Oral Answers to Questions

Jonathan Reynolds Excerpts

Tuesday 1st December 2015 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

5. What assessment he has made of the potential effect on public finances of halving the disabilities employment gap.

[The Chief Secretary to the Treasury (Greg Hands)]

The Government are committed to halving the disability employment gap, which on current figures would mean helping about 1 million extra people to find work. The impact of meeting that on the public finances depends on factors that we cannot predict, such as what people are likely to be paid. However, this is about more than the fiscal impact. The Government want to help disabled people benefit from the security of employment, which is why we have announced a real-terms funding increase to help people with disabilities and health conditions to find work.

[Jonathan Reynolds]

I am pleased to say that a delegation of young people with autism is visiting Parliament today to discuss how we can improve the transition from school to work for people with autism. Does the Chief Secretary agree that improving the routes into work for young people with autism and other disabilities will be a great thing for our national finances but also for the young people themselves, allowing them to participate in the workforce and lead the independent lives that they want?

[Greg Hands]

I join the hon. Gentleman in welcoming so many disabled people to Parliament today, and I agree with him about the importance of doing more to help disabled people into work. That is why we extended the access to work scheme and launched the Disability Confident scheme, to ensure that employers better understand the benefits of recruiting and retaining disabled workers, the specialist employability support and the Work and Health programme, which we launched this year.

The Economy

Jonathan Reynolds Excerpts

Wednesday 18th November 2015 Commons Chamber

[Geraint Davies]

rose—

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

rose—

[Harriett Baldwin]

I will not give way because I want to make a bit of progress and take each of the points in the motion in turn.

I am delighted that the Labour party has remembered to mention the deficit in the motion, although it is not the budget deficit but the current account deficit. Let me remind the House about progress on the budget deficit which, as a share of the economy, has fallen by more than half from its peak in 2009-10 to 4.9% at the end of last year. We forecast that we will be in surplus by the end of this Parliament. That is what the British people asked for, and that is what we are doing.

[Jonathan Reynolds]

rose—

[Harriett Baldwin]

Will the hon. Gentleman welcome progress on the deficit and suggest further progress?

[Jonathan Reynolds]

I love being given way to with caveats based on what I might say in my intervention. Let me ask the Minister a serious point in all this silliness. Since the end of the second world war, this country has been in surplus for only 12 financial years. Of those 12 years, 10 have had Labour Governments. Conservative Governments have hardly ever run a surplus. Is the Minister telling us that the Governments of Thatcher, Macmillan, Anthony Eden and Churchill were all spendthrift and socialist, or will she be a little more serious when addressing these issues?

[Harriett Baldwin]

The hon. Gentleman is right to say that this is a serious issue, and I hope that, as one of the more moderate and sensible members of his party, he will be able to convince those on the Labour Front Bench that this is an important issue to tackle.

The Opposition motion also mentions tax credits.

Charter for Budget Responsibility

Jonathan Reynolds Excerpts

Wednesday 14th October 2015 Commons Chamber

[John McDonnell]

I am sorry for being so ungallant to the hon. and learned Lady and I apologise to her for that, but I have explained three times already.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

We are getting to the crux of this debate, which is that this fiscal charter is intellectually moronic. It essentially commits this House to never borrowing to invest, even when the cost-benefit analysis of that investment is such that the country would benefit greatly. That is why it has not one serious economist backing it, other than the self-styled experts on the Government Benches.

[John McDonnell]

I could not have said it better myself. Can we move on?

The Chancellor may not appreciate these economic points, but I believe many of his advisers do. That is why there is a sizeable get-out clause for the charter rules not to apply outside normal times when there is a significant negative shock to the UK economy. Not only are the social consequences of this programme devastating, but the scale of the cuts we are witnessing represents a false economy. They jeopardise the long-term economic prosperity of our country. It is a false economy to cut adult social care when the burden is shifted on to hospitals and accident and emergency departments. It is a false economy to pursue an ideological sell-off of council housing eventually to put up the rents and eventually increase housing benefit. It is a false economy, ironically, that when this Government came to office there were 70,000 people at HMRC and within the next year that is planned to fall to 52,000—a cut of more than 25% in the number of tax-collecting staff, when HMRC says that tax evasion is as high as £10 billion a year. But the worst—

--- Later in debate ---

[Mike Wood (Dudley South) (Con)]

It is sometimes said that the definition of insanity is doing something over and over again and expecting a different result. On 7 May, the voters decided that it would be insane to let another Labour Government repeat the mistakes that the previous Labour Government made, which, at the very least, seriously worsened the recession. They borrowed too much in order to spend too much.

