Budget Resolutions and Economic Situation

David Anderson Excerpts

Friday 20th March 2015 Commons Chamber

[Mr Pickles]

In a few moments I will. It would be rather nice if I was able to start the speech, because I am sure that the hon. Gentleman would like something to critique.

Five years later, it is a different story: we have stepped back from the cliff edge, our growth rate is faster than that of anywhere in the G7, and our job creation is the envy of the developed world. It all confirms the old Yorkshire proverb, “Where there’s muck, there’s brass” and, boy, did Labour leave us a lot of muck. We have managed to start cleaning up the mess only because we stuck to our long-term economic plan. We stood our ground when ferocious economic headwinds blew in from the eurozone. We did not listen to those who said that the only solution was more borrowing and more spending beyond our means. Nobody now talks about plan B. We stood firm, and as a result today the deficit has been brought down by a half. Living standards are rising and a record number of people have found jobs. With our council tax freeze, there is more money in people’s pockets. The Budget is built on economic success. It will make our economy more resilient and protect taxpayers’ money. It will bring down the deficit and ensure that Britain pays its way in the world, so much so that the shadow Chancellor said that there is nothing in the Budget that Labour would vote against. Now the hon. Member for Blaydon (Mr Anderson) will tell me why the shadow Chancellor was wrong.

[Mr David Anderson (Blaydon) (Lab)]

I will tell the right hon. Gentleman what I want to tell him. He cited a Yorkshire phrase, but what we have seen over the past five years is closer to another Yorkshire phrase: “What’s thine’s mine, what’s mine’s my own.” That is how they operate in the right hon. Gentleman’s party, and they always have.

[Mr Pickles]

I kind of regret giving way to the hon. Gentleman. That sort of bellicose description is not worth considering. After all, Yorkshire is at the very heart of our economic growth, but naysayers like him—

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[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

It is a pleasure to follow the right hon. Member for Bexhill and Battle (Gregory Barker), particularly since he referred to the most left-wing Opposition the country has seen for years. I am afraid that my remarks may not have as much credibility in that regard as he hopes. The one thing his speech has confirmed is that the subject under discussion is a Conservative pre-election Budget. When he made his tentative references to the northern powerhouse even the sun hid behind the moon, and we know that when it re-emerges the Liberal Democrats will take the credit for it and say that that is what they achieved for us, by working with others.

The Chancellor made it very clear—although he did not emphasise the point—that he is raising money in this year’s Budget and he is doing the same again next year. The substantial spending comes in 2018-19 and beyond—in the future. It is unreasonable to criticise a man for being lucky, but the Chancellor has enjoyed good fortune: inflation is falling; the oil price is coming down—no doubt the Liberal Democrats want to take credit for that as well, but such things are largely outside the control of individual Governments—and he is the beneficiary of the one-off receipts of the Northern Rock and Bradford & Bingley mortgages and the Lloyds bank share sell-off.

The Chancellor’s strategy, however, relies on achieving a further £25 billion-worth of public expenditure cuts. In fairness to the Secretary of State for Communities and Local Government, he has made the point that he cannot do the same thing over again in his Department. Three Departments have a measure of protection: Education, Health and International Development, leaving the burden to fall on the rest. Given the significance of what is proposed, we should have more detail before us. We know that at least £12 billion is to come out of the Department for Work and Pensions budget—and almost certainly out of the working-age component of the budget. Since much of this is demand-led, that seems to me to be quite a difficult thing to do, and the Chancellor should have set out to the House exactly how he intends to do it.

In his 2014 conference speech the Chancellor pledged a freeze in working-age benefits up to 2017, saving £3 billion. There is more to be found. He has indicated changes to jobseeker’s allowance and housing benefit and, in that context, the words “change” and “reform” must mean “less”. It is worth reflecting on what other proposals there might be as part of the £12 billion in working age benefit cuts. For example, there is the restriction of child benefit to the first two children. Of course the devil is in the detail. If that turns out to be unachievable, the alternative—if the Government are to have a chance to stick to their long-term plan—will be to look at indirect taxation or at the budgets of the three exempted Departments, such as Health.

The Conservatives have form on indirect taxation. Before the 1979 election they specifically denied they would double VAT. I remind the House, however, that they moved it from 8% to 15%—thus did they keep their pledge. Towards the end of John Major’s Government, the right hon. and learned Member for Rushcliffe (Mr Clarke) abolished zero-rating for fuel bills, bringing them permanently into the lower VAT band. Before the last general election the Conservatives had no plans to raise VAT, but managed to come up with some immediately after the election.

