Jobs and Growth
Chris Heaton-Harris Excerpts(13 years, 1 month ago)
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Tom Blenkinsop
I am sorry, but I am not taking any interventions because of the time.
Those on the Government Front Bench talk about an employee having to work for 24 months before being eligible for employment rights, but that might give the Government some difficulty, because it would run counter to the interests of new starters—young people seeking work, as well as apprentices. If the Government elongate the time to 24 months, it will be easier for a company to sack an apprentice.
Today in the north-east, we have seen a reduction in employment of 17,000, an increase in unemployment of 19,000 and a 1,500 increase in those claiming jobseeker’s allowance. We have seen the highest UK unemployment since 1994. What is the cost to the Treasury and the taxpayer in benefits? The situation also damages demand in the economy.
Tom Blenkinsop
I am sorry, but I am going to continue.
Industry is withholding spending. Small businesses seeking capital cannot get it except at exorbitant rates, and those that do have capital are holding it as cash and not investing. Large industries with access to the money markets are still holding off, as there is no national state capital underwriting or guarantees. This all comes down to confidence. In an article in The Times yesterday entitled “Here comes the double-dip, say finance chiefs”, Ian Stewart, Deloitte’s chief economist, was quoted as saying:
“Although corporates have the firepower to expand, at the moment their trepidation is with growth, so they are cycling back to exactly what they were doing in late 2008, which is cutting costs and building up cash.”
The most troubling factor is the Chancellor’s deficit reduction plan. It was predicated on 3% growth, but we have had less than 0.2% growth since May 2010. This means that his plan is out of kilter with reality. The Office for Budget Responsibility predicted £46 billion extra borrowing by this Government, but that figure is now rising. Sure enough, this Tory-Lib Dem Government will have to borrow half a trillion pounds. However, unlike the Labour Government, who borrowed for growth, this Government are borrowing to cut, and they are cutting too fast and too deep.
The hon. Member for South West Norfolk (Elizabeth Truss) referred to savings surplus economies such as China, Germany and Japan. They are also manufacturing surplus economies. We were one of those, back in the 1980s, until the decimation of the coal, steel and chemical industries, all of which used to exist in my area. Under the 13 years of Labour government, we saw record investment in industry. I speak as someone who worked, and got his hands dirty, in industry. That Government invested in industry at record levels. We set up organisations such as NEPIC—the North East of England Process Industry Cluster—and One North East, which had a budget of £2 billion. We gave businesses leadership, and we gave those organisations the cash to bring businesses in. We saw more than 60 chemical companies come to Teesside, but now we have seen the closure of the Teesside Beam Mill and the loss of 1,500 jobs in the steel industry from Scunthorpe to Teesside. Job losses at BAE Systems and Bombardier are also just round the corner. This Government need to reassess their policy very fast.
Chris Heaton-Harris (Daventry) (Con)
I welcome the hon. Member for Leeds West (Rachel Reeves) to her Front-Bench position, and wish her all the best in it. It has been fascinating to listen to some of the speeches made by Members sitting behind her. We heard, for instance, the “Tale of One City”, the wonderful city of Middlesbrough. The hon. Member for Middlesbrough (Sir Stuart Bell) emphasised the importance of the enterprise zone in securing jobs in the new businesses coming to the city, while the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) essentially “dissed” the whole project. I hope that Middlesbrough has the future predicted by the hon. Member for Middlesbrough rather than that predicted by the hon. Member for Middlesbrough South and East Cleveland.
In discussing this motion about jobs and growth, Opposition Members have tended to refer to public sector jobs and growth while those on our Benches have understandably referred more to the private sector. We know that every penny spent by the state must be created by those who are demonised by a number of Opposition Members, especially the Leader of the Opposition, as those nasty, awful people, the wealth creators of the nation. As my hon. Friend the Member for Thurrock (Jackie Doyle-Price) reminded us, it is people and businesses who generate wealth, not the Government.
Businesses such as Cummins, Ford, Tesco, DHL and hundreds of smaller manufacturing businesses are all creating jobs in my constituency at this moment. I note that the hon. Member for Leeds West has not tried to intervene to remind me about the job statistics in my constituency. Under Labour between August 2006 and August 2010, soon after the present Government came to office, the number of jobseekers nearly doubled. Under this Government it has fallen by a small handful, and the number of people claiming jobseeker’s allowance for more than 12 months has dropped by a third. That is because we have a healthy private sector that we are trying to encourage in the best ways available to us.
I wonder which of the businesses whose names I read out earlier—Cummins, Ford, Tesco and DHL, those horrible big businesses—are among the predatory businesses that the Leader of the Opposition said, in his conference speech, that he or his civil servants would blacklist: businesses such as the awful AA, those terrible people from Saga, McVities, or—my God, even worse than that—the people from Boots!
I am lucky, as my constituency has a dynamic district council that is doing its best on planning and encouraging growth. We have also been lucky in that our bid to have a university technical college based in the constituency was successful. We know that future jobs growth must be sustainable; it needs to be for the local market, and it needs to provide relevant jobs for relevant industries.
This strategy is working in Daventry. When people driving up the M1 reach junction 18 they see big sheds on the left. That is DERFT—the Daventry international rail freight terminal. Some 9,000 new jobs will be created if DERFT 3 goes ahead.
