Transatlantic Trade and Investment Partnership

David Mowat Excerpts

Tuesday 25th February 2014 Commons Chamber

[Mark Field]

If the hon. Lady will allow me, I will not comment on that but will leave it to the Minister. I wanted to speak about financial services, and I appreciate that time is tight.

[David Mowat (Warrington South) (Con)]

Briefly, my hon. Friend mentions the need for an EU-US regulatory framework for financial services, which I have not heard of before. How does he square that with what, for example, the Basel agreements try to do globally at the moment? Is that really the way forward?

[Mark Field]

I say simply to my hon. Friend that given the potential huge benefits of the TTIP, it seems odd that important industries such as the financial and professional services are not included in it. Clearly we are in a state of flux about a lot of international and national regulation of financial services, but it seems that this would be a good place for us to make a robust case for open markets, particularly in an industry that will clearly develop in many other parts of the globe beyond the EU and US.

It is important that those who are proposing the TTIP show just what it can add to people’s lives in terms of trading opportunities, jobs and a better variety of consumer products. If there is a perception that the deal is being engineered in an opaque way, it is likely to fall apart and we shall lose an enormous opportunity. Crucially, the United States must do the same. In that nation, protectionist sentiment and economic nationalism are now fast replacing the wave of enthusiasm on which the TTIP initially rode.

Needless to say, progress in this field of influence will resonate strongly in the UK Government’s negotiations for reforms within the European Union. It was, of course, the wily German statesman Bismarck who observed that

“politics is the art of the possible.”

Although I believe it is sensible that the UK Government do not raise excessive expectations as to what might be achieved in negotiations with our EU fellow members, it is at least worth observing that in the aftermath of last autumn’s EU budget settlement there appears to be a new mood towards some level of reform. One hopes that some of the UK’s traditional European allies such as Poland, Finland and the Czech Republic, will not feel encumbered by a resurgent Russia from making the case for some fundamental institutional reform in the EU. Time will tell, I think.

Thank you, Madam Deputy Speaker, for allowing me to say a few words. This debate on the TTIP shows once again that the UK Government’s goal should be that we remain the most outward-looking trading nation. We have every reason to have been proud of that in centuries gone by, and hopefully we will be in the years and decades to come.

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[Jonathan Edwards]

I fully concur with the views of my hon. Friend. I will go on to talk on that specific issue in the remaining parts of my speech.

Concerns over data protection have been completely overshadowed by the US Prism spying programme. The US is much better organised in economic and industrial policy and will have no qualms about defending its narrow interests, making the need for transparency in the negotiations imperative. Most worrying about the TTIP as it stands are the proposals for investor-state dispute settlement. This would weigh law in favour of big business, allowing them to sue Governments that attempt to defend their citizens. Secretive panels of corporate lawyers could circumvent legal protections and override the will of Parliaments.

[David Mowat]

What proposals does the hon. Gentleman have to protect British investments overseas if he is so passionately against the current structure he mentions?

[Jonathan Edwards]

I am extremely interested in that point. I was going on to say that this is a deal between two advanced trading blocs with advanced legal systems. The hon. Gentleman’s argument would stand up only if he believes that the United States is a banana republic, and I am sure that that is not what he genuinely feels.

Clauses written into trade treaties are often used when dealing with developing countries with weak legal infrastructure, so that companies can protect their investments. However, they should not be necessary in developed economies with some of the best and most highly functioning legal systems anywhere in the world. The hearings are held in secret and would undoubtedly undermine the ability of societies, citizens and communities to contest decisions that affect them. The Democracy Centre has called it

“a privatised justice system for global corporations.”

Plaid Cymru completely opposes any proposals for investor-state dispute settlements within the TTIP, and believes that they are an affront to democracy and should be removed immediately.

Concerns over free trade agreements and the potential for an unequal relationship are not unfounded. The North American Free Trade Agreement between the USA, Canada and Mexico has undoubtedly been of greater benefit to the US and the larger corporations located within it, while US jobs are being outsourced to Mexico for lower wages. On the whole, this has been to the detriment of Mexican home-grown industry, as US corporations have moved in. It has also been detrimental to manufacturing and industrial blue collar jobs in the US, which have been outsourced, and to the small businesses in local communities that such jobs supported.