The public recognise what Labour Front Benchers seek to deny: that we cannot safeguard people’s jobs and mortgages without a secure and stable economy; that we cannot go on spending far more than we earn for long without getting into a lot of trouble; and that there is absolutely nothing progressive about saddling our children and grandchildren with enormous debts over which they have no say.

That is why this evening’s vote is a basic test of Labour’s economic credibility. It is not a test of the shadow Chancellor—those results are already in and they do not look good. It is a test for the remaining moderate Members on the Labour Benches: those Members who say that they have listened to what the voters said so clearly in May and learned from it; those Members who agree with the reported comments of my friend and constituent, the hon. Member for Dudley North (Ian Austin), who is not in his place, that it is time that the hon. Member for Islington North (Jeremy Corbyn) started acting like the Leader of the Opposition, rather than a student union president; and even those Members—perhaps there are some—who remember why Tony Blair is still the only Labour leader in my lifetime to win a general election. If they fail that test, they will be failing to support this self-evidently sensible and moderate measure.

[Jonathan Reynolds]

The hon. Gentleman will be aware from his research for his speech that no Conservative Government in history have ever hit the target being presented to Parliament tonight. None of those historical Conservative Governments ran surpluses according to this fiscal charter. Were the Governments of Harold Macmillan and Margaret Thatcher not economically credible?

[Mike Wood]

I am not sure that even needs dignifying with a response. We fought the election on having a balanced budget by 2019-20, as announced in the Budget, and a system with a fiscal mandate that puts us in line with many of the most successful economies around the world.

Oral Answers to Questions

Jonathan Reynolds Excerpts

Tuesday 21st July 2015 Commons Chamber

[Harriett Baldwin]

My hon. Friend is an example to Opposition Members in the consistency of his political viewpoint. He is right to point out that the euro area has indeed been sluggish. One of the reasons we are experiencing slow growth in the euro area is that our goods exports have been falling to that part of the world. That is why it is so important that we refocus British businesses on exporting to some of the faster growing parts of the world.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

16. That was an extraordinarily complacent answer from the Minister. On this Chancellor’s watch, the UK’s current account deficit has become the largest of any advanced economy, and the value of UK exports is largely what it was in 2010, when the Government came to power. Crucially, that cannot be put down to the sluggishness of the eurozone, because exports to non-eurozone countries have been equally static, and the figure the Minister gave for China reflects demand in the Chinese economy. Does she accept that whatever the strategies the Government have deployed so far, they simply have not worked?

[Harriett Baldwin]

I am glad that the hon. Gentleman shares my view that it is very important for us to help British businesses to export more. We have some fantastic British businesses, and many of them have started to export. UKTI has doubled the number of companies that it has helped in the past five years. He is absolutely right that we should aim to be very ambitious in this area. I would like to point out that export volumes outside the EU have actually grown by 24% since the first quarter of 2008.

--- Later in debate ---

[Mr Osborne]

The short answer is yes. All those vital projects for Somerset and the south-west are included in a massive investment in the transport of the south-west.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

T7. How can the Chancellor justify making people who go out to work worse off while he spends £1 billion on cutting inheritance tax for people who are already wealthy? That is not rewarding hard working; it is rewarding the fortunate few.

[Mr Osborne]

We have increased the personal allowance, taking low-paid people out of tax, and we are now introducing a national living wage, but we make no apology for supporting aspiration and the human instinct that people have to pass something on to their children. If the Labour party is against that as well, it really is moving backwards rather than forwards.

Budget Resolutions and Economic Situation

Jonathan Reynolds Excerpts

Tuesday 14th July 2015 Commons Chamber

[Sajid Javid]

No one wants to see any company close in Britain, and no one wants to see any of the job losses that would potentially come alongside that. What is most important when changes in the economy affect businesses is a growing economy so that businesses are growing at record rates. We have record high growth as a country among the G7, which is exactly the sort of environment we want so that other companies can continue to grow alongside.

