EU annual budgets is to set tough multi-annual framework ceilings. That is why, at the European Council in October 2010, member states agreed that the

“forthcoming Multiannual Financial Framework must reflect consolidation efforts being made by Member States to bring deficit and debt onto a more sustainable path”.

Rather than following that path, however, the Commission has meekly bowed to pressure from the European Parliament to increase the budget, thereby returning to the extravagance and irresponsible spending that sowed the seeds of the current global economic crisis. Just as we cannot accept the Commission’s 2012 budget, we also cannot accept the Commission’s proposal, as set out on 29 June, to increase the multi-annual framework budget for 2014 to 2020 by 11%. Such an increase is incompatible with the tough decisions being taken in the United Kingdom and in countries across Europe to cut spending.

Instead of consolidation, the Commission proposes expansion. It has ignored the calls made in December last year by the UK, France and Germany for a real-terms freeze in spending. The Commission claims to have done as we have asked, but let me make it absolutely clear to the House that it has not. On average, the spend in each year of the next framework would be about €14 billion higher than it is today.

[Mr John Redwood (Wokingham) (Con)]

Given that the Government are now studying the powers and duties that can be brought back to the House for national and local decision, surely we should be taking big lumps out of this budget? If, for example, we repatriated agriculture, industrial aid and regional aid, we could cut the budget by two thirds. I think that the members of the public to whom I answer would be very pleased with that.

[Mr Hoban]

My right hon. Friend makes an important point. In parallel to the debate about the ceilings for the budgetary framework over the course of the period between 2014 and 2020, debates are also taking place on the individual lines of expenditure within the EU budget, and we are proposing significant reductions in cost to underpin our strategy of curbing overall spending by the EU.

--- Later in debate ---

[Chris Leslie]

I understand my right hon. Friend’s frustrations, but I really do not think that the proposal on the table from the Commission would achieve the outcomes that he or I seek. We have to make concerted efforts to broker a deal where any FTT applies in any of the world’s big financial centres, all of which by the way have much to gain from a new and reliable revenue stream that supports jobs, growth and the developing world.

The Commission’s proposal falls short, especially because of its intended destination for the revenue, but I think that the difference my right hon. Friend seeks is this: we felt that there was a real window of opportunity to steer the agenda on a financial transaction tax and to persuade other countries that it was something seriously worth considering, but our Chancellor is out there at the ECOFIN meeting today, resisting under all circumstances. Indeed, he wrote a private letter to bankers the other day in which he indicated that he was not in favour of it at all—even though that contradicts some of his statements in this place. He is wrong to block wider discussion among the G20 and beyond.

The BBC’s Nick Robinson reported this lunchtime that our Chancellor asked what was the point in even having a conversation about the financial transaction tax and, apparently, whether it was

“the best way to spend our time”.

It is important that we address those issues, because the Government’s weak and defeatist attitude is an abdication of leadership and a total abandonment of the gains made for the cause at the G20 meeting in 2009. It is time that Britain stepped up to the plate and showed the leadership needed to broker a better deal by being open to the idea that it is possible to win the argument for a different approach. That is why we call on the Government to engage internationally—beyond the EU proposals alone.

The second major proposal in this multi-annual financial framework is for the Commission to change the correction mechanisms for countries that are the most significant net contributors to the EU. In other words, it proposes to end the UK’s permanent rebate. The rebate returns about two thirds of the difference between the UK’s contribution to the EU and the money we receive back. Let us be absolutely clear: the Commission’s proposals are totally unacceptable. Of all the 27 countries, only Germany is a higher net contributor to the EU budget than the UK, and we have the lowest per capita receipts from it. The common agricultural policy is a far bigger distortion of the EU budget than any correction mechanism such as the UK rebate.

This is a key test for the Prime Minister. He needs to put up a strong defence of our rebate if the language that he uses here in the House is to be matched by his deeds in those negotiations.

[Mr Redwood]

Will the hon. Gentleman give way?

[Chris Leslie]

Everybody will be watching closely, including the right hon. Gentleman, to whom I am happy to give way.

[Mr Redwood]

What promises did the previous Prime Minister but one receive when he gave away a chunk of our rebate? I thought we were promised a reduction in agricultural spending, which would be very welcome.

[Chris Leslie]

I was not a Member at the time to which the right hon. Gentleman refers, but it is true that there have been changes to the UK rebate, although not to the majority of it. My understanding is that, in terms of money returned, the total amount of rebate has actually gone up, with €5.8 billion in the previous MFF round compared with €2.8 billion before, so the rebate is still a very significant gain for the UK.