When out in the States in the summer, during a meeting between the all-party group on European Union-United States trade and investment and a member of President Obama’s inner circle, we were informed that future US economic strategy will be based on three pillars. One is to make the most of the fracking boom in the States, which means that it is now a net exporter of energy. The idea is to offer energy subsidies for heavy industry and manufacturing companies to reverse the flight to the Asia Pacific rim. This will mean that US companies will be at a huge advantage in being more competitive in any TTIP deal.

[David Mowat]

The hon. Gentleman makes the point that the Mexico-US agreement was principally of benefit to the US and multinationals within the US. My understanding, however, is that since that agreement was signed the Mexican economy has grown by an average of 8% or 9%—far more than it had been growing previously. How do those factors stack up?

[Jonathan Edwards]

I think the hon. Gentleman is trying to distract me from the point I was trying to make. I would go as far as to say that the TTIP advantage available to the US could lead to the stripping of my country’s manufacturing base.

To mitigate that potential threat, Wales must have control over its natural resources and energy production infrastructure, so that we can ensure that our manufacturing base is competitive and is not put at a disadvantage. We are a net exporter of electricity, which is why my party has called for the establishment of a not-for-profit Welsh energy company to build up an asset portfolio to protect domestic consumers and our economic base.

You, Madam Speaker, will appreciate that I, the son of a trade union shop steward, am concerned that the TTIP will not include the movement of labour, hence my Marxist critique of the current proposals. As Gary Younge wrote in The Guardian in 2001:

“Our governments are trapped in a morally warped and ideologically unsustainable paradigm. They applaud the free movement of capital; they abhor the free movement of labour.”

Deregulation Bill

David Mowat Excerpts

Monday 3rd February 2014 Commons Chamber

[John Mann]

I do not find it amusing that the Government introducing the Bill have no idea what goes on in workplaces and of the effect that this change will have, so let me illustrate my point. In the kind of work that we were doing, such as setting up major concerts in huge halls, a variety of different people come in and work together. Who is responsible for ensuring that the ladders going up—perhaps 50, 60, 70 feet—are secure? If it is a self-employed person, without that requirement in law because of this change, that buck—that burden—can be shifted. One critical thing in such a situation is having an overall duty because then everyone is liable. When working in complex spaces, with people going backwards and forwards carrying huge loads of equipment, lugging it and putting it up on high, all—whether a single person, a company or a company bringing in self-employed people, as we often did—ensure that the systems and the space is properly secured because they have a responsibility without exclusion.

[David Mowat (Warrington South) (Con)]

I am listening carefully to the hon. Gentleman’s arguments. His scenario is that of several self-employed people working as contractors in an umbrella organisation, but there is nothing in the Bill or clause 1 that would absolve that umbrella organisation from any health and safety aspect that I can see. His examples just do not apply.

[John Mann]

As I illustrated with the mining industry, if we move away from regulation, it will lead to civil litigation, and exactly the same will happen with the clauses in this Bill. That is illustrative not of a specific measure in the Bill in relation to the mining industry, but of the principle that moving away from good regulation creates a liability. It is not a cost saving for the employer because that liability comes back. In such a situation, yes, the Bill would have an impact because there is no overriding factor—that is the point. The case of the mountain guides is a wonderful example because the person who owns the mountain is normally the general public. We cannot say, “Ah well, this private landowner is responsible for this bolt coming out and this person who has been guided up falling to their death.” That is why this form of legislation came in.

The Minister without Portfolio, the right hon. and learned Member for Rushcliffe is the sole Euro-fanatic in the Tory parliamentary party these days. He is more Euro-fanatic than my good self. I note that in the past hour, UKIP has just nicked one of my Bills put to this Parliament about shifting the Department for Culture, Media and Sport to Manchester, and proclaimed it as its own.

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[John Mann]

We will see which are included and which are not. When the Minister talked about mountain guides, he gave the example of a regulator that does not exist for that profession. That was the example he gave to promote his Bill and demonstrate that it would be regulated. Wrong. That regulator does not exist in relation to mountain guides; it is an entirely different body with nothing whatever to do with them.