We want to encourage small business. The Labour party has always had a plan for that, too—it has a good reputation in encouraging small business—but our plan is different. Labour’s plan was to take a big business and add a shed-load of regulation—in which case, sure enough, we will absolutely get a small business—whereas our plan is to make sure we encourage people to take that tiny bit of risk required in business by deregulating as much as possible and having a flexible job market that enables them to create jobs.
My background is not the same as that of the hon. Member for Middlesbrough South and East Cleveland, as I did run my own business. I worked nights for 11 years importing and wholesaling fruit and veg. Alas, however—the hon. Member for Great Grimsby (Austin Mitchell) is wrong about this—I am not a millionaire. I do not even aspire to be one. What I want to do is make sure that my constituents who do aspire to be millionaires get the opportunity to achieve that, and running a small business is a very good way to start.
If we want to encourage jobs and growth, we need to make small businesses more successful. Therefore, we need to reduce regulation, so I welcome the national insurance measures we have introduced, but I think the Government can do much better on relaxing procurement rules to enable small businesses to bid for county council contracts without having to go through pages of needless paperwork. To allow small businesses to succeed, therefore, we need more flexible labour markets and less regulation, and we also need to sort out Her Majesty’s Revenue and Customs.
Eurozone
Chris Heaton-Harris Excerpts(13 years, 1 month ago)
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Mr Osborne
I think the parrot was a Norwegian blue, and Norway is not in the euro.
Chris Heaton-Harris (Daventry) (Con)
Although the Chancellor is completely focused on the eurozone crisis, I am sure that it will not have slipped his notice that meanwhile the European Commission and the European Parliament are asking for more regulation and more money. Could he please instruct his officials to ensure that, while negotiations on these very important matters regarding the eurozone are going on, we kill some of the bad ideas that are flowing from elsewhere in Europe?
Eurozone Financial Assistance
Chris Heaton-Harris Excerpts(13 years, 6 months ago)
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Chris Heaton-Harris (Daventry) (Con)
I beg to move an amendment, to leave out from ‘unsound’ to the end of the Question and add:
‘urges the Government to raise the issue of the EFSM at the next meeting of the Council of Ministers or the European Council; and supports any measures which would lead to an agreement for a Eurozone-only arrangement.’.
As you have made amply clear, Mr Deputy Speaker, we do not have much time. I therefore intend to confine my remarks to the subjects raised in my amendment and to the politics behind it.
The motion argues that there is no legal base for making EU money available for bail-outs. It questions the idea that the natural disasters clause can be used to justify using EU funds to pay the countries concerned. Let me say at the outset that the amendment does not touch the very important line in the original motion that states that the European Scrutiny Committee, of which I am a member,
“has stated its view that the EFSM is legally unsound.”
Let me now deal with some of the politics of today, which were observed by the hon. Member for Vauxhall (Kate Hoey).
Mr David Nuttall (Bury North) (Con)
Was not that line left in the motion because it is a fact—which there is no point in denying—that the European Scrutiny Committee stated that the European financial stability mechanism was legally unsound?
Chris Heaton-Harris
I shall come to that point directly.
Members on both sides of the House know that the Government would not have accepted the motion tabled by my hon. Friend the Member for Rochester and Strood (Mark Reckless), and that if we were to vote on the original text it would be probably be defeated, and the House would be left without a view on this matter. My amendment, which I should like to think has a good chance of being passed, would enable the House to adopt the words of the European Scrutiny Committee.
I believe that the legality of the EFSM, and indeed that of the European financial stability facility—the EFSF—has been questioned in relation to the EU treaty’s “no bail-out” clause, which states that the EU and member states
“shall not be liable for or assume the commitments of”
other member states.
Chris Heaton-Harris
I will say more about the politics later in my speech. In any event, I believe that if either my amendment or the original motion is passed, the House of Commons will be the first member state Parliament to question formally the legality of the stability mechanism.
The remaining part of my amendment involves a fairly academic argument. Does any Member in the House truly believe that, with the Greek economy running out of cash, market fears that the eurozone contagion will spread and reveal itself at the heart of the Spanish and Italian economies, and the continuing problems in Ireland and Portugal, this matter was not going to be up-front and central at the next meeting of the Council of Ministers or the European Council? I should like to think that those problems are not only the first item on the agenda for such meetings, but being discussed every day throughout the Governments of Europe.
Bail-outs have become what they were always going to be: politically toxic, not only for those who provide the cash—the local election results in Bremen at the weekend underlined that—but, much more, for the Governments of the countries receiving the money, who have to introduce economic measures that are politically unpalatable to the people, as so many Spanish socialists found last weekend. Whatever senior advisers of Governments across Europe may think, the markets have already decided—and I consider it to be a matter of fact—that the Greek bail-out has not worked and will be renegotiated.
What I believe my hon. Friend for the Member Rochester and Strood is after is a vote that will prevent us from providing any more money for these bail-outs through the EFSM. Alas, although the UK could vote against any proposal presented—and I should like to think that it would—the simple fact is that because of the disastrous advice given to the former Chancellor of the Exchequer and the consequent actions that he took at meetings on 9 and 10 May last year as the previous Government were leaving office, the UK entered the mechanism. Moreover, the Council decides on these matters now, and will do so in the future, by means of qualified majority voting.
