Management of the Economy and Ministerial Severance Payments

David Linden Excerpts

Tuesday 15th November 2022 Commons Chamber

[David Linden (Glasgow East) (SNP)]

Before the hon. Lady moves on to the section of her speech about the Government abdicating responsibility, does she share my astonishment that the right hon. Members for South West Norfolk (Elizabeth Truss) and for Spelthorne (Kwasi Kwarteng) are not here today? Given that they are no longer in Government, what else do they have to do that is so important that they cannot be here to account for their actions?

[Lisa Nandy]

I imagine that the right hon. Members are counting the value of their severance payments somewhere else. Meanwhile, the rest of us are dealing with our constituents who are suffering from the fallout of their appalling choices. Home ownership rates have fallen over the past 12 years and the number of new affordable homes that are available to buy has plummeted. That is before the mortgage guarantee scheme and Help to Buy come to an end later this year.

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[The Minister of State, Department for Levelling Up, Housing and Communities (Lucy Frazer)]

I would like to start by recognising, as the Prime Minister has done, that mistakes have been made. No Government are immune from mistakes, but to suggest, as the Opposition have done, that these mistakes are the cause of a particular average increase in monthly mortgage rates is wholly inaccurate. Moreover, to say so is simply failing to be honest with the British people.

As the shadow Secretary of State, the hon. Member for Wigan (Lisa Nandy), knows and ought to acknowledge, the economic downturn and the consequent rise in interest rates have been caused by two major global events: the pandemic and the war in Ukraine. She knows that countries across the globe are grappling with the same issues as us. She will know that the US Federal Reserve has been raising its base rate since March 2022. She will know that the economic situation affecting the UK is not unique to this country. Indeed, the International Monetary Fund has stated that a third of the world’s economy will be in recession this year or next as the impacts of the pandemic and Putin’s illegal war in Ukraine are felt across the world.

[David Linden]

May I bring the Minister back to this planet and back to reality for a little minute? Does she not understand that after the mini-Budget there was a run on pensions and the Bank of England had to step in? Will she not just accept that it was her Government who crashed the economy, leading to the pain that many of my constituents are experiencing?

[Lucy Frazer]

I do not accept that there was a run on pensions. I do accept that mistakes were made, but the Prime Minister is focusing on putting the economy on a strong fiscal path and taking the necessary decisions, which I am sure we will hear more about on Thursday.

The shadow Secretary of State will know that in these globally challenging times—in these difficult periods that are affecting people across the country—the former Chancellor, now the Prime Minister, has always been on the side of those who are most vulnerable and need support. He has remained committed to that with the Chancellor as he brings forward the fiscal statement later this week. As a result of the economic challenges, he and the Chancellor are now focusing on restoring stability, sorting out the public finances and getting debt falling so that interest rate rises are kept as low as possible. I welcome this opportunity to remind the shadow Secretary of State and the House of the Prime Minister’s record, of what we are doing to support people in all our constituencies who cannot manage, and of our absolute commitment to continuing to do so.

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[Patricia Gibson]

The hon. Gentleman cannot escape the fact that the markets went into meltdown after the mini-Budget. I know this Government want to pretend the mini-Budget, the consequent run on the pound and the near collapse of the pension system did not happen, but government is about taking responsibility and even saying sorry when mistakes are made.

[David Linden]

Would my hon. Friend also point out to the hon. Member for Devizes (Danny Kruger) that the Government cannot have their cake and eat it? They sometimes talk in this Chamber about how Germany is over-reliant on Russian gas, but simply trying to use Germany as a comparator in this argument is rather like comparing apples and avocados, is it not?

[Patricia Gibson]

Absolutely, and I am sure the hon. Member for Devizes (Danny Kruger) will be taking note and learning the lessons he needs to learn from that insight.

There is not expected to be a reduction in mortgage rates any time soon.

