Parliamentary Contributory Pension Fund
Debate between Angela Eagle and Mark Field(13 years, 2 months ago)
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Mr Mark Field
I understand some of the hon. Lady’s concerns about pre-emption, but does she not also think that at this juncture we need to take a lead on this, despite all the concerns I have—I hope that she will be able to say a little more on the relatively generous rates for parliamentary contributions, compared with others—given the difficulties we will face throughout the public pensions sphere?
Ms Eagle
It is certainly important that we are not seen to exempt ourselves from the required changes, and in this debate so far that sense has been put across by speakers on both sides of the House.
The Government have to show understanding and good will if they are to make progress on public sector pensions.
Ms Eagle
The trouble with the amendment, as the hon. Gentleman would probably admit if he sat down and thought about it, is that, the amended motion would look like we wanted our public sector pension to be treated differently from the generality of public sector pensions, and that would be an unfortunate impression. I hope that he reflects on that meaning of the amendment, to which he has put his name, and thinks better of it when it comes to the debate.
I was in the middle of saying that the outstanding issues caused by the announcement of an across-the-board 3.2% increase in contributions, a shift from RPI to CPI for indexation and speeding up the increase of retirement ages, the latter of which hits women particularly hard, are real issues that I hope the Government will address with good will in the negotiations, rather than regard as a complete fait accompli.
Mr Mark Field
Does not the hon. Lady recognise that one reason for what she would regard as this breakneck speed of reform of the age of retirement and pension arrangements is that so little was done, and not just in the past 13 years, since one could argue, given the actuarial evidence about life expectancy, that the inaction goes back well before 1997? The force of necessity has meant that the Government have had to act relatively quickly to make up for very slothful action from past Governments.
Ms Eagle
I do not agree with the hon. Gentleman’s interpretation at all. We sometimes agree on things; we do not happen to agree on this. We made some good reforms and we saved considerable amounts of money through the negotiations that we had on public sector pensions, which came to an agreement. I am arguing that MPs’ pensions should not be exempt from changes, regardless of whether they are independently provided for and decided on.
I hope that the Government show determination and good will in having meaningful negotiations with the representatives of millions of public sector workers whom they are meeting, and that they recognise the real challenges and dangers, as Lord Hutton pointed out, of going too far and too fast on contribution rates and driving people to leave schemes at a time when there is a ferocious squeeze on living standards. There is a balance to be negotiated, and I am not at all certain that the Government are getting that balance right. If they get it wrong, many hundreds of thousands, even millions, of people will leave schemes and will then look forward to a life on means-tested benefits when they retire, which, paradoxically, will cost the country more than if we can keep them paying into schemes. There is a delicate balance that has not often been reflected in the rhetoric—the bellicose rhetoric, in some cases—from Government Members as these negotiations proceed.
I hope that there will be a new and constructive approach from the Government in the ongoing negotiations on public sector pensions. In the meantime, we will support the motion.
Budget Responsibility and National Audit Bill [Lords]
Debate between Angela Eagle and Mark Field(13 years, 10 months ago)
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Ms Eagle
We do not have a presidential system: we have a prime ministerial system and the leader of the governing party tends to be asked by Her Majesty the Queen to form the Government. That is what has always happened, and if the Minister wishes to change that, perhaps we need to take an even wider look at our constitutional arrangements than that planned by the Deputy Prime Minister.
Mr Mark Field
Although the hon. Lady makes a fair point about explicit mandates, it is surely also the case that there was absolutely no explicit mandate for any of the actions taken by the erstwhile Government after 2008, given the situation that we found ourselves in.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We are getting tempted once again. If Members stick to the Bill, that will be helpful.
Mr Field
My hon. Friend makes an extremely good point. In the one case in which the hon. Member for Wallasey (Ms Eagle) tried to argue that there had somehow been untoward behaviour by the last Conservative Government, events have proven, if anything, that they surpassed what had been expected.
Mr Field
As I recall it, the point was conceded by Opposition Members, not by those on this side.
The relevance of all this to our current economic woes should not be underestimated. With global investors buying into the fiscal assurances made by the erstwhile Government, the rosy forecasts played their part in making it easy for Britain to borrow money during the past decade, and borrow we did, even in the good times. We all now know the disastrous consequences that came to pass.
This salutary experience provided the genesis of the idea for an office for budget responsibility. I must confess that when the Chancellor first mooted the idea in late 2008, when shadow Chancellor, I was sceptical and thought that it sounded like the ideal proposition to be made in opposition and then quietly forgotten. I believe that it is to his great credit that the notion saw the light of day so soon after my party reached government.
My other fear was that it might be an overly inflexible straitjacket to constrain freedom of manoeuvre. Again, the Chancellor has addressed this point up front, as has the Economic Secretary. The Chancellor desires and even relishes such a restriction on himself—and, I suspect, on his successors. Although it might not prove to be quite as revolutionary as the Treasury would have us believe, I accept that it is still an important step towards transparency and accountability in forecasting budgetary numbers.
