Government Spending Cuts
David Laws Excerpts(14 years, 6 months ago)
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Mr Alistair Darling (Edinburgh South West) (Lab)
(Urgent Question): To ask the Chancellor of the Exchequer if he will set out the measures that will be implemented across government to deliver the more than £6 billion of in-year spending cuts announced earlier this week?
The Chief Secretary to the Treasury (Mr David Laws)
Mr Speaker, I am extremely grateful, both to you and to the shadow Chancellor, for this early opportunity to set out to this House the action that this Government are taking to deal with the urgent economic situation and, frankly, the economic mess that we have inherited from our predecessors. I refer to the House to the written ministerial statement that I laid in the House this morning, which sets out the details of this early action.
The previous Government were borrowing at the rate of an additional £3 billion per week—that is an unsustainable rate. Those huge public debts threaten financial stability and, if left unchecked, would derail the economic recovery. We need not look far across our own continent to see that action to tackle our budget deficit is both urgent and necessary, and this is only the first step in a long road to restoring good management of our public finances.
I set out in a written ministerial statement this morning the details of the spending cuts that we will make for Departments in 2010-11. We have found cuts totalling £6.243 billion—that is £243 million more than originally targeted. However, the budgets for health, for international development and for defence will not be reduced. In addition, because we have been effective in finding savings, we have been able to take the important decision to protect the budgets for schools, Sure Start and 16 to 19-year-olds in 2010-11, which I am sure Labour Members will welcome.
The devolved Administrations will have the option of making their savings this year or deferring their share of the savings until the next financial year, and they will also receive their share of the additional spending that has been agreed as part of this statement. We will help local government to deliver its savings by removing the ring fences around more than £1.7 billion of grants to local authorities in 2010-11. That is consistent with our belief in giving more freedoms to local government.
Our first priority has to be to cut waste; we cannot expect difficult decisions to be taken on spending until we have eliminated the waste. We expect Departments to make savings, which will include £1.15 billion in cutting discretionary areas, such as consultancy, travel and advertising costs. In addition, £1.7 billion will come from delaying and stopping contracts and projects. That will include immediate negotiations to achieve cost reductions from the 70 major suppliers to government. Some £600 million is being cut from the cost of quangos and at least £120 million will be saved through freezing civil service recruitment. We will drive those and other savings through a new efficiency and reform group, which will work with the Cabinet Office and draw on expertise within government. The shadow Chancellor will be pleased to learn that this will be funded from within existing budgets. This action is designed to send a shockwave through Departments to focus Ministers and civil servants on whether spending in these areas is really a priority in the difficult times that we are now facing.
As well as reducing waste and the costs of government, we have started to scale back lower priority spending. We have taken the tough decision to pass legislation to end child trust fund payments—that will save £320 million in 2010-11, with the figure rising to £520 million in 2011-12. The House will be pleased to learn that, as part of the net savings, we will be reinvesting money to provide respite breaks for disabled children.
Quangos across government will have to make major savings in their budgets, and regional development agencies will have to cut back on the spending that has the lowest economic impact. Finally, we have decided to allocate, out of these savings, £500 million this year to measures to invest in improving the country’s growth potential and building a fairer society: £150 million will be used to help to deliver up to 50,000 adult apprenticeship starts; following the complete shambles of the colleges capital programme under the previous Government, an additional £50 million will be allocated to help to fund capital investment in the further education colleges in greatest need; and we are allocating an additional £170 million to fund investment in social rented housing in 2010-11 to help to deliver 4,000 social housing starts—Members on both sides should welcome that. We will also freeze the backdated business rates payments under the eight-year schedule of payments, including in respect of businesses in ports, until April 2011, and we will consider any further action in this area and bring forward any plans before the freeze ends.
These are only the first steps that will be needed to put our public finances back in shape, but I believe that the public and most Members of this House will welcome the fact that we finally have a Government with the guts and determination to take these difficult decisions.
Mr Darling
First, I am grateful to the Chief Secretary—I am just sorry that the Chancellor of the Exchequer could not make it. It is important, especially as the Government have difficult decisions and announcements to make over the next few months, that the Chancellor should be ready to come to this House to justify what he is doing. Will the Chief Secretary accept that there is no good reason why the announcement made at a press conference on Monday could not have been made in a statement to the House, where it could have been scrutinised by Members of the House? Will he undertake that, in future, announcements of this magnitude will be made in this House and not through a press briefing?