George Freeman (Mid Norfolk) (Con)
Does my hon. Friend not agree that when the Conservatives were last in office they established a firm veto in precisely this context? That veto was given away in 2001 by the Labour party, and the present Government are now being forced to implement a decision that was sneaked through by Labour in the dying days of its Government.
Chris Heaton-Harris
Absolutely—and let me make it perfectly clear that, thanks to what Labour did a year ago as it was leaving office, the EU cannot veto the grant of an EU loan or credit line extended via the European financial stability mechanism.
Jacob Rees-Mogg
Is there anything to prevent us from requiring the European Court of Justice to rule on whether this use of the mechanism is legal?
Chris Heaton-Harris
I honestly do not think so.
In the most basic terms, voting for the original motion will not mean that we are no longer liable to contribute to bail-outs via the EFSM. Worse than that—as I have said—because the Government signalled they were not likely to accept the original motion, it would in all likelihood have fallen, and therefore, far from this House having put its foot down, it would not have had a view at all. My amendment merely recognises that reality. It does not build up false hope that we can simply stop being involved in these matters, but it does send a message to Government that I hope will be reflected in the ongoing debates on them: that this House wants there to be a eurozone-only arrangement in the future.
Too regularly in this place and elsewhere, those of us who question various aspects of our relationship with the European Union march our supporters to the top of the hill only to find that we are outnumbered and outfoxed, and are then valiantly and gloriously defeated. We need to get real.
Richard Drax (South Dorset) (Con)
Perhaps we are led to the top of the hill and then let down by parliamentarians who do not have the guts to stand up for their country.
Chris Heaton-Harris
My hon. Friend could, perhaps, say that, but he would obviously have to have a good 10-year track record of actually standing up for this country in a different Parliament somewhere else.
The economics of our time is proving us right. It is time we changed tactics, and time we learned from the past. Let us win the arguments we can, bank the result and push forward. I am sure that those on the Treasury Bench have noted the feeling of the House on this matter. I would like to think they understand that we expect the Government to play all the cards they are dealt in negotiations with our European partners, and I would remind them of how much cross-party support they have for their negotiations on the next EU financial framework for 2014-2020. We have a veto on that matter, and are expecting great things.
My endgame is to spare the UK the costs of these bail-outs, leaving them as a proper matter for the euroland countries. I intend to press this amendment—tabled in my name and those of more than 50 other Members—to the vote.
Section 5 of the European Communities (Amendment) Act 1993
Chris Heaton-Harris Excerpts(13 years, 6 months ago)
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Kelvin Hopkins (Luton North) (Lab)
I want to speak briefly on this document and to support my hon. Friend the Member for Nottingham East (Chris Leslie), who sits on the Opposition Front Bench. The Government’s economic policy will drive us into recession. The cuts have not really started yet, and when they do, unemployment will rise, and when unemployment rises, people will lose confidence and stop spending, and we will see a downward spiral into recession. I am convinced of that. I am not the only person saying it. As I have pointed out in the Chamber more than once, Paul Krugman, the Nobel prize-winning economist, has said that the Government are going in precisely the wrong direction. They should be trying to stimulate the economy through additional spending in labour-intensive areas, such as construction and the public sector—but that is the absolute opposite of what they are doing.
If we bring down unemployment, revenues will rise, benefit payments will reduce and the economy will grow, and that will reduce the deficit. I have used this example many times: after the second world war, under Conservative and Labour Governments, we had a gross debt two and a half times GDP—about four times what it is now—but we just maintained a policy of full employment, led by the magnificent Atlee Governments in 1945 and 1951. We had full employment, we created the national health service, living standards rose and we even ran a labour shortage such that people came from abroad to work here because the economy was growing so fast. We ran a growth economy led by public spending. That is what we should be doing now, but we are doing the absolute opposite. If other countries do the same, we will see the 1930s relived, but people have so much more to lose now it will be politically quite dangerous.
There is already a reaction in Europe to what is happening. In Finland, a Government have been elected who are baulking at the idea of bailing out some of the weaker members of the eurozone. I have no idea why we should be bailing out members of the eurozone. Ireland is a special case, because it is our nearest neighbour and effectively part of the sterling-zone economy, not the eurozone economy. We are its major trading partner and we have an exchange of population, so Ireland is a different case from the rest of the EU. For us to be bailing out other countries in the eurozone is complete and total nonsense. The sooner they leave the eurozone, recreate their own currencies and depreciate them, the sooner they will recover.
Chris Heaton-Harris (Daventry) (Con)
The hon. Gentleman puts a happy and cuddly aura around the old hard-left of the Labour party. Bearing in mind that for years we and other European countries have been reporting to the European Commission on these matters, does he think that the Commission has learned any lessons from the information it has been sent? If it has, why did it not try to help the economies of Greece, Ireland, Portugal, Italy and so on?
Kelvin Hopkins
I think that the hon. Gentleman and I agree on this point. It has learned absolutely nothing. To try to squeeze the life out of an economy that is already almost wrecked is nonsense. The Commission should allow those economies to grow, and they can grow only if they can recreate and depreciate their own currencies, and start to compete again. Ireland is in a terrible state because it chose—foolishly, I think—to join the euro. I have said to Irish politicians—in as friendly and comradely a way as possible—that they should recreate and depreciate the punt to something like the level of sterling, and rejoin the sterling zone, which is where Ireland belongs. Its economy would then start to recover. Without that, it will not recover.
