Chris Leslie
Main Page: Chris Leslie (The Independent Group for Change - Nottingham East)Department Debates - View all Chris Leslie's debates with the HM Treasury
(9 years, 8 months ago)
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Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move,
That this House rejects this Government’s failing austerity plan set out in the Chancellor’s Autumn Statement which the Office for Budget Responsibility has said will take public spending back to a share of national income not seen since the late 1930s, before the National Health Service came into existence; notes that the Institute for Fiscal Studies has said that this would entail cuts on a colossal scale and has raised concerns that this could involve a fundamental reimagining of the role of the state; further notes that the Chairman of the Office for Budget Responsibility has said that these spending figures were based on the policy assumption presented by the Chancellor of the Exchequer and signed off by the quad, which consists of the Prime Minister, the Deputy Prime Minister, the Chancellor of the Exchequer and the Chief Secretary to the Treasury; and calls on the Government to instead adopt a different, fairer and more balanced approach, which involves sensible reductions in public spending, a reversal of this Government’s £3 billion-a-year top rate of income tax cut for people earning over £150,000 and an economic plan that delivers the sustained rises in living standards needed to boost tax revenues, in order to get the current budget into surplus and national debt as a share of GDP falling as soon as possible in the next Parliament.
I associate myself with the remarks made by my hon. Friend the Member for Barnsley Central (Dan Jarvis) in his point of order. He made the point eloquently and I pass on our condolences from the Opposition Front Bench.
The choice between this Government’s failing austerity plan and a better plan for working families at this election is now clear. The majority of people are not feeling the benefit of the recovery and the squeeze on living standards has not been so prolonged since the 1920s. When we cut through the Chancellor of the Exchequer’s rosy view and spin and look at the report produced today by the Institute for Fiscal Studies, we can see that it confirms that the vast majority of people, typical working people, are worse off than they were in 2010.
Chris Leslie
I shall give way in a moment. What has been less well known is the devastatingly corrosive effect of stagnant wages, falling tax receipts and rising welfare costs on the health of our public finances. The social security bill is £25 billion more than planned at the outset of the Parliament. Tax credit costs have risen to subsidise the low-wage economy. Incidentally, my hon. Friends know from looking at the statistics last week that, in just one year, the number of zero-hours contracts in our society has grown by 20%.
Chris Leslie
I shall give way in a moment. The number of working people receiving housing benefit has gone up by two thirds since the last general election, tax receipts have been £68 billion lower than expected and national insurance contributions have been £27 billion lower than expected. That impact on the state and health of the public finances has been a direct result of the stagnant wages and suppressed living standards in our society.
Chris Leslie
I hope that the hon. Member for Aldershot (Sir Gerald Howarth) can explain why the deficit has continued at such a level and whether he agrees that the fall in living standards has had that effect on our public finances.
Sir Gerald Howarth
I am grateful to the shadow Chief Secretary for giving way. I will tell him why we are in this situation today: the destruction of the public finances by his right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), the former Chancellor of the Exchequer and the former Prime Minister. When will the shadow Chief Secretary apologise to the British people on behalf of the Labour party for having put them through this misery, which we have now amended? We are restoring the strength of the British economy and we have the fastest-growing economy in the G7. That is no thanks to the shadow Chief Secretary but is thanks to this Government. Apologise.
Chris Leslie
I expected better than that from a knight of the realm. I thought that such partisanship would be beneath the hon. Gentleman, but no. I did not quite hear him mention those words “global banking crisis” and perhaps I might remind him of the cause of the difficulties our economy has faced. He did not answer my question about the state of our public finances today. He seems to feel content that the Chancellor of the Exchequer, who promised that the deficit would all have been eradicated by now, has not done exactly the job he set out to do in 2010. The hon. Gentleman also did not explain why things have not turned out as the Chancellor promised.
Chris Leslie
I will give way to the hon. Gentleman, because I know that he will try his hardest to explain why things have not turned out as the Chancellor promised.
Mr Newmark
I would be delighted to explain it to the hon. Gentleman. It is about something called the structural deficit and the Opposition must acknowledge that the problem we face was created not just by the banking crisis but by the massive overspending of the previous Government. That is called the structural deficit.