My only reservations are relatively small and relate to issues of practice, rather than of principle. I fear that the real strains and potential limitations of any office for budget responsibility will unfortunately come at the point in the economic cycle when we most need prescient and instinctive judgment. At such times of crisis or near crisis in any economic phase, we require a robust willingness to stand up against the conventional wisdom of the day.
In the run-up to the 2008 financial crisis, for example, no forecasting organisation saw the crash coming. No one in this House, not even the Secretary of State for Business, Innovation and Skills, despite all that is now said on his behalf, really foresaw precisely what would happen. That includes all the independent bodies, such as the Institute for Fiscal Studies. Let us wonder how the OBR, had it been established, might have acted only three or four years ago. Had it not shared the outlook of other forecasters, would it have had the mettle or the strength in 2007 to tell the previous Government that they were living far beyond their means? How would it have been viewed if it alone had advised the Government at that stage to hold back on their spending plans or, indeed, increase the tax burden? I believe that the true test of its effectiveness will come only when it is required to deliver such unpalatable news in future.
Similarly, what if the OBR had concurred with the forecasts of other organisations at the time but a more responsible Chancellor had been in place who instinctively viewed the economically clement weather as only a mirage? Might the perceived infallibility of an OBR forecast have restricted his or her ability to take measures that went against the common wisdom? To that extent, I have some sympathy with what has been said by those on both Front Benches, because we do not know how forecasts will pan out. Even as recently as the emergency Budget on 20 June 2010, many predictions for growth; and certainly for unemployment were made at the time that even I thought were slightly too optimistic. The OBR’s notion was that unemployment would reach a peak during the current tax year. We hope that that will be the case, but that will not be down just to Government policy, by any stretch of the imagination. I think that the way the economic cycle has worked out globally means that unemployment is likely to be somewhat higher during 2011-12 and perhaps even higher still the following year.
I believe that there are some unavoidable conflicts in the OBR’s operation. Organisational independence is absolutely vital to its working and credibility, as the Economic Secretary noted in her contribution. However, it must necessarily rely on a close relationship with the Treasury in order to understand its methods and have access to its data. Members have already mentioned the blurring of those boundaries between the Treasury and its new independent conscience that led to the first hiccup last summer—the argument that spilled over from the release of the OBR’s unemployment forecast, which happened to bolster the Prime Minister’s argument when he was under fire later that day at Prime Minister’s questions.
One must accept that there will almost inevitably be an ongoing tension and an inherent potential for a conflict of interest, but I hope that that has been eased now that the OBR has been able to move out of its Treasury offices and acquire an important physical independence. Without the trust that stems from such autonomy, the OBR is absolutely nothing. Nevertheless, there is also a danger that it will be seen as perhaps too credible and as a panacea in its own right.
Budget Resolutions and Economic Situation
Debate between Angela Eagle and Mark Field(14 years, 6 months ago)
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Ms Angela Eagle (Wallasey) (Lab)
It is a pleasure to welcome you to the Chair for the first time, Mr Deputy Speaker. I would also like to add my personal welcome to the Economic Secretary to the Treasury; this is the first time that we have debated over the Dispatch Box since the election, although it is not the first time ever. I hope that she will accept my personal good wishes in the job that she is now doing.
I would also like to commend the maiden speeches that we have heard in the debate today. In particular, I thank the hon. Member for Staffordshire Moorlands (Karen Bradley) for her praise of her predecessor, Charlotte Atkins, who is a very long-standing friend of mine. The hon. Lady spoke passionately about her beliefs and her constituency, which I know is a very beautiful one.
In his maiden speech, the hon. Member for Hendon (Mr Offord) talked about another good friend of mine, his predecessor Andrew Dismore. Alas for the hon. Gentleman, today’s 12-minute limit on speeches meant that he could not even begin to compete with Andrew’s record for the longest speech in the House. However, I am sure that he will rev up and have a go at that.
Unfortunately, my hon. Friend the Member for Kingston upon Hull East (Karl Turner) is unavoidably absent from the wind-ups tonight. As the successor to Lord Prescott he has very big shoes to fill, but his maiden speech was witty and astute. He spoke about his constituency and his political credo, and I am sure that we can look forward to many more contributions from him.
The final maiden speech was made by the hon. Member for Camborne and Redruth (George Eustice), who has one of the smallest majorities in the House. He spoke about Trevithick, the railway pioneer; as he did so, I was thinking about the fact that whenever I return to my own constituency, I travel through Rainhill, where the famous and historic trials that were won by the Rocket took place—an event that brings back many happy memories as we travel to Liverpool Lime Street station.
