Ed Balls
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The Economy and Living Standards
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Ed Balls (Morley and Outwood) (Lab/Co-op)
On this final day of debate on the Queen’s Speech, I beg to move an amendment, at the end of the Question to add:
‘but regret that the Gracious Speech fails to tackle the deepseated cost-of-living crisis with a plan to secure a strong and sustained recovery that delivers rising living standards for the many, not just a few at the top; and call on your Government to act to boost housing supply and ensure at least 200,000 new homes are built each year, introduce an independent infrastructure commission, reform the energy and banking markets to make them more competitive for consumers and businesses, make work pay by expanding free childcare for working parents, raise the value of the minimum wage over the next Parliament, introduce a lower ten pence starting rate of tax, set out reforms to ban recruitment agencies from hiring solely from overseas and put in place tougher enforcement of minimum wage laws to tackle the exploitation of migrant workers that undercuts local workers, introduce a compulsory jobs guarantee for young people and a new gold standard vocational qualification and give business a real say on apprenticeships in return for increasing their numbers to ensure that every young person gets the skills they need to succeed in the future.’.
Our economy is growing again and unemployment is falling [Hon. Members: “Hooray!”] yet we are today debating this Queen’s Speech just three weeks after local and European elections in which mainstream politics in our country was delivered a serious warning shot by the electorate—turnout was desperately low, the two main parties each failed to win even a third of the electorate, the Liberal Democrats were wiped out in most parts of the country, and the poll was topped by a party with no Members at all in this House and which campaigns to lead Britain out of the European Union. As the Leader of the Opposition said in his opening speech of this debate last week, these developments reflect
“a depth and scale of disenchantment that we ignore at our peril—disenchantment that goes beyond one party and one Government.”—[Official Report, 4 June 2014; Vol. 582, c. 15.]
All of us, in all parts of this House, know deep down that my right hon. Friend is right.
We all heard time and again on the doorstep the worries, fears, insecurity and pessimism of people up and down our country that the economic recovery is not working for them, their family and their community. After Labour’s victory in Hammersmith and Fulham, perhaps the Treasurer of Her Majesty’s Household, the right hon. Member for Chelsea and Fulham (Greg Hands) should listen more carefully to the electorate on these matters.
Ed Balls
I will open my remarks on the Queen’s Speech and take interventions in a moment.
In the startlingly honest and blunt words—the Chancellor should listen to these words—of the Minister without Portfolio and previous Conservative Chancellor, the right hon. and learned Member for Rushcliffe (Mr Clarke),
“the populations of most European countries including the United Kingdom have not yet felt any sense of recovery.”
He is right. There is a cost of living crisis and people are not feeling the benefit. The former Chancellor is right, too, to say that we in Britain are not alone. The European elections were no triumph for mainstream parties of left or right in most European countries, with far right or populist parties flourishing. The pattern that we have seen here in Britain—growth returning, but citizens expressing their insecurity and discontent at the ballot box—was repeated in countries such as Denmark and Austria, which also have growth and falling unemployment.
That is why I say to all parts of this House, including my own, that it is a challenge to all mainstream parties that working people do not believe that they will share in rising prosperity, be able to afford a home, secure a better job or save for a decent pension.
Ed Balls
I will give way in a moment, when I have established my argument. [Interruption.] Hon. Members should not be complacent; they should listen to this.
People have good reason to be sceptical. This stagnation in real wage growth is not just a problem of the past few years. It started in Britain over a decade ago as rapid technological change and global trade pressures put the squeeze on middle and low income households. The UK is not alone. That pattern is reflected across the developed world. Low wage and unskilled employment has grown, but research shows that traditionally middle-income, middle-class jobs in manufacturing and services have fallen as a share of total employment in all OECD countries. As the recent publicity around Google’s driverless car shows, labour-substituting technology is likely, if anything, to accelerate.
So the challenge for this Queen’s Speech and for this political generation is to show that, in the face of globalisation and technological change, we can secure rising prosperity that working people believe they can share in. Of course we have to respond to their concerns about immigration and reform in Europe, but the challenge is to get more better paid jobs for people who feel they have been left behind, and to bring in new investment, new industries and new jobs which could replace those in traditional areas where jobs have gone.