Jacob Rees-Mogg
We are not having them, so I have 11 minutes—this is very exciting. Thank you, Mr Deputy Speaker for calling me last—it does sometimes happen that the first will come last and the last first.
Jacob Rees-Mogg
That is a good point.
I had not intended to speak until we heard so eloquently from the shadow Minister about the virtues of reckless spending—it is tremendously important to stop that view of the world. We have to get back to some of the debate we had yesterday, which is why it is worth supporting the Government’s financial outlook position and policy. The reason for that is that the situation will be increasingly difficult. The economy was left to us in a terrible mess, in terms of not only the public finances, but private sector debt. The idea that this will easily be recovered by getting people to borrow again or banks to lend again is simply wrong.
The hon. Member for Luton North (Kelvin Hopkins), who is an hon. Friend on European matters but an hon. Gentleman on other matters, talked about getting more people to spend and taking money off the rich so that it can be spent by poorer people, who have a greater propensity to spend. That might be fine when the banks have money to lend, but we need to get the loans-to-deposit ratio for the banks as a whole in the United Kingdom below 100%, so that the banks have the liquidity to lend. Until we are able to do that, the idea that we can have debt-fuelled re-growth is simply mistaken.
On Government debt, I wish to return to a point made yesterday by the shadow Chief Secretary on Ricardian equivalence. She does not believe in Ricardian equivalence and I do not think that many people do in exactly the terms that Ricardo spelt it out. None the less, his underlying point was completely sound: the debt of Governments will ultimately have to be paid back through tax income raised. Intelligent electors realise that and know that if the economy is growing on the basis of Government debt, that will eventually be a charge to them. It might not affect their behaviour over one or two months, but over one, two or five years it certainly does. Economies that run indefinitely on debt find that their growth levels are neutered, and anybody who doubts that should look at the Japanese economy.
If we look at what has been going on in Japan since 1990, we see that the Japanese have increased their public sector debt from next to nothing to 200% of their GDP and that in that period they have had absolutely no growth—their economy has been stagnant. Their tax revenues were lower in 2010 than in 1985, because the level of growth in the Japanese economy has been so low.
European Summit
Chris Heaton-Harris Excerpts(13 years, 8 months ago)
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Mr Hoban
It is absolutely right that Europe should be competitive and able to compete with companies in north America, Asia and south America in what are becoming increasingly challenging global markets. Europe needs to address its competitiveness, which is why we engaged in the economic taskforce led by Herman van Rompuy. We need to see changes in Europe, and my right hon. Friend the Prime Minister will be pressing for that at the summit.
Chris Heaton-Harris (Daventry) (Con)
The Minister will know that although Portugal has not so far requested any help, it is in a similar situation to Ireland, in that Ireland did not request any help at the very beginning, but was forced to take it later. Yesterday, we voted—essentially—on a treaty change. Will the Minister confirm that, if the change is made in the coming weeks—the Prime Minister having come back to the House—the UK Government will still have a veto to play, or will the veto be played this weekend, meaning that we cannot change anything in the future?
Mr Hoban
I do not know whether my hon. Friend was present for the debate in the House on 16 March when we discussed the ESM, but let me remind him of what my right hon. Friend the Minister for Europe said:
“Should there be any suggestion of amending the draft decision at the European Council—there is no such suggestion from any quarter at present—the Prime Minister could not legally agree to it at the European Council without first coming back to this House and the other place for additional approval after a further debate.”—[Official Report, 16 March 2011; Vol. 525, c. 424.]
Of course, there can be no change to the treaty unless primary legislation passes through both this place and the other place.
Court of Auditors 2009 Report
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Mr Cash
That is the problem. It is easy for us in this House to make scattergun criticisms of bureaucrats, civil servants and the rest of it, but the real problem is that if something does not work, we have to mend it—and there is no evidence of that happening.
I had an exchange with Lord Kinnock when he was responsible for these matters, and set up the new OLAF arrangements. He got a bit shirty with me in a Select Committee some years ago. People like Marta Andreasen were thrown out, and even before then, there was another chap whose name I cannot remember—
Mr Cash
Exactly. The trouble is that the moment anyone starts to get to grips with what is going on, the steel shutters come down and people are thrown out of the European institutional arrangements simply for asking questions that would be regarded as completely normal in any proper democratic system. That is the essence of the problem.
As I have said, I could enlarge at great length on the contents of these 1,035 pages, and every word would be entirely relevant because they are so important. Huge sums of taxpayers’ money and resources are being churned into this failing quagmire. This is not just the ranting of a Eurosceptic; it is the reality of what affects the daily lives of the people of this country, and we seem to be prepared to go along with it.
Chris Heaton-Harris (Daventry) (Con)
Thank you, Mr Deputy Speaker. I just hope that my maths is better than that of the European Commission, so that I know how long to speak for. There is one thing that everybody seems to know about Europe, which is that the European Commission’s accounts are not being signed off—this is the 16th year running that that has happened. What most people do not know and what never gets reported is that after the Court of Auditors gives its opinion, a very long process starts, which lasts at least nine months and gives MEPs and the Council of Ministers the power to look into every euro and cent that the Commission has spent in the previous year.