Chris Leslie
Now we are coming to some of the issues. The hon. Gentleman feels that the Chancellor did not make an error when he promised back in 2010 that by now we would have no deficit and that it would all have been eradicated. The esteemed Chancellor of the Exchequer promised in his autumn statement that
“we will meet our fiscal mandate to eliminate the structural current budget deficit one year early, in 2014-15.”—[Official Report, 29 November 2010; Vol. 519, c. 532.]
That is the year we are in now. This is about the Government’s record for the past four and a half to five years.
Chris Leslie
I will give way to my hon. Friend, whose constituents have been very much affected by the squeeze in living standards. He knows that it is the health of the economy and of the finances of working people across the country that determine the health of our public finances.
Chris Bryant
Will my hon. Friend explain to the hon. Member for Braintree (Mr Newmark) and everyone else who seems to have forgotten that, in 2008, the massed ranks of the Conservative party supported Labour’s public spending plans, so they cannot now pretend that they were not in this as well?
Chris Leslie
It is amazing how quiet Conservative Members are on that particular point.
Chris Leslie
I will give way to the hon. Gentleman in a moment, because a particular part of my speech is dedicated to him.
On the “Today” programme this morning, the Chancellor of the Exchequer—for it was he—uttered the phrase:
“We’ve got on top of our debts and deficits.”
Those were the words—[Interruption.] If Government Members really believe that they have been reducing the national debt and that the deficit has been eradicated, they are either delusional or not feeling particularly well.
Mr Raab
I thank the hon. Gentleman for giving way; he is being very kind. He has blamed the biggest peacetime budget deficit, which we inherited from the previous Government, on the global economic crisis. Will he confirm that the Office for Budget Responsibility’s public finances database clearly shows that public spending rose by £267 billion between 1997 and 2009-10, and that 71% of that rise took place by 2006-07—well before the financial crisis? Will he confirm that that is true?
Chris Leslie
I wonder whether the hon. Gentleman was making those points before the last general election. If he can point to evidence that he was warning, “No, those spending plans are entirely wrong and we shouldn’t be spending on schools and hospitals in that way,” I will give way to him again. Did he warn us about those problems at the time?
Chris Leslie
The hon. Gentleman is misrepresenting the OBR’s views. It is clear, as the Institute for Fiscal Studies has said today, that the global banking crisis had a devastating effect not just on this country’s public finances, but across the world. Conspicuous by its absence from the hon. Gentleman’s comments was any evidence that he had said in the past that public expenditure plans were all wrong. The Chancellor of the Exchequer and the Prime Minister signed up to support all the previous Government’s proposals.
Helen Goodman (Bishop Auckland) (Lab)
Does my hon. Friend agree that Government Members should be reminded of chart 1.1 of the OBR report, which shows that total managed expenditure rose from 36% to 40% of GDP between 1998 and 2008, and then from 40% to 46% by 2009? In other words, the biggest part came from the banking crisis.
Chris Leslie
If we had a Government who understood that a connection exists between living standards, the health of our economy and the health of our public finances, perhaps we could make some progress on deficit reduction and tackle some of those issues. Instead, recent figures show that the gap between what the Government spend and their income is perpetuating at a very high level. I think it came down from £80 billion in the first nine months of last year to £74 billion in the first nine months of this year. The deficit reduction strategy is a thing of the past for this Government, because they do not realise how stagnant wages have pulled the rug from underneath it.
Andrew Gwynne (Denton and Reddish) (Lab)
Of course, the inconvenient truth for the Conservative party is that it cannot whitewash history. [Interruption.] A BBC news online article on Monday 3 September 2007, under the headline, “Tories ‘to match Labour spending’”, said:
“A Conservative government would match Labour’s projected public spending totals for the next three years, shadow chancellor George Osborne has said.”
Chris Leslie
The reason Conservative Members are getting so irritated is that they do not like being reminded that it was a global banking crisis. They like to airbrush that entirely from the record. That has been their strategy throughout, but we will not let them forget that there was a banking crisis across the globe. We needed to take greater action to regulate it, but I did not hear Conservative Members calling for stronger regulation of financial services; the truth was quite the opposite.