Secondly, everyone knows that it is necessary for countries across the world—ours included—to reduce the amount of borrowing but to do it in a way that does not damage growth and that does not damage the economic fabric of this country. That is why I believe that to halve our deficit over a four-year-period was the right thing to do, because it would have enabled us to secure the recovery, which is still fragile. Does the Chief Secretary understand that although during the general election campaign the Conservatives said that they would not cut beyond eliminating what they called waste and inefficiency, they have gone far beyond that today? Does he not accept, too, that he campaigned explicitly on a platform of not reducing expenditure this year? Will he tell the House how cutting 10,000 university places can possibly amount to the elimination of waste and inefficiency? That is not being wasteful or inefficient; that is cutting the investment that we will need to ensure that we have the skills in the future.
Will the Chief Secretary also tell us where the Government said that they would cut the job prospects for young people in particular? The future jobs fund meant that young people coming out of university had the prospect of getting work. Instead, tens of thousands of young people will not have work and their first experience in working life will be of being on benefits, not of going into work. How on earth can that be described as cutting waste or inefficiency? Equally, how on earth can the child trust fund be described as wasteful or inefficient, especially when we are talking about low-income families and about getting those children the best possible start in life?
Does the Chief Secretary accept that the House and the country are entitled to know exactly what these reductions, allocated to each Department, amount to in terms of changes to services or provision? What he has done today is to come out and reread the press statement that he delivered on Monday, but he must know when each Department signed up to specific numbers what that would mean. For example, in education, will he confirm whether funding for personalised teaching, including one-to-one tuition, is being protected? In transport, is it right that more than £100 million could be taken from London’s transport or that maintenance on the motorway network will be curtailed? Will he tell us how many jobs will go in the course of this year as a result of the freeze in jobs that was announced and where those jobs will fall?
The Chief Secretary must accept that although it is necessary to ensure that we live within our means, as I have always said, and although it is necessary for us to reduce our borrowing, it would be unforgivable if action were taken by this Government that damaged growth and investment in the future so that instead of getting a long-lasting recovery we found that we risked that recovery at a time when it is fragile. I hope that in future the Chancellor or the Chief Secretary will come to the House to explain what they have done. There will be an awful lot of explaining to be done over the months to come.
Mr Laws
I am grateful to the shadow Chancellor for the points that he has raised and I shall seek to address as many as I possibly can. Before I engage in those arguments with him, this is the first opportunity that I have had to address him in his new role as shadow Chancellor and I want to say to him that many people on both sides of the House respect him and respect the work that he sought to do as Chancellor. We appreciate that he took over the economic position and the Treasury at a difficult time and also had to deal with the difficult circumstances of having a Prime Minister of the type that the last Prime Minister was. I pay tribute to the work that he did.
I was very interested in the points that the shadow Chancellor made in response to my statement, but the only thing missing from all the questions that he asked was any acknowledgment of what his colleague, the former Chief Secretary, was able to acknowledge to me in the letter that he left on my desk—the former Government left a situation in which there was no money left. I say to the shadow Chancellor gently that the only thing missing from his statement was a single serious proposal about how to deal with the huge financial deficit, with £156 billion-worth of borrowing and £3 billion-worth of borrowing each week. He is an intelligent enough man to know that there are only three ways of tackling the structural deficit—we can cut spending, cut welfare payments or raise taxes. There was not a single clue in the statement that we just heard from him about how he would address those challenges.
May I also respond to the shadow Chancellor’s point about making statements in the House? Of course, Mr Speaker, we want, wherever possible, to make these statements first and to be held to account for them, but if he is so passionate about this, can he explain why it was the case—[Interruption.]
Mr Speaker
Order. [Interruption.] Let the Chief Secretary resume his seat. These discussions are already becoming far too inflamed. I am trying to help the House by enabling these matters to be the subject of scrutiny. Members do not help me or the House or themselves if they shout from a sedentary position. If they think they are going to do that and still get called to ask a question, they have another think coming.
Mr Laws
I am grateful to you, Mr Speaker. I gently point out to the shadow Chancellor that in 1997, the Labour party announced its policy of Bank of England independence not to this place but outside it. That was not even a policy that the Labour party had stood on in its manifesto, so there is a very considerable difference with the proposals that we brought.
Let me also say to the shadow Chancellor that it should be clear, in relation to his questions on schools, that we have protected the schools budget. I would have thought that he would welcome that. The definition that we have used on the schools budget is exactly consistent with the definition that was used by the last Government.