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[Patricia Gibson]

Perhaps the hon. Gentleman has listened to a podcast or something and has not been listening to half of this debate. The point of today’s debate is that the instability created by this Government means that Ministers who have been in post for a matter of weeks are hoovering up huge payoffs. If he can tell me that there is a precedent for this level of instability, I am happy to sit down and let him explain it to me. I see that he is not attempting to do so, so perhaps he should sit there and reflect on the fact that he is attempting to defend tens of thousands of pounds being paid to Ministers who were in post for a matter of weeks. If he is happy to defend that, he certainly will not have the confidence of my constituents.

[David Linden]

Just to reassure my hon. Friend, I can confirm, as a keen and close watcher of Scottish politics, that in the Scottish Parliament Ministers do not resign on average every four days, as they appear to do in Westminster.

[Patricia Gibson]

I thank my hon. Friend for that, but the hon. Member for South Cambridgeshire (Anthony Browne) seems to think that this is okay and perfectly in order. Goodness knows what his constituents will make of it, but that is a matter for him.

If Labour Members are concerned about these obscene ministerial payments, they must support the amendment tabled by my hon. Friend the Member for Glasgow East (David Linden), which would prevent this situation. That is really important, because we cannot allow this situation to continue. All of this adds up to an incompetent Government who have no direction or judgment. They have brought us into this mess—

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[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I just inform the House that the amendment was not selected.

[David Linden]

What a shame.

[Mr Deputy Speaker]

Indeed. So there is no amendment and it is a straight vote on the motion.

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[Paul Howell (Sedgefield) (Con)]

We have all acknowledged that the mini Budget caused a short-term reaction by the financial institutions, but other issues have been far more significant to the British and global economies. Indeed, the gilt yields, which were the focus of so much angst, are now back where they were before the mini- Budget.

Fundamentally, the economy is in the state it is in because of the lasting impact of the covid pandemic and the ongoing war in Ukraine. The Government have done everything possible to soften the blow to ordinary households. The hon. Member for Bradford West (Naz Shah) talked about costs being “Up, up, up, up,”, but interest rates have been at record lows for most of the last 12 years. What happened to change that? Oh—was there a pandemic? Was there a war in Ukraine? There were a couple of things that might just have happened. Do we think that food and power going up are not affected by what is happening in Europe. I find it bizarre that we are just ignoring that.

[David Linden]

Will the hon. Gentleman give way?

[Paul Howell]

No, I will not.

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[David Linden]

The hon. Gentleman spoke about the impact of covid and Ukraine, and I do not deny that they have had an impact on the economy, but does he not also think that the Government’s chaotic handling of Brexit contributed to that as well?

[Paul Howell]

No—that is the easy answer. There have been many challenges with Brexit, but we voted Brexit through in late 2019. Being in a pandemic three months later did not exactly help the process of getting things done.

Coming back to my point, since the pandemic the Government have spent billions to protect businesses. Are Opposition Members saying that we should not have spent that money—that we should not be in debt because of covid and that we should not have supported businesses and people?

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[Gareth Bacon (Orpington) (Con)]

I rise to reject the arguments put forward by the Opposition. It is a matter of regret that Opposition day debates have abandoned any pretence of being a forensic probing of Government policy and have instead become nothing more than petty attempts for clickbait on social media.

[David Linden]

Will the hon. Gentleman give way?

[Gareth Bacon]

No. I have great affection for the hon. Gentleman, but I am mindful of Mr Deputy Speaker’s warning about the time because I know that other Members wish to speak. If the hon. Gentleman makes a speech later, he can address my comments.

In George Orwell’s “1984”, people are required during the “Two Minutes Hate” to watch a film depicting enemies of the state and loudly proclaim their hatred for them. The Labour party appears to believe that “1984” was a guidebook and not a warning, because it seems regularly to covet the chance to fabricate similarly misleading narratives, such as that of MPs voting to allow sewage in rivers, which was patently untrue. The volume of hateful correspondence and even threats against Members of this House has risen in recent years. Anecdotally, I gather from colleagues that there seems to be a strong correlation between spikes in abusive messages and Opposition day debates. I will leave the Opposition to reflect on that and on their methods.