If we had a rational debate, we would see the connection between living standards, growth and the health of the public finances.
Chris Leslie
I will give way in a moment.
I am afraid that Conservative Members are not driven by rationality when it comes to a strategy for dealing with the public finances. They are driven by dogma. [Interruption.] Oh, yes. They are on an ideological crusade to shrink public services as a percentage of national income. Their plan, when they stand up to talk about these things, is not about eliminating the deficit at all; it is beyond that. The guiding principle of the Conservative party is a desire for public services actively to decline year after year after year.
That is why so many Conservative Members have joined that fabled Conservative group, the Free Enterprise Group of Conservative MPs. The hon. Member for Spelthorne (Kwasi Kwarteng) is not in the Chamber, but he has famously called for massive reductions in public spending. The Economic Secretary, who will wind up the debate, is also a member of the Free Enterprise Group, as is her colleague the Exchequer Secretary and the hon. Members for Macclesfield (David Rutley), for Wyre Forest (Mark Garnier), for Esher and Walton (Mr Raab) and for Dover (Charlie Elphicke). I am sure there are others, although perhaps of a lower ranking order within the Free Enterprise Group structure. [Interruption.] Well, I am not a member of the Free Enterprise Group of Conservative MPs and, with members like that, I am quite glad I am not.
That organisation reveals the true face of the Conservative agenda. It believes very much in shrinking the state and it is driven by that fundamental belief. It is highly dogmatic and has used the financial crisis as a pretext for reducing the level of public investment.
Chris Leslie
The hon. Gentleman is a member of the Free Enterprise Group. Does he stand by its manifesto?
Charlie Elphicke
Let us talk about Labour’s spending commitments. The shadow Minister has been going up and down the country making £20 billion-worth of unfunded spending commitments. Would they be paid for by more borrowing or more taxes?
Chris Leslie
That was a good try, but the hon. Gentleman knows very well that we do not have unfunded spending commitments. Our manifesto will be fully costed and fully funded. He does not need to take my word for it: we would be more than happy to let the OBR audit all of the proposals in our manifesto and to undertake to validate that they are, indeed, fully costed. I wonder if any Government Members would like to support the idea that all the political parties should have their manifestos fully costed by the OBR. Can I see a show of hands?
Chris Leslie
There is one individual: the hon. Gentleman is an independent champion on Treasury matters. I wonder whether he would like to at least say that there is a strong case for letting the OBR cut through this political nonsense and make sure that we have proper independent validation of spending commitments. Does he agree with that?
Mark Garnier
I do—absolutely. In the early part of this Parliament the Treasury Committee looked at exactly that point and there was a big and heated debate about it. Conservative members were in favour of it, but Labour members were not, and they were led by the shadow Business Secretary, the hon. Member for Streatham (Mr Umunna), who was dead against it. What does the shadow Minister have to say about that?
Chris Leslie
Well, we are all in favour of it now and I am delighted that there is consensus. In fact, I am tempted to invite the hon. Gentleman to this side of the Chamber, but we have a rigorous application process and he would need to go through a number of other stages first.
The Conservatives’ strategy is failing and there are good reasons for that. They do not realise the important role that active Government can play in supporting our economy and improving living standards. Government and public investment can make a real difference, whether by guaranteeing apprenticeships, tackling unfair energy bills, raising the minimum wage, banning exploitative zero-hours contracts or action on housing and infrastructure to boost productivity. All these would represent a better plan but the Conservatives’ 1930s strategy, coupled with that trickle-down philosophy, is totally discredited. Lavishing tax cuts on the very wealthiest 1% is not just the wrong priority; it is also the wrong strategy.
Chris Leslie
I am conscious that there are many hon. Members who want to get in so I will limit the number of interventions hereafter, but how could I resist giving way to the hon. Member for South Derbyshire (Heather Wheeler)?
Heather Wheeler (South Derbyshire) (Con)
The hon. Gentleman is very kind. He speaks about tax cuts being only for the top 1%. Will he congratulate Conservative-controlled South Derbyshire district council, which is not only holding the council tax for the fifth year running, but is going to give a rebate in July to every council tax payer in the whole of South Derbyshire? They will all get a council tax rebate.