In relation to the changes that there have been over the past couple of months, I also point out gently to the shadow Chancellor that anyone, including someone with his expertise and experience, would know just how much the international situation has worsened in the past couple of months and just how much the sovereign debt risk means that countries that are seen not to be taking action on their public finances are at risk of having an adverse reaction in the international markets. Had we had that, the consequence, inevitably, of that loss of confidence would have been difficulty in auctioning the gilts that we have to sell to fund this deficit, higher costs of auctioning those gilts and therefore higher costs in the public finances. Money that could have been spent on schools, the national health service and defence would have had to go on debt interest rather than on investment in front-line public services.
Finally, may I say that I am very disappointed that the shadow Chancellor has failed to acknowledge the additional package of measures that we announced, which will nurture recovery? Measures such as the 50,000 additional starts for apprenticeships and our dealing with the problems of the colleges capital programme that was left to us by the previous Government will help with investment in skills and will help to ensure that we can bring down the deficit and protect economic recovery at the same time.
Michael Fallon (Sevenoaks) (Con)
Does my right hon. Friend accept that although there were, obviously, extenuating circumstances on Monday, it is always best if these announcements can be made to Parliament first? Will he also confirm that the economic recovery is unlikely to be jeopardised by cuts to the cost and bureaucracy of quangos? It is far more likely to be put in danger by a Government who would simply sit on their hands for the next 12 months.
Mr Laws
I agree with both my hon. Friend’s points. First, he is right that we will seek, wherever we can, Mr Speaker, to make sure that these statements are made in the House, and we welcome the scrutiny from Members on both sides.
Secondly, I agree with my hon. Friend about the importance of cutting quangos. No serious economist believes that the actions we have taken this week will jeopardise the recovery. If the shadow Chancellor were being straightforward with us, he would acknowledge that the previous Government were already taking action to seek to deal with the deficit by tightening policy—for example by putting the rate of value added tax back up to 17.5%.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)
By definition, ring-fenced and specific funding to local government, whether from the Department for Communities and Local Government, the Department for Education or others, is directed specifically at the most disadvantaged and deprived. Will the Chief Secretary tell us precisely what he believes he is doing in cutting more than £1 billion of that specific funding and by unring-fencing the rest, allowing those specific priorities to be eroded?
Mr Laws
The right hon. Gentleman is simply wrong if he thinks local government is incapable of making efficiency savings. All the people I know in local government believe that significant efficiency savings can be made. He does not allow for the significant change that the Government have announced, which will mean that by ending ring-fencing, there is more freedom for local government to decide where those cuts fall, and to make sure that they fall in the areas that are not priorities. I should have thought that as a former Education Secretary, he could have brought himself to congratulate the Government on the way that they have managed to ring-fence the schools budget and the Sure Start budget.
Mr Edward Leigh (Gainsborough) (Con)
I welcome the return to the Treasury of stern, unbending Gladstonian Liberalism. Will the Chief Secretary confirm that if we are to restore the nation’s finances, all Departments, including Health, Education, International Development and Defence, must play their part? For instance, such has been the catastrophic decline in productivity in health over the past 10 years that we can make significant efficiency savings without endangering front-line services.
Mr Laws
I am grateful to my hon. Friend for his kind comments about Gladstonian Liberalism. I hope that this is not only Gladstonian Liberalism, but liberalism tinged with the social liberalism about which my party is so passionate.
In the savings that we make, we are seeking to ensure that we cut with care. We have demonstrated this week that we can find efficiency savings and also put money into the areas that many of us in the House are passionate about—protecting education and putting more money than the previous Government did into social housing. We have shown that we can deliver both of those, but I agree with my hon. Friend that we must make sure that even those areas where the overall budgets are protected are driving out efficiency savings. There are considerable efficiency savings that can be made in the Ministry of Defence, in health and in education, and we must make sure that even as we protect the totality of those budgets, we shift money to the front-line services that matter most.
Ms Angela Eagle (Wallasey) (Lab)
Will the Chief Secretary confirm that the announcements that he made on Monday, about which he is talking to us today, will mean the end of one-to-one tuition for pupils who are falling behind?
Mr Laws
No. That is complete nonsense. What we are doing is protecting the schools budget. Unlike the previous Government, who thought it made sense to dictate to every school and head teacher how to use its budget, we will give freedom to schools so that they can spend the money in the best way. We on these Benches believe—I am sorry that the hon. Lady does not seem to—that people on the front line know better than Government Ministers how to spend public money.
