London Local Authorities Bill [Lords]
Debate between Chris Williamson and Jacob Rees-Mogg(12 years, 10 months ago)
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Jacob Rees-Mogg
I am very sympathetic to what my hon. Friend says, and I add that many of my amendments take chunks out of the Bill. Therefore, visitors from St Albans, North East Somerset and all over the country—from Leeds, indeed, where the shadow Minister is from—
Jacob Rees-Mogg
Derby—I am so sorry. Those visitors would not be caught out by all sorts of strange people. [Interruption.] I do know where Shipley is.
Savings Accounts and Health in Pregnancy Grant Bill
Debate between Chris Williamson and Jacob Rees-Mogg(14 years ago)
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Jacob Rees-Mogg (North East Somerset) (Con)
Thank you for calling me, Mr Deputy Speaker. I feel slightly guilty that you have had to do so three times in almost as many days. I assure you that I am not modelling myself on Psmith—with a silent “P”—and his haunting of John Bickersdyke, which you will remember from the book “Psmith in the City”. I am really not trying to do that, and I will be as brief as I can while discussing this important Bill.
Benjamin Disraeli famously said that the job of the Opposition was to oppose, and we have seen that today. Indeed, we have seen it all afternoon. We have seen rather specious opposition to the Bill. Whenever the subject of where the money is to come from arises, there is no answer. VAT should not go up to pay for our bills; benefits should not be cut to pay for our bills; so we must spend, and we must have no increase in taxation. What happens to the nation’s finances at that point? What happens to the national debt? What happens to the deficit? We go down the sorry road towards bankruptcy. That really is what Opposition Members have been arguing for. It is the “do nothing” school; the argument that, like Nero, we should fiddle while Rome burns.
Chris Williamson
Will the hon. Gentleman at least acknowledge that before the economic downturn, the debt ratio in this country was lower than the debt ratio that the Labour Government inherited in 1997? The fact is that it was the Labour Government who introduced measures to keep people in their homes and in employment, and to prevent the appalling circumstances to which ordinary working people were subject in the 1980s when the hon. Gentleman’s party cast people aside.
Jacob Rees-Mogg
The hon. Gentleman’s point is fundamentally flawed. In 1997, the socialist Government decided to stick to Conservative spending targets. That is the one sensible decision that they made. It is not surprising that they managed to reduce the public debt by doing what the Conservatives had said that they would do. As for the deficit that built up before the crisis hit, there was a structural deficit—probably equivalent to 7% or 8% of GDP—which had resulted from excessive and extravagant expenditure. That is the nub of what we are debating today. We need to examine these benefits, and establish whether they are right in principle.
I will declare an interest. My three children have been the fortunate beneficiaries of £250 each—£250 spent extraordinarily well, Members may think, beneficially and wisely, so that in 18 years’ time my children will have something to spend when they are a little older. Is this really a sensible use of taxpayers’ money? It is too small a sum to make a difference even with the benefits of compound interest, yet too large a sum for our public finances to stand when aggregated across the whole of the economy and the total number of children who will be born. It is a wrong benefit, which is rightly being abolished. To contradict the hon. Member for Stretford and Urmston (Kate Green), who spoke before me, it is also a benefit that cannot be spent for 18 years; it will be of no economic benefit until the child is 18.
Jacob Rees-Mogg
The winter fuel allowance goes to the elderly, many of whom will have paid full national insurance contributions, and it is therefore in some sense a recompense for what they have paid in. I think that to look after the old in society is an important and virtuous thing to do. It is right to give that help so that people can be warm in their homes, but we are talking at present about £250 for children when they are born that will give them a pitiful amount a few years later. We are talking about £190 given to every woman who is going to have a baby for no necessary benefit to her because she may not need the money or it may be received too late for her to address some of the problems referred to earlier. Those two benefits are therefore unnecessary and wrong.
The third benefit is the Government’s matching of personal savings, and there is a misconception here. Saving from a deficit is a dis-saving to the economy because there are costs associated with allocating that saving. To put that more simply, if someone borrows money from one account to put into another account they will pay a higher rate of interest on their borrowings than they will receive on their savings so, net, the country is dis-saving by topping up savings accounts. Opposition Members are therefore wrong to say that this is an encouragement to saving.
