The Economy and Living Standards
Ed Balls Excerpts(10 years, 5 months ago)
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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.
Oral Answers to Questions
Ed Balls Excerpts(10 years, 6 months ago)
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Mr Osborne
My hon. Friend is right that the gap between the north and south grew under the last Government, who put all their bets on the City of London, which went spectacularly wrong. In his part of the world, which he represents so ably, we are not only helping manufacturing by reducing energy costs, which is important for steelworks in his area and elsewhere, but helping with the tolls on the Humber bridge. We have also had the great news that Siemens will open its new wind turbine factory in the area. Those are all examples of how we will have a more balanced economy than the one that we inherited.
Ed Balls (Morley and Outwood) (Lab/Co-op)
Back in 2010, the Chancellor promised to balance the books in 2015 and said that living standards would rise “steadily and sustainably”. Following today’s welcome news that the economy is finally growing again, will the Chancellor tell us whether he is now on track to keep either of those two promises?
Mr Osborne
I am delighted that the shadow Chancellor is still here. He is the man who, quite literally, crashed the car. On that occasion he fled the scene, but when it comes to crashing the British economy he cannot escape scrutiny of his record. Let me be clear: we said we would get the deficit down, and the deficit has come down; we said we would recover the economy, and recovery is taking place. He predicted that 1 million people would lose their jobs, but 1.5 million jobs have been created. He has apologised to the lady whose car he crashed into—why does he not apologise to the British people?
Ed Balls
If this Chancellor wants to have a discussion about whiplash we can do that any day of the week—Mr, Mrs or Mistress. However, let us not go back to biographies of the past; let us get back to the serious issue. The fact is that the Chancellor has failed to answer my question. For all his promises, he has broken them, even on the deficit, and living standards are not rising but falling year on year on year. People are £1,600 worse off under the Tories. If the Chancellor really thinks that his economic plan is working, let him answer this one simple question: at the next election, after five years of this Chancellor, will working people be better off than they were in 2010—yes or no?
Mr Osborne
Of course Britain will be better off because we will not have the mess of an economy on the brink of collapse, a banking system on its knees, and an 11% budget deficit. The only way to help people in this country is to grow the British economy. What the figures reveal today is that Britain is coming back, but we cannot take that for granted. People are still experiencing the impact of the shadow Chancellor’s economic policies, and the only thing he can say to us is “Why are you not clearing up our mess quickly enough?” That is literally what he is saying; it is absolutely pathetic. His car crash was caused by a seven-point turn that he was trying. Why does he not just get up, make a simple U-turn, admit that he got it wrong and that Britain is growing again?
Charter for Budget Responsibility
Ed Balls Excerpts(10 years, 8 months ago)
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Mr Osborne
I will give way in a little moment, but let me make some more progress.
We are creating a welfare state that the country—
Mr Osborne
Of course I will give way, but will the shadow Chancellor confirm, so that we know the terms of this debate, whether he is committed to the specific welfare cap, the list of the benefits included and the level to which the Government have committed? The shadow Work and Pensions Secretary, the hon. Member for Leeds West (Rachel Reeves), said on the radio that Labour would do things differently. Perhaps he could confirm that.
Ed Balls
I will make my speech on the welfare cap in a moment. I want to go back to the remark the Chancellor just made about last night’s vote. We have said that we do not think we should go ahead with the next cut in corporation tax and instead use all the money for a freeze in business rates for small businesses. Is the Chancellor really saying that large companies are business, but small businesses do not count? [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Just to remind everybody, shorter interventions would be helpful. We have 11 speakers to follow and I know the Front Benchers are desperate to hear the Back Benchers.
Mr Deputy Speaker
Order. I want to hear the Chancellor. All the howling behind the Chancellor is not helping me, or other people who want to listen to him. I want to hear the Chancellor as, I am sure, do those on his own side.
Mr Osborne
If the right hon. Gentleman has something useful to say, let us hear it.
Mr Deputy Speaker
Seriously, I could not hear the Chancellor and I want to hear the shadow Chancellor. I want a little bit more respect to both sides.
Ed Balls
We are proposing that all the money from deferring the cut in corporation tax goes to small business in a business rates freeze. That is not a rise in the taxes on business, unless the Chancellor thinks that somehow small businesses are second class and do not count. Is that really what the Chancellor is saying?
Mr Osborne
We have cut the corporation tax rate for small businesses. We have capped rates for small businesses. We are giving a £1,000 discount to high street stores. Those are the measures we are taking for small businesses, and we are also cutting the corporation tax rate. The truth is that Labour is now committed to higher business taxes in Britain with a high corporation tax rate.
Mr Osborne
May I just say to the shadow Chancellor that he does not need to talk to me? He needs to talk to the business community of Britain, which knows that he is anti-business. His party is anti-business, anti-job creation and, as I am about to explain, it is the welfare party, too. If he waits a little, he can intervene and answer the question that we need answered.
Mr Osborne
I will give way in a moment. Let me make progress with my speech. [Interruption.] All right, I will give way if the right hon. Gentleman answers this question in his intervention: is Labour committed to a higher rate of corporation tax? Yes or no?
Mr Deputy Speaker
Order. I think we have heard enough noise. I want to hear the question that has been posed to the Chancellor of the Exchequer and I want to hear the reply. If people do not want to hear, I can explain where the door is. Somebody will be going through it if we do not have calm.
Ed Balls
The Chancellor must not mislead and misrepresent on the welfare state or on business taxes. Labour is not committed to an increase in business tax. He has said that three times. Every time he has said that, he has misled this House. I am saying that all the money from the corporation tax rate will go back to small business. That is the right position. Every time he misleads this House I will correct him, Mr Deputy Speaker.
Mr Osborne
This is desperate stuff from the shadow Chancellor. If Labour had had its way in the vote last night, business taxes would be higher—yes or no?
Mr Osborne
Yes, they would be, because corporation tax would be higher and businesses would be paying more. No wonder Labour does not have a clue about how to fix the economy or how to deal with the welfare system. That is evident from its period in office, when welfare spending, which will be contained by the cap, went up 42% in real terms. Housing benefit went up by £7.6 billion alone, as a real increase—bigger than the entire police budget. Every single one of the pounds the Labour Government spent on working age welfare was not earned, but borrowed—borrowed because Britain could not pay its way in the world. Rather than using valuable public resources to pay for apprenticeships, science, roads and railways, money was spent on an unaffordable, unfair and out-of-control benefits bill. That economic insecurity is being addressed and control is being re-established. We insist that welfare is affordable and we insist that it is fair: fair to those who need it and fair to those who pay for it.
Ed Balls (Morley and Outwood) (Lab/Co-op)
Labour Members support the capping of social security spending, a policy advocated by the Leader of the Opposition last year. With welfare spending now £13 billion higher than the Government planned in their spending review, Labour will make different and fairer choices to get the social security bill under control and tackle the root causes of rising spending. On that basis, we will support the motion.
I shall come to the welfare cap in a moment, but let us first be clear about the background to the motion and the charter for budget responsibility. In the charter, the Government have set out their fiscal targets and reforms, and have also included the welfare cap details. Four years ago, the Chancellor promised to balance the budget in 2015. The Prime Minister said:
“In five years’ time, we will have balanced the books.”
But because they choked off the recovery and flatlined the economy, they are not going to balance the budget at all.
Ed Balls
I am going to speak first about what is in the charter, and then about the welfare cap. I will give way in a moment.
Last week, the Budget revealed that the Government were not balancing the books. The deficit is set to be £75 billion. In this Parliament, partly owing to rising welfare costs, it will be £190 billion more than they planned.
Ed Balls
I will give way in a moment. I want the House to know what is in this document first.
The Chancellor pledged to get the national debt falling. Page 7 of the charter says that
“the Treasury’s mandate for fiscal policy is supplemented by: a target for public sector net debt as a percentage of GDP to be falling at a fixed date of 2015-16”.
So the charter says that the national debt should be falling in 2015-16, but the OBR said in respect of last week’s Budget that it expects the national debt to be rising next year. The national debt is not falling according to this charter, and it is rising according to the OBR. I want the House to understand what is before us. I have to ask the Chancellor this: how on earth did he end up putting before the House a week after his Budget a motion that puts up in lights the fact that he is failing his own target to reduce the national debt? What an own goal! Is he going to blame the chair of the Conservative party for that one, too?
It gets worse for the Chancellor. The charter goes on to say—[Interruption.] Government Members should listen—[Interruption.] They should listen to this:
“The Treasury’s mandate for fiscal policy lapses at the dissolution of this Parliament.”
