Alison McGovern
Main Page: Alison McGovern (Labour - Birkenhead)
Grant Shapps
I will come in a moment to the RDAs that were set up by Lord Prescott. In the meantime, I can tell the right hon. Gentleman that this is a new £1 billion—the regional development fund £1 billion announced in last week’s Budget and designed to help— [Interruption.] Labour Members do not want to hear about this, but it is designed to help in exactly the kind of constituencies that they have come here today to complain are being underfunded. They do not want to know that this coalition Government are doing something to help those areas. That is the truth.
We live in grave financial times, and the previous Government bequeathed a scorched-earth policy. As Labour’s departing Chief Secretary declared, “I’m afraid there’s no money left. Good luck.” [Interruption.] They do not want to hear that either, but it was what the note said, and it also happened to be true.
We inherited spending commitments funded by a litany of IOUs scrawled on the back of fag packets and a toxic legacy of debt from an Administration who went on a spending spree with the nation’s credit card. Our most immediate priority is therefore to reduce the nation’s chronic public spending deficit to pave the way for economic recovery.
Alison McGovern (Wirral South) (Lab)
The hon. Gentleman describes again this picture of deals scrawled on the back of fag packets. Would he like to make a comment to my constituents in Wirral who work for companies that spent a great deal of time working hand in glove with the RDA and the Government to protect our local economy and have been thrown into disarray by the policy being made on the hoof by the new Government? I will listen to anything the Minister has to say that will help us protect our local economy, and I will be grateful for his comments.
Grant Shapps
I welcome the hon. Lady’s intervention. She was not here in the last Parliament, but had she been she might have read our green paper, which describes in detail our plans for the RDAs. Labour Members seem to think that when there is a change of Government, policies should just roll on even if they have not worked. The RDAs were a case in point, of policies that cost a lot of money and got us nowhere.
The prospect of paying £70 billion in debt interest is of deep concern, but apparently not on the Opposition Benches, where it is as if the money has not run out, the party is not over and we can just carry on spending imaginary funds. That £70 billion in debt repayments is more money than the council tax, business rates, stamp duty and the inheritance tax collect put together. That is the size of the deficit we are up against. So we need to tighten our belts. Ministers are cutting their pay, and it is also fair to ask local authorities to pay their part towards the £6.2 billion public sector savings required this year.
John Hemming
One has to make judgments on the time scale based on the effect within the markets. We are not talking about paying off the debt over five years. There will still be net borrowing in the fifth year.
Alison McGovern
Will the hon. Gentleman comment on how effective we will be in paying back the deficit, making these cuts in-year and cutting programmes to which commitments had already been made? Surely that is waste.
John Hemming
First, there needs to be an understanding of terms, because I heard the phrase, “paying back the deficit”. However, the deficit is the forecast difference between income and expenditure in the financial year, the debt is the amount of money that the country as a whole has borrowed, and there is often a lot of confusion between the two figures. This year, if we borrow another £150 billion, that will be added to the debt, and next year, if we borrow some more, that too will be added to the debt. Although we are talking about reducing the debt during this Parliament as a proportion of gross domestic product, our financial strategy does not talk about paying back the debt in cash terms. In fact, at the end of this Parliament we will end up with a higher level of debt, so in comparison with Sweden we cannot pay it back. We would like to do so, but we cannot do things that quickly.
We have to make people confident that the country is solvent. The country could be liquid at this stage without any great difficulty, but we have to make people confident that it is solvent and capable of paying back the debt so that the interest is paid. We are not paying back the deficit, however. The deficit is the amount borrowed each year. [Interruption.] I have another four minutes and am quite happy to explain to the Labour party the basics of finance, because there is a lot of confusion about debt and deficit. “Deficit” is the amount of money borrowed each year on a net basis—[Interruption.] I shall get through to Opposition Members at some stage.
Alison McGovern
I really do understand the difference between debt and deficit, but will the hon. Gentleman explain how the waste of cutting programmes in-year will help to reduce the deficit?