Those of us on the Opposition Benches will, with an open but critical mind, study the proposals in the Queen’s Speech on fracking, annuities, and pensions savings vehicles, but the real test against which this Queen’s Speech and the manifestos of all political parties will be judged over the next year is whether on jobs, skills, innovation and reform this generation can rise to the challenge and build an economy that works for all and not just a few.
Andrew Selous (South West Bedfordshire) (Con)
In his quest to re-engage the electorate who have become disenchanted, I am sure the right hon. Gentleman will believe that transparency and plain speaking are important. In that spirit, will he let us know clearly what Labour’s views are on increases in national insurance for employers?
Ed Balls
I am happy to do so. I know that my right hon. Friend the Member for Birkenhead (Mr Field), whom I respect a great deal, has a proposal, but that is not my proposal and it is not Labour’s proposal at all. We know that there are pressures in the national health service and that £3 billion has been wasted on an NHS reorganisation, but we also know that there is a cost of living crisis. People are paying hundreds of pounds more a year because of the Government’s VAT rise, and what we want to do is cut taxes for working people.
George Freeman (Mid Norfolk) (Con)
The shadow Chancellor mentioned the right hon. Member for Birkenhead (Mr Field), who was quoted as saying,
“I can’t tell you what a good meeting I had”
with the shadow Chancellor about the jobs tax. Will he take the opportunity now in the House to confirm that the Labour party does not have a plan to introduce a jobs tax?
Ed Balls
I have just given exactly that answer. That is my right hon. Friend’s plan, not mine. I remind the House that in April 2010 at the general election the then Leader of the Opposition, now the Prime Minister, said:
“We have absolutely no plans to raise VAT. Our first budget is all about recognising we need to get spending under control rather than putting up tax.”
If hon. Members want to discuss broken promises, they should have a word with the Chancellor of the Exchequer.
Ed Balls
Let me make a little more progress, then I will give way.
Let me start by trying to find some common ground with the Chancellor on these big and difficult debates. I think we can agree that Britain has always succeeded, and can only succeed in the future, as an open, internationalist and outward-facing trading nation, with enterprise, risk and innovation valued and rewarded. We need to back entrepreneurs and wealth creation, generate the profits to finance investment and win the confidence of investors round the world. We can agree on that.
Turning our face as a nation against the rest of the world and the opportunities of global trade is the road to national impoverishment. But at a time when there are powerful forces in technology and trade, which mean that many people are seeing their living standards falling year on year, we cannot take for granted public support for that open global market vision. As the Member of Parliament whose constituency until recently had the largest BNP membership of any in the country, I know how some on the extremes of left and right see isolationism as the solution—turning inwards, setting their face against Europe and the world economy—which would be a disastrous road to take. It would be the wrong way to proceed.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
On the question of jobs, we all applaud the number of jobs created in the country, but do we know how many have been created on zero-hours contracts?
Ed Balls
We know that the zero-hours contract is one of the symptoms of change in our labour market that is causing such insecurity. My hon. Friend raises that matter because the reality is that none of us on either side of the House can afford to bury our head in the sand and ignore the legitimate and mainstream concerns of people across our country about our economy not currently working for them and their families.
The challenge for this generation is how we respond. In my view, there are two quite wrongheaded ways to respond. The first is to assume that business as usual will just do the job—that the return of GDP growth will solve the problem. I must say to the Chancellor and to Government Members—particularly to the right hon. Member for Chelsea and Fulham, given the result in his constituency—that every time they boast that their economic plan is working, I am afraid most people in our country just think they are completely out of touch. It may be working for some—a privileged few—but people say time and again, “It’s not working for me. It’s not working for my family. It’s not working for our community.” That is what they have to solve.
Mr Tobias Ellwood (Bournemouth East) (Con)
We have asked time and again, but will the shadow Chancellor rule out an increase in national insurance or not? I would add that businesses in Bournemouth are worried about another tax—a property owner’s tax, which is another Labour invention—so will he rule that out as well?
Mr Ellwood
I am very pleased to see the shadow Chancellor has a briefing note that even has my picture on it. What he is not informed about is that long-term youth unemployment includes students. I am pleased to say that the three universities in Bournemouth are increasing their numbers. The statistic has gone up because it includes students.