The national living wage will put more money in customers’ pockets. This will deliver a real boost to businesses right across the country, as eight out of 10 people who will see their pay rise live outside London and the south-east of England. These measures will all support growing, dynamic businesses, as we work with them to tackle the economic challenge of our time.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

The right hon. Gentleman has made an intellectual case for what he calls the national living wage, which most people would call a rise in the national minimum wage. Why did the Government not choose to bring in the national living wage? Surely the case he has made is for the national living wage.

[Sajid Javid]

Perhaps the hon. Gentleman missed last week’s Budget and what the Chancellor said. The Chancellor did introduce the national living wage. Of course it will be phased in over five years, but by 2020 it will be equal to at least 60% of median earnings. It is the national living wage.

--- Later in debate ---

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

The Budget we have just seen was a masterclass in presentation, but a poor one for facing up to the real problems of the British economy. Before we begin, it is worth recalling the recent history of these debates and the economic state of the nation. Both major political parties went into the 2008 financial crisis with identical spending plans, because this Chancellor had pledged to match the Labour Government’s spending plans of the time. The UK’s banking regulation comprehensively failed in 2008, but then so did the system of banking regulation in nearly every other country. Both parties then backed the bail-out of the banks, to protect the people from the banks’ mistakes.

The only other major point of difference between the parties was that on our side we favoured a stimulus, a decision replicated in most other countries at the time, and which I believe was correct, but which the present Chancellor and the Conservatives opposed. The Chancellor also made a serious error of judgment in opposing the nationalisation of Northern Rock.

It is worth saying all that because I believe that the standard of debate on the economy in the last Parliament was fairly poor, given that it was the major issue of that Parliament. The partisanship of Government Front Benchers and Back Benchers reached moronic levels at times, reducing serious questions about the prosperity of the UK to slogans with no real content. I hope that we will see a change in this Parliament.

This Budget has proved one thing above all—there really is no long-term economic plan for this country. Deficit elimination has been put back a further year, which is no surprise to any of us who were here in the last Parliament, because that is what happened every time the Chancellor gave us one of his set-piece presentations.

[James Cartlidge (South Suffolk) (Con)]

Will the hon. Gentleman give way?

[Jonathan Reynolds]

I will not give way, because of the direction from the Chair. I hope that the hon. Gentleman will forgive me.

It is surely worth noting that the Chancellor has now failed to match either the Darling plan or the original Balls plan for deficit reduction, mainly because his emergency Budget in the last Parliament damaged the economy so much. We are now debating an emergency Budget in this Parliament, and let me say that there are some good things in it: the apprenticeship levy; the super-tax on bank profits; the reforms to the non-dom rules, creating just one tax regime no matter how wealthy someone is; and of course the increase in the minimum wage. That is all good social-democratic stuff. I hope we will see those commitments maintained, and that we can soon implement the actual living wage, now that the intellectual argument for it has been so comprehensively won by those of us on the left. I also have no hesitation in welcoming the sustained fall in the unemployment rate in the last few years. Like most people, I am concerned about the relatively poor pay and conditions of some of those jobs—that is a very valid point—but work is a very good thing and the more people who are in it, the better.

However, I put it to the House that if we look seriously through the Chancellor’s presentation, we find some fundamental problems with the British economy that he does not seem eager to address. For instance, we are a country with a terrible current account deficit. We simply do not export enough, but even more worryingly we do not have many sectors of the economy that look as though they could substantially increase exports. There have been many warm words from the Government on this matter, but there has been little improvement over the past three to four years, and the sectors that could provide growth, such as the green economy, have been consistently undermined. We need a proper industrial strategy and a smart interventionist state, with the kind of policies pioneered by the Labour Government during the financial crisis, to address that.

We also have poor productivity, as has been fairly well documented, yet the Government are pausing key infrastructure upgrades, such as the electrification of the trans-Pennine rail line through Stalybridge and, even worse, are making it even more expensive for people to go to university and get a degree to improve their skills.