Perhaps Conservative Members would like to listen, because I have worked in this situation. For example, when working to set up a concert there will be a range of different people: some will be self-employed and some will be employed. If overall responsibility for health and safety is removed from the self-employed, that will put everybody at risk, because that responsibility will no longer be defined. That is a fundamental flaw in the Bill that the Ministers clearly have not thought through.

The Minister for Government Policy put up the wrong regulator in the example I cited. I personally negotiated with the previous Government the exemption from the working at heights directive on precise technicalities. I demonstrated that it was not safer to be included. Despite the perception, it would not have provided health and safety. In climbing, there are two ropes. The worst-case contingency training did not allow for one of those ropes snapping, so the directive was a nonsense. It was not a nonsense in terms of the principle of the law; it was a nonsense in the detail. The principle of deregulation should be that if regulation is not effective—when it is useless, when it does not work and when it is outdated—it should be removed, as has been the case for stuff going back 150 years.

[David Mowat]

The hon. Gentleman said that the Minister referred to the wrong regulator. May I then refer to the right regulator in his eyes: the HSE? Why does he think that the HSE supports this deregulation if it contains all the evils that he suggests?

[John Mann]

The HSE does not regulate training for mountain guides. As with any risk assessment, the responsibility for risk assessment, given that there is a health and safety duty, lies with the individual. That is the basis on which the voluntary organisations across the world and in this country that oversee health and safety standards operate. The duty to need to have that risk assessment, and that health and safety duty, is just as applicable for the self-employed as it is for those employing others, so there is no difference in that example.

Let me cite another example of how good regulation works. The Minister said that there were hundreds of pieces of European legislation that should be removed, but he could cite none of them. In our business we worked all over Europe. We had to drive lorries across Europe before good regulation came in. If we did a job in Hungary, we had to drive through France, Belgium, Holland, Germany, Austria and Hungary. There was different regulation for lorries and heavy goods vehicles in each of those countries at that time, and some of the differences were huge. For example, we could not drive on certain roads in Austria. There were different speeds and different specs covering what kind of vehicle was allowed. In terms of free trade, that was a lot of regulation in many countries, and I would suggest that there is now sensible regulation.

Virtually all the regulation emanating from Europe is to do with the single market. The figure that I have read is 90%, but the Minister without Portfolio is a greater expert on this than me, so I am sure he can confirm that. A single market requires regulations so that products can be sold on an equal basis, and they are counter to import controls. Import controls and regulation do not go together; they are polar opposites. If the Conservative party is saying—it would be useful to have this clarification—that it intends to remove a lot of European legislation on the single market, which import controls would it bring back in? Many economists and others would say that import controls are a cost on business, just as civil litigation costs, as the mining industry found, are a cost on business. Good regulation, especially on health and safety, protects the position of the self-employed and the employer. It is not a burden on them, but a protection to them, as well as the worker concerned.

There is some good stuff in the Bill. The provisions on rights of way may well speed up a long drawn out process and ensure that they are brought in properly, appropriately and speedily. That may well be a very good thing, but it would have been useful also to have dealt with regulation on health and safety in graveyards. They are the perfect example: there was no regulation, and 3 million gravestones, due to what many people described as health and safety, were staked. There was no regulation for that; it was precisely the absence of regulation that led to 3 million gravestones being staked. The House may recall that I am a qualified topple tester in graveyard health and safety. What happened was due to the same problem that the mining industry faced: insurance risk. Insurers demanded action, but there was no coherent regulation that said, “Here is what the health and safety standard should be.” Faced with pressure from insurers, people did their own thing—they made it up as they went along—but that is precisely what the Bill proposes should happen in many areas. That is the principle behind what Ministers are proposing, but the Bill will shift the burden on to insurance companies and the courts, and that is not protection for the employer.