I note that in the motion there is no mention at all of the covid pandemic, which caused the greatest contraction of the UK’s economy for 300 years, or of the £400 billion the Government spent on protecting people through the pandemic. Nor is there any mention of the £37 billion of targeted support for those on lower incomes. Nor is there any mention of the war in Ukraine, which has directly led to massive increases in energy prices. The recovery from the pandemic and the war in Ukraine have led to inflationary pressures around the world, which have in turn led to interest rate rises around the world. Again, mysteriously, there is no mention at all of that in the Opposition’s motion.

On what is in the motion, I respectfully point out that ignoring the disastrous consequences of rising energy bills would have been economic mismanagement. Instead, the previous Prime Minister and Chancellor put together a supremely generous support package that safeguarded both businesses and households. The energy price guarantee caps the price per unit of electricity and gas, and was introduced to counteract the looming October price rise, saving each household £700 on average over the winter. Had that not occurred, many families would suffer exorbitant and potentially unaffordable costs.

Similarly, the energy bill relief scheme applies to non-domestic premises so that businesses do not go bust and incur massive job losses across the country, which would have caused destitution for thousands. The previous Prime Minister and Chancellor took action to prevent such situations from occurring in the wake of what are ultimately global surges in energy prices.

It is not ancient history, so let me point out that financially ruining the country and leaving a note that says, “There’s no money left”, as the Labour party did in 2010, is quite literally mismanaging the economy. Thanks to measures taken by this Government, as of yesterday, mortgage rates have begun to fall, and some lenders are offering five-year fixed-term rates at less than 5%.

Lastly, the calls to dock severance pay for departing Ministers are a relatively new phenomenon and an over-personalised cheap shot, which is typical of the Opposition. I am not aware that any Labour Minister was particularly concerned about the matter before certain quarters of the media began discussing it. Indeed, not accepting severance packages was certainly not high on the agenda of departing Labour Ministers throughout the Blair and Brown Administrations, and certainly not when they were booted out of office in 2010. That is underlined by the refusal of the hon. Member for Wigan (Lisa Nandy) to answer both the questions I asked during my earlier intervention. Yet again, it shows that the Opposition only follow and do not lead. The motion is simply game playing. It is entirely without merit and should not be supported.

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[David Linden (Glasgow East) (SNP)]

It is a great honour to follow the hon. Member for South Cambridgeshire (Anthony Browne). I very much enjoyed his history lesson about when Gordon Brown came into power in 1997, when I was in primary 2. What relevance that has to today’s debate and the mortgage rates that are being experienced by my constituents, I am not quite sure. Unfortunately, the hon. Member for Orpington (Gareth Bacon) was unable to take my intervention. I think he is right to express some concern about the tone of Opposition day debates. One of the questions I was going to ask him was how he thinks the Scottish Conservatives conduct their Opposition day debates in the Scottish Parliament and whether he could tell the Chamber how different they are. He seems to be shrugging his shoulders, so I am not sure he is aware how the hon. Member for Moray (Douglas Ross) conducts himself in the Scottish Parliament; perhaps he is going to explain.

[Gareth Bacon]

I am grateful to the hon. Gentleman for giving way. I must confess that I do not spend a lot of time watching the Scottish Parliament, because I am often here, so I cannot answer his question. I would be happy to have a drink with him, and we could discuss it then.

[David Linden]

That is very helpful, and over the course of that drink I will explain to the hon. Gentleman that the behaviour of his colleagues in the Scottish Conservative party during Opposition day debates is quite something. It reminds me of that biblical verse about removing the log from your eye before removing the speck from your neighbour’s.

There are two parts to the motion before the House. The first aspect of it is how interest rates are rising. A theme has been developed throughout the course of the debate that that is to do with what has happened in Ukraine and the covid pandemic. I would not dispute for a minute that what has happened in Ukraine has had an impact on the economy and that the global pandemic has had an impact on the economy. However, as I said to the hon. Member for Sedgefield (Paul Howell), there is a third aspect that has also had an impact on the economy, and that is the nature of the Brexit that we took. I think most people and most respected economists would argue that Brexit has had an impact on the economy, and the cherry-picking—to use the Minister’s term—that the hon. Member for Sedgefield was indulging himself in, to try to ignore the fact that Brexit has had an impact on the economy, does a disservice to the debate.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

My hon. Friend is making a very important point. People are struggling to make ends meet just now because of a number of factors. A key one is food price inflation, which has rocketed due to the costs of Brexit. We have seen prices double, and the price of basic foodstuffs has gone up 60%. It is a price that people cannot afford to pay and should not have been forced into paying, especially in Scotland, where we voted resolutely against Brexit.