Lapses! It has already collapsed. It has expired; it has ceased to be; it is an ex-mandate. The charter goes on to say:
“The duty to set out a fiscal mandate will require the Treasury to set out a revised mandate for fiscal policy as soon as possible in the life of the new Parliament”.
That is what we will do: we will balance the current budget and deliver a surplus in the next Parliament. We will get the national debt falling. We will do those things as soon as we can in the next Parliament, but we will do so in a different way, starting by reversing the Chancellor’s £3 billion tax cut for people earning more than £150,000. That is what we mean by doing things in a different and fairer way.
Julian Smith (Skipton and Ripon) (Con)
Will the right hon. Gentleman confirm his announcement earlier that Labour will be raising taxes on British business?
Mr Deputy Speaker (Mr Lindsay Hoyle)
It was not aimed at an individual; it was aimed at the speech, I presume.
Ed Balls
We have said, Mr Deputy Speaker, that all the money from not proceeding with a further cut in corporation tax will go to small business with a business rates—[Interruption.] When the hon. Member for Skipton and Ripon (Julian Smith) and the Chancellor say that is a tax rise for business, that is only true if they do not think small businesses are proper businesses, which is a bit like saying, “If you didn’t go to Eton, you didn’t go to a proper public school.”
Mark Pritchard (The Wrekin) (Con)
I know the shadow Chancellor always wants to be accurate. Not everybody on the Government Benches went to private or public school, unlike many on the Opposition Benches, including him.
On the specific point, I believe the shadow Chancellor is a fair and reasonable man, so will he join me in welcoming the fact that in the last 12 months 4,000 jobs have been created in Shropshire? Surely that is good news for everybody to celebrate, whatever our party affiliation.
Ed Balls
First, I went to an even lesser private school than the Chancellor of the Exchequer. [Interruption.] Neither of us went to Eton, unfortunately. [Interruption.] I agree with the hon. Member for The Wrekin (Mark Pritchard) that the rise in employment is good news, but I am concerned that in his—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Shelbrooke, we missed you on Budget day, but I am not missing you today, am I?
Ed Balls
The thing I am concerned about—this relates directly to the welfare cap—is that in the constituency of the hon. Member for The Wrekin long-term youth unemployment has gone up by 129% since 2010. I presume the hon. Gentleman would agree that that rise, based on the jobseeker’s allowance claimant count, is a real concern. I think he should be backing our welfare reforms. The fact is—[Interruption.] If the deputy Chief Whip, the right hon. Member for Chelsea and Fulham (Greg Hands), is saying that because the hon. Member for The Wrekin has got a large majority, he does not have to worry about youth unemployment, that would be rather revealing. I hope he was not saying that.
Let me get on to the subject of the welfare cap. The Chancellor has failed to balance the books, he is contradicting his own charter by increasing national debt when it says he should be reducing it in 2015, and he has failed to control welfare spending. We have had plenty of tough talk and divisive rhetoric from the Chancellor, but his failure to tackle low wages, to deal with the cost of living crisis and to get more homes built means that he is spending £13 billion more than he planned in the spending review of 2010, and in last week’s Budget that was revised up by £1 billion in social security spending next year and the year after.
I want to explain where we are. We support the welfare cap. We support what is in the welfare cap. We agree that long-term bearing down on the costs of ageing is a good idea, but it should not be in the welfare cap in the next Parliament; we have agreed with that all along. We have also said we would match the Government’s spending in 2015-16, and the welfare cap over these five years, which we support, would rise on that basis. Although we support that, however, we will make different—
Mark Pritchard
On a point of order, Mr Deputy Speaker. I said that the shadow Chancellor is a fair and reasonable man, and I know he would not want, even unintentionally, to mislead the House. He has got a lot of figures before him, so I have a great deal of sympathy for him, but the fact is that in my constituency of The Wrekin there has been a fall of more than 27% in youth unemployment over the past 12 months.
Mr Deputy Speaker (Mr Lindsay Hoyle)
That is a point of correction, rather than of order.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Mr Burns, I think you need to relax as well. No hon. Member will mislead this House, and I am sure that is not what the shadow Chancellor intended to say and I am sure he will be happy to withdraw it.
Ed Balls
Let me answer the hon. Member for The Wrekin and then I will come to the soon to be ex-hon. Member for Dover. [Interruption.] If hon. Members quieten down, I will answer the point. Since 2010 there has been a 129% rise in long-term youth unemployment: that is young people on the claimant count who have been out of work for more than 12 months. That figure has gone up by 129%. That is the truth. It is a fact, and I will place the information in the House of Commons Library. There has been a 129% rise since 2010 and I think the hon. Member for The Wrekin should support what I am about to say.
Ben Gummer
I thank the right hon. Gentleman for giving way. He chooses his words carefully, but he should know that youth unemployment is lower than it was in 2010, and not only that: it is lower than it was before the crisis partly caused by his Government.
Ed Balls
In the constituency of Ipswich there has been a 140% rise in long-term youth unemployment over 12 months, and long-term youth unemployment is a real problem. I am glad the hon. Gentleman intervened because I was reading his Hansard remarks from 2012 when he said that asking the Office for Budget Responsibility to audit the parties’ manifestos at the next election was the right thing to do. He said there was no reason why that could not be done. I will come back to him in a moment on that one.
We support the welfare cap. We will make different and fairer choices to keep the social security bill down and tackle the root causes of higher welfare spending. Let me explain—
Mr David Burrowes (Enfield, Southgate) (Con)
Will the shadow Chancellor give way?
Ed Balls
No, I am not going to give way until I have made these points. I will give way to both hon. Gentlemen, but if they shout “Give way, give way” at me in the middle of a sentence, I am not going to do so.
We will do things in a different way. We will introduce a compulsory jobs guarantee to get young people who have been out of work for more than 12 months—up by over 129% in The Wrekin and 140% in Ipswich—and the long-term unemployed all back to work, and we will sort out the shambles of the universal credit. As for the idea that the Chancellor should say to the Work and Pensions Secretary, “Take your time to get universal credit right. Have as much money as you want,” how irresponsible is that?
We will stop paying the winter fuel allowance for the richest 5% of pensioners; we will scrap the bedroom tax, which is not only unfair, but may end up costing more money than it saves; we will get more houses built; we will restore the value of the national minimum wage; and we will tackle the low wages which the OBR has said have pushed up the bill for housing benefit. We will make different and fairer choices to keep the social security bill under control and tackle the root causes of higher welfare spending.
Mr Burrowes
Now that the shadow Chancellor has explained that he is going to support the welfare cap, will he also clarify whether he will increase housing benefit? If so, where will he make the welfare savings to keep within the welfare cap? When he finds the statistics on Enfield, he will be able to get confirmation that the youth unemployment claimant count is at its lowest since 1997.
Ed Balls
As we and many others have pointed out, including the National Housing Federation, the Government’s bedroom tax is pushing people on to housing benefit in the private sector—on higher rents—so there is a grave risk that it is going to cost money, rather than save money. We will abolish the bedroom tax, within the welfare cap set out on page 87 of the Red Book. That is our very clear position. I have to say to the hon. Gentleman that in Enfield, Southgate there has been a 500% rise in long-term youth unemployment, and he should be backing our compulsory jobs guarantee.
John Woodcock (Barrow and Furness) (Lab/Co-op)
Will the Chancellor take this opportunity to confirm that he will never follow the shameful record of the Conservative party, which in the 1990s took people off jobseeker’s allowance and actively put them on the sick? We still bear the scars of that policy today.
Ed Balls
It started in 1986 under a Conservative Prime Minister and social security Secretary, it was called “restart” and it actively moved people from JSA— unemployment benefit—on to long-term sickness and invalidity benefits. It meant that very many people then spent many years out of work. It was a shameful policy.
Stephen Doughty
I am glad that my right hon. Friend has mentioned the compulsory jobs guarantee, because is it not an absolute contrast with the manifest failures of the Work programme? Does he agree that the Government ought to be learning from, rather than smearing, the Welsh Labour Government and the success of the jobs growth Wales programme?
Charlie Elphicke
Is the shadow Chancellor committed to a welfare cap on the same benefits and of the same numbers as this Budget—yes or no?
Ed Balls
Yes.
Let me end by discussing the role of the OBR, because that is also set out in this charter. Page 5 states:
“The Coalition Government’s major reform to the fiscal framework has been the creation of the Office for Budget Responsibility”.
We agree with that, which is why we have proposed a reform to enhance the OBR’s role and allow it, as the hon. Member for Ipswich has advocated, independently to audit the tax and spending commitments in the manifestos of the main political parties. Why has the Chancellor not used the opportunity of this updated budget responsibility charter to make that reform? If he were to think again, he would be joining not only me, but the Chair of the Treasury Committee and the Chief Secretary to the Treasury, who have both supported this reform. We need legislation in the Finance Bill to make that happen.