Ed Balls
I am afraid that the hon. Gentleman got that wrong last time, and he is wrong again. I am referring to jobseeker’s allowance—the claimant count—and students are excluded from the figures. I must say that it is excusable to make that mistake once, but having done it twice, his chances of getting on to the Front Bench are severely diminished.
Alison McGovern (Wirral South) (Lab)
Before those interventions, the shadow Chancellor was making an extraordinarily important speech. Does he agree that the fundamental question we face is whether the link between economic growth and the living standards of people doing ordinary jobs in our country is broken or not? Will he return to such points, because those are the issues that my constituents fret about day in, day out?
Ed Balls
I will. This is the most vital and difficult issue. We have seen a rise in unskilled jobs in our country in recent years. That is a good thing, but it is not good enough. If that goes alongside falling living standards year on year for people not just on the lowest but on middle incomes, what will we end up with? We will end up with rising poverty among working people and record numbers of working people going to food banks, as well as rising alienation and a view that mainstream politics is not delivering. Unless Conservative Members wake up to that, they will see the consequences of it next year.
Madam Deputy Speaker
Mr Ellwood, that is not a point of order; that is continuing the debate. You have had three chances at it: three strikes and you’re out—no more.
Ed Balls
It is also completely pathetic. In the hon. Gentleman’s constituency, the number of young people aged between 18 and 24 claiming JSA who have been out of work for more than 12 months has gone up by 700%. As I said a moment ago, you either bury your head in the sand, or you face up to these big issues. We are facing up to them, but Government Members are incapable of doing so.
Ian Austin (Dudley North) (Lab)
The shadow Chancellor is setting out a really important argument about the recent election results, the widespread disenchantment that clearly exists in Britain at the moment, and the effects of globalisation and technological change on the economy. Is it not absolutely extraordinary that while he is doing so, he is being subjected to these utterly juvenile interventions? Does he not find it extraordinary that all Government Members can do is to read out handouts from the Whips, and the idiot from Bournemouth cannot even get that right? [Interruption.]
Madam Deputy Speaker
Sit down, Mr Ellwood. [Laughter.] This is a serious debate. Mr Ellwood, I am sure that you have very broad shoulders, and you will give your all when you get your turn to speak, perhaps in interventions on the Chancellor.
Ed Balls
I am trying to respond to serious issues. The reality is that, yes, after three years of flatlining, our economy is finally growing again, but net lending to small business is still falling, youth unemployment is still at record highs, wages are not keeping pace with prices and people are worse off. What I want to say is that unless we face up to that reality, we will not make progress. [Interruption.]
Madam Deputy Speaker
Order. Mr Ellwood, I can hear what you are saying. Actually, I agree that the way in which the hon. Member for Dudley North (Ian Austin) referred to you was uncalled for. You are an honourable Member of this House, and I am sure that Mr Austin wants to make it clear that that is his view.
Madam Deputy Speaker
No. I am not going to take a point of order; I am going to listen to what Mr Balls has to say. This is getting ridiculous.
Ed Balls
As I said, the first wrongheaded thing to do is to bury one’s head in the sand and not to face up to the reality. We can debate the Chancellor’s record. In 2010, he said that he would balance the Budget in 2015, but the deficit will be £75 million. He said that he would make people better off, but the Institute for Fiscal Studies has confirmed that people will be worse off in 2015 than they were in 2010. He said that we would all be in this together, but he has imposed the bedroom tax on the most vulnerable, seen record numbers go to food banks and cut the top rate of income tax for those earning more than £150,000.
Ed Balls
I will give way in one second.
My greatest concern on the agenda of how we can deliver more good jobs for the future is the Chancellor’s commitment to delivering a balanced economic recovery.
If we look at what is actually happening, it is true that the economy is growing, but within the G7, it is still only the UK and Italy that have not recovered to their pre-crisis peaks in output. With the rise in the population, it will take a full 10 years for income per head to recover to where it was in 2007. Worse than that is the level of business investment.