In earlier decades Conservative Chancellors would treat us to a Budget-day lecture on the money supply without mentioning quantitative easing or the over-optimistic use of leverage in the financial services sector, including the unregulated shadow banking sector. The Chancellor did not mention these things earlier, either. We, as a House—this ought not to be a party political point—need to focus on the work of the Governor of the Bank of England as regulator of the financial services sector and on the Governor’s work in foreseeing potential future shocks to the financial system.

The Chancellor did make one reference to this in the Budget speech, wedged between a section on inflation and a section on farmers’ tax returns. He confirmed the remits of the Monetary Policy Committee and the Financial Policy Committee. There is no new architecture between those committees and the House of Commons, but I think there should be. Accountability and transparency would be powerful weapons in ensuring that those serious issues are being taken seriously. The Chancellor made much of the employment figures, although the tightening of the labour market is not evenly spread throughout the United Kingdom. Unemployment is still an issue for the north-east of England.

I would like to have had some analysis from the Government Front Benchers about the mismatch between the employment figures and the productivity outcomes. The Office for Budget Responsibility described the UK’s “productivity puzzle” as the biggest risk to the United Kingdom’s economic health. The Chancellor is banking on increased tax revenues to help fulfil his Budget forecasts. Low productivity is holding down pay rises, and we are in the fifth year of public sector pay restraint. So there seems to be a contradiction, unless there is an as yet unspoken plan to increase indirect taxation. No doubt, if the Conservatives win and plough on with their long-term plan, they will think about that after the general election.

Unemployment remains an issue for the north-east of England. I welcome the Chancellor’s new-found interest in regional policy, but we in the north-east are not his northern powerhouse—that is Manchester and Leeds; we are his northern outhouse. It is not as if the Chancellor is averse to talking about far-away places in his Budget speeches—last year it was Mars; this year it was Agincourt, so perhaps next year it could be Tyne and Wear and Teesside.

I really would welcome the Chancellor’s taking an interest in the north-east of England. The tragedy is that the political parties do not really disagree about what we need to do. We need to grow, strengthen and deepen the private sector base of the region’s economy.

[Mr Anderson]

Does my right hon. Friend agree that one of the first things the Government did when they came in was to abolish the regional development agency, which had transformed the north-east after decades of deprivation and deindustrialisation? We were moving forward in a positive, united way, in partnership. It was a cynical, clinical move by the Government to get rid of the regional development agency, and it has been detrimental to the north-east.

[Mr Brown]

My hon. Friend is absolutely right. The abolition of the development agency was the largest single blow dealt to economic development in the north-east of England. The Government did it quickly. Governments make most of their mistakes in their first six months. Certainly, on economic development in the north-east of England, this Government did make most of their mistakes in their first six months.

As I said, the tragedy is that we do not disagree about what needs to be done. Resources need to be focused, and the work needs to be led in an authoritative, clear-sighted way. The coalition’s structural changes do not deliver for the north-east of England. Abolishing the RDA was a big step backwards, and the local enterprise partnership is not working for us—it has not even had a chief executive for the past year. If the North East local enterprise partnership had achieved anything, surely the Secretary of State would have told us about it, but he did not have anything to say about it. When I intervened to give him a chance to tell us about it, he still did not have anything to say, apart from generalisations. The money spent over the past five years on regional economic development in the north-east is less than it was for one year under the previous Labour Government’s arrangements.

There is a further regional danger: the unprotected budgets that are lined up for public expenditure cuts disproportionately hit local councils in the north-east. Separately, there have been at least two attempts to redistribute within the budgets that the Chancellor has protected. There are proposals to take £230 million out of the north-east’s health budget and redistribute the money to wealthier parts of the country.

The Chancellor said that we are all in it together. However, on the cost of living, job opportunities, local government budgets and a workable economic development strategy, it does not feel that way in the north-east of England.

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[Mr David Anderson (Blaydon) (Lab)]

Thank you, Madam Deputy Speaker. Having sat here for the past four hours, I will try my best to do as you say. In passing, may I wish you all the best for your future as well as your partner, who is a very good friend of mine from way back?