Jo Swinson (East Dunbartonshire) (LD)
Most people realise that to tackle the deficit, cuts will be inevitable, but it is important that they do not fall hardest on the most vulnerable in society. Will my right hon. Friend tell us whether he has already rejected any cuts on the basis of the impact on the most vulnerable, and whether he will ensure that the principle of fairness is uppermost in his mind as he faces the difficult task of finding future cuts to tackle the deficit?
Mr Laws
I agree entirely with my hon. Friend. Both the Chancellor of the Exchequer and I have rejected proposals that have come forward from officials and others to make cuts when we believe that those would endanger either the key front-line services that all of us want to protect, or people on low incomes. All of us know that the decisions that we take to get on top of the public sector deficit that we have been left will be increasingly difficult, but in the spending review, in the Budget and in the next spending review our minds will always be the need to protect not only those front-line services, but those people in our society who would otherwise be most vulnerable to the action that we must take to deal with the public sector deficit that we have inherited.
Mr Nigel Dodds (Belfast North) (DUP)
I welcome the Chief Secretary’s commitment to making statements first to the House so that Members can find out here, rather than reading them in the press or hearing them on television. I welcome also his statement that the devolved Administrations will be able to defer cuts until next year if they so wish. In Northern Ireland we are already making 3% year-on-year efficiencies and budgets have been set. May I make a plea to him to ensure that in future Treasury Ministers treat Ministers in devolved Administrations with respect? As a former Finance Minister in Northern Ireland, I know that under the previous Government there was not genuine dialogue but diktat from the Treasury, to the cost of the devolved Administration. Will the Chief Secretary ensure that there will be such a dialogue in future?
Mr Laws
I am grateful to the hon. Gentleman for his kind comments. We are giving that flexibility to the devolved Administrations, although I say to them that it is important that they start to make the savings as soon as possible; if they simply wait until next year, they will find it more difficult to make the adjustment. I make an undertaking to the hon. Gentleman that the Treasury will remain open to discussions with all the devolved Administrations, to make sure that their concerns are properly taken into account.
Conor Burns (Bournemouth West) (Con)
I warmly welcome my right hon. Friend’s announcement on the future of our colleges, which were so cruelly deceived by the previous Government. It will give great optimism to Bournemouth and Poole college, which was encouraged by the Labour Government to move out of its buildings and seek new funding for new buildings. The announcement will give great optimism and prove that, even in these difficult times, the Government are committed to giving our young people the best start in life.
Mr Laws
I agree very much with my hon. Friend. The management of the colleges capital programme was, as independent commentators as well as party politicians have said, an absolute and utter shambles. It was perhaps the best example of the incompetent financial management of the previous Government and it wrecked the plans of many colleges across the country, including colleges that had incurred considerable expenditure in preparing their bids. I am very pleased that the Chancellor agreed to put the £50 million aside to help colleges with their capital programmes. The aspiration is that that will leverage in additional private investment to a fund of £150 million in total, which we hope will be able to help up to 50 colleges in a very real way, even in these tough times.
Mr Dennis Skinner (Bolsover) (Lab)
Is the Minister aware that not a single member of the Cabinet has turned up to back him in this statement here today? They are all part of this rag-tag and bobtail army—not one of them is here. Can there be a more pathetic sight than this Liberal Democrat, who campaigned against cuts in 2010, now hammering the young and the old and putting people on the dole as a member of this rag-tag and bobtail Government? Get out!
Mr Laws
The Cabinet have given support where it matters most—in delivering the savings. Those savings were delivered in a matter of days, which the hon. Gentleman’s colleagues were never able to do.
The hon. Gentleman talked about the decisions that we have made. Perhaps he could acknowledge two things. First, we have protected the NHS and we have protected schools. We have put money into social housing, which he might have aspired to do if he had had influence on the previous Government. We have also done something that the last Labour Government failed to do—announced the restoration of the earnings link on the state pension, from April 2011. He should acknowledge that.
Mr Peter Bone (Wellingborough) (Con)
May I congratulate my right hon. ally on having been made Chief Secretary? Does he think that we are living in Alice in Wonderland when the shadow Chancellor complains about making announcements to the press first? He knows a lot about that.
Will the Chief Secretary confirm that the coalition Government’s commitment is to increasing spending on the NHS in real terms each and every year, while improving efficiency, so that front-line services improve?
Mr Laws
I agree with my hon. Friend on both those points, including his first comments about the shadow Chancellor. Yes, we are going to commit to increasing the real budget of the NHS each year, even in these tough economic times when we will have to deal with the consequences of the deficit that the previous Government racked up. We will also ensure that, even with that protection in its budget, the NHS delivers the savings that make sure that we can protect the front-line services that people want to be protected.