John Hemming
That will reduce the deficit because we will spend, and therefore, have to borrow, less money this year. That is not complicated. If we spend less money, we do not have to borrow as much, because the money that we spend has to be borrowed on the gilts market. It would be nice if the reduction were done more cost-effectively at times, but £6 billion is not so great in comparison with the overall deficit. It is appalling for local authorities to pretend that they did not know that cuts were coming down the track, that the country had a major financial problem and that they had to do something. There will be difficulties, but Total Place is part of the solution rather than the problem, and there is no question but that we have to do something.
In the past I have explained how, through various regulations, the people who go round and wash people’s feet are different from those who go round and cut their toenails, because they have to have different qualifications. That is not an efficient way of providing public services. If, through Total Place, the same person can go round and wash people’s feet and cut their toenails, that will be more cost-effective and involve less travel time—[Interruption.] The hon. Member for Nottingham East (Chris Leslie) should make an intervention if he wants to speak.
Alison McGovern (Wirral South) (Lab)
I welcome you to the Chair, Madam Deputy Speaker.
I want to comment on two aspects of local government cuts that will affect the residents I represent in Wirral. I cannot claim to have as much experience of local government as some hon. Members, but I served as a local councillor for four years, which taught me a great deal about the impact that the cuts will have. I would like to bring that experience to the debate. I want to talk about employment in Wirral, our sense of place and the effect of the cuts on our localities.
In Merseyside, the future jobs fund helped 2,800 people find work. The impact of that cannot be underestimated. The employment picture in Merseyside, including Wirral, has historically been fragile. It was important that the Government stepped in during the downturn to help protect our position.
Richard Harrington (Watford) (Con)
Would the hon. Lady like to comment on my research in my constituency, which found that the future jobs fund provided many people with short-term activities, but few long-term jobs afterwards?
Alison McGovern
I thank the hon. Gentleman for his intervention, and I would like to comment on it. It is too early to say, but I can comment from my own experience of meeting people—young people, especially—who have gained work through the future jobs fund. They told me that it was vital to keep their CV consistent over time, and that, although the job might have been short term or perhaps not in the sector they wanted to go into eventually, it gave them good, work-based experience that they could put on their CV. That could help them to find work, perhaps in a different sector, once we came out of the downturn. I cannot emphasise enough how important that continuity is. It was so important in places such as Wirral, and in Merseyside and the north-west generally, that the Government stepped in and helped to protect our employment picture. I shall say more about that in a moment. If we also consider the cutting of the working neighbourhoods fund, which was doing a great deal to address the really deep-rooted problems of unemployment in my part of the world, protecting employment through local government in Wirral starts to look a lot more difficult.
In a wider sense, we shall feel the impact of the regional development agencies being abolished in the emergency Budget. It is interesting to note that the Government seem to be all over the shop when it comes to RDAs. Perhaps the Minister would like to comment on the observations that have been made about listening to the views of local business, local authorities and perhaps local Members of Parliament on the importance of RDAs. The Budget has abolished them, however, and that will cause great difficulty in my area.
The local authority serving my constituents in Wirral has done important work on apprenticeships. The Government have said that they are keen to support apprenticeships, and that is fantastic. We all agree—brilliant! Let us get on with it! I do not see, however, how the local government cuts are going to help Wirral. We were at the forefront in providing the Wirral apprenticeships scheme, which worked alongside the private sector to increase the number of apprenticeships. The cuts will cast a shadow over the local authority officers who were working on that programme. I do not believe that the cuts will help to reduce the deficit over this economic cycle. I think that they will put people on the dole, which will increase the burden on the state. That is incredibly unfortunate.
Mr Kevan Jones
Does my hon. Friend agree that a misapprehension is being peddled—that making cuts in the public sector will have no effect on the private sector? For example, in local government in the north-east, £16 billion has been taken out of the county of Durham. That will directly affect not only suppliers to the county council but future building projects.
Alison McGovern
I could not agree more. If Conservative and Liberal Democrat Members do not agree with my hon. Friend and me, they are welcome to come and meet any of my constituents who run small businesses that have been helped by Invest Wirral or the regional development agency, or who have found apprentices through the Wirral apprenticeships scheme, and to ask them their views on working with the local authority, and on working alongside the public sector so that the public and private sectors can work together to address unemployment. That is the reality that we have seen over the past 13 years.
