Comprehensive Spending Review

David Ruffley Excerpts

Thursday 28th October 2010 Commons Chamber

[Ms Eagle]

I have talked about the importance of getting the deficit down, but the hon. Gentleman is falling for the idea that the coalition have perpetrated that it is somehow not viable to have a bill that needs to be paid. People who have mortgages have to pay them off over time, and they have to pay interest on them. However, it is not sensible for anyone to deal with their mortgage by paying it off so early that they cannot afford to feed their kids in the meantime.

[Mr David Ruffley (Bury St Edmunds) (Con)]

Will the hon. Lady give way?

[Ms Eagle]

I am very happy to give way to the hon. Gentleman; it is great to see him back in the House.

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[Mr Ruffley]

I am most grateful to the hon. Lady, although I am afraid that I will not be lovely and fluffy, or whatever it was she said she wished my hon. Friend the Member for West Suffolk (Matthew Hancock) was. Is she aware that on 18 October, 35 leading businessmen wrote a joint letter stating that delay would cost this country an extra £100 billion alone in the course of this Parliament? Are they all wrong?

[Ms Eagle]

I would not expect the hon. Gentleman to be fluffy—that is not a word that I would ever have associated with him—but it is still good to see him back, and I genuinely welcome his return.

It needs to be pointed out that that letter was organised by Lord Wolfson in the House of Lords, via Conservative central office. It is also interesting to note that some of the signatories of the letter have some kind of vested interest. First, quite a few are Conservatives. Secondly, BT, for example, has cut 20,000 jobs in the past year, which is not exactly helping us to replace public sector jobs with private sector jobs. Others are responsible for outsourcing and stand to make direct gains from the shrinking of the state. The hon. Gentleman can believe that guff if he wants; we do not.

The IFS has been scathing about the Treasury’s analysis on the fairness front, and on who loses what. It has noted that the Treasury analysis conveniently stops in 2012-13, thereby excluding £12 billion of the announced savings—by which I mean cuts to social security. For those who remain in any doubt, let me quote directly from the IFS:

“The tax and benefit changes are regressive rather than progressive across most of the income distribution.”

The Government’s immediate response to that report by the IFS was to try to shoot the messenger. The Deputy Prime Minister launched into an attack on the IFS that bordered on the hysterical. He described its analysis as “distorted” and “complete nonsense”. He neglected to mention the fact that before the election he had regularly lauded the IFS when the results of its analysis suited him. On 29 April, as he preened himself during the leaders’ debate, he told us that he was

“really delighted at the Institute of Fiscal Studies”

for its view of Liberal Democrat proposals. Now that he is in government, he does not seem to like the IFS for pointing out an inconvenient truth.

A flip-flop here, a U-turn there—it is all in a day’s work for the Liberal Democrats as they shoehorn themselves into their new and ill-fitting Tory ideology. It is now abundantly clear that, for the Deputy Prime Minister, the slight awkwardness of signing up to one of the most unfair decisions for generations will not get in his way, even if he occasionally has to struggle with his conscience on “Desert Island Discs”. I know that he has argued for a different, more convenient definition of fairness, but let me tell him that there are some things that are not fair, however we define them.

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[Mr Andrew Tyrie (Chichester) (Con)]

Six minutes is not a long time in which to respond to such high-octane exchanges. I do not intend to add to the highly partisan exchanges that we have just heard, but given that the Treasury Committee is currently undertaking an inquiry into the CSR—the largest that has ever been undertaken—I want to make a few observations about what is in the document. I shall see how far I can get.

I am not sure that everyone will like my first observation. Indeed, I am not sure that anyone will like it. But the truth is that beneath all the political noise there is quite a wide range of cross-party agreement about the need for sharp action to tackle the deficit. At least two thirds of the correction to the deficit, or perhaps more, would have taken place whoever had won the election. That is clear from table 1.1 of the Red Book.

My second observation is that there is also a substantial consensus about overall economic strategy in the United Kingdom. That is in complete contrast to the position in the 1980s, when there were rival economic strategies. There is a consensus not just on deficit reduction, but on the need in principle to reform welfare, the need to sort out the banking system and to bring more competitiveness to it, and the need for some industrial support for biosciences and for some energy production, for example.

The third observation is that these cuts are not unprecedentedly large, as Lord Turnbull, who gave evidence to us this morning, said. The plans to cut public expenditure in the period ahead will keep it broadly steady in real terms for five years. Spending was kept broadly steady in real terms between 1984 and 1990.

[Mr David Ruffley]

I wonder whether that is right, because I have looked at the numbers and it would be appear that, over the period of the CSR, we will see the share of national income accounted for by public spending fall by about 6%, to 41%. That is exactly the same fall as was achieved during the first, and the start of the second, Thatcher Administrations.