The replacement of university grants with loans is one of the changes that I absolutely abhor. Of course, students should make a contribution—that issue is now settled—but £50,000 of debt for a three-year degree is surely far too high. I do not feel that Government MPs really understand what that means. It is effectively a 3% rise in income tax for some young people for the first few decades of their working lives. At the same time, they face much higher pension contributions and housing costs than their parents’ generation. There are limits to how hard those people can be squeezed and choosing to squeeze young people simply because older people are more likely to vote is the height of short-term political cynicism.

Housing is surely the most dysfunctional part of our economy. Whether someone is on the right or the left of British politics, how can it make sense that buying a house as an asset will always be a better investment than starting a business or investing in their skills and training? Housing costs for British workers are absurd compared with those in other European countries and we must not only build more houses but start to tax assets more and income less.

That brings me to the part of the Budget that I completely oppose, which is the inheritance tax cut. To put it quite simply, if somebody has mediocre talents but wealthy parents, this is most certainly a Budget for them. In his speech, the Chancellor said that wanting to leave a house worth £1 million to one’s children was a thing that the left would never understand. My hon. Friend the Member for Blaydon (Mr Anderson) also made this point. What I say back to the Chancellor is that what the right needs to understand is the anger and resentment of hard-working and talented people from modest backgrounds who find their paths regularly blocked by the less able but more gilded sons and daughters of the very wealthy. I believe that even right-wingers should oppose inheritance tax cuts on grounds of meritocracy and instead support a society in which hard work and ability make a difference to one’s life, not inherited wealth.

We have had much talk of tax credits today. There is some evidence that in some sectors and with some employers, such as the big supermarkets, tax credits have subsidised employers, but the scale of what the Government are doing is extremely worrying. Families with two earners but a modest income and with two children face eye-watering reductions in their household budgets. I would certainly notice if someone took more than £2,000 a year from my household income and there needs to be some acknowledgement from the Government that this will cause real pain. In addition, and crucially, it could also cause a disincentive to go out to work. One of the most compelling reasons for the tax credit system in the first place was that it made work pay. Tax credits also served as an incentive to hire and there could be a negative affect on employment figures as a result of the changes.

One of the Government’s plans that I want to succeed is the northern powerhouse initiative. I must admit that the branding of the policy amuses me somewhat as when I was a teenager growing up in the north-east, the Northern Powerhouse was the name of the biggest gay club in Newcastle, although I am sure that the Chancellor did not mean to name his policy after it. The premise behind the policy is strong. As a country, we are far too geographically concentrated—much more so than comparative European nations—to the detriment of both north and south. The centralising of the British state has not just led to poor decision making but has, in my view, infantilised the great northern cities that were once the masters of their own destiny and the drivers of British prosperity. The Government must be aware that there is a great deal of cynicism in the north about this plan, which has been compounded by the recent pause in the rail electrification programme. If the Government want to show that they are serious about the policy, they need not just warm words but an announcement and some progress in the months ahead. I for one would be happy to work with them to make that happen.

We have a Chancellor whose political skills are largely unmatched but whose economic credentials for promoting the national interest are much more questionable. I hope that in this Parliament and in subsequent Budgets we will start to see a much more effective focus on the real economic problems our country faces, which I believe can be overcome. In all seriousness, I believe that in my lifetime the UK could become the biggest economy in Europe and in doing so could create a society in which wealth and opportunity are much more readily available and much more widely shared. The Budget did not contribute to that and in some ways made it even harder to achieve, and I hope that we will start to see better in the future.

Greece

Jonathan Reynolds Excerpts

Monday 29th June 2015 Commons Chamber

[Mr Osborne]

I completely respect my hon. Friend’s opinion, but it is better from my position to say that it is for the Greek people to decide in that referendum. Of course, whatever the outcome, my hon. Friend is absolutely right to say that we are there as a friend of Greece to help it at this troubled time whatever course it chooses to take.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Successive Greek Governments must take responsibility for failing to deliver a sufficiently competitive Greek economy, but does the Chancellor agree that Greece’s creditors need to look at their own behaviour, too? The bail-out five years ago has fundamentally left Greece less able to pay its debts than beforehand. Surely the IMF and the European Commission must learn those lessons, too.

[Mr Osborne]

I think that the European Union in general has not taken sufficient trouble to make the European economy more competitive, less regulatory and a place where enterprise can flourish and private sector jobs can be created. That is one of the principal arguments we are having at the moment in European Councils.