There were changes to the common agricultural policy, although—I accept—not as many as people would have liked, but until we have further proposals from the Commission on reforming the common agricultural policy I am certainly not going to get into the business of urging the Minister to change the UK rebate. It is very important that the Government put up a defence of the current position and, indeed, try harder to engage with further proposals on the CAP. That is by far the bigger distortion. We need to pursue a stronger reform agenda and to have a CAP reform that is fairer to small farmers but does not lavish as much on wealthier players in the wealthiest countries. We need to tackle that anomaly as it is an outdated relic.

I am grateful to Business for New Europe’s pamphlet entitled “Rethinking the EU Budget,” which suggests some very important changes to EU competitiveness deficiencies, such as boosting research and development. It is also important that the Minister address the deficiencies in the structural funds. Few of those are helping to boost growth, when they ought to be getting investment moving into the economy. Above all, the MFF ought to contain far greater emphasis on a strategy for jobs and growth, where we know the Government have a blind spot.

The Commission and the European Parliament also need reminding that, without growth, we cannot solve the debt crisis, the banking crisis or the jobs crisis. Energy infrastructure projects, high-speed broadband and transport link improvements could all be brought forward within the MFF envelope and prioritised to boost employment and economic activity. [Interruption.] The Minister shouts from a sedentary position that that involves more spending, but we are talking about within the limitations of the budget. We do not wish to see the increases proposed by the Commission. The Minister should be out there arguing for a proper strategy for growth, and his failure to do so betrays Ministers’ and the Treasury’s blind spot on these issues.

The motion before us tonight talks tough on some of these issues and we will not oppose it, but it is important that this time Ministers do not flunk the tests when they get into the negotiations.

Eurozone Crisis

Lord Redwood Excerpts

Thursday 3rd November 2011 Commons Chamber

[Mr Hoban]

We have always accepted that the remorseless logic of monetary union is closer fiscal integration. I believe that this crisis demonstrates that monetary union needs to be underpinned by closer fiscal integration. That is not a new expression on my part; I said nothing novel; the Government have taken this view for some time. We need to ensure that the institutional arrangements are in place to support that. What I think hon. Members on all sides of the House want is a stable eurozone because it will contribute towards economic recovery in the UK.

[Mr John Redwood (Wokingham) (Con)]

As joining a single currency is like taking out a joint bank account with the neighbours, when does the Minister think the neighbours will agree how much overdraft they can afford and who gets to pay the bill for it?

[Mr Hoban]

My right hon. Friend will recognise that the agreement that was reached in the European Council last week and then later in the summit of eurozone Governments was on what size the bail-out for Greece should be and what the ring fence should be around that. We welcome last week’s announcement. What is very clear, however, is that more work needs to be done on those questions—particularly what the size of the overdraft will be and who will pay for it. We need eurozone leaders to move that forward as quickly as possible.

Oral Answers to Questions

Lord Redwood Excerpts

Tuesday 1st November 2011 Commons Chamber

[Mr Osborne]

As I was saying, this morning we had the news that our GDP is growing by 0.5%—[Hon. Members: “Ooh!”] Well, GDP fell by about 6% when Labour was in office and when the right hon. Member for Morley and Outwood (Ed Balls) was advising the last Prime Minister. If we look at growth in France or Germany, the most recent figures show that it was either negative or growing at about 0.1%. The instability in the eurozone and the uncertainty in the world are having an effect on all western economies at the moment, and we have to sort that out, but that is not an excuse for Britain not to deal with its problems, which were created by that lot sitting over there.

[Mr John Redwood (Wokingham) (Con)]

Will my right hon. Friend ensure, if he is not using our veto against more fiscal integration, that Britain gets something out of the deal? Do we not need the right to opt out of any past or future EU measure that could damage jobs and prosperity at home?

[Mr Osborne]

We have already extracted a price for the European Stability Mechanism treaty that the eurozone wants to put forward by getting ourselves out of the EU bail-out mechanism to which the last Government had committed us. We are working to keep the increase in the EU budget to a real freeze. In other words, we have, I think, proved in office that we can extract important concessions and in the case of the EU bail-out fund we have actually taken a power back to Britain. That will be the approach we take to future discussions and negotiations—putting Britain’s national interest first.