Ed Balls
I will not give way. We know from the head of the OBR that if an agreement is reached by this summer, this reform independently to audit all tax and spending commitments, including all issues referring to social security spending, can be done in time for next year’s general election. It is a matter of political will. The Chancellor seems to be happy to spend his time, and that of the House, trying to set political traps—traps that keep backfiring on him—but he does not seem happy, and neither do other Government Members, to join the hon. Member for Ipswich and allow the OBR to audit the Conservative party manifesto or our manifesto, so that we can have a proper, open and transparent debate at the next election. Why does the Chancellor not join this cross-party consensus and let the OBR play that role? What has he got to hide? This is really not a trap—it is just the right thing to do.
Mr Deputy Speaker (Mr Lindsay Hoyle)
May I just announce that we will start with a five-minute limit and see how we go from there?
Ben Gummer
I will give way, but does the right hon. Gentleman want to let me finish my point before he intervenes? [Interruption.] I will say merely that I was proposing a fiscal rule on the Swedish model in which, as the Swedes have, there would be an opportunity for all parties’ budgets to be judged. That clearly is not possible under the existing settlement, not least because the head of the OBR said it would not be.
Ed Balls
I most certainly would not want to misrepresent the hon. Gentleman, so let me read out the quote from Hansard. He said:
“I…further suggest that the Office for Budget Responsibility be required to assess the major parties’ manifestos at election time, at the request of those parties…A similar role is performed by the Congressional Budget Office in the United States, and there is no reason why it cannot be so here.”—[Official Report, 25 January 2012; Vol. 539, c. 305.]
I agree, and so does the head of the OBR, and this can be done before the next election. In no way have I misrepresented the hon. Gentleman—the problem is that he disagrees with the Chancellor.
Ben Gummer
Actually, I do not. If the shadow Chancellor reads further, he will find the key point. There is an entire portion beforehand suggesting something, which his colleague, the hon. Member for Leeds West (Rachel Reeves), said that the Opposition disagreed with. Here we come to the crux of the matter. The fact is that people will not believe the Chancellor when he talks about sticking to a cap—[Interruption.] I mean the shadow Chancellor—[Interruption.] Yes, it is as close as he will get. He was the author of the golden rule, which claimed that there would be no excess debt over the economic cycle of his Government. None the less from 2002, the Government were running a deficit—[Interruption.] Will he deny that the Government were running a deficit from 2002?
Ed Balls
We said that we would balance the current Budget over the cycle, which is exactly what is in the mandate before us. It says that there will be
“a forward-looking target to achieve cyclically-adjusted current balance by the end of the rolling, five-year forecast period.”
That is the golden rule. If the hon. Gentleman is attacking the golden rule, it is the second thing on which he is attacking the Chancellor today.
Ben Gummer
The shadow Chancellor is again digging himself into a hole. He wrote a golden rule that claimed that there were would be no deficit over the cycle. He ran a deficit and he is now proposing that there should be a cap on welfare spending. I wish to pin him precisely on the terms of his agreement with the Government. What he has told his Back Benchers in private seems to be rather different from what he is saying in public. [Hon. Members: “Ah.”] Let me list what we have within the frame of the welfare cap proposed by my right hon. Friend. If the shadow Chancellor disagrees with any one of these items, he should stand up and intervene, and his own Back Benchers can draw their own inferences. We have the attendance allowance, bereavement benefits, carer’s allowance, Christmas bonus, disability living allowance, employment and support allowance, financial assistance scheme, housing benefit, incapacity benefit, income support, industrial injuries benefit, in-work credit, maternity allowance, pension credit, personal independence payment, return to work credit, severe disablement allowance, social fund, cold weather payments, statutory adoption pay and statutory maternity pay, statutory paternity pay, universal credit, winter fuel payments, personal tax credits, child benefit and tax-free child care. Is there any single element of that that he would change in the next five years?
Ben Gummer
Not at all. Now his Back Benchers may wish to draw their own inference from that. In private, the shadow Chancellor has been going round saying that he would change it. He would put one in and take one out. [Hon. Members: “Ah.”] Even in the House, he will say that he will supplement one benefit—withdrawing the winter fuel allowance from richer pensioners will raise £100 million and he would use it to pay for the reversal of the under-occupancy charge, which will cost £500 million. How does he make up that £400 million difference? He has been forced to come to this House to explain his maths. That is precisely why this cap is important. It forces a degree of accountability on the shadow Chancellor in making him explain to the British public how his sums add up, when it is clear that they do not. How does he account for the £400 million difference between the two? [Interruption.] I wish to know the answer as does the British public. [Interruption.]
The Chief Secretary to the Treasury (Danny Alexander)
I am grateful to the shadow Chief Secretary for his support for this measure, albeit that from him and the Chancellor we heard another two flatlining speeches from a flatlining political party.
Danny Alexander
Shadow Chancellor. I am glad he agrees that he is flatlining.
This has been an important debate, and I agreed with the hon. Member for Hackney North and Stoke Newington (Ms Abbott) in one respect. She was right to say that this was an important debate on an important subject and should be treated as such. However, it is for precisely those reasons that I support the cap that we are debating, as does my party. Let me explain why. During the debate a few myths have grown up about the cap, which I want to tackle. Fundamentally, as my hon. Friend the Member for Birmingham, Yardley (John Hemming) made clear, the motion is about accountability to Parliament and about the transparency of public expenditure decisions.
Amendment of the Law
Ed Balls Excerpts(10 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ed Balls (Morley and Outwood) (Lab/Co-op)
Yesterday’s Budget was the Chancellor’s last chance to make decisions and announce measures that will make a difference before the general election. For all his boasts and complacency, the Budget did nothing to address the central reality that will define his time in office—the fact that for most people in our country, living standards are not rising but are falling year on year, and that working people will, in fact, be worse off in 2015 than they were in 2010.
Yesterday the Chancellor tried to claim that everything is going well and according to plan, but millions of working people on middle and lower incomes are still not feeling any recovery. Young people stuck on the dole for months are not feeling it. Pensioners seeing their gas and electricity bills rise each year are not feeling it. Parents facing child care costs so high that it barely adds up for them to go to work are not feeling it. People aspiring to own their own home but finding that rising prices have put that beyond their dreams are not feeling it. Small businesses struggling to get a loan from the banks are not feeling it. Nurses who have been told that they will not even get the below-inflation pay rise they were promised certainly are not feeling it.
With wages still rising slower than prices, and working people worse off than they were when this Chancellor took office, the Office for Budget Responsibility revealed yesterday, in table 3.6 of its economic forecast, that real wages will be 5.6% lower in 2015 than in 2010. [Interruption.] I will tell the House what is awful—that people are not better off under the Tories; they are worse off under the Tories.
Andrew Selous (South West Bedfordshire) (Con)
Does the shadow Chancellor agree with the former Labour adviser who said about pensioners last night that
“you can’t trust people to spend their own money”?
Ed Balls
I do not agree, but I will come on to that in a moment.
We will study very carefully the proposals put on the table for discussion. We have just had a statement. The proposals are important, and it is important to have more flexibility and choice. We have been calling for reforms of the annuities market: to be honest, the price of annuities and competition in the market have not been good enough over the past few years. I must say that we all remember the pensions mis-selling of the early 1990s, and we need to make sure that there is a tight grip on tax avoidance. That is why we will look carefully at the proposals.
I must tell the hon. Gentleman that if he looks at table 3.6 on page 87 of the Office for Budget Responsibility’s report on this so-called Budget for savers, he will see that the savings ratio was 7.2% in 2012 and 5% last year and—here is what will happen to savings in the next five years—then goes from 4.1% to 3.6% and down to 3.2%. The Budget for savers will see savings fall every year in the next five years, with each of the figures revised down by the OBR in its latest forecasts. I must say that I am not sure whether this is quite the Budget for saving that it is stacked up to be.
What we desperately needed was a Budget that delivered for the many, not just a few at the top. What a wasted opportunity it was. The annual increase in the personal allowance is outweighed completely by the 24 tax rises that we have seen since 2010. The Chancellor’s welcome conversion to the importance of capital allowances for business investment means that he has reversed the cuts to capital allowances that he made in 2010. Let me tell him what the OBR says in the Budget documents about the overall impact of all the Budget measures:
“The measures in the Budget are, in aggregate, not expected to alter the OBR GDP growth forecast.”
This Budget will have no impact on growth at all.