I am pleased that there are finally signs that business investment is starting to pick up, but as of now, we have the fourth lowest level of business investment in the European Union. Only Cyprus, Greece and Ireland are lower than the United Kingdom. Our export growth is sixth in the G7, 16th in the G20 and 22nd in the EU since 2010. Our research and development expenditure is the lowest in the G7. Lending to business is still falling. There has been a 12% fall in infrastructure output since 2010. Public investment is being cut next year. Those are not figures about which we can be complacent.
Mr Henry Bellingham (North West Norfolk) (Con)
The right hon. Gentleman is talking about investment, but he is being quite selective. In respect of foreign direct investment, is he aware that the UK secured nearly 800 new projects last year—the highest ever—and that we have 20% of all FDI in the EU? Is that not a very good sign indeed?
Ed Balls
Of course that is good news. For decades, we have been an open, global trading nation that attracts investment from around the world, and I want to keep it that way. However, complacency is not the way to make that happen. We have to face up to the reality that living standards are falling because, as the International Monetary Fund said in its report last week, our recovery is characterised by woefully low productivity growth. That is why living standards and wages are still falling, even as growth returns. Unless we face up to that challenge, we will have substantial problems.
James Morris
Last year, the right hon. Gentleman said that the Chancellor should listen to the IMF. Surely, he should take his own advice. He was wrong on growth. The Government’s long-term economic plan is working. Higher taxes would lead to a more insecure Britain. In the spirit of the debate that he wants to have, surely he has to admit that he was wrong on growth.
Ed Balls
In 2010, the Chancellor said that, by now, the economy would have grown by 12%. It has actually grown by half that amount. That is why the deficit has not come down and why people are worse off. The Chancellor would have been well advised to take the sound advice in 2010 and not choke off the economic recovery. He should take the sound advice of the IMF now and look at ways to improve housing supply and to tackle the woeful productivity performance over which he is presiding.
Toby Perkins (Chesterfield) (Lab)
The Chancellor acts as though he is the only person who has delivered growth, but we already had growth when he came to power. When there was light at the end of the tunnel, he spent two and a half years building more tunnel. Finally, now that we have growth—after everyone else—he says, “Haven’t I done well?”.
Ed Balls
My hon. Friend’s description of the historical record since 2010 is correct. However, the real issue is why we still have such low investment and why living standards are still falling. The jobs that we are creating are not delivering rising living standards for working people. We have only to look at the election results from a few weeks ago to see the potential challenge to Britain’s place in the world if we do not understand those forces.
Ed Balls
In a second.
As I said, the first mistake is to bury our heads in the sand. The second mistake is to attempt to appease those who say that the problem is rapid globalisation and technological change and that therefore the simplest thing to do is to put up trade barriers, stop all migration to Britain and leave the European Union. That is the wrong approach as well.
We all know the depth of concern about immigration in our country, but when the Prime Minister claimed, foolishly, that he would reduce net migration to the tens of thousands, “no ifs, no buts”, he did the cause of sensible and progressive immigration reform no good at all, because he has failed. Net migration has not come down to the tens of thousands; it has stuck stubbornly above 200,000 a year. Even the Chancellor has admitted that the Government will not meet their immigration target. Sending ad vans around the country urging immigrants to go home has only undermined their credibility. That is not the right approach on this issue.
We need clear reform on this matter. We need tough new laws to stop agencies and employers exploiting cheap migrant labour to undercut wages and jobs. We need to strengthen our border controls, not weaken them. We need to ensure that people who come to this country can learn English, and we must provide the support to make that happen. We need fairer rules to make sure that people who come here contribute, cannot claim benefits when they arrive and can more easily be deported if they commit a crime. We need to reform the free movement of labour in Europe through longer transitional controls, stronger employment protection and restrictions on benefits. Those are the things that we have to do. We need reform, not posturing and pandering.
Sir Edward Leigh (Gainsborough) (Con)
But the fact remains that too many traditional, working-class voters voted UKIP in the European elections. That is a serious problem for both political parties. Should we not now regret that there was such unrestricted immigration from eastern Europe? Can we not learn the lessons of that?
