Oral Answers to Questions

Danny Alexander Excerpts

Tuesday 21st June 2011 Commons Chamber

[John Stevenson (Carlisle) (Con)]

5. What recent estimate he has made of the size of the structural deficit.

[The Chief Secretary to the Treasury (Danny Alexander)]

The independent Office for Budget Responsibility published its latest forecast on the structural deficit in the March economic and fiscal outlook. The OBR forecast shows the structural deficit was 7.4% of GDP in 2010-11.

[John Stevenson]

I thank the Minister for that answer. Does he agree that one of the main reasons we are experiencing financial difficulties and the large budget deficit is the simply that for a number of years prior to the recession the Labour Government were borrowing money while other, prudent economies were repaying debt, and that has exacerbated our problems now?

[Danny Alexander]

I am grateful to my hon. Friend for that question, and he makes an important point. This country was running a structural deficit from 2002 onwards, so his analysis is exactly right. However, that was not the only problem with the previous Government’s policy, of course; another was their abject failure to regulate the banks and deal with the financial system. That is a further major cause of the problems we face.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Does the Chief Secretary accept that his and his Government’s macho approach of massive cuts and confronting the unions is reducing consumer confidence, which in turn is reducing investment, and that that is hindering growth and has led to the March deficit forecast being increased by £46 billion, which is almost £1,000 per person in Britain?

[Danny Alexander]

No, I do not. The decisions we have taken on reducing the enormous budget deficit we inherited from Labour were absolutely necessary to restore confidence in this country’s ability to pay its way in the world, and that is helping to deliver the low interest rates that are delivering a significant benefit to our economy. The hon. Gentleman should recognise that, too.

[Andrew Selous (South West Bedfordshire) (Con)]

Will the Chief Secretary reassure the House that he will never behave as irresponsibly as The Daily Telegraph has revealed the last Government did? When faced with a massive structural deficit before the recession, they increased spending by £90 billion between 2007 and 2010, even though the Treasury told them to increase spending only in line with inflation.

[Danny Alexander]

I can certainly confirm that we will not repeat that mistake. We have all seen the document entitled, “We’ve spent all this money, but what have we got for it?” It is very important that this country maintains the spending plans we set out in the spending review, in order to deliver the deficit reduction that this country needs to establish confidence in our economy.

[Chris Evans (Islwyn) (Lab/Co-op)]

7. What assessment he has made of trends in bank lending to small businesses in the first quarter of 2011.

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[Steve Rotheram (Liverpool, Walton) (Lab)]

15. What recent assessment he has made of the effect on the economy of trends in the rate of unemployment.

[The Chief Secretary to the Treasury (Danny Alexander)]

The unemployment rate has fallen recently: in the latest data, it was 7.7%—down from 7.9% on the quarter. The Office for Budget Responsibility assumed at Budget 2011 that the structural rate of unemployment was unchanged from its previous trends at 5.25%. In the medium term, unemployment is expected to fall as the economy recovers, supported by the action taken by the Government, including measures published in the Budget and “The Plan for Growth.”

[Bill Esterson]

Youth unemployment peaked in 1985 four years after the recession of 1981, with disastrous consequences for a generation of young people. When the Chancellor scrapped the future jobs fund he showed that he had not learned from what happened in the 1980s. Is not the truth that the Chancellor is out of touch with the realities of life for young people and is on course to repeat the same mistakes as the Tories made in the 1980s, with the same disastrous consequences?

[Danny Alexander]

If the hon. Gentleman was being fair, he would recognise that youth unemployment was growing substantially under the previous Government as well. The country has faced the problem for many years, which is why in the Budget we announced a £200 million package of support, including work experience placements for young people, skills training, guaranteed interviews and progression to apprenticeships. Including the measures in the Budget and the spending review, we will deliver at least 250,000 more apprenticeships over the next four years, compared with the previous Government’s plans.

[Steve Rotheram]

Since this nightmare coalition came to power, the number of people out of work in my constituency has increased, and that is even before the cuts really start to bite. Is it not a fact that the Chancellor, like many Members on the Government Benches, still believes that unemployment is a price worth paying?