As for the Chancellor’s 1p cut in beer duty, welcome as it is, it means that people have to drink 300 pints to get one free. This morning’s Tory poster says:
“Bingo! Cutting the bingo tax & beer duty to help hardworking people do more of the things they enjoy”.
How patronising, embarrassing and out of touch that is. The Tory party calls working people “them”—them and us. Do the Tories really think that they live in a different world from everyone else? Does that not reveal just how out of touch this Tory Government are? It is no wonder that they do not understand the cost of living crisis and no wonder that the Chancellor did nothing in the Budget to tackle it.
We are told by the Chancellor that he did not know that the poster was coming out. The Tories’ chief election strategist did not know about the ad campaign that came out straight after his Budget—pull the other one! It gets worse. I hear that the Prime Minister did not properly understand what the Chancellor was saying. Apparently, when he told the Prime Minister that he wanted to cut taxes for Bingo, the Prime Minister thought he was referring to an old school chum: “Hurrah, another tax break for millionaires. Bingo, Bingo!”
It is okay though, because we know that the job of the chair of the Conservative party is safe. No. 10 says that the Prime Minister has full confidence in the Tory party chair. That’s the end of him then! According to The Sun, the Tory party chair is currently on a tour of northern cities, presumably to see how the other half live. I wonder how it is going. Can you imagine, Mr Deputy Speaker? “Goodness me, the houses even have indoor toilets these days.” I wonder whether he is looking for pigeon fanciers up north. My advice to him is to change his name back to Michael Green. That was a bit safer.
The problem with the Budget was not what it did, but what it did not do. Where was the freeze on energy prices that Labour has called for? Where was the 10p starting rate to cut the taxes of 24 million working people? Where was the expansion of free child care to 25 hours a week for working parents? Where was the compulsory jobs guarantee, paid for by a tax on bank bonuses? Where was the cut in business rates for small firms? Where was the new investment in affordable housing? Where was the reversal of the £3 billion top rate tax cut to balance the books in a fair way? We got none of Labour’s cost of living plan to balance the deficit in a fairer way, just more of the same. Working people are worse off, while millionaires get a tax cut—just more of the same from the same old Tories.
Sir Edward Leigh (Gainsborough) (Con)
If I may gently return to the Budget, I understand that the Labour party accepts the welfare cap—that is fair enough—but that it wants to restore the spare room subsidy, which would cost £465 million. Will the shadow Chancellor explain to the House what other bit of welfare he would cut?
Ed Balls
I will. We have said very clearly that we would take the winter fuel allowance away from the richest 5% of pensioners, which would be a saving. We would also invest in affordable housing to get the housing benefit bill down. I do not know whether the Chancellor gets to read the OBR report. I think that he should listen to what it says:
“The rising proportion of the renting population claiming housing benefit may be related to the weakness of average wage growth relative to rent inflation. This explanation is supported by DWP data, which suggest that almost all the recent rise in the private-rented sector housing benefit caseload has been accounted for by people in employment.”
People in employment are seeing their wages fall and are having to claim housing benefit. It is no wonder the welfare bill has gone up by £13 billion since 2010.
It was not supposed to be this way. We all remember what the Chancellor promised in 2010: he would make people better off, balance the books by 2015 and rebalance the economy for the future. We know that people are worse off. We also know, after three years of flatlining growth, that his commitment to balance the books in 2015 is in tatters. He does not expect a balanced budget in 2015, but a deficit of more than £75 billion. It is all in the OBR report. There will be £190 billion more in borrowing than he planned in 2010. The national debt is rising this year, next year and the year after.
Mr Stewart Jackson (Peterborough) (Con)
Will the right hon. Gentleman give way?
Mr Jackson
I thank the right hon. Gentleman for his helpful suggestion, but I will ask my own question. As we are on the subject of history and mea culpas, would he like to apologise for running a structural deficit for the entire period of his Government’s administration?
Ed Balls
The Chancellor promised that he would abolish the structural deficit in this Parliament and he is going to fail absolutely. We went into the financial crisis with a lower national debt than America, France, Germany and Japan. The deficit went up because of a financial crisis and the failure of the banks. There was a recovery in 2010 and his failed policies choked it off. That is the reality. Let me tell the hon. Gentleman the facts. The Chancellor has already borrowed more in the three years of this Government than the last Labour Government borrowed in 13 years. Perhaps he should be apologising for his abject failure on the deficit, the debt and growth. That is what we should be hearing from him.
It will take the next Labour Government to clear up the mess left by this Chancellor. The Government have failed to get rid of the deficit. We will have to do the job. That is why we have been clear that we will balance the books in the next Parliament. We will have the current budget back in surplus and the national debt falling as soon as we can and before the end of the next Parliament. We will abolish his discredited idea of rolling five-year fiscal targets, which he never meets, and instead legislate for tough fiscal rules.
I will tell you what else we will do, Mr Deputy Speaker. I hope that the Chancellor will reflect on what I am about to say and think again.
Ed Balls
I do not think he will either. May I ask the Financial Secretary how it is going since his comments on women and the Monetary Policy Committee? Is he still revelling in that? If things were done on merit, he would be out on his ear.
I hope that the Chancellor will think again and join me, the Chair of the Treasury Committee and the Chief Secretary to the Treasury in supporting reforms to allow the Office for Budget Responsibility to audit independently the spending and tax commitments in the manifestos of the main political parties before the next election. We know from the head of the OBR that that can be done. Let us be honest: it is all a matter of political will. The problem with the Chancellor is that he wants to set traps, but he cannot be transparent on the matter of OBR audits. Why does he not think again, join the cross-party consensus and do the right thing?
Mark Garnier (Wyre Forest) (Con)
Why was the right hon. Gentleman formerly so keen that the OBR should not do that? Why did Labour members of the Treasury Committee argue in 2010 that it should not happen?
Ed Balls
The irony is that back in 2011 the Chancellor was in favour of it, and now he has changed his mind. The OBR, which we supported from the outset in this Parliament, has established a good track record, and we are happy for our manifesto to be audited. What is it about the Conservative Front Benchers that means that they are scared of independent OBR audit of their manifesto? Who knows?
I return to the welfare cap, and I will give a bit more detail for Government Members. We have had a lot of tough and divisive talk from the Chancellor on welfare over the past three years, but it cannot hide the fact that social security is up by £13 billion compared with his plans, particularly because of his failure on housing benefit. We have called for a cap on social security spending, and we will support the welfare cap next Wednesday, but we will make different and fairer choices to keep the social security bill down. We will introduce a compulsory jobs guarantee to get young people back to work. We will scrap the bedroom tax, which is not only unfair but could end up costing more money, not less. We will also scrap the winter fuel allowance for the richest 5% of pensioners, get more houses built and tackle the low wages that have pushed up spending on housing benefit. That is the fair way to ensure we get people back to work and get welfare costs under control.
Christopher Pincher (Tamworth) (Con)
What I have heard from the shadow Chancellor reminds me of the words of Errol Flynn, when he said, “I find difficulty in reconciling my gross habits with my net income”. The right hon. Gentleman has just made promises to the tune of £465 million of spending. How is he going to find that money and still not breach his welfare cap?
Ed Balls
When the hon. Gentleman referred to my gross assets, was he making a personal point? I am running the marathon in four weeks’ time, and I was rather hoping the Chancellor might join me, but unfortunately his assets do not seem to be up to it.
The hon. Gentleman made an important comment just two months ago, saying to the Tamworth Chronicle:
“There are too many young people without employment and there are too many in longterm unemployment.”
I agree. Why will he not back our bank bonus tax to get young people back to work? That is what he should be doing. The Chancellor has failed on living standards growth and deficit reduction; he has also failed to deliver the balanced recovery that we need.
Mr Tobias Ellwood (Bournemouth East) (Con)
The right hon. Gentleman has just touched on banking. The Opposition constantly belittle our financial services industry. J. P. Morgan is an important bank, one of many in Bournemouth, with 5,000 employees who are not all millionaires. Every time Labour does that, all those companies think a little bit more about possibly leaving the UK and moving elsewhere, and that would be devastating for the economy.
Ed Balls
Jobs in our banking and financial services industry are very important indeed. We need to ensure that we have reforms that strengthen our banking industry rather than undermine it. Many hard-working people on ordinary salaries in our banks feel let down by the mistakes made in the banks and by the bonus culture. I have to say to the hon. Gentleman, though, that I have checked the figures in Bournemouth East. He opposes a tax on bank bonuses to get young people back to work, but in his constituency there has been a 1,000% rise in long-term youth unemployment since 2010. He is not willing to act.