Ed Balls
I am very happy to say to the hon. Gentleman that not having transitional controls in 2004 was a mistake, and one that we all still deal with the consequences of. The question is whether we should have allies in Europe whom we can persuade to do things better for the future or walk away from our European partners and find that we are treated with disdain in the decision-making halls of Europe. That is the real question for statesmanship and politics in our country at the moment.
Our view on that question is clear. We say that there is no future for Britain in walking away from the European Union. It is the biggest single market for the companies, regions and countries of the United Kingdom. We have to reform Europe to make it work better for Britain, but we are much more likely to win the arguments if we are fully engaged, rather than having one foot out of the door.
The Prime Minister and the Chancellor used to agree with that argument. They came though the Lobby with us in 2011 to oppose an arbitrary timetable for an EU referendum. Then, they changed their minds. The Prime Minister flounced out of a summit and decided to appease Tory Back Benchers by performing a U-turn. In the memorable words of Lord Heseltine,
“To commit to a referendum about a negotiation that hasn’t begun, on a timescale you cannot predict, on an outcome that’s unknown, where Britain’s appeal as an inward investment market would be the centre of the debate, seems to me like an unnecessary gamble.”
Dr Thérèse Coffey (Suffolk Coastal) (Con)
On a point of order, Madam Deputy Speaker. Mr Speaker was very clear in his guidance earlier that we should speak to the amendment. I am struggling to find in the amendment any mention of a European referendum.
Madam Deputy Speaker (Dawn Primarolo)
Fortunately, that is a matter for me, and not the hon. Lady. The clear argument that is being advanced is about the importance of that matter to the economy. As long as the right hon. Gentleman stays on that point, he is in order.
Ed Balls
The argument that I am making is that if we as a House—those of us on the left and on the right—are to face up to the challenge of delivering more and better jobs for working people and if we are to see off the pressures for isolation and withdrawal, we cannot take the wrong-headed approach either of denying that there is a problem or of appeasing those who would try to walk away. We need a Queen’s Speech that rises to that challenge. My point is that, in putting all its energy into Europe and the referendum, the Conservative party has the wrong strategy to deal with the challenge that we face.
The Chancellor of the Exchequer (Mr George Osborne)
Just so that we can be absolutely clear, will the right hon. Gentleman make it clear from the Dispatch Box that Labour will not offer a referendum on Britain’s membership of the European Union now or in the manifesto at the general election and will therefore vote against any private Member’s Bill that proposes one?
Ed Balls
We have said very clearly that we do not believe in an ever-closer Union. If there is any proposal to transfer powers to Brussels from London, we will have a referendum in the next Parliament. Our position is clear. We are not turning our face against a referendum. What we are turning our face against is a referendum that would destabilise our country and cause it to lose investment and jobs.
Hon. Members do not have to take my word for it: let me read the conclusion, a year on from the Prime Minister’s decision, of the Chancellor’s biographer in the Financial Times. He stated that Downing street’s three objectives for the referendum were
“to pacify Tory MPs, sap the momentum of the fringe UK Independence party and put the troublesome subject of Europe to sleep until the general election in 2015. On all scores, it failed.”
That must qualify as the understatement of the year. [Interruption.] I have given my view.
Mr Osborne
I ask the shadow Chancellor to answer the question that I put to him. Does he rule out offering, now or in the Labour manifesto at the general election, an in-out referendum on Europe, and will the Labour party therefore vote against any private Member’s Bill that is introduced?
Ed Balls
The answer is no, of course we will not rule that out, because we have a clear commitment that if there is any proposal to transfer powers, we will have an in-out referendum in the next Parliament. That is our position. I gave the Chancellor the answer once, he did not listen and I gave it to him again.
Is not the reality that the Prime Minister’s attempt to appease Tory Back Benchers has failed and that it has not worked very well with the Front Benchers either? Just a few months ago, just after the Budget, the last time we had such a debate, we had read stories in the newspapers about the Education Secretary trying to undermine the leadership ambitions of the Mayor of London—it was briefed, I believe, to The Mail on Sunday at a lunch. Last week, it was the Home Secretary who was targeted by the Education Secretary, this time to The Times over lunch. The first time, the Education Secretary explained that he was tipsy. He has obviously been on the sauce again. There is a pattern here: a rival to the Chancellor tops the “ConservativeHome” leadership poll and the Education Secretary is sent out to try to stop them at all costs. Now we know that when the Chancellor and the Education Secretary have a late-night chat about the Prevent strategy, they are talking about a rather different prevent strategy from the one that we are talking about. It is pretty clear who the Chancellor has tried to prevent through all his interventions.