Chris Leslie
Local government matters are for individual authorities. I know that there are a number of authorities that are struggling financially and finding things very difficult, not least because the funding formula has been so heavily rigged and skewed by the Secretary of State for Communities and Local Government. I do not know the individual case of the hon. Lady’s district council. Individual local authorities will have to make their own decisions. Her constituents, like others, have to look at the situation in the round. The Government are very good at giving a little bit with one hand, and taking back so much more with the other. Her constituents know about the rise in VAT that she voted for and those cuts to tax credits, among other things.
Mr David Anderson (Blaydon) (Lab)
I thank my hon. Friend for giving way. He is being far too generous to Government Members, who do not deserve it. In my council area, £328 is being stolen from every man, woman and child and 1,700 good quality public servants are being put on the dole, just to prove that the Government’s long-term economic plan is working. It is not a plan; it is a sham.
Chris Leslie
We need to tackle the blatant unfairness of the rigged funding formula for local government finance, which the Labour party has committed to do in government.
Helen Jones
Will my hon. Friend remind Government Members that when the Government introduced their Local Government Finance Act 2012, they deliberately set up a system that penalised the poorest councils more than the richest councils, they took no notice of the amount of council tax that could be raised from different boroughs, and in doing so they destroyed the social services system, which is now leading to people remaining in hospital when they should be out—a prime example of a stupid cut which costs more in the end? [Interruption.]
Chris Leslie
Government Members are trying to shout down my hon. Friend because they do not like to hear the truth. The truth is that many of our public services are affected by the support and the funding formula given to local government. She is right to highlight the impact—
Andrew Bridgen (North West Leicestershire) (Con)
Will the hon. Gentleman give way?
Chris Leslie
No.
My hon. Friend the Member for Warrington North (Helen Jones) is right to highlight the impact on our national health service of some of the devastating changes that have hit social care. She made her point well.
It is bad enough that the Chancellor and the Prime Minister fight so hard against the idea that an inclusive approach leads to a stronger economy and a better plan. [Interruption.] What is worse is that the Prime Minister, the Chancellor and Government Members fully intend to accelerate the failing plan for a further five years—[Interruption.]
Madam Deputy Speaker (Dame Dawn Primarolo)
Order. Conservative Members have had their fun in shouting across the Chamber. The debate should settle down now, with interventions when they are taken, but a proper debate. Mr Smith, if you have a question, it is normal to stand up on an intervention, not just speak by Christian name across the Chamber. Thank you.
Chris Leslie
I may give way to the hon. Gentleman in a moment, but not just yet.
I want to pause for a moment and reflect on the implications of taking UK public expenditure on vital public services down to the 35% level that was announced in the autumn statement. These plans would mean that we are only halfway through the cuts. These are plans for the biggest cuts to public services since the second world war. The Office for Budget Responsibility says on page 148 of its report that
“the closest equivalent in the National Accounts implies that by 2019-20 day-to-day spending on public services would be at its lowest level … since the late-1930s as a share of GDP.”
The OBR goes on to say—Government Members may not have heard this—that
“total public spending is now projected to fall to 35.2 per cent of GDP in 2019-20, taking it below the previous post-war lows reached in 1957-58 and 1999-00 to what would probably be its lowest level in 80 years.”
That recalls a time before we had an NHS, when children left school at 14, and when life expectancy was just 60. That is why Paul Johnson of the Institute for Fiscal Studies said on 4 December that we can expect
“Spending cuts on a colossal scale…taking total government spending to its lowest level as a proportion of national income since before the last war.”
Chris Leslie
I seem to have hit a nerve with Government Members. I give way to the good-looking one.
Stephen Hammond (Wimbledon) (Con)
That is one of the few points on which I agree with the hon. Gentleman. He has been quoting selectively from various institutions. He has just quoted the IFS. The director general of the IFS has said that
“if the Conservatives win the election they will neither, despite what the opposition would have us believe, destroy the NHS nor return the welfare state . . . to 1930s level of provision.”
Does the hon. Gentleman accept that, and will he now withdraw his previous comment?
Chris Leslie
With the greatest respect, I do not accept that. I will come to that shortly.