Mr Ellwood
I am not sure where the right hon. Gentleman is getting those figures from. The figures released this week show that the number of people in employment has risen by 400 since a year ago. Employment is doing well in Bournemouth, as it is right across the country.
Ed Balls
Can the hon. Gentleman tell me how many people are long-term unemployed in his constituency? No? If I were him I would not try, because he would almost certainly get it wrong.
The Chancellor has failed on living standards, growth and the deficit, and he has also failed on balanced recovery. When the country is crying out for reforms to our banks to balance the recovery, back wealth creation and get an economy that works for all, not just a few, all that he seems to do is say that we can wait for the wealth to trickle down. Why are apprenticeship numbers for young people falling? Why is bank lending to small businesses still falling? Why are the Government planning to cut infrastructure investment next year?
Phil Wilson (Sedgefield) (Lab)
Is my right hon. Friend aware that today, Hitachi has announced that its global rail building capacity is moving to the UK? Is he aware that the factory where the trains will be built is in my constituency, and that it was a Labour Government who had the wherewithal to bring about the intercity express programme to ensure that Hitachi came to this country?
Ed Balls
The site for that new and welcome investment was designated under the last Labour Government as a result of my hon. Friend’s campaigning. We all want manufacturing investment to rise, but what worries me is that over the past two years, since the Chancellor’s “march of the makers” speech, manufacturing output has actually fallen by 1.3%. That is the reality.
As for house building, it is at its lowest level since the 1920s. We believe that the new Governor of the Bank of England is right to be worried that the recovery is not yet secure or balanced. That is why it is vital that the Chancellor does more to get more homes built for millions who aspire to get on to the housing ladder but find it hard at the moment. I have to say to him, we backed Help to Buy, but he should have reduced the limit from £600,000. There should not be a taxpayer guarantee for people buying homes for £500,000 or £600,000. We also need to do more to invest in affordable housing. That is the only way to avoid a lop-sided recovery, demand running ahead of supply and rising prices, putting pressure on the Governor of the Bank of England to slow the housing market through higher mortgage rates earlier than we need in the recovery. That would put business investment at risk and undermine the budgets of hard-working people across our country.
The Chancellor should have listened to the CBI, the International Monetary Fund and the Opposition and acted more boldly to boost investment in housing supply. He should have listened to Labour, and he should have listened to the Business Secretary, too. We have both warned of the danger of lop-sided and unbalanced growth. Like us, the Business Secretary was right to warn back in 2010 that the pace of deficit reduction risked choking off recovery. The Prime Minister was wrong last autumn to dismiss the Business Secretary as a Jeremiah when he warned about the unbalanced nature of the recovery by saying:
“We mustn’t now settle for a short-term spurt of growth, fuelled by an old-fashioned property boom…there are already amber lights flashing.”
I also remind the House of what the Business Secretary said about unbalanced growth just a few weeks ago:
“The shape of the recovery has not been all that we might have hoped for”.
He was right to make those warnings, but time after time over the past few years when he has publicly made such warnings about the risks, he has been ignored. The problem is, the Business Secretary is a member of the Cabinet that is doing the ignoring. How can he keep on ignoring himself again and again?
As for the top-rate tax cut, which I know a number of Government Members have criticised, I remind the Business Secretary that he said at the weekend:
“I don’t understand why people need a million quid a year.”
What we do not understand is why he has given people on a million quid a year a tax cut of £42,500 each and every year. He asks for sympathy—he told The Guardian a few weeks ago that
“since being in government I have become much more enslaved these days”.
I say “Free the Cable One”. Is it not the sad truth that he is not enslaved but in hock? He is not captive, he has capitulated. It is a Tory agenda, and he is part of it. He knows it, and he should get out of it before it is too late.
As for the Chancellor, he has certainly been busy in recent weeks, and not just preparing his Budget. The manifesto is being written, the team is being assembled, the campaign is under way. But the enemy is not called Ed, and it is not the general election that is preoccupying him. He has his eyes on a different prize. This is what his new best friend, the Education Secretary, said to The Mail on Sunday—[Interruption.] Government Members do not want to hear what he said, do they? [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I think we do want to hear what the right hon. Gentleman has to say.
Ed Balls
They do not want to hear this, so before I remind people of what the Education Secretary said, let me tell the House what was said yesterday about the cost of living, the Budget, and all those matters, by the outgoing Conservative hon. Member for Thurrock (Jackie Doyle-Price): “The biggest impediment”—[Interruption.] I really think that hon. Members, especially those with small majorities, should listen to what she said.
Ed Balls
I have read it, and I think maybe you should too, my son—[Interruption.] I think they should listen. The hon. Member for Thurrock stated:
“The biggest impediment that this Party has when trying to secure a majority at the next election is that on one key question we constantly perform badly. That is on the issue of whether the Party is in touch with ordinary people.”
That was before the poster. She said that
“while people are worrying about whether they are keeping their jobs, whether they will be able to afford the electricity bill and how much it costs to fill the car these days,”
all the Tories seem to be doing is “talking about Boris.” She went on:
“We need to stop talking about ourselves and talk about the things that really matter to people. Otherwise we will be seen as out of touch, and Labour’s message will resonate.”
It certainly will, Mr Deputy Speaker.
In the light of the advice from the hon. Member for Thurrock about the cost of living, let me remind Members what the Education Secretary said over a wine-fuelled dinner with his old boss, Rupert Murdoch. He said that Boris Johnson “has no gravitas”, that the Home Secretary “has no friends”, and that only Osborne is “fit to lead.” Only Osborne is fit to lead? How did the Education Secretary explain his comments? He said he was “tipsy”. Tipsy? He must have been completely legless.
Penny Mordaunt
If press reports, which are what we are talking about, are to be believed, the right hon. Gentleman was critical of the Leader of the Opposition and his speech yesterday for not responding to a single measure in the Budget—there was nothing on support for manufacturing or reforms to pensions. The right hon. Gentleman is well into his speech, which is incredibly amusing, but does he realise that he is in danger of doing exactly the same thing?
Ed Balls
It was very interesting because we scoured the Chancellor’s speech and all the documents for one mention of the cost of living and living standards, and there were none at all—none! Conservative Members say that we are not talking about what is in the Budget, but they are not talking about what is undermining the living standards of people up and down our country.
Last year, the hon. Lady said:
“If we do not believe that the poorest are best served by our policies, we might as well give up and go and do something else.”—[Official Report, 20 March 2013; Vol. 560, c. 1023.]
I am afraid we are going to ensure that she has to give up and do something else.
It has been hard to understand what has been going on, but it is starting to make sense given all the Chancellor’s rebranding of recent weeks and months: the new less foppish hairstyle, the 5:2 diet, the new estuary accent, even photo opportunities down a coal mine—all part of his leadership business; the new working-class hero, not Gideon but George these days.
This weekend the Education Secretary took a further step in the Osborne rebranding. He said that it is “ridiculous”, and “preposterous” that Downing street is governed by a tight clutch of Etonians, and that that has got to change—we say “Hear, hear” to that, Mr Deputy Speaker. However, we all know what he was really trying to say through the pages of the Financial Times. He was saying, “Boris is a toff because he went to Eton, but George is a pleb because he only went to St Paul’s.” The Tory party is having a class war with itself. An Etonian elite has grabbed hold of the commanding heights of the economy, opposing the masses of Tories who went to lesser public schools. Old boys from Harrow and St Pauls, throw off your chains. What are they going to call themselves? The Bullingdon Bolsheviks? The Trust Fund Trots? Posh boys of the world unite?
In all seriousness, does the Chancellor really think that he can stand up for the interests of the energy companies, the hedge funds, Tory donors, deliver a massive tax cut to people earning more than £150,000, and then claim to be on the side of hard-working families—the party of the workers—just because he did not go to Eton? Posing as the posh boy proletarian will not wash when his own Budget ad campaign refers to working people as “them”, and when he will be remembered only as the Chancellor who cut taxes for millionaires while everyone else was worse off.
I know that many hon. Members wish to speak so I will conclude my remarks.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I do not think this clownish class warfare is fooling anybody, but does the right hon. Gentleman welcome the fact that 472 of his constituents will no longer pay income tax as a result of yesterday’s Budget?
Ed Balls
The problem is that they are all worse off because VAT went up to 20%. Is the hon. Lady worried that in her constituency there has been a 600% rise in long-term youth unemployment since 2010, which she is doing nothing about? As for the idea that class war will not wash, if I were the Chancellor I would try to find a different way to take on Boris, as I do not think this way will work.