The plain fact is that the Court has no power over the European budget. I shall say that again: the headlines we read every year about accounts not being signed off refer to an institution that has no power over the institution it is checking. The European Parliament and Council, by contrast, have genuine power. If either of them refused to grant discharge—to sign off the accounts—or even if they questioned strongly the measures that the Commission had taken, the Commission would, although not compelled to resign, be under considerable pressure to sort out the problems within its accounts and accounting systems once and for all. There is a ton of jargon around the budget discharge process, but the process itself deserves a lot more scrutiny from the press, public and parliamentarians alike.
The Court of Auditors seems almost embarrassed about its refusal to sign off the Commission’s accounts and give that positive statement. It is amazingly difficult to find that information in the Court’s own report. As soon as the Court publishes its report, a debate is held in the plenary session of the European Parliament, the Committee on Budgetary Control considers the report, various questions are asked and eventually the European Parliament and the Council of Ministers decide whether to refuse or grant discharge.
The European Parliament has never decided not to grant discharge, so for the past 16 years the Court has refused to sign off the accounts and the Council and the European Parliament have refused to take the Court’s advice. They have just said, “Carry on chaps; it’s all going pretty well.” Let me give a political example. Back in April 2008, when I was still a Member of the European Parliament, Labour MEPs voted, as usual, as they always have, to let that farce carry on, whereas Conservatives MEPs voted against it. We numbered over half the entire opposition in the European Parliament and the discharge was given by 582 votes to 49.
Concurrently, there is also a debate in the European Council among member state Finance Ministers, and the results of that discussion are reported back to the European Parliament, which is why lucky people such as me know about them. That debate rarely lasts longer than a few hours and very few countries seem to care. Rarely does anyone question why money cannot be accounted for correctly, and the purpose of that meeting is pretty much to rubber stamp the accounts. To give credit to the Dutch Government, a few years ago they decided to take a stand against the waste of their citizens’ hard-earned cash and they have been finding a few friends more recently. However, I am very wary that what the Minister has said is very similar to what her Labour predecessors have said. This year, the discussion and the vote take place on 15 February.
Alas, the same cannot be said of the British Government as of the Dutch Government. In all the time that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) was the Chancellor of the Exchequer, neither he nor his Department ever raised any questions about the state of the Commission’s accounts in those meetings. He nodded through the accounts like everyone else. The amount of money that is estimated to go missing each year is between £3 billion and £8 billion, which roughly corresponds to the UK’s net contribution to the EU every year.
Mr Nigel Dodds (Belfast North) (DUP)
If these vast sums of irregular, fraudulent or wasteful expenditure were being talked about in relation to the UK, the Chamber would be packed with people on both sides who would be outraged. Would the hon. Gentleman care to speculate on why more Members on both sides of the House are not more concerned about this ongoing waste, fraud and irregularity? Why does he think that the accounts are just passed on the nod?
Chris Heaton-Harris
I shall come back to that in a moment, but I think it is because the money is spent so far away in such a disjointed fashion. It goes up through a system: it goes through our taxes, goes to the European Commission and is spent by third parties. It is all very confused and distant and I think that people are just bored by the fact that the accounts are not being signed off. It is a huge shame.
The Court of Auditors bowed to political pressure a long time ago and no longer gives a figure on the percentage of money it thinks is being spent incorrectly or wastefully, so for years now we have not had any solid figures with which to work. As a former Dutch member of the Court of Auditors, who retired recently, said:
“There was a practice of watering down if not completely removing criticism...All these abuses never came out in the open because of the Kremlin-style information we provided. But it didn’t enhance our reputation one bit...I had to threaten to resign as head of the investigation and to inform the outside world”
to get some of this information out. We have some real problems.
The accounts are pretty poor. People compare the problems with those accounts with the problems that the Department for Work and Pensions has with its accounts, but EU accounts involve perhaps between 2% and 5% going missing each year through fraud and irregularities, if not a lot more, while the Department for Work and Pensions qualifies about 1% and deals with millions upon millions of transactions. The European Commission simply does not.
What is our money being spent on? We would all be excited to know. Last year, Open Europe brought a number of things to the public’s attention: €411,000 for a dog fitness and rehabilitation centre that was never built, €16,000 to Tyrolean farmers to boost their connection with the landscape and €7.5 million of EU funding for a PR campaign for more EU funding for a region of Spain.
In a time of tight budgetary constraint, the Government should make it a proper priority to use our financial clout to sort out the problem once and for all. I believe that we should threaten to withhold even a small part of our contribution until we see some action that protects UK taxpayers’ hard-earned cash.
Bank Bonuses
Chris Heaton-Harris Excerpts(13 years, 10 months ago)
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Mr Osborne
“It says here.”
What I would say is that we have introduced the code of practice, which extends the coverage of the code to 2,500 firms rather than 25. We are taking that action, and as I have said, we are also seeking a lower bonus pool than existed when the party that the hon. Lady supports was in government last year. That is a sensible step forward in the current climate.
Chris Heaton-Harris (Daventry) (Con)
Is it not a shame that the something-for-nothing deal that was done goes far beyond just bankers’ bonuses, and has meant that small businesses in my constituency have to struggle to get a continuation of a line of credit? Can the Chancellor help me in my dealings with NatWest in this particular process in relation to a number of small businesses in Daventry?