We need to look at all that is being done in the broader context. We have this phenomenal deficit—our highest peacetime deficit—which the Government have, in a workmanlike and serious-minded way, decided to tackle. They have decided to bring the deficit down so that we may have the conditions for economic growth. The essence of good government and of a sensible Treasury policy is to ensure that there are the conditions where business can thrive, jobs can be created and money can cascade through the economy. That is what really lifts people out of—
Chris Williamson
The hon. Gentleman referred to job creation. Will he therefore comment on the fact that almost 500,000 jobs will go in the public sector as a direct consequence of the comprehensive spending review, followed by a further 500,000 jobs at least to go in the private sector? How does the hon. Gentleman square that circle?
Jacob Rees-Mogg
I am not going to try to square circles, which I believe is not possible, but those figures are fundamentally contentious, and it is also worth bearing in mind that outside the private sector the country has no income. Every penny spent by the Government either has to be raised in taxation or borrowed.
Chris Williamson
Is the hon. Gentleman therefore contesting the figures of the Office for Budget Responsibility?
Jacob Rees-Mogg
The hon. Gentleman knows the figures are contentious because he cited the figure of how many jobs will go in the private sector, but he is ignoring the jobs that will be created. We find ourselves in the extraordinary situation that 700,000 public sector jobs were created by the last Government without the money to pay for it. We cannot run a system under which we employ people and pay them what are essentially tokens because we have no real money. Are we to follow California and pay servants of the state IOUs because there is no proper currency with which to pay them? Are we going to so debauch our currency and print even more of it that there are no funds with which to pay people? Are we going to destroy our gilt market so that the Government are unable to raise money? No, Her Majesty’s Government have been brave, courageous and right, and they have taken tough decisions. They have taken decisions mocked by Labour Members because they dared not do this; they talked quietly in secret rooms about how much they were going to cut. These cuts then get leaked in the newspapers because Labour Members dare not come boldly to this House to say what they want to do.
Chris Williamson
I beg your pardon, Mr Deputy Speaker, and that of the House for continuing to intervene on the hon. Gentleman, but I cannot allow him to get away with his remarks. I wonder whether he studied history at all when he went to school and university, and whether he would care to ponder on what happened in the 1930s in America, when its plans put people back into work, compared with what happened then in this country. The prospectus that is being followed by this Administration was similar to what was done in the 1930s and saw mass unemployment.
Jacob Rees-Mogg
I am grateful to the hon. Gentleman for his kind and helpful intervention, because I happen to have with me some economic data from the 1930s. I believe they will prove helpful because they are from the United Kingdom. It is a common error—if I may say so, it is a schoolboy error—to confuse the situation in the United Kingdom with that in the United States in that decade. In 1931, public spending in the United Kingdom was £1.174 billion, a figure that had been cut to £1.061 billion by 1934. Unemployment peaked in 1932 and gross domestic product grew from £4.399 billion in 1931 to £4.813 billion in 1934. So there was a percentage cut of nine-odd per cent. in public spending accompanied by a 9% rise in GDP, and unemployment peaked long before the cut in public spending was at its maximum point.
So in fact this Government are rightly following what the British Government did in the 1930s, and the key thing, which I will give credit to the Labour Government for, was coming off the gold standard. In 1931, having an active monetary policy meant that the economy could grow even while public spending was being cut. Her Majesty’s previous Government, the one that she dispensed with on 6 May or thereabouts, allowed the pound to fall so much and allowed the Bank of England to ease quantitatively—or print money, to put it in less jargonistic terms—that the increased money supply created the conditions where this Government can and must cut fiscally, and can have economic growth and falling unemployment. We are already seeing some of the fruits of that coming through in the figures announced today.
Building a High-Skilled Economy
Debate between Chris Williamson and Jacob Rees-Mogg(14 years, 5 months ago)
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Chris Williamson
The hon. Gentleman is being a little unfair. He fails to recognise the huge expansion in the service sector. We can play with statistics, but in the 1980s, there seemed to be a clear policy of undermining manufacturing in this country. The car industry was destroyed and the steel industry was undermined.
Jacob Rees-Mogg (North East Somerset) (Con)
Labour Members consistently harp on about how Conservative policies in the 1980s affected manufacturing, but will they say something about the damage done to industry by the aggressive trade unionism of the 1970s and 1980s, and might they take the plank out of their own eye before they look at the mote in ours?
Chris Williamson
Labour Members harp on about the 1980s because of what happened then. The policies of the previous Conservative Government damaged the car industry and shipbuilding, and manufacturing right across the piece in our country. It is completely wrong to blame trade unions for the systematic destruction of manufacturing in this country.