There is a cost of living crisis, we do not have a balanced recovery, and all this complacent Chancellor does is play party politics in the Tory party. What a mess—a right old Eton mess! Surely we can do better than this. This was the Chancellor’s last chance, his final opportunity to tackle the cost of living crisis and make decisions that will directly affect people before next year, and he has blown it. Working people will be worse off in 2015 than they were in 2010, and the country now knows, especially after today’s patronising “them and us” advert for the Conservative party, that it will take a Labour Budget to put things right.
Oral Answers to Questions
Ed Balls Excerpts(10 years, 8 months ago)
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Danny Alexander
I welcome the success in the Bedford economy. I am sure that it was just an omission by the hon. Gentleman that he did not mention the Liberal Democrat mayor of Bedford in his list of those responsible. He is right that it is the long-term economic plan of this Government that is ensuring that the economy is on the right track, and the worst thing we can possibly do is to step away from that plan.
Ed Balls (Morley and Outwood) (Lab/Co-op)
May I ask the Chief Secretary to the Treasury about a proposal I made last autumn to allow the Office for Budget Responsibility independently to audit the spending and tax commitments in the manifestos of the main political parties? That proposal, which will require legislation, already has the support of the Chair of the Treasury Committee. Will the Chief Secretary and his party join a cross-party consensus to make that happen ahead of the next general election?
Danny Alexander
The idea is well worth further consideration. What I am worried about is the pressure that it would place on the OBR, which is a new organisation that has only recently taken on responsibility for forecasting the public finances. I worry that in the first election, when it has those responsibilities, the OBR might find it difficult to carry through that function. None the less, the idea is well worthy of debate, because the British people need to know that what every party says is what it means. I respectfully suggest to the shadow Chancellor that spending a bank bonus tax 10 times over does not meet that test.
Ed Balls
The Chief Secretary will know that that statement about the bank bonus tax is entirely out of date, which is why the Chancellor does not want the OBR to audit our policies. I understand his reluctance. After all, the party that pledged in its manifesto not to raise tuition fees and to stop the Tory VAT bombshell has something to fear from an OBR audit. On the other hand, there was some encouragement. I urge him this time, on this one issue, to try to persuade the Chancellor to take a different view, to change his mind and do the right thing by voting in the Finance Bill for this important change. It can and should be done. Let not the Liberal Democrats be a roadblock to this important reform.
Danny Alexander
If the right hon. Gentleman wants to see the influence of the Liberal Democrats in this Government, he can look at the £10,000 income tax personal allowance, which will be reached this April. He can look at the decisions we have taken to rein in higher rate tax relief on pension contributions. He can look at the increase in capital gains tax. He can look at the record number of apprenticeships in our economy. He can look at the work we are doing together, as a coalition Government, to clean up the mess that his party made and ensure that this country is back on the right track economically.
Oral Answers to Questions
Ed Balls Excerpts(10 years, 9 months ago)
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Mr Osborne
While no responsible Chancellor rules out tax changes, I believe the remainder of our deficit reduction plan can be achieved by reducing spending. Indeed, the reduction in the deficit has contributed to the economic stability that has been a platform for the economic growth we have seen. Perhaps the shadow Chancellor will get up and welcome that.
Ed Balls (Morley and Outwood) (Lab/Co-op)
After three damaging years of flatlining in our economy—[Interruption.]
Mr Speaker
Order. Some people are slow learners, so I will say it slowly: keep calm, be patient; Government Members, you have got the man at the Box for whom you were waiting, and now you should just listen. In tennis, new balls come after the first seven games of a match and subsequently after every nine, so patience is required.
Ed Balls
After three damaging years of flatlining, today’s growth figures are welcome, but everything we have seen today from the Chancellor shows he just does not understand that for working people facing a cost of living crisis, this is still no recovery at all. Last week, the Chancellor and the Prime Minister tried to use dodgy figures to tell people they had never had it so good. Why will he not today admit the truth: he has failed to get the deficit down, and since he came to office, working people have been not better off, but worse off?
Mr Osborne
I am not sure that that was worth waiting for. Since we last met, there has been a very important Labour economic announcement, and one that we wholeheartedly support: the decision to keep the right hon. Gentleman in his job until the general election. He welcomes the economic news through gritted teeth, because he said not only that it would not happen, but that it could not happen if we pursued our economic plan. He predicted that jobs would be lost, but 1 million have been created; he predicted that the deficit would go up, but it has come down; he predicted there would be no economic growth, unless we borrowed and spent more. He has been wrong on all these things. What the Opposition need are new crystal balls.
Ed Balls
Very good, Chancellor—a joke about my name being Balls. Fabulous.
The reality is that business investment is still weak, housing demand is outstripping supply, the savings ratio is falling and the average working person is £1,600 a year worse off than they were in 2010. Let me ask the Chancellor about the one thing he has refused to talk about now for four days. He has delivered one massive tax cut for the richest 1% earning more than £150,000, when everybody else is worse off. The Prime Minister and the Mayor of London are now saying that they want to cut the top rate of income tax again, to 40p. Is that really the Conservative party’s priority? If the Chancellor still believes that we are “all in this together”, why will he not stand at the Dispatch Box and rule out another top-rate tax cut from the Conservatives in the next Parliament? Come on, George: stand up and rule it out.
Mr Osborne
I will tell the right hon. Gentleman what the big tax cut was this Parliament: it was for working people through our increase in the personal allowance to £10,000. After last week, it is clear that the shadow Chancellor has learned absolutely nothing from the economic mess he brought upon this country. He said that Labour should have spent more money in the boom; he has set out fiscal plans that allow billions more of borrowing; and on the top rate of tax, he announced a plan that was attacked by Labour Ministers whom he served with in government, by the people who lent the Labour party money and by credible business people across the country—and his costings were shot down by the Institute for Fiscal Studies last night. There cannot have been a more disastrous policy launch in the history of the modern Labour party. On the day we learn that our economy continues to grow, is it not clear that the anti-business Labour party is now the biggest risk to the economic recovery?
Oral Answers to Questions
Ed Balls Excerpts(10 years, 11 months ago)
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The Financial Secretary to the Treasury (Sajid Javid)
At Budget 2013 the Chancellor announced that the Government would make ex gratia payment to Equitable Life with-profits annuitants who were excluded from the Equitable Life payment scheme because their annuity began before September ’92. Thanks to the legislation this Government have brought forward, we are now ready to make those payments. Today, I can confirm that over 9,000 people will receive lump-sum payments of £5,000 each next week, before Christmas, and a further 450 in receipt of pension credit will receive an additional £5,000 each.
Ed Balls (Morley and Outwood) (Lab/Co-op)
On Thursday the Chancellor claimed in this House that living standards are rising, on Friday the Institute for Fiscal Studies said that living standards are falling, so who is right?
Danny Alexander
First, may I say what a great pleasure it is for those on this side of the House to see the shadow Chancellor in his place, and may I join him in condemning the unattributable briefing against him from the people behind him—something that never happened in his day?
The whole reason millions of Britons—[Interruption.]
Ed Balls
The right hon. Gentleman is as bad as the Chancellor. Why can he not admit the truth: this Government’s economic policy is not working for working people? That is the truth. This is what the IFS said after the autumn statement—[Interruption.] Members on the Government Benches do not want to hear it. People are worse off under the Tories; that is the truth. Here is what the IFS said:
“real median household incomes will be substantially lower in 2015-16 than in 2009-10.”
And where is the Chancellor? He is in Brussels, where the Government are taking legal action to stop a cap on bank bonuses. How out of touch can they get? Let me ask the Chief Secretary: are the Liberal Democrats really right behind the Conservatives on this one, too—on stopping the bank bonus cap?
Danny Alexander
I know that the shadow Chancellor has made one change since last week. He has appointed a new special adviser on hand gestures: Greg Dyke. [Interruption.] That is the gesture the shadow Chancellor’s colleagues are making every time they hear him in this House of Commons. The fact is that the Liberal Democrats, as part of this coalition Government, are delivering a sustainable economic recovery. We are part of a Government who are delivering £700 for every single working person in this country and who are delivering a proactive approach in the European Union, including by ensuring that the integrity of the European treaties is maintained, and that is what this legal action is all about.
Autumn Statement
Ed Balls Excerpts(10 years, 11 months ago)
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Ed Balls (Morley and Outwood) (Lab/Co-op)
The whole country will have seen today that for all his boasts and all his breathtaking complacency—[Interruption.]
Mr Speaker
Order. I appeal to the House—[Interruption.] Order. I do not need any sedentary comments from either side of the House. What I said in respect of the Chancellor applies equally in respect of the shadow Chancellor. Let us have a bit of calm and a bit of order. Following the response, as usual, I will facilitate the widest possible opportunity for questioning. Let us have courtesy, please.