We have heard some important speeches today, from all sides of the House. One of most intriguing was made by the hon. Member for Bermondsey and Old Southwark (Simon Hughes). I shall say more about it later, but he said some intriguing things about how he might wish to amend the Budget—particularly with respect to VAT—as it goes through the House. I certainly look forward to seeing the amendments that he may propose. I think that I shall look on them with a sympathetic eye if they do what we want, which is to make this Budget more progressive than it is at the moment.
Other speakers in the debate included my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke), and my hon. Friends the Members for Telford (David Wright), for Eltham (Clive Efford), for Southampton, Test (Dr Whitehead), for Liverpool, Wavertree (Luciana Berger), for Streatham (Mr Umunna), for Walsall South (Valerie Vaz) and for Chesterfield (Toby Perkins). They all made extremely important contributions.
We heard some passionate speeches from the Government Benches, and I agreed with very little of them. However, I can certainly thank the hon. Member for Stafford (Jeremy Lefroy), who was unique among Government Members in recognising that the Labour Government did some good things while in office. I thank him for his grace in accepting that, although I am not sure that it will do him in any good, or help his career.
The hon. Member for Bromsgrove (Sajid Javid) gave the game away when he revealed himself in the Chamber as a crusading small-state Conservative, and proud of it. He praised the Government’s ideological basis, something whose very existence many Government Members were frantically trying to deny.
There were other important contributions to the debate today, and the short speech by the hon. Member for Spelthorne (Kwasi Kwarteng) was by no means the least among them. He asked us to look at the context in which the Budget was held, and I want to spend a little time doing that now.
We have lived through a difficult time in the last two years. We have seen the deepest and most synchronised global recession in living memory, with world GDP falling for the first time since the second world war as a direct result of the global credit crunch. That credit crunch was precipitated by monumentally reckless and greedy behaviour in the banking sector worldwide, which made a few people spectacularly rich but also impoverished countless millions of its victims around the world. I thought that the hon. Member for Cities of London and Westminster (Mr Field) probably came the closest of all Government Members to being up-front about that in his extremely good speech.
The credit rating agencies, which are now so frequently quoted by Government Members with reverence as economic oracles, were particularly compromised by the triple A rating that they awarded to complex derivatives masquerading as assets when they were in fact debts, and they did so for lucrative fees. The credit crunch was exacerbated by the undoubted failure of politicians, policy makers, economists and regulators to understand and price risk appropriately in the complex and interdependent global market. That led to a degree of complacency and the misreading of international conditions that were shared by almost every economic commentator. Hindsight is a wonderful thing, and with the benefit of it we can learn many lessons to prevent those problems from recurring—I certainly hope that we do.
Meanwhile, fiscal deficits everywhere had to rise dramatically to cope with the crisis. Our tax revenues here in the UK were significantly impacted, while spending had to rise to deal with the costs of recession. The fiscal stimulus, which was necessary to stop the global recession turning into a worldwide depression, also had an effect on the deficit. That is the cause of our deficit problem, and it is certainly not unique to this country. The previous Government were right to take the action that we did to protect people’s bank deposits and to shore up the very foundations of our economic system. I am proud that we were able to rise to that challenge.
I have taken some time to outline the economic context, in agreement with the pleas of the hon. Member for Spelthorne, because in four days’ debate on this theatrically named “emergency Budget”, we have not yet heard any Government Member, from the Chancellor down, have the decency and the honesty to mention it at all. They wish the country to believe that, somehow, the considerable economic challenges that we now face were all caused by the previous Government’s irresponsibility and have nothing to do with the greed of reckless bankers and speculators. That is arrant nonsense, and they know it.
Mr Mark Field
Does the hon. Lady not recognise that huge global imbalances built up, and that mistakes by policy makers and politicians of all colours from across the world had their part to play, rather than the problem just being caused by, as she would put it, the greed and recklessness of bankers?
Ms Eagle
I agree, and during an earlier part of my speech I listed all those people as being among those who had things to apologise for, as the hon. Gentleman will see if he reads the record.
In the prelude to the Budget, other preposterous myths have been peddled, designed to justify an austerity programme so severe that it is positively, even gleefully, sadistic. I will just mention one of them in passing. The myth says, “It’s all much worse than we thought.” We have heard the Prime Minister, the Deputy Prime Minister and the Chancellor all singing that refrain in recent days. They had prepared the ground, they had the newspapers all going along with it, and they had briefed their Back Benchers, who are even now loyally parroting the line. How irritating for them, then, that the facts have failed to conform to their prearranged narrative, and how positively annoying that the Chancellor’s new forecasting quango—the pejoratively named Office for Budget Responsibility—should so comprehensively give the game away just before the main show. It quickly became clear that, far from all this being much worse than we thought, it was actually better:
“embarrassingly, the economy is just not playing along. Things just keep getting better.”
I was quoting Fraser Nelson—that well known socialist writer—from the Telegraph.