When we look at the effect on public finances of the plan that the hon. Gentleman has signed up to with the Free Enterprise Group and with the Prime Minister and the Chancellor, the effect on our public services, not least the NHS, could be exceptionally difficult and potentially implausible.
Paul Johnson of the IFS asks:
“How will these cut be implemented? What will local government, the defence force, the transport system, look like in this world? Is this a fundamental reimagining of the role of the state? ... If we move in anything like this direction, whilst continuing to protect health and pensions, the role and shape of the state will have changed beyond recognition.”
Is it any wonder that UKIP has backed Conservative plans? No surprise there.
Be under no illusions—the Conservatives’ pathway for the next Parliament is a statement of intent to wage war on public services, and people need to understand the tremendous risks involved. It is a major threat to the viability of public services, which would wreak havoc especially in non-ring-fenced areas such as policing, border controls, child protection and social care. Such extreme plans would decimate skills, infrastructure, research and development and science, undermining the competitiveness of our economy. Devastation on that scale would not be tolerable, which is why we suspect that the Conservatives have secret plans to hit household finances in other ways.
Chris Leslie
I want to make sure that other Members have a chance to contribute to the debate, so I will give way one final time.
Andy Sawford (Corby) (Lab/Co-op)
The difficulty that Government Members have is the question of motive. When people across the country see Sure Start centres, police stations and NHS walk-in centres closing, underinvestment in schools and queues outside our A and Es, they know what a Tory Government have done already, and they know what will happen if we go back to their 1930s plan.
Chris Leslie
The whole country will be affected, including Scotland, Wales and Northern Ireland, if the Conservatives are given a further five years for their ideological plan. The plan has not just failed to date; it will continue to fail and will continue to harm those on lower and middle incomes and those who depend on public services. The Conservatives will not set out where their billions of social security cuts will hit, for example, so we have to take past performance as a guide.
Chris Leslie
I will not give way again, because I want to make some progress.
Tax credits, for example, have already been hit hard in this Parliament. The typical household is £1,127 worse off this year as a result of the tax and benefit changes introduced since 2010. Those who depend on tax credits to make ends meet need to be aware of what five more years of Conservative Government would mean.
There is a better, sensible and balanced alternative, a sensible fiscal framework aimed at getting the current budget into surplus and national debt falling as soon as possible in the next Parliament. We must make progress and cut the deficit every year. Where we make promises in our manifesto, supported by the hon. Member for Wyre Forest (Mark Garnier), they will be fully funded—we want them to be audited independently by the OBR—and they will not involve additional borrowing. We need workable efficiencies and spending reductions in non-protected areas. We have already published seven of our interim zero-based review reports listing examples of where those could be made. We need fairer choices on taxation, not a £3 billion give-away to the richest 1% earning over £150,000 a year. Fundamentally, we need rising living standards and sustained growth to repair tax receipts and control welfare spending, which has got totally out of control under this Government.
This Government’s failing plan has not eradicated the deficit, but it has left us with an NHS in crisis, the bedroom tax and 20 million meals served in food banks last year. Their sharp turn towards a right-wing ideological approach would cull public investment to levels not seen since the late 1930s. For our public services, for policing, for social care, for defence and for the NHS, at this election the stakes have never been higher. I urge the House to reject the Conservatives’ risky and extreme approach and instead back Labour’s fairer and better plan for the future.
Mr Gauke
My hon. Friend is absolutely right. I was struck that when it came to the substance of the shadow Chief Secretary’s speech, he rather rushed through that process. He tells us that he does not like our spending plans—I will come to the details of that in a few moments—but he does not tell us how much extra he would spend, or, if he is going to spend extra, how he is going to pay for it. Will it be through higher taxes or through more borrowing? We did not get any indication.
Chris Leslie
If the Minister wants to clear all these things up and make sure that we have an independent appraisal, does he back the hon. Member for Wyre Forest (Mark Garnier) in supporting the idea that the Office for Budget Responsibility should be allowed to report on the proposals of all the parties? What is so wrong with that?