Robert Halfon
I am grateful. If the right hon. Gentleman’s economic message is being listened to, why did the Labour vote in Harlow decline by 20% over the past two years, and why did Labour lose three council seats in safe Labour wards? Is it not because Labour betrayed the working classes and voted against our tax cuts for lower earners, our fuel duty freeze and our council tax freeze?
Ed Balls
I respect the hon. Gentleman and his views, but the main message of my speech so far has been a warning against complacency, and I suggest that he heeds that warning. [Interruption.] As should the right hon. Member for Chelsea and Fulham).
As I said, the challenge that this Queen’s Speech should have risen to, but did not, is how we can ensure that we generate a secure recovery that delivers more good jobs for our country. The huge disappointment was that that was not the subject of this Queen’s Speech. We know that there is no quick fix and that we have to earn our way to rising prosperity. We cannot turn our face against change, Europe and the world, but nor can we succeed with a race to the bottom whereby British companies simply try to compete on cost and the Government see their role as simply removing regulation, undermining job security and hoping it will work. That will not generate the low and middle-income jobs that we need in the future. Our view is that we can succeed only through a race to the top, by backing innovation and investing in skills, making our economy more competitive and dynamic and earning our way to higher living standards for all.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
In my constituency, long-term unemployment has increased by almost 600% in the past two years and 380 people are desperately in need of some sight of the so-called recovery. What was in the Queen’s Speech that will give them any hope?
Ed Balls
I am afraid that the Queen’s Speech missed out the key elements of a long-term economic plan that would deliver rising prosperity for all. That is the problem. We know that there is a problem with housing—demand has run ahead of supply—so where was the action in the Queen’s Speech to deliver new towns, Treasury guarantees, planning reform, affordable homes, reform of Help to Buy and a new help to build scheme, which would deliver what we need? We have lower levels of house building than at any time since the 1920s, and the Chancellor is tinkering. It is about time that he showed some leadership on housing; otherwise, the aspirational majority will not get on the housing ladder. The danger is that interest rates will rise much earlier in the recovery than they should, choking off the living standards of people across our country.
The same point applies more widely to the Queen’s Speech. On skills, where was the action to deliver a gold standard for vocational qualifications? Where was the tax on bank bonuses to ensure that every young person who is out of work for a year is guaranteed a job? Where was the action to ensure that we incentivise a non-statutory living wage, improve the minimum wage and tackle the abuse of zero-hours contracts?
Although we welcome the extra investment in child care, that will not happen until the next Parliament. It will fail to help too many families who are struggling with the costs of child care, which have gone up so much. Why will the Chancellor not increase free child care for the under-fives from 15 hours to 25 hours a week for working parents? It is a Labour policy, but it is a good policy and should be in any sensible long-term economic plan.
Andrew Gwynne (Denton and Reddish) (Lab)
My right hon. Friend is absolutely right to seek to raise prosperity and ambition in this country. Is not the Government’s strategy utterly self-defeating? We now have record numbers of people in work but in poverty. Do we not need to ensure that those people have work that pays, and pays well?
Ed Balls
I agree with my hon. Friend. I want to come to a conclusion, because many Members, particularly on the Opposition Benches, want to speak, but he is completely right. Where in the Queen’s Speech was the independent infrastructure commission to get the infrastructure we need? Where was the proper British investment bank to back small businesses? Where were those key elements of a plan that will deliver more and better jobs for working people?
There was one other reform that I was disappointed was not in the Queen’s Speech, and I urge the Chancellor to reconsider it in the next two or three weeks. We know that there are big challenges to restore public trust. Our commitment is clear: we will balance the books in the next Parliament and get the national debt falling, and we will do it in a fairer way. It is hugely disappointing that the Chancellor has not committed, as he could have done, to introduce legislation to allow the Office for Budget Responsibility to audit independently the costings of every spending and tax measure in each main party manifesto. The Chair of the Treasury Committee and the Chief Secretary to the Treasury support that; why will the Chancellor not put politics aside and do the right thing? It would be the first such independent audit ever. It is essential to restore public trust in politics and improve the nature of the political debate, and the Chancellor can still change his mind in the next few weeks and make it happen.