Mr Osborne
Of course I shall be happy to look at my hon. Friend’s constituency case. He highlights the central issue that the previous Government completely failed to address: how to increase lending to the small and medium-sized business sector. That is one of our central economic objectives; that is why we are in discussions with the banks. The previous Government achieved nothing in that regard; we hope to achieve something, and we will come to the House and report on our progress.
Financial Assistance (Ireland)
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Mr Osborne
I thank the right hon. Gentleman for the support that he has given to the action that we have decided to take today. He will know that my right hon. Friend the Northern Ireland Secretary is pursuing with vigour the subject of Northern Ireland’s economic environment and business environment, the corporation tax rate and so on, and we are coming forward with plans to stimulate the Northern Ireland economy. Specifically, the Northern Ireland Secretary and my hon. Friend the Financial Secretary to the Treasury will be in Northern Ireland later this week to talk principally about what is going on this week, but I am sure they can have discussions about broader issues as well.
Chris Heaton-Harris (Daventry) (Con)
As much as I am uncomfortable with the fact that we are bailing out a eurozone country, I have to concur that it is overwhelmingly in our national interest to do so. After 13 years on the sidelines, it is nice to see us playing a central part in negotiations that affect eurozone countries and the IMF. Can my right hon. Friend reassure the House that the UK will commit resources to Ireland only if we are confident that Ireland is able to grow its way out of trouble and pay our money back?
Mr Osborne
I thank my hon. Friend for his support, and the answer to his question is yes.
Draft EU Budget 2011
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Kerry McCarthy (Bristol East) (Lab)
The Minister certainly talks very tough talk about the current EU budget negotiations, but I have several questions about how she intends to turn that talk into action. She has given a very clear exposition of the negotiations to date—the Commission originally proposed an increase of getting on for 6% in the payment appropriations; the Council then discussed reducing those appropriations; and the UK failed, at that meeting, to persuade a significant number of member states to accept the EU’s position that there should be substantial cuts. We are now at a halfway house, which means that there will still be an increase in the budget. I understand that the EU Parliament will vote next week, on 20 October, on whether to reinstate all the budget lines. Why does the Minister think that the UK Government failed in that way at the meeting and why, when the Chancellor went to ECOFIN in May to propose a cash freeze, was he unable to win a consensus?
Chris Heaton-Harris (Daventry) (Con)
The hon. Lady talks about failure. Will she remind the House how many times in the 13 years of the previous Labour Government Ministers raised one question about the fact that the European Commission’s accounts were not being signed off by the European Court of Auditors?
Kerry McCarthy
That is completely irrelevant to the subject that we are debating. The matter has been discussed in the House on many occasions and has been raised by many of the hon. Gentleman’s colleagues. I understand that, as a new Member, he was not in the House then, but it has been discussed many times.
Chris Heaton-Harris (Daventry) (Con)
I thank my hon. Friend the Economic Secretary for her comments. I shall raise a couple of issues because I should like a tiny bit of clarification on a couple of matters.
I welcome the shadow Minister to her role. Obviously, I am very new here, but what she probably does not know is that, alas, I have had to follow the European budget for 10 years as a Member of the European Parliament. In that time, I followed the abject failure of Labour Ministers who came to Brussels, gave away money and powers and did not care for this country. They did not bother to raise any questions when we were looking at the accounts and whether or not they were signed off. The hon. Lady might have forgotten the failure of a former Prime Minister who went and tried, when he was Chancellor, to get back money from structural funds but failed and then went quiet on the issue. I very much doubt that the hon. Lady has yet, in her new job, read the European budget line by line and page by page. Alas, I did that nine times out of 10: the 10th time, I found a fantastic new doorstop.
I am not going to talk about the budget in financial terms, as my hon. Friend for Harwich—[Hon. Members: “Clacton.”] I love these boundary reviews; they are so much fun. My hon. Friend the Member for Clacton (Mr Carswell) has outlined the costs. I want to press home the process behind all this. Having sat on the back benches of the European Parliament, watching all this go through, I have seen the process get to the stage that we are at now, when the European Parliament’s Budgets Committee adopted its wishlist for how much more money it could possibly spend, and I know what comes next. There will be a little knock-back from the Council at the meetings that the Economic Secretary is about to attend and then there will be the stage at which these matters will be decided by qualified majority voting, because that is how all this works.
Mr David Nuttall (Bury North) (Con)
Qualified majority voting is a term that might not be understood widely outside the House. Could we more simply describe it as other countries telling this country what to do?
Chris Heaton-Harris
I suppose so; I have heard it put in slightly more complicated terms. At the end of the qualified majority voting process, member states coalesce into different groups and it is quite remarkable that we have so many member states on our side at this time. That is something else that the Labour Government utterly failed to achieve on any occasion when it came to the budget. I think we are heading in the right direction.
I want the House to give our Economic Secretary the strong message that a number of us are simply reflecting the views of the people who elected us to this place. They see a lot of money being wasted and a lot of excess in the European Union and they know that we want to do something about it, but we need to negotiate from a very strong position. I know that the Economic Secretary is an unbelievably good negotiator. She speaks many languages when she goes abroad to talk to our European friends and those with whom we have to negotiate. I would like her to know that when she goes into those negotiations she can say, “This Government have taken a perfectly reasonable position. We are reasonable, but look at the Members of the House of Commons who are trying to represent their constituents—they are absolutely livid about the position the Government are taking just to get a half-decent cut, or maybe a standstill, in the European budget.” We are trying to give extra force to her argument—nothing more, nothing less.