[David Linden]

Absolutely. I do not intend to rehash the debate on Brexit, though I am tempted to do so and feel that I would be on pretty strong political ground, but my hon. Friend is right to talk about the impact on food prices. In his constituency in particular, it is not just food prices that are crippling people; it is the fact that many of his constituents are off the gas grid. The paltry £100 that has been offered by the UK Government is not acceptable, as I think my hon. Friend is about to explain.

[Drew Hendry]

I am grateful to my hon. Friend for giving way once again; he is being very generous with his time. This is another vital point. The energy price guarantee does nothing for those people who are already paying an average bill of £4,000, which might rise to £6,000 a year, and for those off the gas grid, the £100 put forward by the UK Government has been described as “derisory” by Energy Action Scotland. These costs are crippling for people in constituencies like mine, where many people are off the gas grid.

[David Linden]

Absolutely. I am conscious that the motion focuses specifically on mortgages, so I will move away from energy and deal with the issue of mortgage interest rates.

The general theme that Government Back Benchers are developing today is that Ukraine is to blame, and covid is to blame, and that is why interest rates have risen. I would not want to indulge in a whole lecture on the Phillips curve—[Interruption.] The Parliamentary Secretary, Cabinet Office tempts me. A number of people, including me, would question whether the Bank of England holding interest rates at the historic low levels they have been at relative to unemployment is something that merits a debate. Whether today’s Opposition day debate is that, I am not sure.

There has been a rewriting of history in the course of the debate. A number of Members seem to be suggesting that this is the fault of covid and Ukraine, and the mini-Budget had nothing to do with it. The reality is that the mini-Budget did spook the markets. The UK was put on a watch list by the IMF. Members have been falling over themselves with excitement to say, “What would have happened if the right hon. Member for Islington North (Jeremy Corbyn) had become Prime Minister?” I am not sure that even they would have imagined that under the right hon. Gentleman’s leadership the UK would have been put on an IMF watch list, as it was after the antics of the right hon. Member for Spelthorne (Kwasi Kwarteng).

Over the course of the debate, Members have said that this is to do with covid and Ukraine, but the Scottish housing market review for quarter 3 of 2022—which we must bear in mind is written not by politicians but by economists and civil servants—says:

“There was a substantial increase in the number of high LTV products offered by mortgage lenders after the Covid-19 pandemic, with the number of 95% LTV mortgages products increasing from 14 in September 2020 to 274 in September 2022. However, after the UKG Plan for Growth/mini-budget on 23 September 2022, the residential mortgage market saw a dramatic fall in the number of deals available to new borrowers over the month. The total number of residential mortgage products dropped to 2,258 in October.”

I am not going to do a “woe is me”, as a highly paid politician, but I am one of the people whose house was on the market at the time of the mini-Budget. We had an offer in, and then the mortgage product was pulled, so the sale of the house has fallen through. I am also one of the people who took sound financial advice and was told to fix my mortgage rate for two years, because most of us expected—quite rightly—that, given relative levels of unemployment, mortgage rates would start to rise. That is why a number of people fixed for two years. As I say, I am not saying “woe is me”, because I am a politician, and I am very highly paid; I am far too overpaid, in my view. However, as a result of the changes to mortgages that happened in an accelerated fashion as a result of the mini-Budget, the vast majority of my constituents will now have to go back to the position of many of my constituents in the 1980s—the people who live in the Mount Vernon area—who saw interest rates of 14% and 15%. We are not there yet, but I would not be surprised if we ended up in that place, because this is not going to be fixed overnight. The harsh reality for the Government is that, yes, interest rates have been rising and should have been rising, but everybody in the Chamber knows that the mini-Budget spooked the markets, and there was a run on the pound and a run on pensions. That was a direct result of the actions of Government Ministers.

