Comprehensive Spending Review

Baroness Hughes of Stretford Excerpts

Monday 1st November 2010 Lords Chamber

[Baroness Hughes of Stretford]

My Lords, it is with great pleasure that I have listened to the maiden speeches tonight. They were all excellent, particularly those of my noble friends Lady Nye and Lady Healy. There were also a number of other very notable speeches on this subject. In the short time that I have, I wish to address the four spurious claims that the Government are making to justify the plans that they have produced in their comprehensive spending review.

The first is that the current crisis is the legacy of the Labour Government’s handling of the economy. When the credit crunch started in 2008, as we have heard in great detail from the noble Baroness, Lady Nye, and the noble Lord, Lord Low, Great Britain had one of the lowest debt-to-expenditure ratios among comparable countries. It also had lower debt as a proportion of GDP than the debt which the Conservative Government left us in 1997. It was a time of low interest rates, low inflation and low unemployment. It is quite clear that public spending did not cause the scale of the credit deficit. That was caused by a global financial crisis in relation to which the Labour Government took decisive action, not to shore up the banks as an objective in itself but to protect people’s savings, people’s jobs, people’s homes and livelihoods and to protect businesses. As a result, unemployment rose by only half as much as in previous recessions, and there was a more rapid return to growth, the momentum of which is still with us, just about, in the quarter 3 figures published this week, although it is clearly dwindling because of the lack of a growth strategy from the Government and their slashing of capital projects. Construction is still the main contributor to the growth that we have seen so far.

My noble friend has just touched eloquently on the second claim: that the scale and pace of these cuts are avoidable. In his opening remarks the Minister said that it was about striking the right balance. He is right, but implicit in that acknowledgement is that choices are being made. I have been in government for 12 years and I know that in meeting and solving a problem you always have choices. Generally speaking, you try to make the choices that most fit with your value set, ideological position and political objectives. As several of my noble friends and others have commented today, the Government have chosen to make the cuts deeper and faster than necessary. This is a political agenda, not an economic objective, which will have serious long-term consequences for this country and our citizens.

The third claim is that in the midst of these proposals the Government are protecting key public services. This is, frankly, incredible. We need only look back at what happened under the previous Tory Government—this is, of course, a Tory Government despite the fact that it is called a coalition—when Margaret Thatcher’s cuts, which pale into insignificance when compared with what is being proposed in this spending review, led to long-term damage for our country. The noble Baroness, Lady Browning, who is not in her place, referred to amnesia. There is amnesia on that side of the Chamber, too, because Members there seem to have forgotten the dilapidated state of schools and hospitals, the leaking roofs, school standards that had flatlined, people waiting 18 months to two years for elective surgery and outpatient appointments, unemployment rising dramatically, youth unemployment hitting record highs, pension poverty doubling during the 1980s and 1990s and child poverty more than doubling. It is inconceivable that the impact of the cuts now proposed will not be even worse than the ones that we saw in the 1980s and 1990s.

The damage the country sustained then was long term and, despite all the improvements and investment that the Labour Government made to redress that damage, we are still left with that legacy in part. Key public services will not be protected; they will be decimated by these cuts. People do not yet understand the depth of the damage that will be done.

The fourth and final claim that the Government are making—again already referred to by many Members—is that the cuts are fair and will fall on the broadest shoulders. I wish to draw attention to their impact on those least able to speak for and protect themselves against the Government—that is, children and young people. Cuts from a variety of different sources will impact negatively on children and young people, and on the most vulnerable children and young people the worst. First, there will be an impact on schools. We have heard about the pupil premium for schools with disadvantaged children. We were told by the Prime Minister and the Deputy Prime Minister that this would be paid for by money outside of and additional to the Department for Education’s budget. We now know that the Secretary of State has had to admit that that is not true. He also admitted that the settlement for schools will mean real-terms cuts because there is no element in the settlement for schools to cover the rise in pupil numbers over this period. The IFS has estimated that 60 per cent of primary school children and 87 per cent of secondary school children will experience cuts in their school’s budgets.

Secondly, there is the non-school budget, because in order to sustain the settlement for schools, such as it is, the Department for Education will experience a 12 per cent cut in its non-school budgeting, achieved by, and I quote from the Government’s document here,

“rationalising and ending centrally directed programmes for children and young people and families”.

This means that some of the things that we have not yet heard about, because we have not seen the Department for Education’s budget plan, have gone. Support for the strategy to reduce the rates of teenage pregnancy across the country has gone; support for the strategy to reduce the number of young people not in education, training or employment has gone; the Youth Taskforce, working to help some of the most vulnerable young people to reduce antisocial behaviour, has gone; and the City Challenge in Greater Manchester, the Black Country and London to raise aspirations and standards among some of the most disadvantaged children has just been scrapped. Young people’s services, support for parents, and support for disabled children and their families have simply all been stopped, and I think we will see a severe impact from the cessation of those programmes.

Thirdly, there is the reduction in local government spending of 7.1 per cent in each of the four years covered by the spending review. I have been talking to a number of chief executives and directors of children’s services over the past few weeks who tell me that such is the level of cuts they are facing that their councils cannot protect children’s services, that they will be able to preserve only the minimum level of statutory provision, and that a lot of the progress we have seen in local children’s services over recent years, with a focus on early intervention and prevention to stop some of those problems escalating, will simply go.

Last but not least, it is families with children, as my noble friend Lady Sherlock mentioned earlier, who will be the biggest losers from the array of tax and benefit changes that are proposed. Page 98 of the document published by the Government says that the negative impact of freezing child benefit and withdrawing it from those who pay higher-rate tax will be offset by the indexation of child tax credit and ensure,

“no measurable impact on child poverty”.

That is simply risible.

What we do not have in the documents produced by the Government is any comprehensive assessment of the cumulative impact of all these cuts from different sources on children and young people. It is not simply about child benefit; it is about the cumulative impact of the four housing benefit changes and the changes to working tax credit, to childcare tax credits and to parents losing their jobs and going on to time-limited benefits, as well as the service issues that I have outlined. It is inconceivable, frankly, that child poverty will not rise as the Joseph Rowntree Foundation predicts. I know that there are Members on the Benches opposite who are also concerned about children, and I hope when the time comes that they will scrutinise all these proposals for their cumulative impact on children and young people.

I also ask the Minister if he will commit in his summing-up to producing a comprehensive impact assessment of all these changes together on children and young people. These cuts will not fall equally across the income distribution but will be concentrated on some families rather than others, so some children and young people will be very severely damaged.