Budget Resolutions and Economic Situation

Chris Heaton-Harris Excerpts

Tuesday 22nd June 2010 Commons Chamber

[Austin Mitchell]

I am sorry for mistaking the hon. Gentleman for a Liberal. As a Conservative, he must be sitting in some kind of custodial role on the Liberal Benches.

The analogy that the hon. Gentleman makes is false. It is no use comparing us with Spain, Greece or any of the European countries. Our borrowing is on 13 or 14-year terms, and the interest rates that we pay on it are much lower, whereas Greece’s borrowing is on two-year terms, or less.

We are protected by something for which our previous Prime Minister is never given credit—the fact that we did not enter the euro. The Liberal party wanted us to do that, but our being outside it means that we can take exchange rate adjustments that Greece, Spain, Portugal and the other countries in this situation cannot. As a result, we are not facing the same problem, or the same threat to our debt.

[Chris Heaton-Harris (Daventry) (Con)]

I take it, therefore, that the hon. Gentleman is proud of the fact that we pay £80,000 in debt interest every minute that ticks by. Is he proud of that?

[Austin Mitchell]

I am proud of that, because it keeps the economy running at a higher level than would otherwise be the case. It keeps people in work, and it stimulates the growth that is the only answer—

--- Later in debate ---

[Chris Heaton-Harris (Daventry) (Con)]

I am grateful for the opportunity to say that I am winding up for the Government side of the House in today’s debate. I shall certainly put that in my press release, and I am sure that the Daventry Express will print it word for word.

The emergency Budget was unavoidable because the previous Government’s handling of the UK economy simply failed. Labour did not understand what every business and family throughout the country knows: if money is borrowed, it must be repaid or trouble will come; and it is best for people to live within their means. My constituents and I struggle to comprehend the size of the problem that the Budget sets out to fix. Every minute that passes, the Government spend £80,000 on debt interest, so £800 million a week is spent just servicing our debt. The money that is used for interest payments cannot be spent on things such as education, health, defence or poverty eradication in Sefton.

It was pleasing that today’s measures were at least announced against the backdrop of growth in the economy, which is in spite of, not because of, the previous Government. I have been surprised to hear that Labour Members do not understand that every penny spent by the public sector was initially raised by the private sector.

[Stewart Hosie]

Will the hon. Gentleman explain what happens to public sector employees’ tax? Where does that go in this pot?

[Chris Heaton-Harris]

It certainly contributes to tax income, but if we were to rely on only the public sector, an ever diminishing circle of tax income would come into the Exchequer and, in the end, we would not be able to pay for anything.

The way out of this mess is undoubtedly to boost and revitalise the private sector, so I welcomed the announcements in the Budget on regional job creation and the measures to cut waste and unaffordable cost from the public sector. That is exactly what our European partners and competitors are doing. Jean-Claude Trichet, the president of the European Central Bank, told the European Parliament—my old place of work—that firm control of Government spending and tax policies is essential to restore the confidence of households, businesses and investors. He said:

“We are in a situation where a lack of confidence is operating against recovery. A budget policy which you”—

if he were addressing the House, I assume that he would mean Labour Members—

“might describe as restrictive from a certain point of view is in fact a policy which we would call confidence building.”

He went on to say that if public finances continue along an unsustainable path,

“households are going to be frightened. They will not spend or consume as much, companies will not prepare for the future and investors will know they are going to have difficulty getting a return.”

Those investors have choices: they do not have to choose the United Kingdom or, indeed, Europe, as other markets are becoming increasingly attractive. France and Germany—in fact, nearly all our major competitors—have taken tough measures to sort out their public finances, and make their economies strong and attractive to future investors. We would weaken the chances of prosperity for our children if we did not do the same.

As the Chancellor noted, we need to increase the incentives to work. Welfare costs under the Labour Government rose by nearly 40 per cent., but there are still more than 5 million people on out-of-work benefits. Youth unemployment is a massive problem—1.4 million people under 25 are unemployed—and Labour’s spending to alleviate poverty failed, and has fractured society. Many people thought that the previous Government built barriers based on welfare payments that disincentivised individuals from finding a job. At the same time, those who are working pay more in tax, but why should they work hard to do the right things for themselves, their communities and their families when people who choose not to do so seemingly have everything that they do? It is a terrible disincentive.

I am a bit of a supply-side economist. I do not like tax rises, but anyone who looks at our structural deficit will understand that we need to remove as much of it as we can as quickly as possible. I will swallow my pride on the capital gains tax rise, but I note that it is a voluntary tax—people can sit on their hands and not realise the value of their shares, their property or whatever it might be. I certainly welcome the cuts in corporation tax, but I accept that the cuts in departmental budgets will be tough. I suggest that there is a great deal of waste to remove, especially from middle and upper management in some Departments. I recently received a letter from a constituent who works for the Vehicle and Operator Services Agency, who said that the directors, who were all based in the Bristol headquarters, travelled to Edinburgh for meetings, for no reason other than that it was a nice place to go.

[Toby Perkins]

The hon. Gentleman is raising an issue that many of his colleagues have raised, and said that somehow under a Labour Government there was profligate, wasteful spending that could easily be tidied up—[Interruption.] They all agree, and I am glad to hear it. Why, therefore, have the Government cut not that wasteful spending but the future jobs fund, thus pulling the rug from under the economic recovery? Why has the Sheffield Forgemasters loan been cut? Why do they not cut this waste, rather than all the things that will hit the poorest people most?

[Chris Heaton-Harris]

If only we had the money to spend on some of those projects, it would be wonderful but, unfortunately, your party spent it all. If you live in Northamptonshire, you can see areas—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

rose—

[Chris Heaton-Harris]

I should have said the hon. Gentleman’s party.

[Mr Deputy Speaker]

Thank you for that. We have to make sure that we are in order.

--- Later in debate ---

[Chris Heaton-Harris]

I apologise, Mr Deputy Speaker. I am new to the conventions of the House.

People who live in Northamptonshire see some parts of government where costs could be removed. Something that I hope will be looked at in the spending review is the cost of quangocracy. I am not against all quangos—some do a good job—but the money spent and the powers wielded by many non-departmental public bodies could, and should, reside with locally elected officials. The budget for those bodies in 2009 was a massive £46.5 billion, although the TaxPayers Alliance pitches the figure a bit higher.

To give a quick example, someone who lives in Daventry in my constituency has a good district council and a county council, but they also have the west Northamptonshire joint planning unit, which tries to impose housing plans and which, as my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) outlined, local people absolutely do not want. They also have the West Northamptonshire Development Corporation—there is also a North Northamptonshire Development Corporation—the East Midlands Development Agency and the Government office for the east midlands. All those quangos do roughly the same thing, so I very much welcome the announcement in the Budget—on page 31 of the Red Book—of local enterprise partnerships, which could lead to excellent consolidation in that field.

One quango that I would very much like to see examined is the National Policing Improvement Agency. Set up in 2007, it now has a budget of more than £500 million. I suggest that those who, like me, are facing cuts in their local police forces, look at the report on that agency, because it is not worth the money.

I certainly welcome the measures on encouraging small businesses—