This is Labour’s agenda for economic change. As I have argued from the beginning of this speech, we will sustain support for an open and dynamic market economy only if we can show that it will work for all, not just some. We need radical reforms to deliver more good jobs and make work pay, in marked contrast to Tory Ministers and Back Benchers burying their heads in the sand, repeating a hollow mantra and hoping that more of the same will restore public trust. That is patently not working. We need 200,000 homes a year, a compulsory jobs guarantee, a gold-standard vocational qualification, 25 hours a week of free child care, energy market reform with a 20-month price freeze, the books to be balanced in a fair way, a proper British investment bank and an independent infrastructure commission. That is the long-term economic plan that Britain needs, and only Labour will deliver it.
Mr Osborne
I will come on to say something about the housing market, and I am the first to say that we must be vigilant about housing. But to get a lecture from the party that presided over the biggest housing boom and bust in British history—
Mr Osborne
The shadow Chancellor says “what?” He might forget what happened in 2007-08 when the banks almost went bust because they extended housing loans that people could not afford, house prices fell, housing starts went off a cliff, and the people of Britain paid the price of an economic policy predicated on the fact that there would be no more boom and bust. The people of Britain are living with the consequences of that policy. Will he just accept now that basing an economic policy on the prediction that there would be no more boom and bust was an error of judgment?
Ed Balls
Will the Chancellor like to tell the House how many people went into negative equity after 2007, and how that compares with the number of people—the tens of thousands—who were put into negative equity after the Conservative housing crash of 1989? If he is going to make these statements he ought to be able to make them stand up. While we are here, will he tell us—
Madam Deputy Speaker (Dawn Primarolo)
No, no, no. Mr Balls, sit down. Not “While we are here.” One point at a time.
Mr Osborne
The right hon. Gentleman’s argument seems to be, “My crash was better than your crash.” That is a brilliant argument. I will tell him the answer. He was going to remove a temporary scheme that protects people from mortgage costs when they become unemployed. I extended it year after year after year. I have extended it again in the Budget to make sure that people do not find themselves having their homes repossessed. Can I also tell him that the housing market fell by almost 20%? The price of houses fell and there were people at Northern Rock—[Interruption.] His argument is literally, “I’m sorry we messed it up, but you messed it up in the past as well.” That is an absolutely hopeless argument. I have learned the lesson from the terrible mistake—
Mr Osborne
I was wrong? This is the man who presided over the deepest recession in British modern history and the biggest banking crisis since the Victorian age. He has the nerve to get up and say to the team that is turning the country around that we got it wrong. The truth is that he is the person who got it wrong.
There was a very interesting observation this week by Charles Clarke, who was the Home Secretary when Labour were in office. This is what he said:
“we have rested a great deal on assuming that the Conservative strategy wouldn’t succeed, that ‘plan A’…would not work and that has proved to be an unwise judgment because in fact, the Conservatives have succeeded in getting the economy onto a more positive path which leaves us”—
the Labour party—
“very little place”.
Mr Osborne
My hon. Friend is absolutely right that what we need in our regulation is the exercise of judgment, rather than just process. One of the biggest errors of judgment was the abolition of the Bank of England as an authority that would oversee systemic risks in our economy and monitor levels of debt, and the creation of the tripartite regime, which we have abolished.
One of the new features of the financial regulation landscape is the Financial Policy Committee, which is the group, independent of the Government, that looks at systemic financial risks, seeks to spot asset booms and has the tools to do something about them—something that, sadly, was completely lacking six or seven years ago. We have given the Financial Policy Committee far-reaching powers over capital ratios and mortgage standards, with powers to recommend limits on loans-to-income and even loans-to-value. That is the answer to the question about housing and the impact of housing debt on our financial system and families. I am clear that the Bank of England should not hesitate to use those powers, and any others we make available, should it see serious risks emerging in the housing market. That is a fundamental improvement in the resilience of the British economy.