Ed Balls
The whole country will have seen today that for all his boasts and all his utterly breathtaking complacency, the Chancellor is in complete denial about the central fact defining this Government in office: under this Chancellor and this Prime Minister, for most people in our country living standards are not rising, but falling year on year.
Let me ask the Chancellor to demonstrate, because he did not mention it, that he is not completely out of touch with the cost of living crisis facing millions of people in our country. Can he confirm that, on average, working people in our country are £1,600 a year worse off than they were when the Government came into office in 2010, that prices will continue to rise faster than wages this year and into next year and that, as a result, people will be worse off in 2015 than they were in 2010? [Interruption.] Is not this the truth: after three damaging years of flatlining, after the slowest recovery for over 100 years—[Interruption.]
Mr Speaker
Order. However long it takes, the response—[Interruption.] Order. Mr Morris, I do not require your assistance. Calm down. Take up yoga, or whatever is necessary. However long it takes, the response, like the statement, will be heard. The sooner Members on both sides of the House grasp that very simple fact, the better.
Ed Balls
There is a cost of living crisis, even if Government Members will not admit it in this House, and we all know why: after three damaging years of flatlining and the slowest recovery for over 100 years, from a Chancellor and a Prime Minister who said that we were all in this together and then gave a huge tax cut to millionaires, do we not know the truth? Working people are not better off under the Tories, but worse off. For all their complacent boasts, after three damaging and wasted years for most people in the constituencies of hon. Members on both sides of the House there is still no recovery at all.
Let me ask the Chancellor about the promises he made to the House on growth and living standards three years ago. He said then that the economy would grow by more than 8.4% by the end of this year, but even after today’s welcome upward revisions, growth is set to be half that—lower growth than he forecast in 2010 this year, next year, and the year after as well.
Did not the Chancellor pledge to get the banks lending, yet net lending to business is now down by £100 billion compared with May 2010? Did he not make the No. 1 test of his economic credibility keeping the triple A credit rating, yet it has been downgraded not once but twice? As for his promise to balance the books by 2015, did he not confirm today that in 2015 he will not be balancing the books but borrowing £79 billion? For all his smoke and mirrors—[Interruption.] For all his smoke and mirrors, he is borrowing £198 billion more than he planned in 2010: more borrowing to pay for three years of economic failure; more borrowing in just three years under this Chancellor than under the previous Government in 13 years. He used to say that he would balance the books in 2015; now he wants us to congratulate him on saying he will do it in 2019. With this Government, it is clearly not just the badgers that move the goalposts.
On energy bills, after the Government’s panicked and half-baked attempt to steal Labour’s clothes, we know that they are not only not very good at shooting badgers, but not very good at shooting other people’s foxes either. What is the truth? For three months, the Leader of the Opposition has been calling for an energy price freeze, and did the Chancellor announce an energy price freeze? No, he did not. Can he confirm that while the energy companies have already announced price rises of £120 this year, his policy will still see energy prices rise by £70 this winter? Under this Chancellor, the only freeze this winter will be for millions of families and pensioners with rising bills struggling to heat their homes. Does he really think he can get away with tinkering at the edges, moving green levies his own party introduced off the bills and on to the taxpayer, and—surprise, surprise—letting the energy companies completely off the hook? They are not paying a penny. Does he not realise that for millions of hard-pressed families, pensioners and businesses across our country, nothing less than a freeze will do? Rather than hard-pressed taxpayers, it should be the excess profits of the energy companies that pick up the tab.
As for the Prime Minister’s flagship policy for families—a tax break for marriage—why will not the Chancellor admit the truth and tell the Prime Minister that the policy will not even help the families the Prime Minister says it will? His own Treasury Minister has let the cat out of the bag: I have it here in black and white. The Exchequer Secretary says that just under one third of married couples will get the married couples tax allowance. Just one in six families with children will benefit. Contrary to the Prime Minister’s claim in this House a few weeks ago, a married couple both paying basic-rate income tax will get no benefit at all. [Interruption.] No wonder his own Chancellor of the Exchequer has this week told The Daily Telegraph that he thinks the Prime Minister’s policy is
“a turkey of an idea”.
The Chancellor thinks the Prime Minister’s policy is a turkey. Merry Christmas, Prime Minister, Merry Christmas! [Interruption.]
Mr Speaker
Order. It is very simple; this just lengthens the proceedings. It does not bother me; I very much enjoy chairing the proceedings. [Interruption.] I think that what Members on both sides of the House will wish to consider is how this conduct is regarded by the public we are here to represent.
Ed Balls
I think that on this one the Chancellor is right—it is a turkey of an idea.
On the cost of living crisis, on energy, on supporting families, this Government just do not get it. There is a reason why this Prime Minister and this Chancellor—the Chancellor said it in his statement—believe that people are better-off: it is that the people on their Christmas card lists have seen their bonuses rise and their taxes cut. They have shown that they are willing to stand up for the interests of the energy companies—[Interruption.] We have a Prime Minister and a Chancellor who will stand up for the energy companies, stand up for the hedge funds, and stand up for people earning over £150,000—who get a tax cut—but will not stand up for millions of families and pensioners in our country: people struggling with rising energy bills, falling wages, and rising child care costs.
We all know and agree that rising life expectancy means we are going to have to work longer and that the Chancellor’s failure on growth and the deficit means more tough spending decisions in the next Parliament. But when the country is crying out for a Government who will work with business to promote investment and wealth creation and build an economy that works for the many and not just the few, does this Chancellor really think he can get away with tinkering at the edges, letting the free market rip, and waiting for the wealth to trickle down? Is not what the Chancellor has announced today the clearest evidence yet that the Government just do not understand the scale of the challenge we face to get an investment-led recovery that works for all and not just a few—a strong recovery built to last?
Let me ask the Chancellor—[Interruption.] With the permission of the House, let me ask the Chancellor this: with house building under this Government at its lowest level since the 1920s, does he not see that his Help to Buy scheme to boost mortgage demand can deliver a strong and balanced recovery only if he does what we and the IMF have urged and invests in housing supply—more affordable homes. [Interruption.] Government Members sneer at building more affordable homes. Can the Chancellor tell the House why infrastructure output has actually fallen by 15% since 2010? No wonder the CBI is so upset.
On investment, why has not the Chancellor used the money from the planned increase in spectrum licence fees to endow a proper business investment bank? On tax avoidance, will he tell the House why HMRC has reported that the amount of uncollected tax actually rose last year?
Almost 1 million young people are unemployed; a record number who want to work full time are being forced to accept part-time work; the Work programme is a flop; the welfare bill is rising; and, as we have learned today, universal credit is a complete and utter shambles. There was no mention of universal credit in the statement: IDS—in deep shambles.
Is it not the fact that, for all the shambles and chaos and rising welfare bills, what the Chancellor has announced on youth unemployment is too little, too late? There will be help for under-21s only, and only in the last weeks of this Government in 2015. Why is he not being more ambitious? Why will he not repeat the successful tax on bank bonuses to pay for a compulsory job for all young people—a job they will take or lose?
Why will the Chancellor not remove the winter allowance from the richest 5% of pensioners? Why will he not reverse his tax cut for hedge funds and protect disabled people in our country by scrapping the unfair and perverse bedroom tax this Prime Minister introduced? Why will he not go further on the bank levy and expand free child care for working parents, make work pay and use it to help working parents?
Is not this the truth: will the Chancellor confirm that even after what he has announced today on fuel duty and increases in the personal allowance, his VAT rise, his cuts to tax credits and his cuts to child benefit mean that, on average, families with children are worse off because of his Budgets? That is the truth—giving with one hand, taking away much, much more with the other.
With energy bills still rising this winter, no real action to tackle the cost of living crisis, no proper plan to earn our way to rising living standards for all, surely Britain can do better than this.
This complacent Chancellor sits there and thinks he deserves a pat on the back. I have to say that, with bank bonuses rising and millionaires enjoying a big tax cut, this is a policy that is working for a few. But as this autumn statement shows, with this out-of-touch Chancellor and Prime Minister, hard-working people are worse off under the Tories.
Mr Osborne
The Leader of the Opposition and I agree on one thing: that was a complete nightmare. The only turkey around here is the speech just given. As for denial, the man who said that borrowing would not come down, unemployment would not come down and growth would not happen, and who refuses to apologise for what he did to the British economy, is the very epitome of denial. That is the central problem with his response and, indeed, his whole economic framework. Not only did he predict that the recovery would never come; he went out of his way to say that if we stuck with our plan it could never come.
This is what the right hon. Member for Morley and Outwood (Ed Balls) said in March this year:
“I’ve said consistently…unless there is a government led plan for confidence, for growth and jobs, the economy will get worse but also the deficit won’t come down, it’ll go up”.