Mr Gauke
I am afraid that that is a bit of a red herring. If the shadow Chief Secretary wants to set out what his plans are, and if he believes that spending needs to be higher than it would be under a Conservative Government, he can tell us how much higher—he does not need the OBR to look at his numbers. Does he believe that spending should be financed through more borrowing or more tax? What is it to be—a tax bombshell, a borrowing bombshell, or both? I will happily give way to him. He does not want to answer.
Mr Gauke
My hon. Friend makes a very important point, to which I will return in a moment.
Although we have made considerable progress, the reality is that we face further difficult decisions. On that basis, the House signed up to the “Charter for Budget Responsibility” last month. It enshrines in law that the Government elected in May, whatever their colour, must have a plan to tackle the deficit and to bring our national debt under control. Pretty well all of us, with one or two exceptions, committed to achieving falling national debt as a share of GDP by 2016-17, and to balance the cyclically adjusted current budget by the end of the third year of the rolling forecast period, which is 2017-18.
On the latest forecasts, the charter requires about £30 billion of consolidation in the first two years of the next Parliament. Under the plans set out by the Chancellor, it will be achieved by bearing down on spending, the welfare budget, and tax avoidance and evasion. To break the figure down, that is at least £13 billion of savings from Departments’ spending, at least £12 billion from welfare and more than £5 billion from tax avoidance and evasion.
The Labour party agreed to the charter: the motion was passed by 515 votes to 18. Perhaps it believes that a fiscal consolidation of £30 billion is too much. After all, that is the position of the Greens and the nationalist parties, who have explicitly said that they would borrow more over the next three years. That position is irresponsible, but I accept that it is coherent with everything else that those parties are saying. Labour, however, has voted to accept that a fiscal consolidation of £30 billion is necessary, so where is it coming from?
Mr Gauke
In a moment. If the Labour party does not believe in making savings from departmental budgets or welfare, where is the money coming from? To quote its leader,
“if we just try and cut our way to getting rid of this deficit, it won’t work.”
That is the Labour party’s position. Out come the old answers, but where is the money coming from?
Chris Leslie
The Minister must have the charter for budget responsibility with him. I will give him a moment if he wants to pick it out of his file. Where does it say in the charter for budget responsibility—perhaps he could give us a page or line reference—that the figure is £30 billion? Can he quote the OBR on that figure either? Is it not the case that the charter for budget responsibility was about agreeing to focus on current budget plans, and not about the absolute budget surplus that his party was apparently committed to? What on earth was going on?
Mr Gauke
That position is supported by the IFS. The figure is £30 billion. Where is it coming from? The Labour party simply does not have an answer. If it is not prepared to accept the £30 billion figure, it will be borrowing more. If it does accept the £30 billion figure, where is it coming from? If it is not coming from spending, it must be coming from tax.
Mr Gauke
As I said, the money has to come from somewhere, and middle-income earners are probably pretty high up the list. To be fair, it is not just the 50p rate, although that is the only policy mentioned in the motion. In television interviews, the shadow Chief Secretary to the Treasury has proclaimed one other policy to reduce the deficit. This is the key to deficit reduction and the policy that will restore public finances to health: a future Labour Government will put up fees for gun licences. How much will that raise? A whopping £17 million—except, to be fair, the shadow Home Secretary has already pledged to spend that money elsewhere.
Chris Leslie
The hon. Gentleman urged me to give the Minister both barrels, but I will try to resist. It is all very good banter trying to claim that that is the only way we would deal with the deficit, but of course that is absolute nonsense—when asked for examples, we give examples. The Minister raises an important point about gun licences. It is a small amount of money but it is still worth doing. Is he saying that we should not raise gun licence fees? Is he ruling that out because he thinks it is the wrong idea?
Mr Gauke
It was an attempt to show how ridiculous the Labour party’s economic policy is when the only example it puts forward, apart from the 50p rate, which is likely to cost money, is increasing the cost of gun licences. I did not really expect the shadow Chief Secretary to take it seriously that that was the big policy. Does he disagree that the shadow Home Secretary has already claimed that that money will be spent on policing? It is going to be spent on policing, is it not? There was a time in debating these matters when the big argument from Labour Members, their big macro-economic analysis, was that we were going too far, too fast. Now it has come down to this. What have they got a few days away from a general election? They have a policy on gun licences—that is it. What has the great Labour party come to? Gun licences!