Oral Answers to Questions

David Mowat Excerpts

Wednesday 29th January 2014 Commons Chamber

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

7. What steps he is taking to improve commercial skills in the civil service.

[David Mowat (Warrington South) (Con)]

9. What steps he is taking to improve commercial skills in the civil service.

[The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)]

The Government have been working for the past three years to drive up the level of commercial skills across central Government. There is still a long way to go, given the shortcomings of where we started. The need to press ahead with redoubled speed was highlighted in our recent cross-Government review of contracts. We are creating the Crown Commercial Service, which will come online later this year.

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[Mr Maude]

I am absolutely satisfied with the Major Projects Leadership Academy, which was set up to address what was identified by everybody as a major deficiency in Government and is now approaching its second anniversary. There is a requirement for all major project leaders to be alumni of the academy by the end of 2015, and all of them will have at least started training by the end of the current year. We started with a real deficiency of skills and experience, but we are building those with civil servants, which has been very much welcomed.

[David Mowat]

Just before Christmas, the cross-Government review of major projects identified a number of serious weaknesses in the way contracts with Serco and G4S had been administered. Will the Minister confirm that the review’s conclusions will be implemented in full? Will he also consider requiring senior civil servants to spend three years in a commercial environment before becoming permanent secretaries?

[Mr Maude]

I can confirm that we have accepted the recommendations, and Departments are producing their plans for implementing them imminently. With regard to the requirement for senior civil servants to get commercial and operational experience, we have already set out that someone looking to be appointed as permanent secretary of a delivery Department must be able to show at least two years of commercial or operational experience before being considered.

Oral Answers to Questions

David Mowat Excerpts

Wednesday 4th September 2013 Commons Chamber

The Minister for the Cabinet Office was asked—

[David Mowat (Warrington South) (Con)]

1. What progress the Government have made in response to the 2010 report on use of the Government estate.

[The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)]

We are committed to saving money by, among other things, cutting our occupancy of property in London and elsewhere. We are consolidating into freehold space wherever practical. Since the general election, the central civil estate in London has been reduced by about 22%. Across the country we have cut estate costs by nearly £500 million and we are on track to deliver a further £80 million by the end of the current financial year.

[David Mowat]

I thank the Minister for that answer. The Smith report identified that 15,000 jobs could be moved from London to the English regions by 2015. That would first of all save money, but also correct the spending imbalance by which London has the highest current spending per head of any English region. Is there more we can do to make swifter progress?

[Mr Maude]

The Smith recommendations were, so far as I can see, made on an assumption of stable public sector employment. Owing to the size of the public sector deficit that the coalition Government inherited, public sector employment has been falling since then by more than 400,000, and the size of the civil service is down by about 73,000 since the election, so the priority has been to reduce the amount of property we occupy, rather than moving employment from one part of the country to another.

Oral Answers to Questions

David Mowat Excerpts

Tuesday 9th July 2013 Commons Chamber

[The Deputy Prime Minister]

Dare I say it, it is interesting that the right hon. and learned Lady is raising detailed points about reforming party funding now, when her party singularly failed to do so in the cross-party talks that, unfortunately, have just come to an end. We see the consequences in the headlines: the Labour party has failed and failed and failed to address the fact that it is at the beck and call of major vested interests in British society. That is not healthy for the Labour party. That is not healthy for trade unions. That is not healthy for democracy.

[David Mowat (Warrington South) (Con)]

T3. In the event of a no vote in the Scottish referendum next year, there is some discussion that further devolution, sometimes called devo max, will be offered. Will the Deputy Prime Minister confirm that before we go ahead with anything along those lines, there will be clarity on how many fewer MPs from Scotland there will be in this place?

[The Deputy Prime Minister]

It is for each party to explain how it wants to see the process of devolution continue in the wake of next year’s referendum. Let us first settle the question of whether Scotland will remain a part of the family of nations that makes up the United Kingdom, and then decide as different parties. Speaking on behalf of my party, we will always be at the forefront of arguing for greater devolution within a United Kingdom.

Oral Answers to Questions

David Mowat Excerpts

Wednesday 19th June 2013 Commons Chamber

[Mr Hurd]

The hon. Lady should direct her first inquiries to the council, because not all councils are cutting funding to the voluntary sector. She should be aware of the broad national picture, in which volunteering is up, giving is stable and social investment is rising. There is a whole range of Government programmes to support and strengthen civil society and help it to maintain its resilience through this very difficult period.