He predicted that the economy would get worse and the deficit would go up and that 1 million jobs would be lost, but the economy is growing, 1 million jobs have been created and the deficit has gone down. I have an explanation for what has happened: we do have a Government-led plan for confidence, for growth and jobs. It is our plan, it is working and the right hon. Gentleman should have welcomed it.
The extraordinary thing about the right hon. Gentleman’s performance was that he could not bring himself to welcome any of the better economic news. He has built his whole proposition as shadow Chancellor on the basis that our effort to deal with the public finances would make that growth impossible. That makes me wonder what the right hon. Gentleman has been up to with his time, but he gave a clue in a newspaper interview this week. He said that he had to cancel his grade 3 piano exam, because it was
“exactly the time when George Osborne is standing up to do the Autumn Statement!”
I think he should have gone ahead with the “Chopsticks” rendition. The newspaper article also says that he asked Miss Perrin, his piano teacher:
“‘If I go wrong can I start again?’ She said: ‘I think it’s probably best to keep going.’”
He takes the same approach to economic policy as he does to his piano. The final thing he said is that he hopes to reach grade 8 piano over the next four years. After his performance today, I can see why he expects to have a lot more time to practise.
Let me turn to the points the right hon. Gentleman raised. The central point is that it is not possible to have a cost of living plan without an economic plan. Labour’s silence on the economy goes to the heart of its weakness. It cannot talk about its record, because it had the biggest recession ever. It cannot talk about the deficit, because it has no plan to deal with it. The right hon. Gentleman cannot even talk about infrastructure and his much vaunted plan for a cross-party consensus, because he was the person who tried to break the consensus on the biggest project of all. He cannot talk about housing, because there were 420,000 fewer affordable homes at the end of the Labour Government. He cannot talk about business rates, because they went up 71% under Labour. He cannot talk about support for business, because he wants to put taxes up on business. He cannot ask about standing up to the powerful, because this is the week that Labour caved in to the trade unions. He cannot ask about jobs, because he wants more jobs taxes. And he cannot ask about banking and financial services, because the person Labour hired to advise it was the Reverend Flowers.
The right hon. Gentleman has said that he would be the co-operative Chancellor. Let me end by saying that that is exactly what he would be: borrowing more than he can afford, with catastrophic management of the finances, and a deluded leadership preaching one thing and doing another. It is hard-working people who will pick up the price if it blows up again. He cannot welcome the economic recovery because he is the biggest risk to economic recovery.
Oral Answers to Questions
Ed Balls Excerpts(11 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Osborne
What a question from a Labour Front- Bench team that wants to spend £27 billion more, and to borrow every penny of it. If this is the hon. Gentleman’s debut performance as shadow Chief Secretary, I am afraid that he will have to do a lot better. His job should be to control the promises that he makes. As for our side, we are paying for the commitments that we are making to the hard-working people of this country.
Mr Osborne
I will tell the right hon. Gentleman how: by sorting out the mess that he created.
Mr Osborne
I completely agree with my hon. Friend. Of course, one of the consequences of the higher borrowing that the Labour party is advocating would be not just higher taxes, but higher interest rates, which would be absolutely disastrous for families. That is precisely why we have to stick with the economic plan that is delivering the recovery.
Ed Balls (Morley and Outwood) (Lab/Co-op)
I welcome the Economic Secretary and the shadow Financial Secretary to their new jobs, and let us not forget the former Treasury Whip, the Treasurer of Her Majesty’s Household, the hon. Member for Chelsea and Fulham (Greg Hands), who has finally got the promotion we have been urging him to get for three years.
On this Chancellor’s watch, the UK is experiencing the slowest recovery for more than 100 years, and with prices, including energy prices, rising faster than wages, for millions of people this is no recovery at all. Yet from the Chancellor’s earlier answers to the Chair of the Treasury Committee, he seems to think he can get away with cutting energy bills by simply shifting the burden of his green levies on to the ordinary taxpayer. Let me ask the Chancellor—[Interruption.]
Mr Osborne
First, I join the right hon. Gentleman in welcoming the two hon. Ladies to their new Front-Bench positions, although I think he got the title wrong of his new shadow Exchequer Secretary. By the way, while I am at it, may I welcome the fact that the right hon. Gentleman did not move in the reshuffle, because he is exactly where we want him to be?
Perhaps one of these days the right hon. Gentleman will welcome the fact that GDP is increasing, that unemployment is coming down and that today we had the best services purchasing managers index since May 1997. I believe we should roll back some of the levies and charges that have been imposed on energy bills. I am not clear whether he agrees.
Ed Balls
After three years of flatlining, people are worse off because of this Chancellor of the Exchequer. As for ordinary people’s rising energy bills, he just does not give an EDF.
Is it not the case that, over the past year, energy prices in the euro area fell by 1.7% while in the UK they have risen by a staggering 7.7%? Simply switching green levies on to the taxpayer is giving with one hand and taking with the other. Why does this Chancellor always hit ordinary families while standing up for a powerful few?
Mr Osborne
With questions like that, the right hon. Gentleman is never going to be npower, is he?
The truth is that the right hon. Gentleman created a situation in our economy whereby living standards were hit hard, because he destroyed jobs and economic prosperity. Like a bonfire on Guy Fawkes night, every single one of his economic predictions has gone up in smoke, and he has nothing credible or serious to say about the British economy.
Oral Answers to Questions
Ed Balls Excerpts(11 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Osborne
I said in the Budget that we would make special ex gratia payments to Equitable Life policy holders who had bought their with-profits annuity before 1992. I said that we would try to make those payments as soon as possible, and I am pleased to be able to tell the House and the constituents of my hon. Friend, who represents them so well, that we can make those payments in this financial year, rather than in the next one as we originally predicted. We will shortly be writing to those annuitants with more information, but I can confirm that they will receive the money directly, without having to make an application. We are doing this not because we are legally obliged to do it but because, quite simply, it is the right thing to do.
Ed Balls (Morley and Outwood) (Lab/Co-op)
On growth, on living standards, on the deficit, on every test that the Chancellor set himself, his economic plan has failed. Since 2010, growth has been not 6.9% but 1.8%, families have been worse off not better off, and the deficit has not gone down to £60 billion but is stuck at £120 billion. How on earth can the Chancellor now claim that his economic plan has worked? After three wasted and damaging years, does he not realise that he cannot just airbrush out his failure?
Mr Osborne
The shadow Chancellor cannot airbrush out his predictions. He said:
“Britain’s double-dip recession is even deeper than first thought”,
but there was no double-dip recession. He also said that it was a “complete fantasy” that private sector job creation would replace losses in the public sector, but it has done so three times over. And three months ago, he said that our policy would choke off the recovery. The fact is that he cannot stand the fact that the economy is recovering and his plan would have been a disaster. Let us fear that the predictions about his own future in the shadow Cabinet turn out to be more accurate than his predictions about the British economy.
Ed Balls
Three years ago, this Chancellor did choke off the economic recovery. That is what happened, and his arrogant complacency will jar with millions of ordinary families who, even with growth returning at last, are still worse off because of his failing plan. Let me ask him who is benefiting from his policies. Can he confirm what the Office for National Statistics reported last month—namely, that the incomes of the highest earners were boosted in April because they delayed receiving their bonuses by a month in order to benefit from the tax cut for people earning more than £150,000 a year? The wealthy might be celebrating with the Chancellor, but everyone else thinks that he is completely out of touch.
Mr Osborne
I hope this is not our last encounter across the Dispatch Box, because we are enjoying this. We are enjoying the fact that the shadow Chancellor simply does not admit to the mistakes he made, not only in office but in opposition. He is increasingly like Monty Python’s black knight defending that bridge. When unemployment falls, he says that it is but a scratch; when business confidence rises, he says, “I’ve had worse”; the recovery—it is just a flesh wound. The limbs are falling off his economic argument, and it would be a comedy if it were not for the fact that Labour’s economic policies were a tragedy for this country.
Sir Peter Tapsell (Louth and Horncastle) (Con)
Although the economy is improving, I am afraid that the same cannot be said of the deputy Chancellor—[Interruption.]
Sir Peter Tapsell
Yes—you! [Laughter.]
Given that Sir John Vickers has just warned us that British banks are still seriously under-capitalised, does my right hon. Friend now accept that ring fencing, whether electrified or not, cannot be relied on to provide adequate protection for depositors and businesses in the event of another banking crisis? Will he therefore give further thought to the proposal, supported by Mr Paul Volcker and Lord Lawson, for the total separation of the commercial and investment banking sectors?