Mr Mike Hancock (Portsmouth South) (LD)
I congratulate my right hon. Friend on his appointment and his performance here today. Will he explain to the House some of the benefits that will accrue, particularly with regard to the amount of money being put into social housing? Will he also say whether he was as impressed as I was by the transition of the former Chancellor from Chancellor of the Exchequer to stand-up comedian in a very short space of time?
Mr Laws
My hon. Friend makes a very good point. I am pleased to have support from another Gladstonian Liberal on the Liberal Democrat Benches. I am grateful to him for drawing attention to the additional investment that we are making in social housing. That is a real priority for many Members across the House, including those in the Liberal Democrat party and the Conservative party, and, I suspect, for a lot of Members on the Labour Benches, who have been sad that the previous Government were unable to invest more in social housing. Among the many black holes that we are discovering in the public finances left to us by that Government, we have already found a very big black hole in the funding of the social housing programme. We are determined to do everything we can to ensure that the vulnerable people who depend on social housing—those who are on the waiting lists that built up under the previous Government—will have some hope under this Administration.
Miss Anne Begg (Aberdeen South) (Lab)
We have experience of removing ring-fencing in Scotland, because the Scottish National party Government have done that for local government. May I advise the Chief Secretary to take a look at the Lib Dem council in Aberdeen to see the effects of the removal of that ring-fencing? Its priorities are to close schools and day centres for disabled people; instead, it is spending money on grandiose building schemes.
Mr Laws
I have already made it clear that our priority is to protect schools, which is precisely what we have done in the spending statement. I am afraid that there is a basic ideological differences between those on the Labour Benches and those on the Government Benches—we believe in devolving power and giving freedom to people. We do not believe that Government know best, and the previous Administration proved that very effectively.
Christopher Leslie (Nottingham East) (Lab/Co-op)
Given that the Chief Secretary is taking more than £1 billion away from local authorities in this financial year, can he give a categorical guarantee that no local authorities will have to issue emergency changes to council tax bills in this financial year? Many people are worried about that.
Penny Mordaunt (Portsmouth North) (Con)
I am sure that the Chief Secretary knew about Labour’s mismanagement before coming to office, as did many others, which is why Labour Members now sit on the Opposition Benches. However, did he know about the scorched-earth policy that we have heard so much about in the past few weeks and leading up to the general election? What will his Department do to ensure that that abuse will never happen again?
Mr Laws
I am grateful to my hon. Friend. I agree that there seems to have been a scorched-earth strategy as regards not only the state of the public finances but the way in which the Government were spending money at the end of their term. We are looking very closely at all the decisions that have been made, and we will be making further announcements shortly about the action that we will have to take.
Caroline Flint (Don Valley) (Lab)
I am firm believer that we should provide real opportunities and have employers at the heart of devising these schemes. What on earth is to be gained by taking away resources from the future jobs fund, which I understand means that there will be 80,000 fewer job opportunities working with employers around the country?
Mr Laws
We are maintaining the young person’s guarantee. I have to tell the right hon. Lady that the clear advice that we have had is that that particular part of the young person’s guarantee was simply not effective and was wasteful—that the proportion of expenditure that was being saved as a consequence of it was minor and the administration costs were huge. I would instead point out to her the real action that we are taking to help young people in these tough times, with an additional 50,000 apprenticeship starts. That will make a real difference and will be far more effective than the scheme that we are amending in order to save money, which frankly was simply not working.
Mr John Baron (Basildon and Billericay) (Con)
Perhaps the Chief Secretary would like to take this opportunity to correct a fundamental flaw in the thinking of the Opposition in believing that spending cuts necessarily take money out of the economy, whereas in reality every pound that is spent and borrowed by Government ultimately comes from the private sector, and we need a strong private sector-led recovery to help us to reduce the deficit.
Mr Kevin Barron (Rother Valley) (Lab)
Could the right hon. Gentleman tell the House what is fair about cutting the future jobs fund, which was aimed at helping 8,000 young unemployed people in Yorkshire and Humberside? Would he personally be happy to see youth unemployment rise to the levels that we saw in the recession of the early 1990s?
Mr Laws
Of course we would not, but I have to tell the right hon. Gentleman that the policy that we set has to be informed by the facts, and the facts and advice that we had from the Department for Work and Pensions about the future jobs fund suggested that it was simply not effective and that the money was wasted. We have a £156 billion deficit to deal with, and if we did not tackle the wasteful expenditure we would have to make cuts in the areas that matter. I repeat the point that I made to the right hon. Member for Don Valley (Caroline Flint) a moment ago: we are reinvesting money in apprenticeships, which will make a real difference to many of the young people about whom the right hon. Gentleman cares.