I agree that we need more homes as well, and the changes to our planning system are now increasing housing supply. Planning permissions and starts are now at a six-year high. The fundamental answer to the challenge of the British housing market is to see more homes built. Frankly, I would ask the Labour party, which opposed the planning changes when they were introduced a couple of years ago, to reconsider its position and confirm that they will remain in place. And by the way, as the hon. Member for Bishop Auckland (Helen Goodman)—who I think sits on her party’s Front Bench—said that Labour should get rid of the Help to Buy scheme, let me tell her that it is helping families across the country, overwhelmingly outside the south-east of England, to buy homes that are well below the national average house price. I am proud that this Government are helping people with the aspiration of buying their own home and providing the support for families who can afford it to get on the housing ladder.
Ed Balls
May I ask for a clarification of what the Chancellor is announcing to the House today and at Mansion House later? He wrote to the Governor of the Bank of England setting the remit for the Financial Policy Committee as recently as March. The Governor of the Bank of England wrote back to the Chancellor with his comments on the remit on 31 March. Is the Chancellor now, a couple of months later, having to add to, revise or supplement that remit? Is that a reflection of the fact that there is widespread and growing concern, including in the Bank of England, that what is happening in the housing market is destabilising, and does he regret that he did not face up to these issues earlier?
Mr Osborne
Well, Mr Deputy Speaker, that was the definition of a cheap political pot shot, and it rather sums up the tone of Labour Members’ approach. They started with a whole spiel about new politics and having to engage with the disenchanted, but after only a few minutes, it has swiftly deteriorated.
Mr Osborne
Let me directly answer the hon. Gentleman’s point and then I shall take a final intervention from the shadow Chancellor before winding up.
We are very clear that we want impartial and free guidance—face to face if people want it. We are talking to consumer groups such as Which?, Saga, and Citizens Advice about how to ensure that we deliver such free and impartial advice through the industry and consumer groups all working together.
Ed Balls
We have welcomed annuities reform and the introduction of collective pension vehicles. The test for us is whether the sums will add up, whether it will cost more, whether it will work in a fair and equitable way and whether the advice and guidance will be sufficient. I put it to the Chancellor that this may be something on which we could try to get a cross-party consensus in the long term rather than play politics.
Mr Osborne
I certainly hope, in the spirit of new politics, that there will be agreement across the House and that the Labour party will support our reforms. There was no agreement on this issue when we were in opposition. My hon. Friends who were Opposition MPs at the time—when, indeed, the right hon. Gentleman was a Treasury Minister—will remember that we tried time and again to get the Treasury to open up annuities and to remove the compulsory requirement to annuitise. We remember the private Member’s Bill proposed by David Curry—and my right hon. Friend the Member for Croydon South (Sir Richard Ottaway) was involved, too—attempting to achieve this objective, with the Conservative party turning up en masse to try to deliver it. We tried. If the shadow Chancellor is telling me that he has had a change of heart and supports this measure, I can say “all well and good”. Perhaps that will help to address the disillusionment of Labour supporters that he he mentioned earlier—[Interruption.] The shadow Chancellor ends like he started. He wanted to give us a big new thing about new politics, but he cannot resist trading the blows across the Chamber.
Mr Osborne
I would argue that the best way to address people’s disillusionment is to create an economy that works for people and grows jobs for people. I enjoyed the right hon. Gentleman’s tour d’horizon of the global economy, and I certainly agree that the Google self-drive car will be an important intervention—and he will probably be one of the first customers for it.
We passed a milestone this week when we learned that 2 million new jobs had been created by our economic plan. We saw new surveys this week showing Britain attracting investment from around the world. The IMF said we would have the fastest- growing major advanced economy in the world and confirmed that deficit reduction strategy at the heart of our approach is the anchor of stability. We saw again today that the shadow Chancellor and the Labour party would be a disaster for the British economy, with more borrowing, more spending, more taxes and a war on business. In this Queen’s Speech, we reject these disastrous policies. Instead, we deliver on the long-term economic plan that is turning Britain around and offers a brighter future for all. I urge the House to support the Queen’s Speech.