[David Mowat (Warrington South) (Con)]

T3. In 2010, the Smith report suggested that substantial cost savings would result from moving parts of the civil service from London to the regions. It suggested a target of moving 15,000 civil servants by 2015. Will the Minister update us on progress?

[Mr Maude]

By last year, there were already nearly 12,000 fewer civil servants based in London. Our priority is to exit excess space and we have now exited 1.6 million square feet of office space, but there is much more that we can and will do.

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[The Prime Minister]

I can tell you, Mr Speaker, that Lynton Crosby has never lobbied me on anything. The only opinions that I am interested in are how we destroy the credibility of the Labour party, on which he has considerable expertise, though I have to say that he is not doing as good a job as the Labour party.

[David Mowat (Warrington South) (Con)]

Q14. Last year the Prime Minister successfully intervened in the case of newly born baby Lexie-Mai, who has eventually been confirmed as the daughter of Private Daniel Wade, who died on active service in Afghanistan. Private Wade’s fiancée and her family are in the Gallery today. This whole situation would not have arisen if the Ministry of Defence routinely kept samples of DNA of soldiers on active duty. Are we making any progress on this?

[The Prime Minister]

My hon. Friend makes an important point, and he is quite right to have stood up for his constituents in the way that he did. I would like to convene a meeting with MOD Ministers so that I can get back to him with the very best answer about the action we can take to stop these problems happening in the future.

Oral Answers to Questions

David Mowat Excerpts

Wednesday 20th March 2013 Commons Chamber

[The Prime Minister]

The point I make to the hon. Lady is that after the start of the financial year the top rate of tax will be higher than in any year when Labour was in office, and I am sure that that is something with which Michael Heseltine would fully agree.

[David Mowat (Warrington South) (Con)]

Today is the 20th anniversary of the Warrington bombing. The Prime Minister will recall that more than 20 people were killed and injured, among them a 12-year-old boy, Tim Parry. Will he join me in congratulating Tim’s parents, Wendy and Colin, on how they have worked tirelessly for peace over the past two decades, and particularly on the establishment of the Foundation for Peace, which brings help to victims of conflict around the world?

[The Prime Minister]

I certainly join my hon. Friend in praising that family for the incredible bravery they have shown. When someone suffers such a tragedy, it must be so much easier to try and put it behind them and forget about it, but to go on and campaign for peace and to bring together the people of Warrington as they have done shows enormous character and fortitude. They have the backing of the whole country.

European Council

David Mowat Excerpts

Monday 22nd October 2012 Commons Chamber

[The Prime Minister]

My hon. Friend makes an extremely intelligent point. The creation of the single currency has created a different dynamic in Europe. Inevitably, if countries are not in and do not want to join the single currency, they will not be involved in every single discussion about the future of the single currency. That is what has created different pathways in the European Union. We must be mature about and accept that fact, and think, “Now we know it, how can we best protect and defend the British interest in the EU?” She makes a very important point.

[David Mowat (Warrington South) (Con)]

Much of the discussion this afternoon has been on the need to protect our banking industry from regulation. For the avoidance of doubt, will the Prime Minister confirm that all our other exporting industries, such as pharmaceuticals, energy and oil, will be given the same respect in our negotiating position?

[The Prime Minister]

Of course—my hon. Friend makes an important point. I am not saying that we should stand up just for financial services and not for other industries. The industries he mentions are extremely important. However, we account for around 40% of the EU’s financial services, so it is an important industry. I am not a mercantilist, but it is one industry segment in which we have a substantial positive trade balance with the EU. A British Prime Minister, Foreign Secretary or Business Secretary would not be doing their duty if they did not speak up and point out some of the dangers of not having reasonable outcomes on those issues, but my hon. Friend is absolutely right that many other industries benefit from being members of the EU and from ensuring that we are writing fair rules for the single market.

