Charter for Budget Responsibility

Danny Alexander Excerpts

Wednesday 26th March 2014 Commons Chamber

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

I am grateful to the shadow Chief Secretary for his support for this measure, albeit that from him and the Chancellor we heard another two flatlining speeches from a flatlining political party.

[Ed Balls]

Shadow Chancellor.

[Danny Alexander]

Shadow Chancellor. I am glad he agrees that he is flatlining.

This has been an important debate, and I agreed with the hon. Member for Hackney North and Stoke Newington (Ms Abbott) in one respect. She was right to say that this was an important debate on an important subject and should be treated as such. However, it is for precisely those reasons that I support the cap that we are debating, as does my party. Let me explain why. During the debate a few myths have grown up about the cap, which I want to tackle. Fundamentally, as my hon. Friend the Member for Birmingham, Yardley (John Hemming) made clear, the motion is about accountability to Parliament and about the transparency of public expenditure decisions.

[Mark Durkan (Foyle) (SDLP)]

Will the right hon. Gentleman give way?

[Danny Alexander]

I do not have much time; I intend to make some progress.

Fundamentally, the motion is about ensuring that we have greater control over public expenditure in this country, and that where a Government wish to deviate from the plans they set out to this House, they must return to the House to explain why they want to make a change, or what action they will take to deal with the pressures that have emerged.

One of my priorities when I came into office as Chief Secretary was to increase the amount of public expenditure that is under the direct control of Government, and indeed under the direct control and accountability of this House.

[Mr MacNeil]

Will the right hon. Gentleman give way?

[Danny Alexander]

I will not give way.

When we came into office, only 53.8% of public expenditure was under a direct mechanism of control—departmental expenditure limits. That means that nearly half of public expenditure was simply beyond control—it was so-called annually managed expenditure, which in practice meant annually unmanaged expenditure. Progressively, over the course of this Parliament, we have put in place additional mechanisms to control an ever-rising amount of public expenditure. The pension reforms, which mean that in future the state pension age will be linked to life expectancy, bring greater control over the costs of the basic state pension. The reforms of public service pensions, which include a cap on the costs within public sector pension schemes, bring that source of expenditure, which had ballooned out of control under Labour, much more directly under the control of Government.

In total, when the measures in the welfare cap are included, we will have increased the amount of expenditure under direct control and directly accountable and transparent to this House from around 50% at the start of the Parliament to 77% at the end of it. From the perspective of every Member in the House, that ought to be a welcome change, because it means that this House has more say and more ability to scrutinise and hold accountable the Government for changes in public expenditure that take place on their watch.

A number of hon. Members mentioned unemployment benefits and jobseeker’s allowance. The hon. Member for Paisley and Renfrewshire North (Jim Sheridan) referred to his experience in receipt of unemployment benefits. He is right that most people in that situation are not there through any fault of their own. That is precisely why jobseeker’s allowance is excluded from the scope of the cap. The benefits that are the so-called automatic stabilisers that fluctuate with the state of the economy—jobseeker’s allowance and the benefits that are passported from it and, in due course, those elements of universal credit, too—will not be in the scope of the cap, precisely for the reasons that he described in his speech. That perhaps ought to reassure him and encourage him to vote for the measure.

Fundamentally in the end, I think those people who are speaking against the cap betray their own lack of confidence in their ability, should they wish to, to come to the House transparently and accountably and persuade the House—

[Mr MacNeil]

rose—

[Danny Alexander]

I have one minute left. No, I am not going to take any interventions; I am going to make progress.

Those people who speak against the cap betray an enormous lack of confidence in the ability of those who think that, in response to circumstances, welfare spending should be increased above the cap, to come here and persuade the House that that increase in expenditure would be necessary. The truth, over many years, has been that where there have been changes in forecasts, and where decisions have been made that have led to increased costs, they have been sneaked in through the back door, through the forecast, without any direct accountability to this House.

The people who say that the cap involves expenditure cuts are also wrong. The cap starts at around £120 billion and rises over five years to £127 billion, in line with inflation, so we have set it at a reasonable level. In this House, we should never again go back to the situation we had under the previous Government, where public expenditure was uncontrolled, and where debt and the deficit were allowed to balloon uncontrollably. This is part of clearing up the mess that was made of the public finances, and I commend the motion to the House.

Question put.