Mr Andrew Tyrie (Chichester) (Con)
The whole House will have heard the concerns expressed in all parts of the House about the need to make statements here first, and I am sure that the Chief Secretary will take that on board when formulating policy for the Budget and for the vital spending review that will come in the autumn. Will he do a little more to remind the House why such an emergency set of policies was necessary—in particular the Greek-style deficit and debt level that he has inherited?
Mr Laws
The hon. Gentleman is exactly right, and in the news even this morning and over the past few days we have seen the real risk that the lack of financial confidence could spread across the European Union and engulf even some nations that have not been affected to date. As a consequence, all countries are having to take very hard decisions. Because of the mess in the public finances created by the last Government, the amount of debt interest that we have to pay out is growing and beginning to exceed some core Government budgets. Had we not acted to maintain the credibility of our fiscal policy, there was a real risk that we could have seen a big rise in interest rates that would have gobbled up additional expenditure and helped to wreck the recovery that is now taking place.
Mr Graham Allen (Nottingham North) (Lab)
The Chief Secretary will know, as we all do, that these cuts are the easiest ones—they are the first tranche—yet they are still very hurtful in constituencies such as mine. Addressing the structural nature of the deficit will be even harder. He is a member of the Cabinet Sub-Committee on early intervention, so will he seek to address some of the problems of the structural deficit by ensuring that we invest in babies, children and young people, so that they do not later require billions of pounds of remedial treatment for drug addiction, teenage pregnancy and a lack of aspiration in education and work, and so that we can build the type of society that most of us in the Chamber want to see?
Mr Laws
As ever, the hon. Gentleman makes a serious and important point, and he is absolutely right that as we take tough decisions and come towards the spending review at the end of the year, we will have to try to maintain the services that we particularly value and that protect individuals in society who are on very low incomes. We need to protect investments that have the potential to pay off in the future, and I promise him that I will examine carefully the matters that he mentions. If he wants to meet to discuss them at some stage, I would welcome the opportunity.
Tony Baldry (Banbury) (Con)
Given the unambiguous admission of my right hon. Friend’s predecessor that the Labour party left the public finances without any money, will he place in the Library as soon as is convenient a straightforward statement that we can share with our constituents setting out clearly and unambiguously the exact nature and extent of the public finances that this Government have inherited? In that way, as we progress through this Parliament there can be no attempt by those on the Opposition Benches to rewrite history.
Mr Laws
The hon. Gentleman makes a very good point, and there are two answers to his question. The first is that the Chancellor of the Exchequer will make a Budget statement in this place on 22 June, when he will set out precisely the state of the public finances, and the second is that crucially, through the Office for Budget Responsibility, he will make assumptions about the public finances and growth that are objectively and independently informed. He will not do what previous Governments have been able to do, which is fiddle the growth figures for their own purposes.
Mr Lindsay Hoyle (Chorley) (Lab)
I welcome the Chief Secretary’s commitment to the defence budget. Will he share with us the benefits to the north-west, such as the jobs that are important to us? Will he confirm that tranche 3 of Eurofighter, the Typhoon aircraft, will now go ahead?
Richard Ottaway (Croydon South) (Con)
Will the Chief Secretary agree that no Labour Government have left office with unemployment lower than when they came in? Does he agree that this lot, the last Government, were absolutely no different, and that it is a bare-faced cheek for them to come and ask questions of such a nature on this occasion?
Mr Laws
My hon. Friend is right that the Labour party’s record on unemployment is very far from the original boasts that were made. That is why, even while we are taking tough action to bring down the deficit, we are ensuring that we invest in apprenticeships. We are also—this is the most important thing of all for employers—creating a stable economic environment, keeping interest rates low and ensuring that the recovery will be sustained.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
Can the Chief Secretary to the Treasury guarantee that his transport cuts will not affect rail electrification or the Northern Way, which are both essential for economic regeneration and jobs?
Mr Laws
Both those issues are for the Secretary of State for Transport rather than for me. I suggest that if the hon. Lady is concerned about them, she should arrange to meet one of the Ministers in the Department for Transport, who, I am sure, will be delighted to receive her representations.