Oral Answers to Questions

David Mowat Excerpts

Tuesday 10th July 2012 Commons Chamber

[The Deputy Prime Minister]

As I explained earlier, although House of Lords reform greatly exercises people here—people in Westminster get terribly hot under the collar—most people in the country at large think it a fairly common sense reform to introduce a slither of democracy to a legislative Chamber. It is not an issue on which the main parties, formally speaking, disagree, and a referendum would be very expensive and, as I said, cut across an all-important referendum on the future of the United Kingdom.

[David Mowat (Warrington South) (Con)]

T10. There is a body of opinion in Scotland that says that the upcoming referendum should have a third option: devo-max. Does the Deputy Prime Minister agree that putting that option on the ballot paper in advance of detailed discussions with the UK Government would be misleading and wrong?

[The Deputy Prime Minister]

I disagree with people who want to turn the referendum on Scotland’s place in the United Kingdom into a sort of smorgasbord or multiple-choice exercise. That is playing cat and mouse with the Scottish voters. There should be a simple question —whether Scotland remains part of the United Kingdom: yes or no? In our view, that question, in plain, simple terms, should be put to the Scottish people as soon as possible.

Regional Pay

David Mowat Excerpts

Wednesday 20th June 2012 Commons Chamber

[Grahame M. Morris (Easington) (Lab)]

I was rather perplexed by the Minister’s response. My impression is that if it walks like a duck, talks like a duck and quacks like a duck, it is a duck. The Minister, however, says he is in favour of national pay negotiations, but wants to change how they are delivered regionally. As I say, I am confused about whether this is a U-turn, or is it two U-turns so that the Minister is facing in the same direction? It seems as if that is exactly what has happened.

Any decision to allow regional pay differences for low-paid workers in the public sector would only exacerbate the economic and social north/south divide. In fact, we recently had a Westminster Hall debate in which some of the relevant statistics and factors were put on the record. The announcement in the autumn statement that this was on the Government’s agenda came without any prior evidence base for such a move. When Ministers talk about how public sector pay might better reflect local markets, they mean only one thing—pay less to people in poorer areas such as ours.

Rebalancing our economy for the future and addressing the north/south divide should be a Government priority. However, these proposals for regional or local pay differentials—whatever the terminology—would simply entrench that divide. The north-east is facing a double-dip jobs crisis. Government policies of slash and burn in the public sector are hitting the north-east hardest, and the promised private sector-led recovery was always a Tory mirage. [Interruption.] Let me remind Conservative Members who are heckling from a sedentary position that the figures for the north-east show unemployment now standing at 145,000—up 8,000, providing a regional figure of 11.3%, which is an absolute disgrace. Regional pay in the public sector would only make things worse, turning the north-east, and indeed other peripheral regions, into low-pay ghettos.

[David Mowat (Warrington South) (Con)]

I thank the hon. Gentleman for giving way, as I have been trying to intervene for a while. He makes a point about the north/south divide, about which many hon. Members on both sides are concerned. Will he concede that in the last year of the previous Government, the gross value added difference between London and the north-east reached the highest level for a decade and a half? I do not think that was due to the present Government, so what was it due to?

[Grahame M. Morris]

I shall come to that point. Under the last Government, the GVA differential was considerably reduced over 10 years. I do not have much time, but if the hon. Gentleman reads the Hansard report of the Westminster Hall debate, he will find all the information there.

In trying to justify his proposals, the Minister mentioned the evidence base, as did the hon. Member for Stourbridge (Margot James). That worries me. Pay review bodies and police boards oversee a pay bill of about £95 billion, and any changes in the distribution of that money would have major consequences. The reverse multiplier and the taking of moneys from local economies are a huge issue, and the benefit changes have already had a terrible effect on the economy in the north-east.

I refer the Minister and the hon. Member for Stourbridge to the Government’s own evidence to the current review, which includes some key sets of figures that I found intriguing. According to that evidence, statistics from the Office for National Statistics on regional price levels relative to national price levels show that, if London is excluded, price levels throughout the United Kingdom vary by only 5.3%, from 97% in Yorkshire and the Humber to 102.3% in the south-east. In my region, the north-east, the price level is 98.2%. Those figures show the smallest variation in price increases throughout the United Kingdom. If the Government proceeded with their proposal to vary pay levels in the public sector, those in the poorest regions, such as the north-east, would be worse off while the wealthiest regions benefited to the tune of billions.