Nothing epitomises this callous Government more than what we saw on Wednesday at Prime Minister’s Question Time, when the Prime Minister, as usual, tried to make a joke out of it and said that the leader of my party:

“does not know where his next meal is coming from”.—[Official Report, 18 March 2015; Vol. 594, c. 755.]

The sad reality in this country is that far too many of our citizens do not know where their next meal is coming from, but 2 million do—it is coming from the food banks. What an absolute disgrace. What a record of failure. It is those people who will again face the brunt of Tory policy—whether in trying to find out the £12 billion of secret welfare cuts or the £13 billion of secret public sector cuts, neither of which have been spelled out in the past three days of the Budget debate. So can we trust the Chancellor going forward? He has failed miserably up to now.

May I add, Madam Deputy Speaker, that I do not have any problem with hearing, but I do have a problem when people talk during my speech, as the right hon. Member for Hazel Grove (Sir Andrew Stunell) is doing now.

Let us have a look at this Chancellor’s record. This week we had a report from the King’s Fund. The NHS has supposedly had its budget protected, if we are to believe what the Government said, and yet the number of cancelled operations is up by a third. Ambulance response times are going backwards; all three national targets have been missed this year. Sixty out of 83 foundation trusts are in deficit.

In A and E, in December 2014, 414,000 people waited longer than four hours—a 47% increase on the previous quarter. In December, 42,000 people waited on trolleys—a 124% increase since 2013. Sixty-six foundation trusts missed the target for A and E waiting times—double the number in 2013. The percentage of people waiting longer than 18 weeks for treatment was up from 2.5 million in 2010 to 3.2 million in 2014. In the last year alone, there has been a 30% increase in people waiting longer than 18 weeks for treatment. In this country, 12.5% of patients are waiting longer than 18 weeks—the worst ever recorded level.

For cancer, there is a 62-day target for people to be treated. Although the target was met in 86.7% of cases in April 2010, it was met in only 83.5% of cases in October 2014. In December 2014, 31 trusts missed the target—double the number in the middle of last year. In adult social care, because of 12% cuts across council care budgets we have seen a 25% reduction in the numbers receiving community care services. That obviously has a huge knock-on effect on the capacity of the NHS.

Another public service hit by this Government—another public service struggling—is the police service. The Metropolitan police have 1,748 fewer police officers than in 2010. Over half a million rest days were owed in one year. That means that every week in this city, 1,000 policemen are working shifts for which they are not getting paid. In addition, 43% of officers say they are suffering from stress-related illnesses. Case loads are described as unmanageable. More people than ever are living in this city—nearly 9 million more people—and £1.5 billion less is being spent on them. That is the legacy of this Government.

The Prison Service is in disarray. This week, the Prison Officers Association responded to the news that its members would not be getting a pay rise by saying that in the past year there have been 4,000 assaults on prison staff; a 40% increase in serious assaults; an overcrowded prison system, with a prison population at record levels; 3,500 fewer officers to the year ending 2014; a service that is finding it difficult to recruit and retain; staff forced away from their homes and families because they are being put on detached duty to make up for lost staff; and motivation and morale at an all-time low. It is no wonder, because the service is failing to meet every recognised health and safety requirement.

I received a letter from a constituent, Craig Robson, who is a prison officer. This is what he said to me:

“Dear Dave,

As you can see, one of your constituents who was”

once

“a proud Crown servant is”

yet again

“being treated as a second class citizen”

with

“a pay rise of 0%. I will give you some history. The last 5 years have been”

for me

“0%, 0%, £100, 1%, 0%.”

These are supposed to be pay rises.

“Am I happy? No, but to add insult to injury I was looking at a pay note from”

September 2011 and comparing that pay note with the one I received this month.

“I am now £109.41 worse off”—

£27 a week worse off. When the Tories deny the claims that we make regularly that people are £1,600 a year worse off, they might be right, because that gentleman is a lot more than £1,600 worse off, and that takes no account of inflation. He goes on to say:

“The prime minister stated not two weeks ago that he thought everyone should have a pay rise. What happened to loyal servants who were in hand to hand combat”

in jails every day up and down this country?

What we have seen is a record of failure: every target missed; a record of pain for those who are least able to handle it; and a record of spin and deceit from the Tory party. Gull manure was talked about earlier. It is not gull manure that we are getting from this Budget; it is bull manure—left, right and centre—and there is a promise of more to come. The Tories promise more pain for those who are on welfare, more cuts for our essential services and more bungs for their friends, whether MPs in marginal seats or their friends in the City. They are failure personified, and this country will have a chance in seven weeks’ time to hold them to account for their failure and for the way in which they have led this country astray.