I commend what we are doing in the European Parliament. My colleague James Elles, a Conservative Member of the European Parliament, has tabled many fantastic amendments, some of which might go through, because he is an able negotiator who knows the institutions very well, and some of which will not. However, we will still end up in the same position whereby, at the end of the process, the European Commission’s budget is bigger this year than it was last. That is unacceptable to the British public.
President Barroso recently gave a state of the Union address. I talk about that because I want to put into context where the argument sits now. We might be talking about the 2011 budget for the European Parliament, and I am trying to look forward to how we negotiate in the negotiations that are just opening up for the next financial framework. President Barroso put his cards on the table in his state of the Union address: not only does he want more money, but he wants to raise it in a completely different way. A former Minister for Europe talked about own resources; essentially, President Barroso would like to have a European tax. There is a debate for us to have on that.
Some people want a European tax because more member states are having debates such as the one in the Chamber today whereby their parliamentarians say, “You are spending a lot of money from direct taxation, not from the way you used to raise it.” My hon. Friend the Member for Hertsmere (Mr Clappison) referred to that and it is unacceptable in the current economic climate.
Steve Baker (Wycombe) (Con)
My hon. Friend adds a great deal to the Chamber with his wealth of experience. For those of us who are new to the EU institutions, will he explain how members of the British public may cast a vote to dismiss President Barroso?
Chris Heaton-Harris
That is a good question. I am not convinced that it is possible. There is only one way to get rid of any European Commissioner, and that is to get rid of the whole lot. That involves a process that an individual constituent— [Interruption.] No, I did not. I was way too young to be there.
Mr Dodds
May I suggest one way to address the particular issue of getting rid of some of those people? The British people should be allowed a referendum on the question of our relationship with Europe. Instead of having a referendum next May on the alternative vote system, which is not what people want to talk about, should we not have a referendum on this issue, which everybody is interested in?
Chris Heaton-Harris
The answer is yes.
I want to wind up by taking us back to the process that we are involved in. We are discussing the EU budget for 2011. Coming down the track is the EU budget for the next five or six years. If we do not make a stand now, we will be viewed as a pushover when we come to those negotiations next time round. We have done fantastic work. There has been no failure whatever by our Front-Bench team in already getting a bunch of countries to agree with what we are saying on the EU budget. I want the Economic Secretary to know that behind her she has so many friends wishing her to do well. We are just representing the British people in what they want as well.
Finance (No. 2) Bill
Chris Heaton-Harris Excerpts(14 years, 1 month ago)
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Bill Esterson (Sefton Central) (Lab)
I want to start by discussing some of the comments made by the hon. Member for Watford (Richard Harrington). He talked of total denial among Labour Members about what has happened, but probably demonstrates the same himself on behalf of the Members around him. The figures on unemployment, repossessions and business failures in my constituency this year and over the past two years during the recession are roughly half those on unemployment, repossessions and business failures during the Tory recession of the 1990s. Many Members on both sides of the House will have found that to be the case. The reason for that is the support given to families and businesses during the most severe recession since the 1930s and a decision to look after the human side at a time of greatest peril. I am afraid that that factor is in danger of being missed by this Government.
The decisions taken in this place, which my hon. Friend the Member for Wirral South (Alison McGovern) commented on, affect people’s lives as they go about their everyday business. We need to consider that; this is not just a series of numbers. Some Members on the other side of the House operate as if the cuts in spending and child benefit and the rise in VAT are just numbers, but the effect is very real for millions of people out there, and it is that effect that really counts.
The hon. Member for Watford also mentioned the multiplier effect. I see he is no longer in the Chamber— [Interruption.] He has moved seats; I apologise. The point about the multiplier effect is that it is key to providing the stimulus that will allow the economy to grow and the deficit to be cut. Only by growing the economy can we possibly have any hope of cutting the deficit.
It is the role of Government in a recession to step in and support the economy until the private sector is strong enough to take over. The reality is that, at this stage, the private sector in much of this country is not strong enough to take over, step in and replace the Government in growing the economy. That is why the issue is one of timing: how soon we make cuts and how quickly we can pay off the deficit. That is an important point, alongside the impact on people’s lives.
Chris Heaton-Harris (Daventry) (Con)
Does the hon. Gentleman not recognise that the Government can grow the economy only with money already paid to them in tax? We therefore desperately need the private sector to be kicking off, and the Government cannot replace the private sector.
Bill Esterson
The hon. Gentleman makes an important point that is often made by Conservative Members, but if the private sector is not strong enough to step in and support the economy, that approach does not work. Only when the private sector is strong enough can it step in and behave in the way that he describes. At this stage, the recovery is so fragile that my concern is that we will follow what has happened in Ireland and slip back into recession unless we get this absolutely right.
It is crucial that the timing is right, which is why the Chancellor is now considering a return to quantitative easing as advocated by the Governor of the Bank of England. It is interesting that the Chancellor is looking at increasing the amount of money in the economy, which is done by borrowing—the other way of doing this. Even the Chancellor recognises that we have to get this decision right at this stage of the economic cycle.