Roger Williams (Brecon and Radnorshire) (LD)
On 26 November 2009, the then Secretary of State for Wales made a commitment, which was supported by the current Secretary of State for Wales, that the Government will take action if Wales is adversely affected by the outdated Barnett formula. Will the Chief Secretary and the Government make a similar commitment, particularly as regards Barnett consequentials resulting from Government spending reductions?
Richard Burden (Birmingham, Northfield) (Lab)
I am afraid that I do not buy what the Chief Secretary has said about the future jobs fund. The fact is that the Liberal Democrats and the party of his new-found allies agreed and made a commitment on the future jobs fund to protect existing commitments, and they are abrogating that commitment. He says that his apprenticeship plans are an alternative, but what mechanism will ensure that the 10,000 jobs allocated under the future jobs fund in my region are somehow transferred to those apprenticeship schemes?
Mr Laws
We are obviously going to allocate the apprenticeships out, but is the hon. Gentleman really suggesting that if we are advised by the Treasury and the Department for Work and Pensions that a part of that particular guarantee is not working, we should go on spending wastefully, in the current environment? I can tell him that we will have to take very difficult decisions, and that we must start by taking decisions when there are clear recommendations. We have had such recommendations on that.
Andrew Percy (Brigg and Goole) (Con)
May I thank my right hon. Friend the Chief Secretary for his swift action on the freeze on backdated port taxes, which is in stark contrast to the months of inaction under the previous Government, which led to the collapse of Scotline and the loss of local jobs in Goole? May we have an assurance that the new system will be worked out swiftly, and that that will involve full and proper consultation with the port operators and businesses, which would be in stark contrast to the previous system?
Mr Laws
I am grateful to my hon. Friend for his comments. We quite understand the distress and concern that has been caused in the ports and elsewhere by that situation. The Chancellor of the Exchequer announced earlier this week that we would freeze the existing obligations for the rest of the financial year, and we are currently looking very carefully indeed at what action we can take to resolve the matter which, as my hon. Friend will be aware, affects not only the ports, but many other businesses across the country. That is why we are determined to move swiftly, but also to take time to get things right, and to consult in a proper way.
Tony Lloyd (Manchester Central) (Lab)
Will the Chief Secretary give a very straightforward answer to this question? What estimate did his officials give him of the number of people who would lose their jobs either directly or indirectly because of the cuts, and of what that will cost?
Mr Laws
It is impossible to pick a figure out of the air, but I can tell the hon. Gentleman—he will be delighted to hear this—that Treasury officials and the Governor of the Bank of England pointed out the beneficial effects of this package in keeping interest rates down and stopping the tax on jobs that would otherwise eliminate them. It is therefore likely that over time the net effect of taking such action will be to support employment and the economy rather than to eliminate jobs.
Mr Tobias Ellwood (Bournemouth East) (Con)
The new shadow Chancellor shows some nerve coming here complaining about efficiency savings, given that he was responsible for so much waste. An example of that waste is the so-called national Potato Council, which costs the taxpayer £50 million a year. How much money was wasted there? I am glad to see it go, and I am glad to see other cuts being made as well.
Mr Laws
My hon. Friend is absolutely right. It is staggering that we have been able to find so much waste in Government expenditure, in spite of the state of the public finances and public borrowing. We would have expected the previous Government to have taken action to eliminate some of the waste. We are determined that the exercise that we have embarked on will be not only an efficiency drive, but one that delivers real cost savings in a way that some of the exercises under the last Labour Government simply did not do.
Clive Efford (Eltham) (Lab)
Does the right hon. Gentleman agree that it is the convention that the letter left for him by his predecessor should be kept confidential between them? Will he say whether any of the officials in his Department have expressed disappointment that he has broken that tradition, and is it not true that he just bought himself a cheap soundbite to cover the fact that on 6 May he did not support £6 billion in cuts, but on 7 May he did?
Richard Graham (Gloucester) (Con)
I congratulate the Chief Secretary on his announcement of 50,000 additional apprenticeships. Will he confirm that this will help, first, constituencies such as mine, where we face, like the rest of the country, record youth unemployment and, secondly, productivity and improvements in our manufacturing sectors, which suffered record drops under the previous Government, and the recovery of which is so important to our business-led economic recovery?
Mr Laws
My hon. Friend is absolutely right, first about the importance of supporting manufacturing, which has had a particularly tough time during the recession, and, secondly, about supporting young people, because we must be conscious that young people so far have borne the brunt of the recession in terms of unemployment. We are all aware of the consequences if young people stay out of work for a long time and of the scarring effect that it can have on their opportunities. That is why we were so determined to introduce these additional 50,000 apprenticeships, which will make a real difference.