Jobs and Growth

Lord Redwood Excerpts

Wednesday 12th October 2011 Commons Chamber

[Mr John Redwood (Wokingham) (Con)]

I am grateful to the Chancellor for giving way. I welcome the work that he and his colleagues are doing on a growth strategy, which he said is needed. A big component of that is the £75 billion of quantitative easing. We are also told that there will be credit easing to get the money into private companies. Will that be on top of the £75 billion injection or within it?

[Mr Osborne]

It will be on top of the £75 billion. I have not gone through the QE and credit easing policies in detail today because I went through them in the House on Monday, but I would be happy to do so if Members like. QE is an operation undertaken by the Bank of England under the procedures established by my predecessor. The credit easing options that we are looking at involve the Treasury—or rather the Government—using its balance sheet to get money to small businesses either by purchasing securitised small loans, purchasing mid-cap company bonds in the bond market or issuing guarantees through the banking system. All those things currently happen in Britain, but on a very small scale. Our intention is greatly to increase them, and I will set out the proposals in November.

Eurozone

Lord Redwood Excerpts

Monday 10th October 2011 Commons Chamber

[Mr Osborne]

I welcome the shadow Chancellor to his place. When I heard that the Labour leadership were clearing out their shadow Treasury Front-Bench team today, I was worried that the Conservative party would lose its greatest electoral asset, but it is great to see him still in his place.

Let me address the right hon. Gentleman’s specific questions. First, he asked about the exposures to eurozone nations. The FSA publishes the appropriate information on that, on the exposures overall to peripheral economies and to other eurozone banks, and it is appropriate that it does so. On RBS, I touched specifically on that issue, because there has been speculation, but let me make it very clear: in our assessment, and in that of the FSA, RBS is well capitalised and liquid.

On the eurozone facility, let me answer the right hon. Gentleman’s specific question. I believe that it should be broad in application, as well as deeper in funds, and undertake as many operations as is required. He talks about meetings, but let me reassure him that I have been to many, many meetings over the past few weeks. There has not been a shortage of meetings; there has been a lack of leadership from eurozone leaders in those meetings. But, that is changing, and that is very welcome.

Frankly, it is absolutely astonishing that a shadow Chancellor, who led his entire party through the Division Lobby in July to vote against the increase in IMF resources initiated at the London summit by the previous Prime Minister, should accuse us of a lack of leadership in the international community. Let us just imagine if that vote had been won—presumably the right hon. Gentleman cast his vote hoping to win the Division—we, alone in the world, I think, would not be ratifying the increase in IMF resources, and I would have to turn up at those meetings and explain, “I am very sorry, but the British House of Commons does not want to use the Bretton Woods institutions to help us with one of the greatest financial crises of the century.” As I say, his lectures on leadership come a little thin, and perhaps he should practise what he preaches.

I end by saying this. We will have our debate on the British economy, but it would be hard to imagine the shadow Chancellor coming back from the Labour conference with his party’s economic credibility even lower than it was before he began the conference season, but there is still no recognition from him that his Government spent too much money, ran up a big budget deficit when times were good and spent more money than they had available—even though that is acknowledged by Tony Blair, who was Prime Minister at the time. The shadow Chancellor still thinks that the answer to a debt crisis is to spend more money. His five-point plan is, of course, a complete abandonment of the plan set out by the last Chancellor of the Exchequer, to which, as I understood it, the Labour party was still in theory committed.

When we listen to the combined speeches of the shadow Chancellor and the Leader of the Opposition, they seem to amount to more regulation and more tax on businesses—indeed, they confirm the Labour party’s reputation as the anti-business party. The shadow Chancellor has managed to get the Labour party into an extraordinary position for an Opposition—of complete irrelevance: irrelevant at home and irrelevant abroad. The leader of the Labour party asked a good question—“Why would you bring Fred Goodwin back to run the banks?” But why on earth would we bring the shadow Chancellor back to run the British economy?

[Mr John Redwood (Wokingham) (Con)]

When the Chancellor gave his authority to create another £75 billion of money, what forecast was he given about the impact that that will have in the next couple of years on the price level and therefore on real incomes? So far it has been high inflation that has clobbered real incomes and depressed demand.

[Mr Osborne]

As my right hon. Friend will know, in its most recent quarterly bulletin, the Bank of England did an assessment of the impact that the previous round of quantitative easing had had; it thought that that had increased GDP by 1.5% to 2%, but that it had also increased inflation. However, the Bank was very clear that in recommending or requesting further quantitative easing, it was still aiming to hit its inflation target in the required two-year period.