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[Guy Opperman]

I also believe that regional pay is divisive and manifestly unfair. Members who read The Daily Telegraph today—obviously, that includes many on the Opposition Benches—will know that it has criticised me personally for leading the opposition to these divisive plans. It must be very rare to be criticised by The Daily Telegraph and praised by the hon. Member for Sedgefield (Phil Wilson) all on the same day. I was interested when I read on to find that its argument is that pay distortions are

“economically destructive. They make it harder for businesses in the regions to recruit workers at competitive wage rates and as a consequence they stifle enterprise.”

That is not what individual businesses, whether small or large, in my constituency and elsewhere in the north-east are saying to me, however.

This Government, like previous Governments in 2003 and 2007, are right to look at all potential options for boosting growth, and I have no difficulty with them referring the matter for consideration by the pay review body, but ultimately this will not find business support or create the prospect of business growth in the regions that we represent, and we should not support it if it becomes Government policy.

The majority of public sector workers in my region are doing their bit already. They are hard working, and along with the vast majority of my constituents they accept that the Government are right to reduce the deficit, to cut public sector spending, to reform public sector pensions, to freeze pay in some areas and to eradicate some of the non-jobs and excesses that we saw before 2010. That is accepted.

[David Mowat]

I agree with the thrust of my hon. Friend’s remarks. He cited the phrase “economically destructive”, but does he agree that what is also economically destructive is average public spending per head in London being 15% higher than in the north-west, and that if we wish to tackle the issue under discussion that would be a place to start?

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[Jacob Rees-Mogg]

Of course there is not a bigger pot of money, but if we allow competition to work, it will increase the local economy, which means that more money will be gathered in through council tax and the area will have the ability to pay more for the public sector that it needs.

The problem with what we are doing at the moment is that it impoverishes the poor. It keeps the poorest areas of the country poor for as long as possible. I know that Opposition Members and some of my hon. Friends are in favour of the current situation not because they want to keep the poorest areas poor, but for the most noble and romantic of motives. However, their noble approach to this issue is fundamentally wrong. They think that it is fair to ensure that everybody is paid the same, but if by doing that we destroy employment in certain areas and make more people dependent on the state, we are not acting in the broader interests of society.

[David Mowat]

My hon. Friend’s analysis would be 100% right if there were proof that higher public sector pay was crowding out private sector growth. I have not heard that argument being made.

[Jacob Rees-Mogg]

I gave a little bit of the evidence earlier, but it is the basic logic of economics that if there is a limited supply of labour and a high price is set for that labour in the public sector, it will be forced into the public sector rather than being available for the private sector.

If we set high wage rates for the public sector in the poorest areas of the country, the most able people will be attracted to the public sector, leaving them unavailable for the private sector, and it will set at an unaffordable level the rate that the private sector must pay to compete. The private sector will therefore move down to the south of England, where it is closer to so much other economic activity. If we want to create employment in areas of high unemployment, we have to make it attractive. It therefore has to be cheap. Otherwise, the magnetic pull of London and the region around it pulls employment down here. Those who really care about creating employment in impoverished areas should be in favour of getting rid of national pay bargaining.

National pay bargaining not only gets rid of competitiveness for the private sector, but pushes up all prices in the area. If there are highly paid public servants in poor areas of the country, the costs of housing and services are pushed up. The money that is spent by those people forces up prices and makes it increasingly difficult for the private sector to compete. That is the basic, unassailable logic of economics, and it will not be overcome by the mush of sentimentalism of those who think it is simply unfair to pay people different amounts. As my hon. Friend the Member for Cannock Chase (Mr Burley) said, we accept that principle in other areas, such as with the London weighting. We need to go much further so that every school and every hospital decides the pay rates that it will give its employees. We should make it as local as it possibly can be, and in that way we will allow the private sector to flourish and bloom, the economy to grow and our overall situation to improve enormously.