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
In my constituency, 300 young people are currently benefiting from the future jobs fund. They do not think it is a waste of time, and I have heard nothing but positive feedback from the DWP locally. Will the Chief Secretary provide the evidence that he is receiving from the DWP, which is contrary to what we have been told, and what would he suggest I tell my constituents, still suffering from the ravages of the last Tory Government, about the future jobs fund?
Mr Laws
I suggest that the hon. Lady tells her constituents the truth about the catastrophic amount of debt left by the last Government, their total irresponsibility and the risk that would have been posed to the country’s economy and their prospects if we had a Government sitting around doing nothing as her Government did for the past two years.
Savings (2010-11)
David Laws Excerpts(14 years, 6 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chief Secretary to the Treasury (Mr David Laws)
The coalition agreement set out that the Government would make modest cuts of £6 billion to non-frontline services within the financial year 2010-11 to help tackle the UK’s £156 billion deficit.
The Chancellor of the Exchequer and I have set out this week details of £6.243 billion of savings from Government spending in 2010-11 in line with the coalition agreement.
Spending on health, defence, overseas aid, schools, Sure Start and education for 16 to 19 year-olds has been protected in this exercise, with in-year efficiencies recycled back into budgets.
Outside local government and the devolved Administrations, the savings are allocated across different areas as follows:
£1.15 billion in discretionary areas like consultancy and travel costs;
£95 million through savings in IT spending;
£1.7 billion from delaying and stopping contracts and projects, including immediate negotiations to achieve cost reductions from the major suppliers to Government;
£170 million from reductions in property costs;
At least £120 million from a recruitment freeze across the civil service for the rest of 2010-11;
£600 million from cutting the cost of quangos; and
£520 million by reducing other lower-value spend.
In addition, £1.165 billion of savings will be made in local government by reducing grants to local authorities. Alongside this, the Government will remove the ring fences for over £1.7 billion of grants to local authorities in 2010-11, giving them greater flexibility to find the required savings.
The devolved Administrations will have the option of either making savings this year or deferring their share of the savings, which totals £704 million, until the next financial year.
As part of these savings, the Government will deliver £10 million from reducing first-class travel, and will limit the ministerial entitlement to a dedicated car and driver, saving at least one third from the cost of the Government car service.
The savings allocated to each department are as follows:
Department for Education—£670 million;
Department for Transport—£683 million;
Communities and Local Government—£780 million;
CLG Local Government—£405 million;
Business, Innovation and Skills—£836 million;
Home Office—£367 million;
Ministry of Justice—£325 million;
Law Officers’ Departments—£18 million;
Foreign and Commonwealth Office—£55 million;
Department for Energy and Climate Change—£85 million;
Department for Environment, Food and Rural Affairs—£162 million;
Department for Culture, Media and Sport—£88 million (includes responsibility for £27 million of savings from the Olympic Delivery Authority);
Department for Work and Pensions—£535 million;
Chancellor’s Departments—£451 million (includes £320 million of savings in annually managed expenditure from reducing the Child Trust Fund);
Cabinet Office—£79 million; and
Devolved Administrations—£704 million.
Reductions to departmental budgets will be made immediately, and reflected at both the Budget on 22 June, and in Main Estimates, which will go before Parliament.
The great majority of the £6.243 billion of savings will be used to reduce the deficit. However a total of £500 million will be reinvested as follows:
£50 million of Government investment in further education colleges, which colleges will be able to leverage to create a £150 million fund to provide capital investment to those colleges most in need.
£150 million to fund 50,000 new apprenticeship places, focused on small and medium enterprises.
£170 million to safeguard delivery of around 4,000 otherwise unfunded social rented homes to start on site this year.
£50 million for action to tackle backdated business rates bills, including a freeze on payments for 2010-11.
Barnett consequentials in these areas will be paid at the same time as devolved Administrations make their contribution to the £6.243 billion, making a total of £500 million reinvested savings.
The savings will be driven by the new efficiency and reform group, whose board will be chaired jointly by the Minister for the Cabinet Office and Paymaster General, the right hon. Member for Horsham (Mr Maude), and myself. The group will be formed by pulling together existing capabilities, drawing on expertise of officials from across Whitehall. As well as helping Departments to deliver savings, the group will oversee an immediate freeze on non-critical spending on consultancy, advertising, and recruitment of non-frontline civil service staff. The group will be comprised of existing civil servants, and will be located within existing premises, with no additional cost to departmental budgets.