Alison McGovern
I am glad that the hon. Gentleman asked me that, because there has been a misapprehension that Labour had no plans when we were in government, and that we did not set any of them out. That is all very convenient, but the proposals were in our March Budget. There was a great deal of discussion about efficiencies, about what we would have done with the future jobs fund and the working neighbourhoods fund, and about how we would have looked at those funding programmes. All the detail is in our March Budget. My problem with the proposals in last week’s Budget is not that we have to make cuts or that we have to reduce the deficit; it is the timing.
I want to talk about place shaping, and about the things that make Wirral a great place to live. I have spoken before about the importance of sport, the arts and culture to who we are in Wirral. The cutting of the free swimming programme will not help the Oval sports centre in my constituency to be successful. The cutting of free school meals will not help Grove Street primary school to carry on its great work on increasing food sustainability and nutrition. Getting rid of the libraries modernisation fund will certainly not help Wirral to bring our libraries up to the standard that my constituents expect.
The cuts could, of course, help to reduce the deficit—I do not disagree with that at all—and there are certain efficiencies that we might need to look at. My argument is that we are talking about marginal amounts. Cutting the libraries modernisation fund will not have a massive impact on reducing the deficit. The thing that will reduce the deficit is getting people back into employment. If we cut the deficit at the expense of all the things that people have come to rely on, we shall see a hollowing-out of town centres, and the retreat of the Government from supporting people in the things that they want to do in their lives. I do not think that that would be worth while. The impact of the cuts on employment and on the things in our communities that we hold dear will be very grave in Wirral.
It is worth mentioning the differential impact of the cuts. Wirral will be hit a lot harder than those in nearby Cheshire, or in Oxfordshire, who will not feel the same impact at all. For the past 13 years, the Labour Government made great strides towards resetting the economy. People no longer had to leave Merseyside to get a job. We have done great work on that, and it needed to continue. I fear that this withdrawal of the state from our area will result in our sliding back into the problems we had before. The Government’s proposals represent a withdrawal of activist government.
The Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell), has spoken about removing layers of government, as though it were possible simply to cut away pieces of the work being done by regional development agencies or local authorities, and to hand the money over to someone else, in the expectation that the work would still be done. My experience of local authorities might be limited, but I believe that to be unrealistic. The regeneration practices that local authorities have developed should be prized and used, and their proactive work with RDAs should not be overturned overnight in order to remove a layer of government. That is phraseology for the sake of it, and I do not think that it will help our country to develop economically.
Andrew Gwynne
My hon. Friend is making an excellent case for regional development agencies. One of the important roles of the RDAs was to put in place regional programmes of investment for major transport schemes. Does she think a region such as the north-west would be able to put together a major programme of transport improvements if it were left to the individual local authorities from Cumbria down to Crewe?
Alison McGovern
It would not be able to do it. Travel-to-work distances are a problem in Wirral—compared with, say, south-east England—and we simply do not have adequate connectivity to centres of employment such as Manchester, Warrington and the north Wales coast. The RDA was doing fantastic work in addressing that connectivity problem, working hand in hand with local authorities. I do not think that the Government fully understand those practices.
Certain ideologies in the Government are driving the cuts. The first is that less government is better. Conservative and Liberal Democrat Members might say that, but I believe—please forgive the truism—that better government is better. This is not the time for the state to withdraw entirely. Secondly, the Government believe that pure deficit reduction is all that matters, and that reducing the deficit will itself drive growth if we demonstrate to the City and the markets that we are being tough. I do not think that there is any evidence for that. I am a great believer in evidence-based policy making, and I would like to see some evidence for that.
Gavin Barwell
The hon. Lady asks for evidence: a report from Goldman Sachs looks at every fiscal correction in major world economies since 1975 and shows that those based on reductions in spending work and actually boost growth.
Alison McGovern
I always look carefully at reports from the likes of Goldman Sachs, PWC and others—and one thing that being a local councillor taught me was never to believe at first glance what the consultants say. However, I will certainly look into the report that the hon. Gentleman mentions. I have an open mind.
The Government want us to believe that there is no alternative. I have mentioned already that Labour’s Budget in March detailed much that we could do to find efficiencies, and talked about many of the things that we have heard from the Government. The question is not about reducing the deficit: it is about the timing and the manner in which it is done. I can only hope that my words today will make the Government realise some of the impact that their actions will have on my constituents in Wirral.