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[Priti Patel]

I will correct the hon. Lady. It is not nonsense. The money has gone to the Greater London authority to deliver affordable new homes. She said that the Help to Buy ISA would not help her constituents. It is projected to help 190,000 people in London buy their first home over the next five years. Of course, the average first-time buyer is a basic rate taxpayer.

We have heard complaints that the North East combined authority is not doing enough. Let us be clear: more people are employed in the north-east then ever before. We have heard about Croydon. There has been £7 million of funding in Croydon and the GLA is delivering 4,000 new homes and 10,000 new jobs. Those are positive and proactive measures that are transforming people’s lives.

When it comes to job creation and job growth—

[Mr Anderson]

Will the Minister give way?

[Priti Patel]

The hon. Gentleman will recognise that I do not have time to give way.

In every single region of the United Kingdom, unemployment has fallen over the past year. We should put to bed the desperate myth of the Labour party that the new jobs are somehow second-tier jobs. That is an insult to the British public. Some 80% of the jobs are full time and 80% of them are in skilled occupations. Each and every one of them represents one more person standing on their own two feet. The Budget delivers for every single region of our great nation, whether it is by helping manufacturing in the midlands, connecting the south-west or growing the economy.

I would like to pay tribute to a number of Government Members. My right hon. Friend the Member for Bexhill and Battle (Gregory Barker), my hon. Friend the Member for South Suffolk (Mr Yeo), my right hon. Friends the Members for Somerton and Frome (Mr Heath), for Havant (Mr Willetts) and for Uxbridge and South Ruislip (Sir John Randall), my hon. Friend the Member for Bury St Edmunds (Mr Ruffley), my right hon. Friends the Members for Banbury (Sir Tony Baldry) and for South East Cambridgeshire (Sir James Paice) and my hon. Friend the Member for South Thanet (Laura Sandys) are all distinguished Members who have made substantial contributions to the House and to this afternoon’s debate. They covered some of the key Budget points that affect their constituencies. They drew on their expertise from their time in the House or from their time as Ministers to speak in detail about infrastructure, energy, jobs, education and higher education.

My right hon. and hon. Friends also spoke about the prudent financial management that this Government have introduced through our long-term economic plan. It is this Government who have set out long-term economic plans for every region in the United Kingdom. It is this Government who are committed to investing in the whole of the United Kingdom. It is this Government whose long-term infrastructure plan is connecting our regions.

My hon. Friend the Member for Milton Keynes South (Iain Stewart) mentioned the housing growth and infrastructure growth in his constituency. I will come back to him on the personal pension allowance, which he asked me to do. We are allowing the local leaders in our communities to make the key growth-delivering decisions in their areas, rather than making top-down decisions from the centre. We are recovering from the worst recession since the second world war. We are turning the country’s finances around, improving the lives of hard-working families, and putting more of people’s hard-earned cash back into their pockets where it belongs. We are increasing living standards, with real household disposable income revised up to increase by 3.7% this year, and to keep on rising—[Interruption.] As ever, the Labour party sneers when it comes to discussing living standards and household incomes. [Labour Members: “What?”] Well, let us be clear: the best way to improve living standards is to get people back into work and boost productivity and growth. This Government have delivered the highest levels of employment ever. Unemployment is down to 1975 levels—it has fallen at its fastest and was down by just under 500,000 in the year to December 2014. We are putting Britain back on its feet, and this Budget marks a step in delivering prosperity to all corners of our country.

The choice our country faces is between returning to the economic chaos that Labour Members were part of under the previous Government, or sticking to the long- term economic plan that will deliver for the constituents of the hon. Member for Islington South and Finsbury (Emily Thornberry) and every Member of this House. In this Budget we choose the future and are taking another big step on the road to a stronger economy.

As I close this debate I thank all hon. Members for their contributions this afternoon, and in particular I send—[Interruption.] I hoped for a degree of courtesy and civility at this point. I send my best wishes to all right hon. and right hon. Members who have made their last contributions in the Chamber today. I thank you, Madam Deputy Speaker, for your time overseeing debates and the civil way you have handled them, and I commend the Budget to the House.

Ordered, That the debate be now adjourned.—(Greg Hands.)

Debate to be resumed Monday 23 March.