History teaches us many lessons. In the ’30s, and to some extent in the ’80s and ’90s, the then Governments decided to cut hard and fast. What happened was what we have seen in Ireland over the past three years: the economy grew smaller, and it grew harder to pay off the deficit, not easier. The lessons are there for us if we wish to learn from them. I hope that the Government will learn. As I have said, there are signs that the Chancellor is learning some of those lessons.
I also want to talk about the value of investment in capital projects. Tonight, some Members have talked about the way that many projects were implemented over the past few years. As I have shown by referring to low unemployment and low rates of business failure and home repossession, those investments in capital projects—not least the Building Schools for the Future programme—benefited local economies very much by providing work and business for many small and medium-sized enterprises. It is important that we keep that kind of capital spending going, which is why it was so wrong that the Government cut Building Schools for the Future and many other capital programmes when they came to office.
The primary capital programme is another such example, and I raised the playbuilder programme in Education questions earlier today. There are also schemes such as the Thornton relief road in my constituency. Road projects are a great example of how a stimulus can be very effective in a short time, through the multiplier effect, which was mentioned by the hon. Member for Watford, who has now left the Chamber. The way to pay off the deficit is by getting that stimulus in place now until the private sector is strong enough, and not to go back into recession, where the deficit will only grow.
A number of Members have mentioned the role of the banks and how they are operating at present. I have seen that myself as a number of constituents have described the circumstances that they face. Banks have been calling in loans and overdrafts at a moment’s notice, using the small print, which they always reassured business owners they would never do. In some banks, the debt collection department often steps in and threatens business owners with either having to repay at a moment’s notice or pay punitive interest rates. All that goes on without the relationship side of the bank knowing that it is being done. I have already had a number of examples of that in my constituency.
The behaviour of the banks also needs to be tackled, and I am pleased to hear that Members on both sides of the House, having experienced this through their constituents, are determined to take action. However, there is also the issue of the responsibility of the banks for creating the global financial crisis in the first place. We need to tackle that and ensure that it never happens again. We also need to ensure that those responsible for the scale of the crisis through irresponsible lending to people who could not possibly repay their loans and disguising that by using complex financial instruments are made responsible. We must come up with an effective way to deal with that in the long term.
I know that there has been discussion in Government circles of the international banking levy, and I would be interested to hear what Ministers have to say on that issue. My understanding is that they do not propose to go anything like as far as President Obama, but the opportunity should not be missed, because if we can get decent international co-operation on the level of levy that should be brought in, we have a chance of putting the international financial system in a far stronger position for the future, of finding a way to invest back in the global economy, and of ensuring a robust and lasting recovery.
A levy on banking transactions is a far fairer way of tackling the deficit than the kind of cuts being proposed. People to whom I speak in my constituency do not see how cutting child benefit or tax credits, or putting up VAT, will help to cut the deficit; they see it as taking money out of the economy and feel that they are not being supported. That makes them less likely to spend the money that will, ultimately, help businesses to get back on their feet. They do not see why people on middle and low incomes should shoulder the burden of sorting out the financial problems caused by the major financial institutions, and that is why we need to work closely with partners at an international level to sort things out.
I want to talk about why I think that some of the moves made by the Government will make it harder for us to cut the deficit and will, in fact, have the opposite effect to the one that the Government claim for them. As we have heard Members say, scrapping regional development agencies has a clear implication. By going from eight organisations to 58, it seems to me—this is also being said by business leaders, certainly in the north-west—that all we will do is cause duplication, with costs being repeated 58 times instead of eight times. The changes will make economic co-ordination more, not less, difficult. Also, many of the RDAs have a very good track record of generating inward investment. The move will cost more money and be less effective. We see the same kind of mistake being made in the health service with the scrapping of primary care trusts: that will result in the creation of more organisations that do exactly the same job, with a repeat of the costs.
I mentioned the proposals on VAT, which will take money out of the economy at a time when the recovery is still fragile. The VAT cut had the opposite effect, and I do not accept the arguments of Government Members who say that it did not. The VAT cut resulted in an immediate benefit to the economy, because the money saved was generally spent straight away: people had spare change, and they used it. That had an effect at a very local level, in the shops. Of course, VAT increases hit the poorest hardest, and the Prime Minister himself called VAT a very regressive tax when he spoke at Cameron Direct in May 2009. For once, he really did agree with Nick; Nick told the “Today” programme the same thing on 7 April this year.
In my constituency, 40% of jobs are in the public sector. What happens when those jobs are cut? When police officers, teachers or health workers lose their jobs, they stop spending money with those same small businesses that we need to thrive. They stop spending their money not only in the shops, but on builders, plumbers and other tradespeople. That puts pressure on people who are self-employed and who run small businesses, and not just on public sector workers. There will be an effect not just on the public sector but in the private sector, unless we get the approach right at this stage in the cycle.
In conclusion, we need to look to the banks in solving this problem. We need the banks to lend to small businesses, as Members have said, and we need to look to the banks to take responsibility through a global financial levy. The Government need to reconsider many of the approaches that they are taking, because they are going to make things worse; they are going to increase the deficit and make it harder to grow the economy, and their measures will not work in the way that they hope.