[Danny Alexander]

Certainly not. That is why in Merseyside, we have announced a new enterprise zone that will encompass the Liverpool Waters and Mersey Waters regeneration projects. The regional growth fund has announced several projects in Merseyside, and the Work programme in Merseyside will help to deliver support for people to get off benefits and into work; the second contractor got under way yesterday. I hope the hon. Gentleman agrees that is a serious programme to help people off benefit and into work in Merseyside.

[Charlie Elphicke (Dover) (Con)]

Will the Minister confirm that the recent announcement of the sharpest fall in unemployment in a decade and the creation of 500,000 jobs in the private sector over the past year shows hope that things are going in the right direction for unemployment?

[Danny Alexander]

We always said that the economic recovery would be choppy, but it is none the less welcome that we have seen significant job creation in the private sector over the past year. That offsets some of the job reductions in the public sector that are necessary as part of our deficit reduction programme.

[Mr Rob Wilson (Reading East) (Con)]

May I tell my right hon. Friend that since May last year unemployment in my constituency has fallen by 11%? That is due to fast-growing private companies, such as Pegasystems. Is not the key to reducing high unemployment sticking to the deficit reduction programme and removing barriers to growth?

[Danny Alexander]

My hon. Friend is absolutely right. We have to stick to the deficit reduction programme, which is the essential underpinning for future economic growth in this country. We also need to take steps to ensure that that economic growth is balanced across the country, and the regional growth fund and the local enterprise partnership programme are an important part of ensuring that we have growth across the entire United Kingdom.

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

12. What recent assessment he has made of the rate of job creation in the private sector.

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[Alison McGovern (Wirral South) (Lab)]

18. What assessment he has made of the most recent growth forecast by the Office for Budget Responsibility.

[The Chief Secretary to the Treasury (Danny Alexander)]

Growth forecasts are for the independent Office for Budget Responsibility. In March it forecast the economy to grow by 1.7% in 2011, 2.5% in 2012 and 2.9% in 2013.

[Alison McGovern]

If the OBR embarrasses the Treasury again by downgrading growth forecasts yet again, how will the Government respond?

[Danny Alexander]

As I say, growth forecasts are a matter for the independent Office for Budget Responsibility. I am clear that the deficit reduction programme is essential to ensure that we have confidence in the UK economy. Given that the Opposition caused the mess we are trying to clear up, I hoped the hon. Lady would support that.

[Stephen Hammond (Wimbledon) (Con)]

Does the Chief Secretary agree that one of the assessments that we can make on growth is that encouraging job creation in the private sector will see a reversal of the decline in the productivity experienced when the Labour party was in power, and is likely to see growth forecasts continue to rise?

[Danny Alexander]

The hon. Gentleman is right that we need to see the private sector lead the economic recovery. Many of the measures that we announced in “The Plan for Growth”, such as reforms to the planning system, the measures on regulation and some of the tax measures that we announced to support investment, will all help to encourage and support private sector businesses to lead the recovery that we all want to see.

[Glyn Davies (Montgomeryshire) (Con)]

19. What steps he is taking to reform the regulation of banks and financial institutions.

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[Stephen Williams (Bristol West) (LD)]

The spending review said that employee contributions to public sector pensions would need to increase in order to make the funds sustainable for the future. Does my right hon. Friend agree that that rate should not be applied uniformly in order to protect the lowest-paid public sector workers and encourage them to stay within public sector pension schemes?

[The Chief Secretary to the Treasury (Danny Alexander)]

I am grateful for the question. I agree with my hon. Friend. In fact, a similar point has been made by several trade union representatives in the very constructive talks that we are having at the moment, which will be going on over the next few weeks. In applying the increase in pension contributions, it is very important to protect the low-paid so as to minimise the risk of opt-out.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

Repossessions are rising and are up by 17% on the last quarter. That is very reminiscent, sadly, of the conditions under the Conservative Government in the 1990s and the cost and misery caused to families. Will the Chancellor, and perhaps the housing Minister, tell us what direct action he is going to take to support those affected and to restore confidence to the housing market?