As for the second part of the motion, most of us would accept that if somebody started working at, for example, Tesco on a Monday, and they were in charge of the frozen foods aisle, and in the three days that they were in work, they did not turn on the freezers and all of that supermarket’s stock was lost, the chances are that they would be given their jotters—they would be sent home from work, and they would be fired. The Government have conducted some sort of economic experiment based on the Thatcherite economics of the gruesome twosome of the right hon. Members for Spelthorne and for South West Norfolk (Elizabeth Truss). They have crashed the economy—the equivalent of ruining all the frozen goods—and they have got off scot free. The thing that really sticks in the craw of Members of this House and, most importantly, of people outside the House is the fact that not only have they walked away and left absolute economic carnage behind them but they have been given a severance payment.

Far too often, watching Conservative Members and Opposition Members fighting with each other is like watching two bald men fight over a comb. Conservative Members say, “Oh well, in 2010, you took this much by way of ministerial several payments,” but we are not living in normal times: it has been calculated that a Minister resigned every four days over the last year. The Conservative party has the audacity to lecture people about sound money and sound government when, at one point, Ministers were resigning on average every four days as a result of complete incompetence. Some of the people we saw at the Dispatch Box, particularly over the summer, are folk I never dreamed would have a red box—people who I would not put in charge of tying shoelaces—but they are all walking away with ministerial bungs.

As far as I am concerned, there is a legitimate debate to be had by the Government and His Majesty’s Opposition about severance payments. As luck would have it, last month, I introduced a private Member’s Bill, the Ministerial and other Pensions and Salaries (Amendment) Bill, which seeks only to bring Ministers into line with mere mortals outside of this House. If someone has not been with their employer for two years, they are not subject to a statutory redundancy payment.

We are in a ridiculous situation. Granted, the right hon. Member for Chippenham (Michelle Donelan), who was Education Secretary for, I think, a day, did the right thing and said, “I’m not taking my severance payment,” but under the current legislation, Ministers and Secretaries of State who are in post for literally hours or a couple of days are entitled to vast severance payments. That needs to change. We can have the what-aboutery in the Chamber about Labour or Conservative Ministers taking payments, but for goodness’ sake, let us fix the legislation to ensure that Government Ministers are subject to the exact same regulations as those we in this place seek to represent.

[Drew Hendry]

rose—

[Drew Hendry]

I will be brief. My hon. Friend is making a powerful point. Earlier, he reflected on the cost for people and their households. How does he think that the vast payments that Ministers are walking away with after a matter of days resonate with people who are struggling to pay their bills?

[David Linden]

I am always keen to use the local Glasgow vernacular, but I am mindful that if I used it to explain how angry my constituents are, I would probably get chucked out of the House for unparliamentary language. That gives my hon. Friend a flavour of how my constituents feel about the grotesque sight of failed Government Ministers coming into the Chamber, playing with their little Tufton Street economic strategies and using my constituents, who are incredibly economically vulnerable, as lab rats, then walking away with thousands of pounds in a pay-off. That is absolutely outrageous and most of my constituents would not stand for it.

The motion before the House talks about severance payments. In reality, I would like to amend the legislation. Given the disgusting behaviour that we have seen from Conservative Governments, however, I would be keener to see Scotland severed from this Union altogether.

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[David Linden]

Does the Minister understand that some of us see a hint of irony in how he chastises Opposition Members about where they are getting their figures? The disastrous mini-Budget was brought forward without a forecast from the OBR. The Government locked them in the boot.

[Alex Burghart]

The hon. Gentleman is an established and experienced debater in this Chamber. He will know that it is important for Members of this House to choose their figures wisely and get them right. If they intend to build a case, it is important that they do their analysis properly.

Ministerial pay arrangements have been in place for a number of Administrations. Ministerial changes and departures are part of the fabric of government; all Administrations experience them and they are a routine part of the operation of government.